Document:

Exhibit 10.3.6

 

EMPLOYMENT AGREEMENT

 

 

                This Agreement is

made as of the Effective Date between Broadwing Communications Inc.

(“Employer”), and Jack Chidester (“Employee”). 

For purposes of this Agreement, the “Effective Date” will be Employee’s

first day of employment with Employer, currently set for May 7, 2001.

 

Employer and Employee agree as follows:

 

1.             Employment.  By this Agreement, Employer and Employee set

forth the terms of Employer’s employment of Employee on and after the Effective

Date.  Any prior agreements or

understandings with respect to Employee’s employment by Employer are canceled

as of the Effective Date.

 

2.              Term of Agreement.   The term of this Agreement initially shall

be the one year period commencing on the Effective Date.  On the first anniversary of the Effective

Date and on each subsequent anniversary of the Effective Date, the term of this

Agreement automatically shall be extended for a period of one additional

year.  Notwithstanding the foregoing,

the term of this Agreement is subject to termination as provided in Section 13.

 

3.             Duties.

 

A.              Employee will serve as President, Sales and Marketing

or in such other equivalent capacity as may be designated by the Chief

Executive Officer of Employer. Employee will report to the President Chief

Operating Officer of Employer or to such other officer as the Chief Executive

Officer of Employer may direct.

 

                B.            Employee shall furnish such

managerial, executive, financial, technical, and other skills, advice, and

assistance in operating Employer and its Affiliates as Employer may reasonably

request.  For purposes of this

Agreement, “Affiliate” means each corporation which is a member of a controlled

group of corporations (within the meaning of section 1563(a) of the Internal

Revenue Code of 1986, as amended (the “Code”)) which includes Employer.

 

                C.            Employee shall also perform such

other duties, consistent with the provisions of Section 3.A., as are reasonably

assigned to Employee by the President Chief Operating Officer of Employer.

 

                D.            Employee shall devote Employee’s

entire time, attention, and energies to the business of Employer and its

Affiliates.  The words “entire time,

attention, and energies” are intended to mean that Employee shall devote Employee’s

full effort during reasonable working hours to the business of Employer and its

Affiliates and shall devote

 

 

at least 40 hours per week to the business of Employer and its

Affiliates.  Employee shall travel to

such places as are necessary in the performance of Employee’s duties.

 

4.             Compensation.

 

                A.            Employee shall receive a base salary

(the “Base Salary”) of at least $325,000.00 per year, payable not less

frequently than monthly, for each year during the term of this Agreement,

subject to proration for any partial year. 

In addition, Employee shall receive a car allowance of $850.00 per

month.  Employee’s Base Salary, and all

other amounts payable under this Agreement, shall be subject to withholding as

required by law.

 

                B.            In addition to the Base Salary,

Employee shall be entitled to receive an annual bonus (the “Bonus”) for each

calendar year for which services are performed under this Agreement.  Any Bonus for a calendar year shall be

payable after the conclusion of the calendar year in accordance with Employer’s

regular bonus payment policies.  Each

year, Employee shall be given a Bonus target, by Employer’s Compensation

Committee, of not less than $180,000.00.

 

                C.            On at least an annual basis,

Employee shall receive a formal performance review and be considered for Base

Salary and/or Bonus target increases.

 

                D.            Employee shall be entitled to

receive a signing bonus of $200,000.00, payable $100,000.00 upon the

commencement of employment and $100,000.00 ninety days later.  Such signing bonus is conditioned Employee’s

non-receipt of his year 2000 bonus from his prior employer.  In the event that Employee receives the

payment of any or all of his year 2000 bonus from his prior employer, such

signing bonus will be reduced by a corresponding amount.

 

5.             Expenses.  All reasonable and necessary expenses

incurred by Employee in the course of the performance of Employee’s duties to

Employer shall be reimbursable in accordance with Employer’s then current

travel and expense policies.

 

6.             Benefits and

Stock.

 

                A.            While Employee remains in the employ

of Employer, Employee shall be entitled to participate in all of the various

employee benefit plans and programs, or equivalent plans and programs, which

are made available to similarly situated officers of Employer.  Employee shall be entitled to 20 days Paid

Time Off in addition to paid Company holidays.

 

                B.            Notwithstanding anything contained

herein to the contrary, the Base Salary and Bonuses otherwise payable to

Employee shall be reduced by any benefits paid to Employee by Employer under

any disability plans made available to Employee by Employer.

 

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                C.            As of the Effective Date, Employee

shall be granted options to purchase 300,000 common shares of Broadwing Inc.

under Employer’s 1997 Long Term Incentive Plan, vesting over 3 years: 28% on

the first anniversary of such grant, and 3% on the first of each month

thereafter.  In each year of this

Agreement after 2000, Employee will be granted stock options under Employer’s

1997 Long Term Incentive Plan or any similar plan made available to employees

of Employer.

 

                D.            As of the Effective Date, Employee

shall receive a restricted stock award of 35,000 common shares of Broadwing

Inc.  Such award shall be made under

Employer’s 1997 Long Term Incentive Plan, vesting 25% on each one-year

anniversary of such grant.

 

7.             Confidentiality.  Employer and its Affiliates are engaged in

the telecommunications industry within the U.S.  Employee acknowledges that in the course of employment with the

Employer, Employee will be entrusted with or obtain access to information

proprietary to the Employer and its Affiliates with respect to the following

(all of which information is referred to hereinafter collectively as the

“Information”); the organization and management of Employer and its Affiliates;

the names, addresses, buying habits, and other special information regarding

past, present and potential customers, employees and suppliers of Employer and

its Affiliates; customer and supplier contracts and transactions or price lists

of Employer, its Affiliates and their suppliers; products, services, programs

and processes sold, licensed or developed by the Employer or its Affiliates;

technical data, plans and specifications, present and/or future development

projects of Employer and its Affiliates; financial and/or marketing data

respecting the conduct of the present or future phases of business of Employer

and its Affiliates; computer programs, systems and/or software; ideas,

inventions, trademarks, business information, know-how, processes,

improvements, designs, redesigns, discoveries and developments of Employer and

its Affiliates; and other information considered confidential by any of the

Employer, its Affiliates or customers or suppliers of  Employer, its Affiliates. 

