**Exhibit 10.5**
**EMPLOYMENT AGREEMENT**
     This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into asof the 25th day of March, 2003, by and between Ricardo A. Verdaguer (the“Executive”) and IMPSAT Fiber Networks Inc., a Delaware corporation (the“Company”), and is intended to confirm the terms and conditions of theExecutive’s employment with the Company. For the purposes of this Agreement,the term “Company” shall include all subsidiaries of the Company.
     For good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the Company and the Executive hereby agree as follows:
     1.     Position and Duties.  During the Employment Period (as definedbelow), the Executive shall be employed as Chief Executive Officer andPresident of the Company and shall have such duties and responsibilities as arecustomarily assigned to individuals serving in such positions and such otherduties consistent with Executive’s titles and positions as the Board ofDirectors of the Company (the “Board”) specifies from time to time. TheExecutive, in carrying out his duties under this Agreement, shall report and besubject to the Board, and shall be responsible for the general and day-to-daymanagement of the affairs of the Company, including, but not limited to,personnel matters, budgeting, investor relations, retention of professionalsand strategic planning. During the Employment Period, the Executive will be themost senior executive officer of the Company and all other executives andbusinesses of the Company will report to the Executive or his designee. Duringthe Employment Period the Company shall use its commercially reasonable effortsto cause the Executive to be nominated for election to the Board. During theEmployment Period the Executive’s primary office shall be located in BuenosAires, Argentina. Except as otherwise specifically provided herein, theExecutive’s employment shall be subject to the employment policies of theCompany in effect from time to time during the term of the Executive’semployment hereunder.
     2.     Performance. During the Employment Period, and excluding anyperiods of vacation, holiday, personal leave and sick leave to which theExecutive is entitled, the Executive shall devote the Executive’s full businesstime, attention and ability to the business and affairs of the Company andshall use the Executive’s reasonable best efforts to carry out the Executive’sresponsibilities faithfully and efficiently in a professional manner. It shallnot be considered a violation of the foregoing for the Executive to (a) serveon corporate or civic boards or on charitable boards or committees, (b) deliverlectures or fulfill speaking engagements, or (c) manage his or his family’spersonal investments, in each case so long as such activities do notsubstantially interfere with the performance of the Executive’sresponsibilities as Chief Executive Officer and President of the Company and donot violate the Company’s rules and policies or present a material conflict ofinterest with the Company, but, with respect to the matters referred to inclauses (a) and (b) above, only with the prior written consent of the Board,which consent shall not be unreasonably withheld.
     3.     Term. The Company shall employ the Executive for an initialterm commencing on March 25, 2003 (the “Commencement Date”) and endingon the third
 

 

anniversary thereof (the “Initial Term”). Upon theexpiration of the Initial Term and of each Additional Term (as defined below),the Executive’s employment hereunder shall be deemed to be automaticallyextended, upon the same terms and conditions as those terms and conditions thencurrently in effect for the Executive, for an additional period of one year(each such additional one year period being an “Additional Term”), ineach such case, commencing upon the expiration of the Initial Term or the thencurrent Additional Term, as the case may be, unless, at least ninety (90) daysprior to the expiration of the Initial Term or such Additional Term, either theCompany or the Executive gives written notice to the other of its intention notto extend the Employment Period (a “Non-Renewal Notice”). The entireperiod during which the Executive is employed by the Company pursuant to thisAgreement is referred to herein as the “Employment Period.”
     4.     Compensation.
             4.1   Base Salary.  The Company shall pay the Executive a base salaryat an annual rate (“Annual Base Salary”). For the Initial Term theAnnual Base Salary shall be Five Hundred Ten Thousand Dollars (U.S.$510,000).The Annual Base Salary shall be payable according to the Company’s regular andcustomary payroll practices for salaried employees as such practices aredetermined from time to time by the Board, but in no event less frequently thanmonthly. Commencing in 2003, the Annual Base Salary shall be reviewed by theCompensation Committee of the Board (the “Compensation Committee”)yearly by no later than April 15 of each year and may be increased (but notdecreased) by such amount as the Compensation Committee in its sole discretionshall determine.
