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EXHIBIT 10.57
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement"), made
as of this 28th day of February, 1997 by and between AMERICAN COMMUNICATIONS
SERVICES, INC., a Delaware corporation, having its principal place of business
at 000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxxx, Xxxxxxxx 00000
(which, together with any affiliates or subsidiaries are hereinafter
collectively referred to as "Company") and Xxxxx X. Xxxxxx, an individual
residing at 0000 Xxx Xxxx Xx., Xx. Xxxxxxx, XX 00000 (hereinafter referred to
as "Employee").
WITNESSETH
WHEREAS, the Company desires to employ the services of
Employee as its Chief Financial Officer under the terms and conditions set
forth herein; and
WHEREAS, Employee desires to provide services as Chief
Financial Officer for the Company under the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants undertaken herein, and with the intent to be legally bound
hereby, the Company and Employee hereby agree as follows:
1. Employment. The Company hereby agrees to employ
Employee and Employee hereby agrees to said employment in accordance with the
terms and conditions hereinafter set forth.
2. Term. Employment hereunder shall be deemed to have
commenced as of March 24, 1997 (the "Effective Date") and continue through
March 23, 2001 (the "Termination Date"), unless otherwise terminated pursuant
to the terms hereof, or otherwise extended by written agreement or continuation
of this Employment Agreement upon such terms and conditions as are then
mutually acceptable to the Employee and the Company.
3. Location. The Company shall provide office space for
Employee at the Company's headquarters within the Annapolis, Maryland
metropolitan area or wherever the Company's headquarters may be located.
4. Duties. Employee shall serve as Chief Financial
Officer of the Company and each operating affiliate. Employee shall report to,
and take direction from the Chief Executive Officer, or in his absence, Xxxx X.
Xxxxx, or the Executive Chairman of the Company (each of the foregoing, in the
designated order, the "Designated Officer"). Employee shall be responsible for
maintaining the Company's financial books and records and fulfilling all
financial reporting requirements to lenders, investors and government agencies,
as well as ensuring the
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integrity of the Company's financial systems and controls and other duties
commensurate with Employee's position as Chief Financial Officer as directed
by the Designated Officer. Employee shall devote his full business time to the
affairs of the Company.
5. Compensation.
a. Salary. Employee shall be compensated by the
payment of $175,000 per annum in accordance with the Company's standard payroll
practices for employees at his level, (as such amount may be increased from
time to time, "Base Salary"). Employee understands that all salary and bonus
compensation paid to Employee under this Employment Agreement shall be subject
to the usual and customary federal and state tax withholding and other
employment taxes as required by law. Except for the cash bonuses payable in
accordance with section 5(b) hereof, in the event Employee is terminated For
Cause as defined in paragraph 12 hereof or voluntarily leaves the Company's
employ, all compensation shall be prorated if employment is terminated other
than at the end of a calendar month. Employee will receive a salary review on
each anniversary of the Effective Date. Additional or increased compensation,
while not formalized, will be based on the Company's performance as well as his
individual contribution to that performance, and shall be determined at the
sole discretion of the Designated Officer and the Company's Board of Directors
(the "Board").
b. Cash Bonuses. On the effective date of this
agreement, Employee shall be entitled to receive, a one-time, lump-sum payment
of $30,000 as a signing bonus. In addition, Employee shall be eligible to
receive an annual cash bonus (the "Performance Bonus") equal to up to thirty
percent (30%) of his Base Salary based upon the achievement of certain
performance goals as reasonably determined by the Designated Officer. Such
Performance Bonus will be payable within sixty (60) days after the completion
of each fiscal year of the Company during the term hereof. The performance
goals for the fiscal year ending December 31, 1997, shall be determined within
thirty (30) days of the Effective Date and the performance goals for each
fiscal year thereafter will be determined no later than thirty (30) days after
the end of the preceding fiscal year. Notwithstanding the foregoing, if the
Company eliminates Performance Bonuses for officers of the Company, other than
for Xxxx X. Xxxxx and Xxxxxxx X. Xxxxxxxxx, the Company shall not be required
to pay the Performance Bonus to Employee. If, however, any officer (other than
Xxxxxxx X. Xxxxxxxxx or Xxxx X. Xxxxx) continues to be paid, or be eligible for
a similar type bonus, Employee will be entitled to the Performance Bonus on the
terms set forth in Paragraph 5.b.
c. Stock Options.
