Document:

ex10-25

 

February 20, 2002

Asghar D. Mostafa

956 Bellview Rd.

McLean, VA 22102

Dear Asghar:

ASC, Inc. acknowledges notification and acceptance of your intent to resign
from your position of Chief Executive Officer and President of the Company
effective April 20, 2002, for “good reason” as that term is defined in
paragraph 11(b) the employment agreement, dated August 31, 1998, between you
and ASC (the “Agreement”). You will continue as a member of the Board of
Directors. You will continue to be paid at your current pay rate, with
benefits and service credit through April 20, 2002, when your employment with
ASC will terminate for “good reason”. By terminating your employment for “good
reason”, you will receive the benefits and salary continuation set forth below.

	•	 	Pursuant to paragraph 12 of the Agreement, you will
receive a sum equal to your base salary for three years (a three-year
total of $600,000), which is to be paid in a lump sum, less statutory
withholdings, no later than May 20, 2002. Your employment agreement
also calls for a payment equal to two times the average aggregate
bonuses previously paid you; however, this amount is zero given the
fact that you have not received any bonus payments previously.
               
               
               
           [ADM] Initial here
	 
	•	 	Our records indicate that your vacation balance as of your termination
date will be 222.2 hours. Subject to confirmation of this balance,
you will be paid $21,365.38, less statutory withholdings, for your
accrued and unused vacation hours. Your vacation pay will be included
with your final payroll check. This payment will be contingent on
your return of any company property in your possession.
	 
	•	 	Your current medical, dental and vision coverage will end April 30,
2002. However, pursuant to the Agreement, you will receive insurance
benefits for a period of up to two years. Therefore, the company will
reimburse you for the cost of continuation under COBRA, conversion to
another MAMSI plan, or for the cost of an individual policy during the
two year time period beginning May 1, 2002 through April 30, 2004.
ASC will assist with the additional tax liability associated with
these reimbursements through a gross-up allowance for federal, state
and FICA tax with the payment of tax withholdings on your behalf.
	 
	•	 	Your Employer-Sponsored Group Life Insurance, Voluntary Life
Insurance, Short and Long Term Disability will cease as of April 30,
2002. You will have the option to convert the employer paid portion
of the Life insurance to an individual Whole Life policy with the
Guardian. If you wish to convert this benefit, the Guardian must
receive your application by

 

 

	 	 	May 31, 2002. ASC will reimburse you for the cost of this Whole Life policy
during the two year time period beginning May 1, 2002 through April 30,
2004. There are no continuation options for Short Term or Long Term
Disability; however, if you wish to purchase an individual disability
policy, ASC will reimburse you for the cost of this benefit during the two
year time period beginning May 1, 2002 through April 30, 2004. ASC will
assist with the additional tax liability associated with these
reimbursements through a gross-up allowance for federal, state and FICA tax
with the payment of tax withholdings on your behalf. Please be advised that
you may be subject to medical underwriting when applying for individual
policy benefits.
	 
	•	 	If you become reemployed with another employer and become eligible to receive insurance or other benefits under another
employer’s plan, the medical and/or other insurance benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.
	 
	•	 	As a participant in the company’s 401(k) plan, you will need to decide the appropriate disposition of any 401(k) funds you
may have. You will receive information directly from Cigna concerning 401(k) plan rollover procedures. Your 401(k)
payroll deduction will cease as of your termination date, unless you notify Laurie Foglesong in Human Resources that you
would like to change your election or discontinue your participation sooner.
	 
	•	 	ASC has been given advice that Section 4999 of the Internal Revenue Code is not applicable to your separation payments.
You are however, free to verify this opinion and in fact, we recommend that you seek an opinion from an attorney of your
own choosing.
	 
	•	 	Enclosed you will find a Personnel Option Status statement which provides a detailed summary of the status of each of your
stock options. You must exercise any vested, unexercised options under the 1998 Nonqualified Stock Option Plan, the Second
1998 Nonqualified Stock Option Plan and/or the 1999 Nonqualified Stock Option Plan by April 20, 2002 or you will forfeit
these options. You must exercise any vested, unexercised options under the 2000 Stock Incentive Plan by July 19, 2002.
Please contact Laurie Foglesong in Human Resources if you wish to exercise your options. All unvested options will be
forfeited upon your termination date.
	 