Employee agrees to retain the Information in absolute confidence and not

to disclose the Information to any person or organization except as required in

the performance of Employee’s duties for Employer, without the express written

consent of Employer; provided that Employee’s obligation of confidentiality

shall not extend to any Information which becomes generally available to the

public other than as a result of disclosure by Employee.

 

8.             New

Developments.  All ideas,

inventions, discoveries, concepts, trademarks, or other developments or

improvements, whether patentable or not, conceived by the Employee, alone or

with others, at any time during the term of Employee’s employment, whether or

not during working hours or on Employer’s premises, which are within the scope

of or related to the business operations of Employer or its Affiliates (“New

Developments”), shall be and remain the exclusive property of Employer.  Employee shall do all things reasonably

necessary to ensure ownership of such New Developments by Employer, including

the execution of documents assigning and transferring to Employer, all of

Employee’s rights, title and interest in and to such New Developments, and the

execution of all documents required to enable Employer to file and obtain

 

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patents, trademarks, and copyrights in the United

States and foreign countries on any of such New Developments.

 

9.             Surrender of

Material Upon Termination.  Employee

hereby agrees that upon cessation of Employee’s employment, for whatever reason

and whether voluntary or involuntary, Employee will immediately surrender to

Employer all of the property and other things of value in his possession or in

the possession of any person or entity under Employee’s control that are the

property of Employer or any of its Affiliates, including without any limitation

all personal notes, drawings, manuals, documents, photographs, or the like,

including copies and derivatives thereof, relating directly or indirectly to

any confidential information or materials or New Developments, or relating

directly or indirectly to the business of Employer or any of its Affiliates.

 

10.           Remedies.

 

                A.            Employer and Employee hereby

acknowledge and agree that the services rendered by Employee to Employer, the

information disclosed to Employee during and by virtue of Employee’s

employment, and Employee’s commitments and obligations to Employer and its

Affiliates herein are of a special, unique and extraordinary character, and

that the breach of any provision of this Agreement by Employee will cause

Employer irreparable injury and damage, and consequently the Employer shall be

entitled to, in addition to all other remedies available to it, injunctive and

equitable relief to prevent a breach of Sections 7, 8, 9, 11 and 12 of this

Agreement and to secure the enforcement of this Agreement.

 

                B.            Except as provided in Section 10.A.,

the parties agree to submit to final and binding arbitration any dispute, claim

or controversy, whether for breach of this Agreement or for violation of any of

Employee’s statutorily created or protected rights, arising between the parties

that either party would have been otherwise entitled to file or pursue in court

or before any administrative agency (herein “claim”), and waives all right to

sue the other party.

 

                                (i)            This agreement to arbitrate and any

resulting arbitration award are enforceable under and subject to the Federal

Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). 

If the FAA is held not to apply for any reason then Ohio Revised Code

Chapter 2711 regarding the enforceability of arbitration agreements and awards

will govern this Agreement and the arbitration award.

 

                                (ii)           (a)           All

of a party’s claims must be presented at a single arbitration hearing.  Any claim not raised at the arbitration

hearing is waived and released.  The

arbitration hearing will take place in Cincinnati, Ohio.

 

                                                (b)           The arbitration process will be

governed by the Employment Dispute Resolution Rules of the American Arbitration

Association (“AAA”) except to the extent they are modified by this Agreement.

 

4

 

                                                (c)           Employee has had an opportunity to

review the AAA rules and the requirements that Employee must pay a filing fee

for which the Employer has agreed to split on an equal basis.

 

                                                (d)           The arbitrator will be selected from

a panel of arbitrators chosen by the AAA in White Plains, New York.  After the filing of a Request for

Arbitration, the AAA will send simultaneously to Employer and Employee an

identical list of names of five persons chosen from the panel.  Each party will have 10 days from the

transmittal date in which to strike up to two names, number the remaining names

in order of preference and return the list to the AAA.

 

                                                (e)           Any pre-hearing disputes will be

presented to the arbitrator for expeditious, final and binding resolution.

 

                                                (f)            The award of the arbitrator will be

in writing and will set forth each issue considered and the arbitrator’s

finding of fact and conclusions of law as to each such issue.

 

                                                (g)           The remedy and relief that may be

granted by the arbitrator to Employee are limited to lost wages, benefits,

cease and desist and affirmative relief, compensatory, liquidated and punitive

damages and reasonable attorney’s fees, and will not include reinstatement or

promotion.  If the arbitrator would have

awarded reinstatement or promotion, but for the prohibition in this Agreement,

the arbitrator may award front pay.  The

arbitrator may assess to either party, or split, the arbitrator’s fee and

expenses and the cost of the transcript, if any, in accordance with the

arbitrator’s determination of the merits of each party’s position, but each

party will bear any cost for its witnesses and proof.

 

                                                (h)           Employer and Employee recognize that

a primary benefit each derives from arbitration is avoiding the delay and costs

normally associated with litigation. 

Therefore, neither party will be entitled to conduct any discovery prior

to the arbitration hearing except that: 

(i) Employer will furnish Employee with copies of all non-privileged

documents in Employee’s personnel file; (ii) if the claim is for discharge,

Employee will furnish Employer with records of earnings and benefits relating

to Employee’s subsequent employment (including self-employment) and all

documents relating to Employee’s efforts to obtain subsequent employment; (iii)

the parties will exchange copies of all documents they intend to introduce as

evidence at the arbitration hearing at least 10 days prior to such hearing;

(iv) Employee will be allowed (at Employee’s expense) to take the depositions,

for a period not to exceed four hours each, of two representatives of Employer,

and Employer will be allowed (at its expense) to depose Employee for a period

not to exceed four hours; and (v) Employer or Employee may ask the arbitrator

to grant additional discovery to the extent permitted by AAA rules upon a

showing that such discovery is necessary.

 

                                                (i)            Nothing herein will prevent either

party from taking the deposition of any witness where the sole purpose for

taking the deposition is to use the

 

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deposition in lieu of the witness testifying at the hearing and the

witness is, in good faith, unavailable to testify in person at the hearing due

to poor health, residency and employment more than 50 miles from the hearing

site, conflicting travel plans or other comparable reason.