           4.2   Annual Bonus.  The Executive is hereby granted a bonus ofU.S.$200,000 in respect of his performance for the Company’s fiscal year endingDecember 31, 2002. With respect to each fiscal year of the Company commencingon or after March 1, 2003, the Executive shall be eligible to participate inthe Impsat Fiber Networks, Inc. Executive Incentive Bonus Plan (the“Incentive Bonus Plan”). The Incentive Bonus Plan shall, with respectto any such fiscal year, provide that if the Company meets certain targets forsuch fiscal year, as set by the Compensation Committee, the Executive shallreceive an annual bonus (the “Annual Bonus”). Each Annual Bonus shallequal 100% of the Executive’s Annual Base Salary, determined as of the date thetargets for the fiscal year relating to such Annual Bonus are set by theCompensation Committee, subject to the right of the Compensation Committee, inits sole discretion, to pay a lesser such percentage (or to pay no Annual Bonuswhatsoever). The targets for each such fiscal year will be determined by theCompensation Committee by no later than March 31 of such fiscal year. TheAnnual Bonus with respect to each such fiscal year will be payable no laterthan thirty (30) days following the Board’s receipt of the Company’s auditedfinancial statements for such fiscal year.
           4.3   Employee Benefits.  The Company shall maintain one or moreemployee benefits plans, including any such plans required under applicable lawto be maintained, for its senior executives relating to medical, dental andlife insurance, disability and retirement, and the Executive shall be entitledto benefits under all
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components of such plans, which plans shall be approved by the Compensation Committee.
           4.4   Stock Options.  On the Commencement Date (or, if later, thedate on which the fair market value of the Company’s common stock is determinedunder the terms of the Impsat Fiber Networks, Inc. 2003 Stock Incentive Plan(the “2003 Long Term Incentive Plan”), and subject to the approval ofthe Compensation Committee, the Executive shall, pursuant to the terms of the2003 Long Term Incentive Plan, be granted an option, which is not an incentiveoption under Section 422 of the Internal Revenue Code (the “Option”),for 617,400 shares of the Company’s common stock. The exercise price per sharefor each of the Option shares shall be U.S.$15.00 (or, if greater, the fairmarket value of the stock, as determined under the 2003 Long Term IncentivePlan, on the date of grant). The term of the Option will be eight years fromthe date of the Option’s grant. Subject to Section 6.6 hereof, the Optionshall vest in four installments: One-quarter of the Option shares shall veston the Commencement Date; one-quarter of the Option shares shall vest on thefirst anniversary of the Commencement Date; one-quarter of the Option sharesshall vest on the second anniversary of the Commencement Date; and the finalone-quarter of the Option shares shall vest on the third anniversary of theCommencement Date, but, in each case, only if the Executive is still employedwith the Company on such respective date. The grant to the Executive of theOption shall be without prejudice to any other share options which may begranted to the Executive in the future under any plan adopted by the Company.The grant of the Option shall, in all events, be subject to the terms andconditions of the 2003 Long Term Incentive Plan, and shall be effectuated by anon-statutory stock option agreement between the Company and the Executiveentered into pursuant to the 2003 Long Term Incentive Plan.
           4.5   IMPSAT Restricted Stock.  On the Commencement Date, theExecutive shall be granted 100,000 shares of the Company’s common stock (theshares so granted to the Executive being the “Restricted Stock”).Subject to Section 6.6 hereof, the Restricted Stock shall vest one-quarter onthe Commencement Date; one-quarter on the first anniversary of the CommencementDate; one-quarter on the second anniversary of the Commencement Date; andone-quarter on the third anniversary of the Commencement Date, but, in eachcase, only if the Executive is still employed with the Company on suchrespective date. The Restricted Stock shall, in all events, be subject to theterms and conditions of the 2003 Long Term Incentive Plan and shall beeffectuated by a restricted stock agreement between the Company and theExecutive entered into pursuant to the 2003 Long Term Incentive Plan.
           4.6   Relocation.  Subject to the Executive’s agreement in accordancewith Section 6.4 and to no less than four (4) months’ prior notice to theExecutive, the Company may request the Executive to reside outside of Argentinaduring the Executive’s employment with the Company (a “ForeignRelocation”). In the event that the Executive agrees to a ForeignRelocation, the Company shall at no cost to the Executive (including but notlimited to any tax costs to the Executive resulting from imputed income)provide the Executive at the site of the Foreign Relocation with use of a houseand use of an automobile which are in each case approximately equal to thehouse
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and automobile used by the Executive immediately prior to the ForeignRelation. In the case of a Foreign Relocation, the Company shall also fullycompensate the Executive for any adverse tax consequences suffered by theExecutive as a result of the Foreign Relocation.