	•	 	Please return all Company property in your possession on or before April 20, 2002.
	 
	•	 	The Company will cancel your American Express corporate card, if applicable, effective April 20, 2002. You are responsible
for any outstanding balance on your American Express corporate card. If have any outstanding business-related expenses,
please submit a final expense report to Cindy Poling. Upon receipt of this information, Advanced Switching Communications
will be able to process your final expense reimbursement.

 

 

	•	 	You are reminded that the
confidentiality provisions set forth in paragraph 8 of the Agreement survive termination of employment. If a court of competent jurisdiction
finds that you have violated any of the provisions contained in paragraph 8 of the Agreement, ASC shall terminate any
further payments or benefits pursuant to paragraph 12 of the Agreement, and you will be required to return any and all
payments received by you since the time of the violation.

Please feel free to contact Laurie Foglesong in Human Resources at
703.288.8145, if you have any questions or concerns with any of the
above-mentioned items.

Sincerely,

/s/ Arthur J. Marks

Arthur J. Marks

	 	 	 
	Enclosure:	 	
ASC Employee Benefit Information
	 	 	
Personnel Option Status Statementex10-26

 

	 	 	 
	 	 	
Exhibit 10.26
	 	 	
1585 Broadway
	 	 	
New York, NY 10036
	 	 	
tel 212.761.4000

	 	24 October 2001

PERSONAL AND CONFIDENTIAL

Mr. Asghar D. Mostafa

President & CEO

Advanced Switching Communications, Inc.

8330 Boone Boulevard, 5th Floor

Vienna, Virginia 22182

Dear Asghar:

Pursuant to our recent discussions, I am pleased to confirm the arrangements
under which Morgan Stanley & Co. Incorporated (“Morgan Stanley”) is engaged
by Advanced Switching Communications, Inc. (“ASC” or the “Company”) in
connection with assessing ASC’s strategic alternatives, including an
acquisition or a sale transaction involving the Company or its liquidation or
dissolution.

During the term of our engagement we will provide you with financial advice
and assistance in connection with this assignment, including advice and
assistance with respect to defining objectives, performing valuation
analysis, and structuring, planning and negotiating the transaction.

As you know, our fees for services depend on the outcome of the assignment
and are designed to reflect our contribution to a major strategic objective.
In the event that a Transaction (as defined below) is not completed, or there
is a liquidation or dissolution event of the Company, by the end of the term
of Morgan Stanley’s engagement, we will charge an “Advisory Fee” which will
reimburse us for our time and efforts expended. For this assignment, the
Advisory Fee will be $150,000. If the project is terminated prematurely and
our efforts have not warranted the Advisory Fee, we will negotiate in good
faith to reach agreement on an appropriately lower fee.

Upon termination of our services hereunder, we will provide ASC with an
updated list of potential parties to a business combination transaction that
will be mutually agreed upon by Morgan Stanley and ASC (“Contacted Parties”).

 

 

If a Transaction (as defined below) involving the Company is accomplished, we
will charge a “Transaction Fee” against which any Advisory Fees paid will be
credited. For this assignment, our Transaction Fee will be $1,750,000.

The Transaction Fee in connection with a completed Transaction will become
payable and is to be paid by ASC only upon the sale or issuance of 50% or
more of the outstanding common stock of ASC, a merger involving the transfer
of control of ASC, or a sale of 50% or more of the assets of ASC (based on
the book value thereof) in one or a series of related transactions (a
“Transaction”). The Advisory Fee will be payable within five (5) business days
of the end of the term of Morgan Stanley’s engagement. ASC agrees to arrange
for payment of any applicable fee hereunder by wire transfer on or before the
applicable date. Nevertheless, our advisory efforts pursuant to this letter
will continue after control is obtained (as discussed in the first sentence
of this paragraph) to assist you with a second step merger or similar
transaction.