                                                (j)            Arbitration must be requested in

writing no later than 6 months from the date of the party’s knowledge of the

matter disputed by the claim. A party’s failure to initiate arbitration within

the time limits herein will be considered a waiver and release by that party

with respect to any claim subject to arbitration under this Agreement.

 

                                                (k)           Employer and Employee consent that

judgment upon the arbitration award may be entered in any federal or state

court that has jurisdiction.

 

                                                (l)            Except as provided in Section 10.A.,

neither party will commence or pursue any litigation on any claim that is or

was subject to arbitration under this Agreement.

 

                                                (m)          All aspects of any arbitration

procedure under this Agreement, including the hearing and the record of the

proceedings, are confidential and will not be open to the public, except to the

extent the parties agree otherwise in writing, or as may be appropriate in any

subsequent proceedings between the parties, or as may otherwise be appropriate

in response to a governmental agency or legal process.

 

11.           Covenant Not to

Compete.  For purposes of this

Section 11 only, the term “Employer” shall mean, collectively, Employer and

each of its Affiliates. During the one-year period following termination of

Employee’s employment with Employer for any reason (or if this period is

unenforceable by law, then for such period as shall be enforceable) Employee

will not engage in any business offering services related to the current

business of Employer, whether as a principal, partner, joint venture, agent,

employee, salesman, consultant, director or officer, where such position would

involve Employee in any business activity in competition with Employer.  This restriction will be limited to the

geographical area where Employer is then engaged in such competing business activity

or to such other geographical area as a court shall find reasonably necessary

to protect the goodwill and business of the Employer.

 

                During the

two-year period following termination of Employee’s employment with Employer

for any reason (or if this period is unenforceable by law, then for such period

as shall be enforceable) Employee will not interfere with or adversely affect,

either directly or indirectly, Employer’s relationships with any person, firm,

association, corporation or other entity which is known by Employee to be, or

is included on any listing to which Employee had access during the course of

employment as a customer, client, supplier, consultant or employee of Employer

and that Employee will not divert or change, or attempt to divert or change,

any such relationship to the detriment of Employer or to the benefit of any

other person, firm, association, corporation or other entity.

 

6

 

During the one-year period following termination of

Employee’s employment with Employer for any reason (or if this period is

unenforceable by law, then for such period as shall be enforceable) Employee

shall not, without the prior written consent of Employer, accept employment, as

an employee, consultant, or otherwise, with any company or entity which is a

customer or supplier of Employer at any time during the final year of

Employee’s employment with Employer.

 

                Employee will not,

during or at any time within three years after the termination of Employee’s

employment with Employer, induce or seek to induce, any other employee of

Employer to terminate his or her employment relationship with Employer.

 

12.           Goodwill.  Employee will not disparage Employer or any

of its Affiliates in any way which could adversely affect the goodwill,

reputation and business relationships of Employer or any of its Affiliates with

the public generally, or with any of their customers, suppliers or

employees.  Employer will not disparage

Employee.

 

13.           Termination.

 

                A.            (i)            Employer

or Employee may terminate this Agreement upon Employee’s failure or inability

to perform the services required hereunder because of any physical or mental

infirmity for which Employee receives disability benefits under any disability

benefit plans made available to Employee by Employer (the “Disability Plans”),

over a period of one hundred twenty consecutive working days during any twelve

consecutive month period (a “Terminating Disability”).

 

                                (ii)           If Employer or Employee elects to

terminate this Agreement in the event of a Terminating Disability, such

termination shall be effective immediately upon the giving of written notice by

the terminating party to the other.

 

                                (iii)          Upon termination of this Agreement on

account of Terminating Disability, Employer shall pay Employee Employee’s

accrued compensation hereunder, whether Base Salary, Bonus or otherwise

(subject to offset for any amounts received pursuant to the Disability Plans),

to the date of termination.  For as long

as such Terminating Disability may exist, Employee shall continue to be an employee

of Employer for all other purposes and Employer shall provide Employee with

disability benefits and all other benefits according to the provisions of the

Disability Plans and any other Employer plans in which Employee is then

participating.

 

                                (iv)          If the parties elect not to terminate

this Agreement upon an event of a Terminating Disability and Employee returns

to active employment with Employer prior to such a termination, or if such

disability exists for less than one hundred twenty consecutive working days,

the provisions of this Agreement shall remain in full force and effect.

 

                B.            This Agreement terminates

immediately and automatically on the death of the Employee, provided, however,

that the Employee’s estate shall be paid Employee’s

 

7

 

accrued compensation hereunder, whether Base Salary, Bonus or

otherwise, to the date of death.

 

                C.            Employer may terminate this

Agreement immediately, upon written notice to Employee, for Cause.  For purposes of this Agreement, Employer

shall have “Cause” to terminate this Agreement only if Employer’s Board of

Directors determines that there has been fraud, misappropriation or

embezzlement on the part of Employee.

 

                D.            Employer may terminate this

Agreement immediately, upon written notice to Employee, for any reason other

than those set forth in Sections 13.A., B. and C.; provided, however, that

Employer shall have no right to terminate under this Section 13.D. within one

year after a Change in Control.   In the

event of a termination by Employer under this Section 13.D., Employer shall,

within five days after the termination, pay Employee an amount equal to one

times the sum of the annual Base Salary rate in effect at the time of

termination plus the Bonus target in effect at the time of termination. For the

remainder of the Current Term, Employer shall continue to provide Employee with

medical, dental, vision and life insurance coverage comparable to the medical,

dental, vision and life insurance coverage in effect for Employee immediately

prior to the termination; and, to the extent that Employee would have been

eligible for any post-retirement medical, dental, vision or life insurance

benefits from Employer if Employee had continued in employment through the end

of the Current Term,  Employer shall

provide such post-retirement benefits to Employee after the end of the Current

Term.  For purposes of any stock option

or restricted stock grant outstanding immediately prior to the termination,

Employee’s employment with Employer shall not be deemed to have terminated

until the end of the Current Term.  In

addition, Employee shall be entitled to receive, as soon as practicable after

termination, an amount equal to the sum of (i) 

any forfeitable benefits under any qualified or nonqualified pension,

profit sharing, 401(k) or deferred compensation plan of Employer or any

Affiliate which would have vested prior to the end of the Current Term if

Employee’s employment had not terminated plus (ii) if Employee is participating

in a qualified or nonqualified defined benefit plan of Employer or any

Affiliate at the time of termination, an amount equal to the present value of

the additional vested benefits which would have accrued for Employee under such

plan if Employee’s employment had not terminated prior to the end of the

Current Term and if Employee’s annual Base Salary and Bonus target had neither

increased nor decreased after the termination. 