           4.7   Method of Payments.  All sums due the Executive from theCompany under Sections, 4.1, 4.2, 4.3, 4.6, 4.10 and 6.6 of this Agreement maybe paid by the Company to the Executive either directly from the Company orindirectly from any subsidiary of the Company, in such proportions as theCompany may from time to time determine in its sole discretion.
           4.8   Withholding.  All amounts payable to the Executive pursuant tothis Agreement shall be paid subject to such reporting and withholdingrequirements, if any, as may be imposed by applicable law and applicableCompany policy.
           4.9   Vacation Benefits.  The Executive shall be entitled to fiveweeks paid vacation time per calendar year.
           4.10   Reimbursement.  Subject to policies established from time totime by the Company, the Company shall reimburse the Executive for thereasonable expenses incurred by him in connection with the performance of hisduties hereunder, including but not limited to, relocation expenses incurredpursuant to a Foreign Relocation, travel expenses and entertainment expenses,for which the Executive shall account to the Company in a manner sufficient toconform to applicable tax and accounting requirements.
     5.    Confidential Information.
           5.1   Nondisclosure.  The Executive acknowledges that, as part of theExecutive’s employment with the Company and as a result of the Executive’saccess to the Company’s Trade Secrets and Confidential Information (each asdefined below), the Executive will occupy a position of trust and confidencewith the Company. The Executive agrees to maintain strictly theconfidentiality of all Trade Secrets and Confidential Information which theExecutive may receive or to which the Executive may have access or become privyto during the Executive’s employment with the Company. If the Executive isunable to determine whether information is a Trade Secret or ConfidentialInformation, the Executive shall treat such information as a Trade Secret andConfidential Information and such information shall be considered as a TradeSecret and Confidential Information. Without limitation on the foregoing, theExecutive agrees that Executive shall not, except with the express priorwritten permission of the Board: (i) transfer or disclose any Trade Secrets orConfidential Information, directly or indirectly, to any third party except toanother Company employee or independent Company contractor known by theExecutive to be bound by a written confidentiality obligation with the Companyprecluding the disclosure of any such Trade Secrets or ConfidentialInformation; or (ii) use any Trade Secrets or Confidential Information in anymanner, except as contemplated under this Agreement for the purposes for whichsuch
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Trade Secrets and/or Confidential Information may have been provided tothe Executive by the Company; or (iii) take any other action with respect tothe Trade Secrets or Confidential Information inconsistent with theconfidential and proprietary nature of such Trade Secrets and/or ConfidentialInformation.
The restrictions contained herein shall extend (a) with respect to TradeSecrets, during the term of Executive’s employment with the Company and for solong thereafter as the pertinent ideas and information embodied therein remainsecret and (b) with respect to Confidential Information, during the term of theExecutive’s employment with the Company and for so long thereafter as thepertinent ideas and information embodied therein remain competitivelysensitive.
           5.2   Defined Terms.  As used in this Agreement, the following termsshall have the following meanings:
     “Confidential Information” means and includes: (i) all business orfinancial information, plans, processes and strategies, market research andanalyses, projections, financing arrangements, consulting and sales methods andtechniques, expansion plans, forecasts and forecast assumptions, businesspractices, operations and procedures, marketing and merchandising information,distribution techniques, customer information and other business informationrespecting the Company; (ii) all information and materials which areproprietary and confidential to a third party and which have been provided tothe Company by such third party for the Company’s use; and (iii) allinformation derived from such Confidential Information. ConfidentialInformation shall not include information and materials that are already, orotherwise become, known by or generally available to the public withoutrestriction on disclosure, other than as a result of an act or omission by theExecutive in breach of the provisions of this Agreement or any other applicableagreement between the Executive and the Company.
     “Trade Secret” means and includes the whole or any portion or phaseof any scientific or technical information, design (including, withoutlimitation, screen design), process, formula, password, concept, dataorganization, reference manual, user manual, logic manual, systemspecifications, configuration manual, help text, other system documentation, orany improvement of any thereof, in any case that is valuable and secret (in thesense that it is not generally known to competitors of the Company), andincludes, without limitation, the specialized information and technology thatthe Company has developed or may develop or acquire.