(i) In addition to the foregoing
compensation, Employee is hereby granted non-qualified options under the
Company's Amended 1994 Stock Option Plan (the "Plan") to purchase up to 200,000
shares of the common stock of the Company upon the following terms and
conditions (such options are referred to herein as the "Initial Stock
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Options"). Subject to the vesting requirements set forth herein, the Initial
Stock Options shall be exercisable as to each tranche of shares through the day
immediately preceding the fifth (5th) anniversary of the vesting date for such
tranche. The exercise price of the Initial Stock Options will be $7.33 per
share, which is not less than 85% of the last reported sale price of the common
stock on February 28, 1997, the date of grant as determined pursuant to the
terms of the Plan. The Initial Stock Options will vest on an "earn out" basis,
that is 50,000 Initial Stock Options will vest after completion of Employee's
first year of employment with the Company (March 23, 1998), 50,000 Initial
Stock Options will vest after completion of Employee's second year of
employment with the Company (March 23, 1999), 50,000 Initial Stock Options will
vest after completion of Employee's third year of employment with the Company
(March 23, 2000), and 50,000 Initial Stock Options will vest after completion
of Employee's fourth year of employment with the Company (March 23, 2001). The
Initial Stock Options shall not vest if prior to the relevant vesting date,
Employee voluntarily leaves the Company's employ or if Employee is terminated
For Cause as defined in paragraph 12 hereof. In the event of termination of
Employee's employment by the Company without Cause or pursuant to subparagraph
12 (b), (d), (e) or (f) hereof, all Initial Stock Options shall vest and become
immediately exercisable.
(ii) In addition to the issuance of the
Initial Stock Options as provided above, Employee is hereby granted additional
non-qualified options under the Plan to purchase an aggregate of 50,000 shares
of common stock (the "Performance Stock Options"), at the per share exercise
price of $7.33, which is not less than 85% of the last reported sale price of
the common stock on the date of grant. The Performance Stock Options shall
vest and become exercisable on March 23, 2003, if Employee shall then be
employed by the Company; provided, however, that the Performance Stock Options
immediately shall vest and become exercisable, at such time as Employee has met
the management business objectives (which are to be reasonably determined by
the Designated Officer within sixty (60) days of the Effective Date) provided
that Employee is then employed by the Company. It is the intent of Company for
the management business objectives to be met no later than one year from the
effective date. Once vested, the Performance Stock Options shall be
exercisable for a term of five years from the date of vesting. In the event of
termination of Employee's employment by the Company without Cause or pursuant
to subparagraphs 12 (e) or (f) hereof, the Performance Stock Options shall vest
and become immediately exercisable.
(iii) With respect to amendments to the Plan,
and with respect to future stock option plans or programs to be participated in
by senior officers or key employees of the Company or its successor companies,
Employee shall participate in an equitable manner, consistent with the
participation of other senior officers and key employees of the Company.
6. Other Payments and Benefits. In addition to the
compensation and other consideration provided in paragraph 5 above, Employee
will be given a one-time payment of $80,000 within thirty (30) days of the
Effective Date for payment of reasonable costs to relocate
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his personal goods and family to the Annapolis Junction, MD area within a
reasonable time after the Effective Date, which is expected to be not later
than September 1, 1997. The Company will determine and also pay the amount
equal to the federal, state and local income taxes payable by Employee with
respect to such $80,000 payment based on the deductions taken by the Employee
for such relocation costs on his personal tax returns. In the event Employee
voluntarily leaves the Company's employ prior to completion of his first year
of employment (March 23, 1998), he will be required to reimburse the Company in
the amount of $80,000, plus any additional payments made by the Company to
Employee pursuant to the immediately preceding sentence.