For purposes of this Section 13.D., “Current Term” means the one year

period beginning at the time of termination. 

For purposes of this Section 13.D. and Section 13.E.,  “Change in Control” means a change in

control as defined in Employer’s 1997 Long Term Incentive Plan, including all

relevant modifications.

 

E.             This Agreement shall terminate automatically in the

event that there is a Change in Control and Employee’s employment with Employer

is actually or constructively terminated by Employer within one year after the

Change in Control for any reason other than those set forth in Sections 13.A.,

B. and C.  For purposes of the preceding

sentence, a “constructive” termination of Employee’s employment shall be deemed

to have occurred if, without Employee’s consent, there is a material reduction

in

 

8

 

Employee’s authority or responsibilities or if there

is a reduction in Employee’s Base Salary or Bonus target from the amount in

effect immediately prior to the Change in Control or if Employee is required by

Employer to relocate from the city where Employee is residing immediately prior

to the Change in Control.  In the event

of a termination under this Section 13.E., Employer shall pay Employee an

amount equal to one times the sum of the annual Base Salary rate in effect at

the time of termination plus the Bonus target in effect at the time of

termination, all stock options shall become immediately exercisable (and

Employee shall be afforded the opportunity to exercise them). For the remainder

of the Current Term, Employer shall continue to provide Employee with medical,

dental, vision and life insurance coverage comparable to the medical, dental,

vision and life insurance coverage in effect for Employee immediately prior to

the  termination; and, to the extent

that Employee would have been eligible for any post-retirement medical, dental,

vision or life insurance benefits from Employer if Employee had continued in

employment through the end of the Current Term,  Employer shall provide such post-retirement benefits to Employee

after the end of the Current Term. 

Employee’s accrued benefit under any nonqualified pension or deferred

compensation plan maintained by Employer or any Affiliate shall become

immediately vested and nonforfeitable and Employee also shall be entitled to

receive a payment equal to the sum of (i) any forfeitable benefits under any

qualified  pension or profit sharing or

401(k) plan maintained by Employer or any Affiliate plus (ii) if Employee is

participating in a qualified or nonqualified defined benefit plan of Employer

or any Affiliate at the time of termination, an amount equal to the present

value of the additional benefits which would have accrued for Employee under

such plan if Employee’s employment had not terminated prior to the end of the

Current Term and if Employee’s annual Base Salary and Bonus target had neither

increased nor decreased after the termination. 

Finally, to the extent that Employee is deemed to have received an

excess parachute payment by reason of the Change in Control, Employer shall pay

Employee an additional sum sufficient to pay (i) any taxes imposed under

section 4999 of the Code plus (ii) any federal, state and local taxes

applicable to any taxes imposed under section 4999 of the Code.  For purposes of this Section 13.E., “Current

Term” means the one year period beginning at the time of termination.

 

F.             Employee may resign upon 60 days’

prior written notice to Employer.  In

the event of a resignation under this Section 13.F., this Agreement shall

terminate and Employee shall be entitled to receive Employee’s Base Salary

through the date of termination, any Bonus earned but not paid at the time of

termination and any other vested compensation or benefits called for under any

compensation plan or program of Employer.

 

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G.            Upon termination of this Agreement as a result of an

event of termination described in this Section 13 and except for Employer’s

payment of the required payments under this Section 13 (including any Base

Salary accrued through the date of termination, any Bonus earned for the year

preceding the year in which the termination occurs and any nonforfeitable

amounts payable under any employee plan), all further compensation under this

Agreement shall terminate.

 

                H.            The termination of this Agreement

shall not amend, alter or modify the rights and obligations of the parties

under Sections 7, 8, 9, 10, 11, and 12 hereof, the terms of which shall survive

the termination of this Agreement.

 

14.           Assignment.  As this is an agreement for personal services

involving a relation of confidence and a trust between Employer and Employee,

all rights and duties of Employee arising under this Agreement, and the

Agreement itself, are non-assignable by Employee.

 

15.           Notices.  Any notice required or permitted to be given

under this Agreement shall be sufficient, if in writing, and if delivered

personally or by certified mail to Employee at Employee’s place of residence as

then recorded on the books of Employer or to Employer at its principal office.

 

16.           Waiver.  No waiver or modification of this Agreement

or the terms contained herein shall be valid unless in writing and duly

executed by the party to be charged therewith. 

The waiver by any party hereto of a breach of any provision of this

Agreement by the other party shall not operate or be construed as a waiver of

any subsequent breach by such party.

 

17.           Governing Law.  This agreement shall be governed by the laws

of the State of Ohio.

 

18.           Entire Agreement.  This Agreement contains the entire agreement

of the parties with respect to Employee’s employment by Employer.  There are no other contracts, agreements or

understandings, whether oral or written, existing between them except as

contained or referred to in this Agreement.

 

19.           Severability.  In case any one or more of the provisions of

this Agreement is held to be invalid, illegal, or unenforceable in any respect,

such invalidity, illegality, or other enforceability shall not affect any other

provisions hereof, and this Agreement shall be construed as if such invalid,

illegal, or unenforceable provisions have never been contained herein.

 

20.           Successors and

Assigns.  Subject to the

requirements of Paragraph 14 above, this Agreement shall be binding upon

Employee, Employer and Employer’s successors and assigns.

 

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21.           Confidentiality

of Agreement Terms.  The terms of

this Agreement shall be held in strict confidence by Employee and shall not be

disclosed by Employee to anyone other than Employee’s spouse, Employee’s legal

counsel, and Employee’s other advisors, unless required by law.  Further, except as provided in the preceding

sentence, Employee shall not reveal the existence of this Agreement or discuss

its terms with any person (including but not limited to any employee of

Employer or its Affiliates) without the express authorization of the President

of Employer.  To the extent that the

terms of this Agreement have been disclosed by Employer, in a public filing or

otherwise, the confidentiality requirements of this Section 21 shall no longer

apply to such terms.