           5.3   Proprietary Rights.  The Executive acknowledges that theExecutive is being hired in part for the purpose of inventing, creating andmaintaining confidential and/or proprietary materials for the Company. TheExecutive agrees that all such materials which the Executive develops orconceives and/or documents during the Executive’s employment with the Company,including, without limitation, all designs, discoveries and inventions, shallbe owned solely and exclusively by the Company and the Company shall be theowner thereof owner for all purposes, including, but not limited to, for thepurposes of distribution, exhibition, advertising and exploitation of such
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materials or any part of them in all media and by all means now known or whichmay hereafter be devised, throughout the universe in perpetuity. The Executiveagrees that in furtherance of the foregoing, the Executive shall disclose,deliver and assign to the Company all such designs, discoveries and inventionsand shall execute all such documents, including patent and copyrightapplications, as the Company reasonably shall deem necessary to furtherdocument the Company’s ownership rights therein and to provide the Company thefull and complete benefit thereof. The Executive reserves no rights withrespect to any such materials, and hereby acknowledges the adequacy andsufficiency of the compensation paid and to be paid by the Company to theExecutive for the materials and the contributions the Executive will make tothe development of any such information or materials. The Executive agrees tocooperate with all lawful efforts of the Company to protect the Company’srights in and to any or all of such information and materials and will at therequest of the Company execute any instrument or documents in order toregister, establish, acquire, prosecute, maintain, perfect or defend theCompany’s rights in and to such information and materials.
     6.    Termination.
           6.1   Termination Upon Death or Disability.  This Agreement shallautomatically terminate upon the death or Disability of the Executive. Forpurposes of this Agreement, “Disability” shall mean the inability, dueto medical reasons (other than a medical reason arising out of, or relating to,alcoholism or illegal drug abuse), of the Executive to fulfill his duties asChief Executive Officer and President of the Company on a full-time basis for aperiod of either (a) 180 consecutive days or (b) 210 days in any 12-monthperiod. Any question as to the existence of the Disability of the Executive asto which the Executive and the Company cannot agree shall be determined inwriting by a qualified independent physician who is mutually acceptable to theExecutive and the Company. If the Executive and the Company cannot agree as toa qualified independent physician, each shall appoint a qualified physician andthose two physicians shall select a third physician who shall make suchdetermination in writing. The determination of Disability made in writing tothe Company and the Executive shall be final and conclusive for purposes ofthis Agreement. The Executive’s compensation during any period of disabilityof the Executive prior to any Disability of the Executive shall be the amountsnormally payable to him in accordance with his then current Annual Base Salary,reduced by the amounts of disability pay, if any, paid to the Executive underany Company disability program.
           6.2   Termination by Company for Cause.  The Company shall have theright to terminate the Executive’s employment under this Agreement for“Cause,” which shall be: (a) the Executive’s grossly negligent conductor willful misconduct in connection with the execution of his duties hereunderthat causes material and demonstrable injury to the Company or the Company’sreputation, continuing thirty (30) days after written notice by the Chairman ofthe Board to the Executive of the need to cure; (b) the Executive’s willfulfailure or refusal to perform in any material respect the Executive’s dutieshereunder, provided the nonperformance continues uncorrected for a period ofthirty (30) days after written notice thereof by the Chairman of the Board tothe
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Executive; (c) the breach by the Executive of any material term orcondition of this Agreement (including, but not limited to, the provisions ofSections 5.1, 5.3 and 6.7.2, which, in all events, shall be deemed to bematerial terms and conditions of this Agreement); (d) the Executive’s willfuldishonesty, fraud, alcohol or illegal drug abuse, or misconduct with respect tothe business or affairs of the Company which, in each case, adversely affectsthe operations, prospects or reputation of the Company; or (e) the Executive’sconviction of a felony or other crime involving moral turpitude. Anydetermination of “Cause,” and of the Executive’s cure of the matters referredto in clauses (a) and (b) above shall be determined by the CompensationCommittee.
           6.3   Termination by Company without Cause.  The Company may, withoutCause, terminate the Executive’s employment under this Agreement, effectivethirty (30) days after written notice is provided to the Executive.