Upon your request and at no additional expense, we will render a financial
opinion letter as to the fairness, from a financial point of view, of the
consideration to be received in the Transaction, in accordance with our
customary practice, except in the event that the Company liquidates or
dissolves its assets. The terms of our opinion and the nature and scope of
any analysis and investigation we undertake in order to render such opinion
shall be such as we consider appropriate in the circumstances. Any advice or
opinions provided by Morgan Stanley may not be disclosed or referred to
publicly or to any third party except in accordance with our prior written
consent, which consent shall not be unreasonably withheld.

If, in connection with this assignment, ASC effects a repurchase of or a
public sale or private placement of equity, preferred or debt securities or
ASC effects real estate financings, asset or property sales, and ASC requires
investment banking services in connection therewith, ASC agrees to offer to
retain Morgan Stanley on mutually agreeable terms to assist it with such
transaction. In addition, if in connection with this assignment, ASC effects
any interest rate, equity-related or currency hedges or currency conversions,
including but not limited to currency transactions on a spot, forward or
option basis, ASC agrees to offer to retain Morgan Stanley on mutually
agreeable terms to assist it with such transaction.

In addition to our fee for professional services, we will separately bill our
reasonable expenses as incurred. Generally these expenses include travel
costs, document production and other expenses of this type, and will also
include the reasonable fees of outside counsel and other professional
advisors should they be engaged with your consent. In the event that we incur
expenses in excess of $35,000 in any single month, Morgan Stanley will obtain
the prior consent of ASC.

 

 

Morgan Stanley will act under this letter agreement as an independent
contractor with duties solely to ASC. Because we will be acting on your
behalf in this capacity, it is our practice to receive indemnification. A copy
of our standard indemnity form is attached to this letter.

Morgan Stanley shall, upon execution of this letter agreement, enter into a
confidentiality agreement with the Company, upon terms acceptable to both
parties, concerning information provided by ASC to Morgan Stanley in
connection with this engagement.

Please note that Morgan Stanley is a full service securities firm engaged in
securities trading and
brokerage activities, as well as providing investment banking, financing, and
financial advisory services. In the ordinary course of our trading,
brokerage, and financing activities, Morgan Stanley or its affiliates may at
any time hold long or short positions, and may trade or otherwise effect
transactions, for our own account or the accounts of customers, in debt or
equity securities or senior loans of the Company or any other company that
may be involved in this transaction.

As you know, affiliates of Morgan Stanley own approximately 3% of the equity
of ASC. Consequently, you agree that you will not assert any damage,
conflict of interest or other claim against us or our affiliates arising out
of our ownership interest in ASC.

Our services hereunder may be terminated with or without cause by you or by
us at any time and without liability or continuing obligation to you or to us
(except or any compensation earned (including the Transaction Fee) and
expenses incurred by us to the date of termination and except, in the case of
termination by ASC, for our right to fees pursuant to this letter for any
Transactions involving Contacted Parties effected within eighteen (18) months
of such termination) and provided that the confidentiality and indemnity
provisions will remain operative regardless of any such termination.

Morgan Stanley and ASC (on its own behalf and, to the extent permitted by
law, on behalf of its shareholders) each waives any right to trial by jury
in any action, claim, suit or proceeding with respect to Morgan Stanley’s
engagement as financial advisor or its role in connection herewith.

If the terms of our engagement as set forth in this letter are satisfactory,
kindly sign the enclosed copy of this letter and indemnification form and
return them to us.

We look forward to working with ASC on this very important assignment.

 

 

	 	 	 
	Very truly yours,
	 
	MORGAN STANLEY &
CO. INCORPORATED
	 
	 	 	

	 
	By:	 	
/s/ Morgan Hanlon

Morgan Hanlon

Vice President

Accepted:

ADVANCED SWITCHING COMMUNICATIONS, INC.

	 	 	 
	By:	 	
/s/ Harry D’Andrea  
	Title:	 	
CFO                          
	Date:	 	
October 24, 2001    

Enclosure

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