 

                IN WITNESS

WHEREOF, the parties hereto have caused this Agreement to be duly executed as

of the day and year first above written.

 

 

	

  Broadwing Communications Inc.

  
	

   

  
	

  By:

  	

  /s/ Richard S. Pontin

  
	

   

  	

   

  	

  Richard S. Pontin

  
	

   

  	

   

  	

  President and Chief Operating Officer

  
	

   

  
	

  EMPLOYEE

  
	

   

  
	

  /s/ Jack Chidester

  
	

  Jack Chidester

  

 

 

11Exhibit

10.3.7

 

EMPLOYMENT AGREEMENT

 

 

                This Agreement is

made as of the Effective Date between Broadwing Communications Inc.

(“Employer”), and Michael R. Jones (“Employee”).  For purposes of this Agreement, the “Effective Date” is October

11, 2000.

 

Employer and Employee agree as follows:

 

1.             Employment.  By this Agreement, Employer and Employee set

forth the terms of Employer’s employment of Employee on and after the Effective

Date.  Any prior agreements or

understandings with respect to Employee’s employment by Employer are canceled

as of the Effective Date.

 

2.              Term of Agreement.   The term of this Agreement initially shall

be the one year period commencing on the Effective Date.  On the first anniversary of the Effective

Date and on each subsequent anniversary of the Effective Date, the term of this

Agreement automatically shall be extended for a period of one additional

year.  Notwithstanding the foregoing,

the term of this Agreement is subject to termination as provided in Section 13.

 

3.             Duties.

 

A.              Employee will serve as Senior Vice President Network

Engineering & Operations for Broadwing Communications Inc. or in such other

equivalent capacity as may be designated by the Chief Executive Officer of

Employer. Employee will report to the President, Chief Operating Officer of

Broadwing Communications Inc. or to such other officer as the Chief Executive

Officer of Employer may direct.

 

                B.            Employee shall furnish such

managerial, executive, financial, technical, and other skills, advice, and

assistance in operating Employer and its Affiliates as Employer may reasonably

request.  For purposes of this

Agreement, “Affiliate” means each corporation which is a member of a controlled

group of corporations (within the meaning of section 1563(a) of the Internal Revenue

Code of 1986, as amended (the “Code”)) which includes Employer.

 

                C.            Employee shall also perform such

other duties, consistent with the provisions of Section 3.A., as are reasonably

assigned to Employee by the President, Chief Operating Officer of Broadwing

Communications Inc.

 

 

                D.            Employee shall devote Employee’s

entire time, attention, and energies to the business of Employer and its

Affiliates.  The words “entire time,

attention, and energies” are intended to mean that Employee shall devote Employee’s

full effort during reasonable working hours to the business of Employer and its

Affiliates and shall devote

 

 

at least 40 hours per week to the business of Employer and its

Affiliates.  Employee shall travel to

such places as are necessary in the performance of Employee’s duties.

 

4.             Compensation.

 

                A.            Employee shall receive a base salary

(the “Base Salary”) of at least $220,000.00 per year, payable not less

frequently than monthly, for each year during the term of this Agreement,

subject to proration for any partial year. 

Such Base Salary, and all other amounts payable under this Agreement,

shall be subject to withholding as required by law.

 

                B.            In addition to the Base Salary,

Employee shall be entitled to receive an annual bonus (the “Bonus”) for each

calendar year for which services are performed under this Agreement.  Any Bonus for a calendar year shall be

payable after the conclusion of the calendar year in accordance with Employer’s

regular bonus payment policies.  Each

year, Employee shall be given a Bonus target, by Employer’s Compensation

Committee, of not less than $88,000.00.

 

                C.            On at least an annual basis,

Employee shall receive a formal performance review and be considered for Base

Salary and/or Bonus target increases.

 

5.             Expenses.  All reasonable and necessary expenses

incurred by Employee in the course of the performance of Employee’s duties to

Employer shall be reimbursable in accordance with Employer’s then current

travel and expense policies.

 

6.             Benefits.

 

                A.            While Employee remains in the employ

of Employer, Employee shall be entitled to participate in all of the various

employee benefit plans and programs, or equivalent plans and programs, which

are made available to similarly situated officers of Employer.

 

                B.            Notwithstanding anything contained

herein to the contrary, the Base Salary and Bonuses otherwise payable to

Employee shall be reduced by any benefits paid to Employee by Employer under

any disability plans made available to Employee by Employer.

 

                C.            As of the Effective Date, Employee

shall be granted options to purchase 100,000 common shares of Employer under

Employer’s 1997 Long Term Incentive Plan. 

In each year of this Agreement after 2000, Employee will be granted

stock options under Employer’s 1997 Long Term Incentive Plan or any similar

plan made available to employees of Employer.

 

                7.             Confidentiality.  Employer and its Affiliates are engaged in

the telecommunications industry within the U.S.  Employee acknowledges that in the course of employment with the

Employer, Employee will be entrusted with or obtain access to

 

2

 

information proprietary to the Employer and its Affiliates with respect

to the following (all of which information is referred to hereinafter collectively

as the “Information”); the organization and management of Employer and its

Affiliates; the names, addresses, buying habits, and other special information

regarding past, present and potential customers, employees and suppliers of

Employer and its Affiliates; customer and supplier contracts and transactions

or price lists of Employer, its Affiliates and their suppliers; products,

services, programs and processes sold, licensed or developed by the Employer or

its Affiliates; technical data, plans and specifications, present and/or future

development projects of Employer and its Affiliates; financial and/or marketing

data respecting the conduct of the present or future phases of business of

Employer and its Affiliates; computer programs, systems and/or software; ideas,

inventions, trademarks, business information, know-how, processes,

improvements, designs, redesigns, discoveries and developments of Employer and

its Affiliates; and other information considered confidential by any of the

Employer, its Affiliates or customers or suppliers of  Employer, its Affiliates. 

Employee agrees to retain the Information in absolute confidence and not

to disclose the Information to any person or organization except as required in

the performance of Employee’s duties for Employer, without the express written

consent of Employer; provided that Employee’s obligation of confidentiality

shall not extend to any Information which becomes generally available to the

public other than as a result of disclosure by Employee.