7. Fringe Benefit Plans. Employee shall be entitled to
all benefits accorded to Company officers in general . Employee shall also be
entitled to participate in fringe benefit plans, including, but not limited to,
the Company's medical and dental insurance, life insurance, stock option plans,
or other benefit plans which may be adopted or amended by the Company from time
to time during the term of this Employment Agreement to the same extent and in
the same manner as other employees similarly situated. Employee's
participation in and coverage under such fringe benefits plans shall become
effective on the Effective Date. In addition to the aforementioned benefits,
the Company shall provide to the Employee, at the Company's expense,
incremental term life insurance coverage in the amount of $350,000, the
benefits from which shall be payable to Employees' beneficiaries provided that
Employee has no pre-existing condition which would make such insurance
unobtainable on commercially reasonable terms, if at all. This incremental
coverage will continue to be maintained by the Company throughout the term of
the Employment Agreement, until basic life insurance benefits available to
executive employees provide for basic term life insurance coverage up to
$500,000.
8. Employee and Company Representations. Employee
hereby represents and warrants to the Company that (i) the execution, delivery
and performance of this Employment Agreement by Employee do not and will not
conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Employee is a party
or is presently bound; and (ii) Employee is not a party to or bound by any
employment agreementor non-competition agreement or confidentiality agreement
with any other person or entity except for the Non-Disclosure Agreement between
Employee and Chicago Fiber Optic Corporation signed October 3, 1987, and the
Non-Disclosure/Confidentiality Agreement between Employee and Metro Fiber
Systems of Chicago, Inc. signed April 29, 1988.
9. Business Expenses. The Company shall reimburse
Employee for all reasonable business and professional expenses incurred by
Employee in connection with his employment within thirty (30) days of the
Company's receipt of vouchers, receipts or other appropriate documentation
which conform to the requirements of the Company's expense reimbursement
procedures.
10. Vacation. Employee shall be entitled to an initial
annual vacation of two (2) weeks. Scheduling of each vacation shall be with
the reasonable consent of the Designated
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Officer.
11. Professional Education. Employee's attendance at
professional seminars, and the payment and/or reimbursement of costs and
expenses associated therewith, shall be decided on an ad hoc basis by the
Company and Employee.
12. Term of Employment. The term of the Employee's
employment shall commence on the Effective Date and shall continue for the
period set forth in paragraph 2 above unless sooner terminated as hereunder
provided:
a. For "Cause", as that term is defined
below, upon ten (10) days' written
notice by the Company to Employee.
b. Upon the death of Employee.
c. Upon ten (10) days' written notice
to the Company of resignation by
Employee.
d. If Employee shall become disabled,
upon ten (10) days' written notice
by the Company to the Employee.
Employee shall be deemed disabled
within the meaning of this
Employment Agreement if as a result
of sickness (including mental or
related illnesses), accident or
injury, Employee is unable to
perform his duties to the Company
for a period of six (6) consecutive
months.
e. If the Company is in material breach
of any of its obligations hereunder
and such breach is not cured, within
thirty (30) days' after written
notice thereof from Employee, after
expiration of such notice period,
provided that the Company shall only
be entitled to one cure period per
calendar year.
f. Upon the event of an "Involuntary
Termination", as that term is
defined in this paragraph 12.
For purposes of this Employment Agreement, for "Cause" shall
mean (i) the commission of a felony, any crime involving moral turpitude or any
other act involving dishonesty, disloyalty or fraud with respect to the
Company; (ii) substantial failure to perform duties as reasonably directed by
the Company, which failure is not cured within fifteen (15) days' written
notice thereof to Employee from the Company (iii) gross negligence, intentional
or willful misconduct or (iv) any other material breach of this Employment
Agreement by Employee which is not cured within thirty (30) days' after written
notice thereof to Employee from the Company.
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For purposes of this Employment Agreement, "Involuntary
Termination" shall mean either (i) the actual involuntary termination without
Cause of the Employee's employment with the Company, or (ii) the constructive
involuntary termination of the Employee's employment with the Company. The
term "constructive involuntary termination" shall include (a) material
reduction in the Employee's compensation, including applicable fringe benefits
from those in place as of the Effective Date to the extent such reduction is
not applicable generally to executive employees; or (b) a substantial change in
location of the office space provided for the Employee by the Company without
the Employee's written consent in the event the Company fails to pay reasonable
relocation costs; or (c) the Employee's material demotion or diminution in the
Employee's position, authority, duties or responsibilities without Cause or the
Employee's written consent. "Substantial change in location" means any change
in the location of the office space provided for the Employee by the Company
(new office), where the distance between the Employee's home (as determined in
connection with paragraph 6), and the new office, is more than fifty miles
greater than the distance between the Employee's home and the office space
provided for the employee on the Effective Date in accordance with paragraph 3.