           6.4   Termination by Executive for Good Reason.  The Executive mayterminate his employment under this Agreement for “Good Reason,” whichshall be the continuance of any of the following after thirty (30) days priorwritten notice by the Executive to the Company specifying the basis for suchExecutive’s having Good Reason to terminate this Agreement: (a) a materialadverse change in the Executive’s status, title, position or responsibilities;(b) the assignment to the Executive of any duties materially inconsistent withthe Executive’s position as specified in Section 1 hereof, including status,offices, responsibilities or persons to whom the Employee reports ascontemplated under Section 1 hereof, or any other action by the Company whichresults in a material and adverse change in such position, status, offices,titles or responsibilities; (c) any other material breach of this Agreement bythe Company, including the failure to pay the Executive on a timely basis theamounts to which he is entitled under this Agreement; (d) any change in thelocation of the primary office of the Executive from that set forth in Section1 which, to the sole discretion of the Executive, is unsatisfactory; (e) aChange of Control (as defined below) of the Company; or (f) failure by theCompensation Committee to approve the Option, or approval by the CompensationCommittee of the Option at an exercise price greater than U.S.$15.00 per share,provided, however, that the Executive shall not be entitled togive notice of such failure under this Section 6.4(f) until at least 30 daysafter the Commencement Date.
For the purposes of this Agreement: (a) “Change of Control” means, andshall be deemed to have occurred, if (i) a “person” or “group” (within themeaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than anyExisting Stockholder or its Affiliates, becomes the ultimate “beneficial owner”(as defined in Rule 13d-3 under the Exchange Act) of Voting Stock representingmore than 30% of the total voting power of the Voting Stock of the Company on afully-diluted basis and such ownership represents a greater percentage of thetotal voting power of the Voting Stock of the Company, on a fully-dilutedbasis, than is held in the aggregate by the Existing Stockholders or theAffiliates on such date; or (ii) individuals who on the effectiveness of thePlan constitute the Board (together with any new directors whose election bythe Board or whose nomination for election by the Company’s stockholders wasapproved by a vote of at least two-thirds of the members of the Board then inoffice who either were members of
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the Board on the effectiveness of the Plan orwhose election or nomination for election was previously so approved) cease forany reason to constitute a majority of the members of the Board then in office;(b) “Existing Stockholders” means each holder of the common stock of theCompany (“Common Stock”), or of securities of the Company convertibleinto or exchangeable for, Common Stock, in each case, representing five percent(5%) or more of the Company’s total Common Stock on a fully-diluted basis as ofthe date of the effectiveness of the Plan; (c) “Voting Stock” meanscapital stock of the Company of any class or kind ordinarily having the powerto vote for the election of directors, managers or other voting members of theBoard; and (d) “Plan” means the Plan of Reorganization of the Companyfiled on September 4, 2002 (as amended and supplemented) with the U.S.Bankruptcy Court for the Southern District of New York (the “BankruptcyCourt”) in the Company’s proceeding under Chapter 11 of the U.S. BankruptcyCode (Case No. 02-12882 (REG)), which Plan was confirmed by the BankruptcyCourt on December 11, 2002.
           6.5   Termination By Executive without Good Reason.  The Executivemay, without Good Reason, terminate the Executive’s employment under thisAgreement, effective thirty (30) days after written notice is provided to theCompany.