 

8.             New

Developments.  All ideas,

inventions, discoveries, concepts, trademarks, or other developments or

improvements, whether patentable or not, conceived by the Employee, alone or

with others, at any time during the term of Employee’s employment, whether or not

during working hours or on Employer’s premises, which are within the scope of

or related to the business operations of Employer or its Affiliates (“New

Developments”), shall be and remain the exclusive property of Employer.  Employee shall do all things reasonably

necessary to ensure ownership of such New Developments by Employer, including

the execution of documents assigning and transferring to Employer, all of

Employee’s rights, title and interest in and to such New Developments, and the

execution of all documents required to enable Employer to file and obtain

patents, trademarks, and copyrights in the United States and foreign countries

on any of such New Developments.

 

9.             Surrender of

Material Upon Termination.  Employee

hereby agrees that upon cessation of Employee’s employment, for whatever reason

and whether voluntary or involuntary, Employee will immediately surrender to

Employer all of the property and other things of value in his possession or in

the possession of any person or entity under Employee’s control that are the

property of Employer or any of its Affiliates, including without any limitation

all personal notes, drawings, manuals, documents, photographs, or the like,

including copies and derivatives thereof, relating directly or indirectly to

any confidential information or materials or New Developments, or relating

directly or indirectly to the business of Employer or any of its Affiliates.

 

3

 

10.           Remedies.

 

                A.            Employer and Employee hereby

acknowledge and agree that the services rendered by Employee to Employer, the

information disclosed to Employee during and by virtue of Employee’s

employment, and Employee’s commitments and obligations to Employer and its

Affiliates herein are of a special, unique and extraordinary character, and

that the breach of any provision of this Agreement by Employee will cause

Employer irreparable injury and damage, and consequently the Employer shall be

entitled to, in addition to all other remedies available to it, injunctive and

equitable relief to prevent a breach of Sections 7, 8, 9, 11 and 12 of this

Agreement and to secure the enforcement of this Agreement.

 

                B.            Except as provided in Section 10.A.,

the parties agree to submit to final and binding arbitration any dispute, claim

or controversy, whether for breach of this Agreement or for violation of any of

Employee’s statutorily created or protected rights, arising between the parties

that either party would have been otherwise entitled to file or pursue in court

or before any administrative agency (herein “claim”), and waives all right to

sue the other party.

 

                                (i)            This agreement to arbitrate and any

resulting arbitration award are enforceable under and subject to the Federal

Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). 

If the FAA is held not to apply for any reason then Ohio Revised Code

Chapter 2711 regarding the enforceability of arbitration agreements and awards

will govern this Agreement and the arbitration award.

 

                                (ii)           (a)           All

of a party’s claims must be presented at a single arbitration hearing.  Any claim not raised at the arbitration

hearing is waived and released.  The

arbitration hearing will take place in Cincinnati, Ohio.

 

                                                (b)           The arbitration process will be

governed by the Employment Dispute Resolution Rules of the American Arbitration

Association (“AAA”) except to the extent they are modified by this Agreement.

 

                                                (c)           Employee has had an opportunity to

review the AAA rules and the requirements that Employee must pay a filing fee

for which the Employer has agreed to split on an equal basis.

 

                                                (d)           The arbitrator will be selected from

a panel of arbitrators chosen by the AAA in White Plains, New York.  After the filing of a Request for

Arbitration, the AAA will send simultaneously to Employer and Employee an

identical list of names of five persons chosen from the panel.  Each party will have 10 days from the

transmittal date in which to strike up to two names, number the remaining names

in order of preference and return the list to the AAA.

 

                                                (e)           Any pre-hearing disputes will be

presented to the arbitrator for expeditious, final and binding resolution.

 

4

 

                                                (f)            The award of the arbitrator will be

in writing and will set forth each issue considered and the arbitrator’s

finding of fact and conclusions of law as to each such issue.

 

                                                (g)           The remedy and relief that may be

granted by the arbitrator to Employee are limited to lost wages, benefits,

cease and desist and affirmative relief, compensatory, liquidated and punitive

damages and reasonable attorney’s fees, and will not include reinstatement or

promotion.  If the arbitrator would have

awarded reinstatement or promotion, but for the prohibition in this Agreement,

the arbitrator may award front pay.  The

arbitrator may assess to either party, or split, the arbitrator’s fee and

expenses and the cost of the transcript, if any, in accordance with the

arbitrator’s determination of the merits of each party’s position, but each

party will bear any cost for its witnesses and proof.

 

                                                (h)           Employer and Employee recognize that

a primary benefit each derives from arbitration is avoiding the delay and costs

normally associated with litigation. 

Therefore, neither party will be entitled to conduct any discovery prior

to the arbitration hearing except that: 

(i) Employer will furnish Employee with copies of all non-privileged

documents in Employee’s personnel file; (ii) if the claim is for discharge,

Employee will furnish Employer with records of earnings and benefits relating

to Employee’s subsequent employment (including self-employment) and all

documents relating to Employee’s efforts to obtain subsequent employment; (iii)

the parties will exchange copies of all documents they intend to introduce as evidence

at the arbitration hearing at least 10 days prior to such hearing; (iv)

Employee will be allowed (at Employee’s expense) to take the depositions, for a

period not to exceed four hours each, of two representatives of Employer, and

Employer will be allowed (at its expense) to depose Employee for a period not

to exceed four hours; and (v) Employer or Employee may ask the arbitrator to

grant additional discovery to the extent permitted by AAA rules upon a showing

that such discovery is necessary.

 

                                                (i)            Nothing herein will prevent either

party from taking the deposition of any witness where the sole purpose for

taking the deposition is to use the deposition in lieu of the witness

testifying at the hearing and the witness is, in good faith, unavailable to

testify in person at the hearing due to poor health, residency and employment

more than 50 miles from the hearing site, conflicting travel plans or other

comparable reason.

                                                (j)            Arbitration must be requested in

writing no later than 6 months from the date of the party’s knowledge of the

matter disputed by the claim. A party’s failure to initiate arbitration within

the time limits herein will be considered a waiver and release by that party

with respect to any claim subject to arbitration under this Agreement.

 

                                                (k)           Employer and Employee consent that

judgment upon the arbitration award may be entered in any federal or state

court that has jurisdiction.

 

5

 

                                                (l)            Except as provided in Section 10.A.,

neither party will commence or pursue any litigation on any claim that is or

was subject to arbitration under this Agreement.