Anything in this Employment Agreement to the contrary
notwithstanding, the Company reserves the right to terminate the term of
Employee's employment at any time, in its sole discretion, without Cause;
provided that if Employee's employment is terminated by the Company without
Cause or if Employee's employment is terminated pursuant to subparagraphs (b),
(d), (e) or (f) of paragraph 12 hereof, Employee or Employee's estate shall be
entitled to receive any previously awarded but unpaid bonus under paragraph 5
hereof and all Initial Stock Options shall vest and become immediately
exercisable. In the event of termination of Employee's employment by the
Company without Cause or pursuant to subparagraphs (b), (d), (e) or (f) of
paragraph 12 hereof Employee shall receive his then current Base Salary and
health and medical benefits coverage at the Company's expense for two (2) years
from the date of such termination, as severance compensation.
13. Termination of Compensation. Except as otherwise
provided in paragraph 12 hereof, if Employee's employment with the Company
terminates, Employee shall not be entitled to any compensation hereunder after
the date of such termination. Notwithstanding the foregoing, the parties shall
be required to carry out any provisions hereof which contemplate performance by
them subsequent to such termination, including: (i) the payment of any amounts
of compensation under paragraph 5 then accrued but unpaid to the effective date
of termination; (ii) the ability of Employee to exercise vested Initial Stock
Options and Performance Stock Options; and (iii) the covenants regarding
confidential information under paragraph 15 hereof, the covenants regarding
work product under paragraph 16 hereof;and (v) the covenants not to compete or
solicit under paragraph 17 hereof. In addition, termination of this Employment
Agreement shall not affect any liability or other obligation which shall have
accrued prior to termination, including but not limited to any liability for
borrowed money or loss or damage on account of default hereunder.
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14. Loyalty. The performance of services hereunder shall
be Employee's exclusive employment relationship and Employee shall devote his
full business time and best efforts to the performance of services under this
Employment Agreement. During the term of this Employment Agreement, Employee
shall not at any time or place whatsoever, either directly or indirectly,
engage in business or render services to any extent whatsoever to any third
party, except under and pursuant to this Employment Agreement.
15. Confidential Information. Employee acknowledges that
the proprietary information, observations and data obtained by Employee while
employed by the Company concerning the business or affairs of the Company or
any affiliate or subsidiary thereof ("Confidential Information") is the
property of the Company. Therefore, Employee agrees not to disclose to any
unauthorized person or use for the Employee's account any Confidential
Information without the prior written consent of the Company unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Employee's acts or omissions.
Upon request, Employee shall deliver to the Company at the termination of this
Employment Agreement, or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the Confidential Information or the business of the
Company. This provision shall not apply to information deemed to be known by
Employee at the time of the execution of the Employment Agreement, including
information gained by virtue of his past experience and know-how, or to his
general expertise.
16. Work Product. Employee agrees that all methods,
analyses, reports, plans and all similar or related information which (i)
relate to the Company or any of its affiliates or subsidiaries and which (ii)
are conceived, developed or made by Employee in the course of his employment by
the Company ("Work Product") belong to the Company. Employee will promptly
disclose such Work Product to the Company and perform all actions reasonably
requested by the Company to establish and confirm such ownership by the
Company.
17. Covenants Not to Compete or Solicit. For two (2)
years following the termination of Employee's employment with the Company,
Employee covenants and agrees with the Company not to engage, either directly
or indirectly, as an equity owner or personally as an officer, director,
employee, partner, consultant or agent, in the rendering of any of the same
services as are provided by the Company at the time Employee's employment with
the Company is terminated, or which the Company has targeted to provide in its
written business plan which has been approved by the Board of Directors as of
the time of such termination, in any of the market areas in which the Company
is providing such services at the time of such termination, or in any of the
market areas in which the Company has targeted to provide such services in its
business plan at the time of such termination, provided that Employee may own
up to 2% of the outstanding equity securities of any publicly-traded company
regardless of whether any such company is a competitor of the Company, so long
as Employee's relationship to any such
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company is that of a strictly passive investor.