           6.6   Termination Compensation.
                   6.6.1   Subject to Section 6.6.4, upon:
                              (a)   (i) non-renewal of this Agreement by the Company pursuant to aNon-Renewal Notice; (ii) any termination of this Agreement upon the death orDisability of the Executive; (iii) termination by the Company of theExecutive’s employment under this Agreement without Cause; or (iv) terminationby the Executive of the Executive’s employment under this Agreement for GoodReason resulting from any of the events described in Sections 6.4(a)-(e), then(A) the Executive or the Executive’s estate or legal representative, asapplicable, shall be entitled to receive from the Company (1) in the case ofany such termination prior to the end of the Initial Term (which shall notinclude any non-renewal of this Agreement by the Company pursuant to aNon-Renewal Notice), a lump sum payment equal to the sum of (x) the amount towhich the Executive would be entitled in respect of his Annual Base Salary forthe remainder of the Initial Term plus a bonus equal to fifty percent (50%) ofsuch amount in respect of his Annual Base Salary during the remainder of theInitial Term and (y) one hundred percent (100%) of his then current Annual BaseSalary, (2) in the case of any such termination after the end of the InitialTerm (including in the case of a non-renewal of this Agreement by the Companypursuant to a Non-Renewal Notice), a lump sum payment equal to one hundredpercent (100%) of the Executive’s then current Annual Base Salary, and (3) ineach of (1) and (2) above, any other benefits described in Section 4.3 (otherthan retirement benefits) to which the Executive would have been entitled,under applicable law or the terms of the Company’s benefit plans as in effectat the time of such termination, had the Executive been continued to have beenemployed at the Company for one year following the date of termination;provided, however, that in the event that the Company for legalreasons cannot continue to provide the Executive with continued
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coverage under any one or more of the Company’s plans (or under any one or more of thecomponents of such plan or plans) regarding such other benefits, the Companymay provide the Executive with cash in a lump sum amount that is sufficient toenable the Executive to receive, on an after-tax basis, and after taking intoaccount the tax treatment to the Executive of the benefits which would havebeen so provided under such plan or plans, the same benefits from third partyproviders (such benefits and/or lump sum payment being the “OtherBenefits”), and (B) any unvested portion of the Option and the RestrictedStock shall automatically and fully vest (including in the case of anon-renewal of this Agreement by the Company pursuant to a Non-Renewal Notice);or
                              (b)   termination by the Executive of the Executive’s employment under thisAgreement for Good Reason resulting from any of the events described in Section6.4(f), then (i) the Executive or the Executive’s estate or legalrepresentative, as applicable, shall be entitled to receive from the Company(A) a lump sum payment equal to the sum of (1) the amount to which theExecutive would be entitled in respect of his Annual Base Salary for theremainder of the Initial Term plus a bonus equal to fifty percent (50%) of suchamount in respect of his Annual Base Salary during the remainder of the InitialTerm and (2) five hundred percent (500%) of his then current Annual BaseSalary; and (B) the Other Benefits (as defined in Section 6.6.1(a)), and (ii)any unvested portion of the Option and Restricted Stock shall automatically andfully vest.
                   6.6.2   If the Executive’s employment under this Agreement is terminated bythe Company for Cause or if the Executive terminated his employment under thisAgreement other than for Good Reason or pursuant to a Non-Renewal Notice fromthe Executive, the Company shall pay the Executive his earned but unpaid thencurrent Annual Base Salary through the date of termination of the Executive’semployment, and the Company shall have no further obligations under thisAgreement.
                   6.6.3   Upon any (a) non-renewal of this Agreement by the Company pursuantto a Non-Renewal Notice or (b) termination of this Agreement upon theDisability of the Executive, by the Company Without Cause or by the Executivefor Good Reason, the Executive shall be under no duty to mitigate the amount ofany payments and benefits due to the Executive under Section 6.6.1 hereof, asapplicable, and such payments and benefits shall not be offset by an amountsthe Executive may earn or any benefits the Executive may receive in otheremployment or otherwise.
                   6.6.4   Notwithstanding anything to the contrary set forth in Section 6.6.1,the Executive shall be entitled to all amounts required by applicable law to bepaid to the Executive upon termination of employment for any reason whatsoever,and all amounts so payable shall be deducted from the amounts owing to theExecutive pursuant to Section 6.6.1, with the result that the Executive shallreceive on an aggregate basis the greater of (i) the amounts set forth inSection 6.6.1 and (ii) the amounts payable pursuant to applicable law.
           6.7   Termination of Employment; Other Employment.
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                   6.7.1   Termination of Employment.  At such time, if ever, as theExecutive’s employment with the Company is terminated, the Executive shallreturn to the Company all records, materials and other physical objectsrelating to the Executive’s employment with the Company, including, withoutlimitation, all security cards and access keys and all materials relating to,containing or derived from any Trade Secrets (as defined below) or ConfidentialInformation (as defined below).