 

                                                (m)          All aspects of any arbitration

procedure under this Agreement, including the hearing and the record of the

proceedings, are confidential and will not be open to the public, except to the

extent the parties agree otherwise in writing, or as may be appropriate in any

subsequent proceedings between the parties, or as may otherwise be appropriate

in response to a governmental agency or legal process.

 

11.           Covenant Not to

Compete.  For purposes of this

Section 11 only, the term “Employer” shall mean, collectively, Employer and

each of its Affiliates. During the one-year period following termination of

Employee’s employment with Employer for any reason (or if this period is

unenforceable by law, then for such period as shall be enforceable) Employee

will not engage in any business offering services related to the current

business of Employer, whether as a principal, partner, joint venture, agent,

employee, salesman, consultant, director or officer, where such position would

involve Employee in any business activity in competition with Employer.  This restriction will be limited to the

geographical area where Employer is then engaged in such competing business

activity or to such other geographical area as a court shall find reasonably

necessary to protect the goodwill and business of the Employer.

 

                During the

two-year period following termination of Employee’s employment with Employer

for any reason (or if this period is unenforceable by law, then for such period

as shall be enforceable) Employee will not interfere with or adversely affect,

either directly or indirectly, Employer’s relationships with any person, firm,

association, corporation or other entity which is known by Employee to be, or

is included on any listing to which Employee had access during the course of

employment as a customer, client, supplier, consultant or employee of Employer

and that Employee will not divert or change, or attempt to divert or change,

any such relationship to the detriment of Employer or to the benefit of any

other person, firm, association, corporation or other entity.

 

During the one-year period following termination of

Employee’s employment with Employer for any reason (or if this period is

unenforceable by law, then for such period as shall be enforceable) Employee

shall not, without the prior written consent of Employer, accept employment, as

an employee, consultant, or otherwise, with any company or entity which is a

customer or supplier of Employer at any time during the final year of

Employee’s employment with Employer.

 

                Employee will not,

during or at any time within three years after the termination of Employee’s

employment with Employer, induce or seek to induce, any other employee of

Employer to terminate his or her employment relationship with Employer.

 

6

 

12.           Goodwill.  Employee will not disparage Employer or any

of its Affiliates in any way which could adversely affect the goodwill,

reputation and business relationships of Employer or any of its Affiliates with

the public generally, or with any of their customers, suppliers or

employees.  Employer will not disparage

Employee.

 

13.           Termination.

 

                A.            (i)            Employer

or Employee may terminate this Agreement upon Employee’s failure or inability

to perform the services required hereunder because of any physical or mental

infirmity for which Employee receives disability benefits under any disability

benefit plans made available to Employee by Employer (the “Disability Plans”),

over a period of one hundred twenty consecutive working days during any twelve

consecutive month period (a “Terminating Disability”).

 

                                (ii)           If Employer or Employee elects to

terminate this Agreement in the event of a Terminating Disability, such

termination shall be effective immediately upon the giving of written notice by

the terminating party to the other.

 

                                (iii)          Upon termination of this Agreement on

account of Terminating Disability, Employer shall pay Employee Employee’s

accrued compensation hereunder, whether Base Salary, Bonus or otherwise

(subject to offset for any amounts received pursuant to the Disability Plans),

to the date of termination.  For as long

as such Terminating Disability may exist, Employee shall continue to be an

employee of Employer for all other purposes and Employer shall provide Employee

with disability benefits and all other benefits according to the provisions of

the Disability Plans and any other Employer plans in which Employee is then

participating.

 

                                (iv)          If the parties elect not to terminate

this Agreement upon an event of a Terminating Disability and Employee returns

to active employment with Employer prior to such a termination, or if such disability

exists for less than one hundred twenty consecutive working days, the

provisions of this Agreement shall remain in full force and effect.

 

                B.            This Agreement terminates

immediately and automatically on the death of the Employee, provided, however,

that the Employee’s estate shall be paid Employee’s accrued compensation

hereunder, whether Base Salary, Bonus or otherwise, to the date of death.

 

                C.            Employer

may terminate this Agreement immediately, upon written notice to Employee, for

Cause.  For purposes of this Agreement,

Employer shall have “Cause” to terminate this Agreement only if Employer’s

Board of Directors determines that there has been fraud, misappropriation or

embezzlement on the part of Employee.

 

7

 

                D.            Employer

may terminate this Agreement immediately, upon written notice to Employee, for

any reason other than those set forth in Sections 13.A., B. and C.; provided,

however, that Employer shall have no right to terminate under this Section

13.D. within one year after a Change in Control.   In the event of a termination by Employer under this Section

13.D., Employer shall, within five days after the termination, pay Employee an

amount equal to one times the sum of the annual Base Salary rate in effect at

the time of termination plus the Bonus target in effect at the time of

termination. For the remainder of the Current Term, Employer shall continue to

provide Employee with medical, dental, vision and life insurance coverage

comparable to the medical, dental, vision and life insurance coverage in effect

for Employee immediately prior to the termination; and, to the extent that

Employee would have been eligible for any post-retirement medical, dental,

vision or life insurance benefits from Employer if Employee had continued in

employment through the end of the Current Term,  Employer shall provide such post-retirement benefits to Employee

after the end of the Current Term.  For

purposes of any stock option or restricted stock grant outstanding immediately

prior to the termination, Employee’s employment with Employer shall not be

deemed to have terminated until the end of the Current Term.  In addition, Employee shall be entitled to

receive, as soon as practicable after termination, an amount equal to the sum

of (i)  any forfeitable benefits under

any qualified or nonqualified pension, profit sharing, 401(k) or deferred

compensation plan of Employer or any Affiliate which would have vested prior to

the end of the Current Term if Employee’s employment had not terminated plus

(ii) if Employee is participating in a qualified or nonqualified defined

benefit plan of Employer or any Affiliate at the time of termination, an amount

equal to the present value of the additional vested benefits which would have

accrued for Employee under such plan if Employee’s employment had not

terminated prior to the end of the Current Term and if Employee’s annual Base

Salary and Bonus target had neither increased nor decreased after the

termination.  For purposes of this Section

13.D., “Current Term” means the one year period beginning at the time of

termination.  For purposes of this

Section 13.D. and Section 13.E., 

“Change in Control” means a change in control as defined in Employer’s

1997 Long Term Incentive Plan, including all relevant modifications.

 