For two (2) years following termination of employment under
the terms of this Employment Agreement, Employee covenants and agrees with the
Company not to, either directly or indirectly, whether acting on behalf of
himself or a corporation, partnership, joint venture or some other entity:
a. induce or attempt to induce any employee of
the Company to leave the Company's employ, or
in any way interfere with the relationship
between the Company and any employee thereof;
and/or
b. hire directly or through another entity any
person who was an employee of the Company at
any time during the twelve (12) months
preceding Employee's termination.
Employee represents that he has disclosed to the Company in
writing all obligations to third parties which might limit his ability to
perform services under this Employment Agreement.
18. Reimbursement for Attorney's Fees. The Company
agrees to reimburse Employee up to $3,000 for attorneys' fee incurred for
review of this Employment Agreement, within thirty (30) days of the Effective
Date.
19. Non-Assignability. Neither this Employment Agreement
nor any right or interest hereunder shall be assignable or subject to any
encumbrance, pledge, hypothecation, attachment, or anticipation of any kind by
Employee, his spouse or his legal representatives, without the Company's
written consent but shall inure to and be binding upon Employee's estate.
20. Entire Agreement. This Employment Agreement shall be
the entire agreement and understanding of the parties relating to the subject
matter hereof, and any prior negotiations, promises, agreements,
representations, warranties, or understandings relating to the same subject
matter, and except as specifically provided herein, shall be subject to
subsequent modification only by another mutually signed written instrument
which by its terms evidences an intention to modify or amend the provisions
hereof.
21. Choice of Law. This Employment Agreement shall be
construed in accordance with the internal laws of the State of Maryland. For
purposes of this Employment Agreement, the parties consent to jurisdiction in
the State of Maryland.
22. Cost of Enforcement. Each party shall bear its own
costs and attorneys' fees in connection with any suit or proceeding against the
other to enforce any provision of this Employment Agreement or to recover
damages resulting from a breach hereof, however, the
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party which prevails in any such suit or proceeding shall be entitled to
receive from the non-prevailing party the costs and reasonable attorneys' fees
of the prevailing party incurred in such suit or proceeding.
23. Severability. In the event that any provision hereof
is determined to be illegal or unenforceable, such determination shall not
affect the validity or enforceability of the remaining provisions hereof, all
of which shall remain in full force and effect.
24. Counterparts. This Employment Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Employment Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
25. Interpretation. All masculine terms shall include
the feminine counterpart and all singular terms shall include plural and vice
versa, as necessary to interpret and enforce the intent of this Employment
Agreement. All captions are included only for reference and shall not
constitute substantive provisions hereof.
26. Notices. Any notice, request, claim, demand,
document and other communication hereunder to either party shall be effective
upon receipt (or refusal of receipt) and shall be in writing and delivered
personally or sent by telex or telecopy (with such telex or telecopy confirmed
promptly in writing sent by first class mail) or other similar means of
communications, as follows:
(i) If to the Company, addressed to American
Communications Services, Inc.,
000 Xxxxxxxx Xxxxxxxx Xxxxxxx,
Xxxxx 000,
Xxxxxxxxx Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel; or
(ii) If to Employee, addressed to him at:
0000 Xxx Xxxx Xx.
Xx. Xxxxxxx, XX 00000
or, in each case, to such other address or telex or telecopy number as such
party may designate in writing to the other by written notice given in the
manner specified herein.
All such communications shall be deemed to have been given,
delivered or made when so delivered personally or sent by telex or telecopy
(confirmation received), or five business days after being so mailed.
INTENDING TO BE LEGALLY BOUND BY THIS EMPLOYMENT AGREEMENT,
the parties have signed below as of the date first written above.
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EMPLOYEE: AMERICAN COMMUNICATIONS SERVICES, INC.
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Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxxx
Executive Chairman
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