                   6.7.2   Noncompetition.
                              (a)   Without limiting the Executive’s obligations to the Company pursuantto Sections 1 and 2 hereof, and only to the extent consistent with theprovisions of such Sections, the Executive hereby covenants and agrees thatduring the period of the Executive’s employment with the Company the Executivewill not, directly or indirectly, or as a partner, shareholder, lender,officer, director, trustee, employee, agent, consultant or member of anyperson, firm or corporation, or otherwise, enter into the employ of, render orotherwise engage (i) in any business activities which are the same or similarto any of the business activities of the Company, or (ii) in any consulting oradvising regarding any activities of the Company or about any aspect of anyexisting or contemplated agreement with the Company for any person or entitythat is, or has been at any time in the prior twelve (12) months, a customer ofthe Company or a person or entity which has contacted, or been contacted by,the Company regarding any potential services which the Company might providesuch person or entity. Subject to the Executive’s obligations to the Companypursuant to Sections 1 and 2 hereof, and only to the extent consistent with theprovisions of such Sections, the foregoing limitations shall not be deemed toprohibit the Executive from acquiring as a passive investment not more thanfive percent (5%) of the capital stock of a competing business, which stock istraded on a national securities exchange or the over-the-counter market.
                              (b)   The Executive hereby covenants and agrees that during the period ofExecutive’s employment with the Company the Executive will not, directly orindirectly, or as a partner, shareholder, officer, director, trustee, employee,agent, consultant or member of any person, firm or corporation, or otherwise,solicit, by way of offering an employment or consulting opportunity orotherwise, employees of the Company.
                              (c)   The Executive hereby covenants and agrees that during the period ofExecutive’s employment with the Company and, in the case of termination of suchemployment by the Company for Cause, termination of such employment by theExecutive other than for Good Reason or any other case of termination pursuantto which the Company is paying to the Executive the termination compensation(or other amounts) set forth in Section 6.6.1, for one (1) year after thetermination of such employment, the Executive will not, directly or indirectly,or as a partner, shareholder, officer, director, trustee, employee, agent,consultant or member of any person, firm or corporation, or otherwise: (i)solicit any customer of the Company; (ii) be employed by, or render consultingor advisory services to, any corporation, partnership or other entity if theExecutive’s knowledge or expertise during the course of
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such employment or consulting or advisory services would be used to solicit customers of theCompany; (iii) directly or indirectly attempt to induce any vendor, customer orsupplier of or to the Company to terminate such person’s relationship with theCompany; or (iv) hire, induce or seek to induce any employee of the Company orany of the Company’s subsidiaries to leave such employment; provided,however, the restrictions in this clause (iv) shall not apply to suchhiring or inducement of any employee if the employee’s employment with theCompany has been terminated by the Company prior to such hiring or inducement.
                   6.7.3   Continuing Obligations.  Except as otherwise indicated, theobligations of this Agreement shall continue notwithstanding the termination ofExecutive’s employment.
     7.    Indemnification.
           7.1   Proceedings.  The Company agrees that if, during or after theEmployment Period, the Executive is made a party, or is threatened to be made aparty, to any action, suit or proceeding, whether civil, criminal,administrative or investigative (a “Proceeding”), by reason of the fact that heis or was a director, officer, or employee of the Company or is or was servingat the request of the Company as a director, officer, member, employee or agentof another corporation, partnership, joint venture, trust or other enterprise,including service with respect to employee benefit plans, whether the basis ofsuch Proceeding is the Executive’s alleged action in an official capacity whileserving as a director, officer, member, employee or agent or in any othercapacity while serving as a director, officer, member, employee or agent, theExecutive shall be indemnified and held harmless by the Company to the fullestextent legally permitted or authorized by the Company’s certificate ofincorporation or bylaws or resolutions of the Company’s Board of Directors,against all cost, expense, liability and loss (including, without limitation,attorney’s fees, judgments, fines, excise taxes or other liabilities orpenalties and amounts paid or to be paid in settlement) reasonably incurred orsuffered by the Executive in connection therewith, and such indemnificationshall continue as to the Executive even if he has ceased to be a director,member, employee or agent of the Company or other entity and shall inure to thebenefit of the Executive’s heirs, executors and administrators. The Companyshall advance to the Executive all reasonable costs and expenses incurred byhim in connection with a Proceeding within twenty (20) calendar days afterreceipt by the Company of a written request for such advance. Such requestshall include an undertaking by the Executive to repay the amount of suchadvance if it shall ultimately be determined that he is not entitled to beindemnified against such costs and expenses.