E.             This Agreement shall terminate automatically in the

event that there is a Change in Control and Employee’s employment with Employer

is actually or constructively terminated by Employer within one year after the

Change in Control for any reason other than those set forth in Sections 13.A.,

B. and C.  For purposes of the preceding

sentence, a “constructive” termination of Employee’s employment shall be deemed

to have occurred if, without Employee’s consent, there is a material reduction

in Employee’s authority or responsibilities or if there is a reduction in

Employee’s Base Salary or Bonus target from the amount in effect immediately

prior to the Change in Control or if Employee is required by Employer to

relocate from the city where Employee is residing immediately prior to the

Change in Control.  In the event of a

termination under this Section 13.E., Employer shall pay Employee an amount

equal to one times the sum of the annual Base Salary rate in effect at the time

of termination plus the Bonus target in effect at the time of termination, all

stock options shall become immediately exercisable (and Employee shall be

afforded the opportunity to exercise

 

8

 

them). For the remainder of the Current Term, Employer

shall continue to provide Employee with medical, dental, vision and life

insurance coverage comparable to the medical, dental, vision and life insurance

coverage in effect for Employee immediately prior to the  termination; and, to the extent that

Employee would have been eligible for any post-retirement medical, dental,

vision or life insurance benefits from Employer if Employee had continued in

employment through the end of the Current Term,  Employer shall provide such post-retirement benefits to Employee

after the end of the Current Term. 

Employee’s accrued benefit under any nonqualified pension or deferred

compensation plan maintained by Employer or any Affiliate shall become

immediately vested and nonforfeitable and Employee also shall be entitled to

receive a payment equal to the sum of (i) any forfeitable benefits under any

qualified  pension or profit sharing or

401(k) plan maintained by Employer or any Affiliate plus (ii) if Employee is

participating in a qualified or nonqualified defined benefit plan of Employer

or any Affiliate at the time of termination, an amount equal to the present

value of the additional benefits which would have accrued for Employee under

such plan if Employee’s employment had not terminated prior to the end of the

Current Term and if Employee’s annual Base Salary and Bonus target had neither

increased nor decreased after the termination. 

Finally, to the extent that Employee is deemed to have received an

excess parachute payment by reason of the Change in Control, Employer shall pay

Employee an additional sum sufficient to pay (i) any taxes imposed under

section 4999 of the Code plus (ii) any federal, state and local taxes

applicable to any taxes imposed under section 4999 of the Code.  For purposes of this Section 13.E., “Current

Term” means the one year period beginning at the time of termination.

 

F.             Employee may resign upon 60 days’

prior written notice to Employer.  In

the event of a resignation under this Section 13.F., this Agreement shall

terminate and Employee shall be entitled to receive Employee’s Base Salary

through the date of termination, any Bonus earned but not paid at the time of

termination and any other vested compensation or benefits called for under any

compensation plan or program of Employer.

 

9

 

G.            Upon termination of this Agreement as a result of an

event of termination described in this Section 13 and except for Employer’s

payment of the required payments under this Section 13 (including any Base

Salary accrued through the date of termination, any Bonus earned for the year

preceding the year in which the termination occurs and any nonforfeitable

amounts payable under any employee plan), all further compensation under this

Agreement shall terminate.

 

                H.            The termination of this Agreement

shall not amend, alter or modify the rights and obligations of the parties

under Sections 7, 8, 9, 10, 11, and 12 hereof, the terms of which shall survive

the termination of this Agreement.

 

14.           Assignment.  As this is an agreement for personal

services involving a relation of confidence and a trust between Employer and

Employee, all rights and duties of Employee arising under this Agreement, and

the Agreement itself, are non-assignable by Employee.

 

15.           Notices.  Any notice required or permitted to be given

under this Agreement shall be sufficient, if in writing, and if delivered

personally or by certified mail to Employee at Employee’s place of residence as

then recorded on the books of Employer or to Employer at its principal office.

 

16.           Waiver.  No waiver or modification of this Agreement

or the terms contained herein shall be valid unless in writing and duly

executed by the party to be charged therewith. 

The waiver by any party hereto of a breach of any provision of this

Agreement by the other party shall not operate or be construed as a waiver of

any subsequent breach by such party.

 

17.           Governing Law.  This agreement shall be governed by the laws

of the State of Ohio.

 

18.           Entire Agreement.  This Agreement contains the entire agreement

of the parties with respect to Employee’s employment by Employer.  There are no other contracts, agreements or

understandings, whether oral or written, existing between them except as

contained or referred to in this Agreement.

 

19.           Severability.  In case any one or more of the provisions of

this Agreement is held to be invalid, illegal, or unenforceable in any respect,

such invalidity, illegality, or other enforceability shall not affect any other

provisions hereof, and this Agreement shall be construed as if such invalid,

illegal, or unenforceable provisions have never been contained herein.

 

20.           Successors and

Assigns.  Subject to the

requirements of Paragraph 14 above, this Agreement shall be binding upon

Employee, Employer and Employer’s successors and assigns.

 

10

 

21.           Confidentiality

of Agreement Terms.  The terms of

this Agreement shall be held in strict confidence by Employee and shall not be

disclosed by Employee to anyone other than Employee’s spouse, Employee’s legal

counsel, and Employee’s other advisors, unless required by law.  Further, except as provided in the preceding

sentence, Employee shall not reveal the existence of this Agreement or discuss

its terms with any person (including but not limited to any employee of

Employer or its Affiliates) without the express authorization of the President

of Employer.  To the extent that the

terms of this Agreement have been disclosed by Employer, in a public filing or

otherwise, the confidentiality requirements of this Section 21 shall no longer

apply to such terms.

 

                IN WITNESS

WHEREOF, the parties hereto have caused this Agreement to be duly executed as

of the day and year first above written.

 

 

	

  Broadwing Communications Inc.

  
	

   

  
	

  By:

  	

  /s/  Richard S. Pontin

  
	

   

  
	

   

  
	

  EMPLOYEE

  
	

   

  
	

  /s/ Michael R.

  Jones

  
	

  Michael R. Jones

  

 

 

11

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