           7.2   Amounts Claimed.  Neither the failure of the Company (includingits Board, independent legal counsel or stockholders) to have made adetermination prior to the commencement of any Proceeding concerning payment ofamounts claimed by the Executive under Section 7.1 hereof that indemnificationof the Executive is proper because he has met the applicable standard ofconduct, nor a determination by the Company (including its Board, independentlegal counsel or stockholders) that the
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Executive has not met such applicablestandard of conduct, shall create a presumption that the Executive has not metthe applicable standard of conduct.
           7.3   Directors’ and Officers’ Policy.  The Company agrees tomaintain at all times during the Employment Period directors’ and officers’liability insurance policy covering the Executive.
     8.    General Provisions.
           8.1   Remedies.  The Executive acknowledges and agrees that theservices provided by the Executive pursuant to this Agreement are of a special,unique, unusual, extraordinary and intellectual character, which gives them apeculiar value, the loss of which cannot be reasonably or adequatelycompensated in damages in an action at law. Accordingly, the Executive herebyconsents and agrees that for any material breach or violation by the Executiveof any of the provisions of this Agreement, a restraining order and/orinjunction may be issued against the Executive, in addition to any other rightsand remedies the Company may have, at law or equity, including withoutlimitation the recovery of money damages.
           8.2   Counterparts.  This Agreement may be executed by the partieshereto on any number of separate counterparts and all of said counterpartstaken together shall be deemed to constitute one and the same instrument.
           8.3   Assignment.  This Agreement may not be assigned by the Company.This Agreement may not be assigned by the Executive; provided,however, that the Executive may assign this Agreement to a corporationof which the Executive is the sole beneficial owner so long as such corporationcauses the Executive to perform the services and comply with the obligationsset forth herein to the Company.
           8.4   Beneficiaries.  As used in this Agreement, all references tothe Company shall also be construed to refer to its and their subsidiaries,affiliates, and controlling parties, unless the context otherwise requires.This Agreement shall inure to the benefit of the Company, its and theirsubsidiaries, affiliates, and controlling parties, and its and their successorsand assigns.
           8.5   Severability.  It is the intention of the parties that theprovisions herein shall be enforceable to the fullest extent permitted underapplicable law, and that the unenforceability of any provision or provisionshereof, or any portion thereof, shall not render unenforceable or otherwiseimpair any other provisions or portions thereof. If any provision of thisAgreement is determined by a court of competent jurisdiction to beunenforceable, void or invalid in whole or in part, this Agreement shall bedeemed amended to delete or modify, as necessary, the offending provisions orportions thereof and to alter the bounds thereof, including specifically, anytime, place and manner restrictions contained in any of the restrictivecovenants contained herein, in order to render it valid and enforceable. Inany event, the balance of this Agreement shall be enforced to the fullestextent possible without regard to such unenforceable, void or invalidprovisions or part thereof.
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           8.6   Enforcement Actions.  The Executive acknowledges that in anyaction by the Company to enforce the provisions of this Agreement, claimsasserted by the Executive against the Company arising out of the Executive’semployment with the Company or otherwise shall not constitute a defense toenforcement of the Executive’s obligations hereunder.
           8.7   Acknowledgment.  THE EXECUTIVE ACKNOWLEDGES THAT, BEFORESIGNING THIS AGREEMENT, THE EXECUTIVE WAS GIVEN AN OPPORTUNITY TO READ IT,CAREFULLY EVALUATE IT, AND ASK ANY QUESTIONS THE EXECUTIVE MAY HAVE HADREGARDING IT OR ITS PROVISIONS. THE EXECUTIVE ALSO ACKNOWLEDGES THAT THEEXECUTIVE HAD THE RIGHT TO HAVE THIS AGREEMENT REVIEWED BY AN ATTORNEY OF THEEXECUTIVE’S CHOOSING AND THAT THE COMPANY GAVE THE EXECUTIVE A REASONABLEPERIOD OF TIME TO DO SO IF THE EXECUTIVE SO DESIRED.
           8.8   Notice.  Any notice required or permitted hereunder shall bemade in writing (a) either by actual delivery of the notice into the hands ofthe party thereunder entitled, or (b) by the mailing of the notice by certifiedor registered mail, return receipt requested, all postage prepaid and addressedto the party to whom the notice is to be given at the party’s respectiveaddress set forth below, or such other address as the parties may from time totime designate by written notice as herein provided.
If to the Company:  IMPSAT Fiber Networks, Inc.