EXHIBIT 10-4
NON-COMPETITION AGREEMENT
AGREEMENT made by and between ACC CORP., 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 and XXXXXXX X. AAB, residing at 00 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX
00000 ("Employee").
R E C I T A L S:
WHEREAS, Employee has served as the Chairman and Chief Executive Officer
of ACC Corp. (the "Company") for more than twelve years; and
WHEREAS, Employee is stepping down as ACC Corp.'s Chief Executive
Officer, but plans to remain as its Chairman of the Board and as an employee of
the Company, with the concurrence of the ACC Corp. Board of Directors; and
WHEREAS, the Company wishes to strengthen the terms of Employee's
existing Covenant Not To Compete under his current Severance Agreement dated as
of February 8, 1994, and Employee is willing to agree to such additional
restrictions in consideration for the terms contained hereinafter in this
Agreement; and
WHEREAS, the parties desire to supersede the terms of their existing
Covenant Not To Compete through their execution of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
in this Agreement:
(a) "ACQUIRING ENTITY" shall mean any entity, whether a corporation,
partnership, joint venture, etc., that, as a result of a Change In Control,
either directly or indirectly has effective control over the business plans,
direction and operations of ACC Corp. This term shall also include any
subsidiaries or related entities over which the Acquiring Entity has control.
(b) "CHANGE IN CONTROL" shall mean a change in control of ACC Corp. of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 as in effect on the date of this Agreement or, if in the future Item 6(e)
is no longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 which serve similar
purposes; provided that, without limitation, a Change In Control shall be
deemed to have occurred if and when: (x) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than
the Employee, is or becomes a beneficial owner, directly or indirectly, of
securities of ACC Corp. representing a majority of the combined voting power of
ACC Corp.'s then outstanding securities (excluding, however, the transfer of
any shares beneficially owned by the Employee); or (y) individuals who were
members of the Board of Directors of ACC Corp. immediately prior to a meeting
of the shareholders of ACC Corp. involving a contest for the election of
Directors shall not constitute a majority of the Board of Directors following
such election.
(c) "COMPANY" shall mean ACC Corp. and/or any of its subsidiaries
and/or affiliates as the same may exist from time to time anywhere in the
world, regardless of the laws under which incorporated.
(d) "EVENT OF TERMINATION" shall mean the termination of the Employee's
employment and his status as the Chairman of the Board of ACC Corp., whether
due to a Termination For Cause, a Termination Without Cause, a Change In
Control or a Voluntary Termination of Employment by the Employee, such that the
Employee is no longer employed by the Company nor serving as its Chairman of
the Board.
(e) "TERMINATION OF EMPLOYEE'S EMPLOYMENT IN THE EVENT OF A CHANGE IN
CONTROL" shall mean that if, as a condition precedent to, as a result of, or
within one year following, a Change In Control of ACC Corp. (i) the Employee's
employment with the Company is terminated for cause or without cause by the
Company or the Acquiring Entity, or (ii) the Employee resigns his employment
with the Company or with the Acquiring Entity upon the occurrence of either of
the following events:
(1) A reduction in Employee's total compensation as the same
existed immediately prior to the Change In Control; or
(2) Employee is no longer serving as the Chairman of the ACC
Corp. Board of Directors.
(f) "TERMINATION FOR CAUSE" shall mean that the Company, in its sole
discretion, terminates the Employee's employment for any of the following
reasons: Employee fails to perform his assigned duties as an officer and/or
employee of the Company in a satisfactory manner due to dishonesty, fraud,
gross neglect, or use of alcohol or drugs; or any breach the terms of this
Agreement. Employee shall not be deemed to be in breach of this Agreement nor
to have been Terminated For Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
a three-fourths majority of the entire Board of Directors at a Board meeting
duly called and held for that purpose (after reasonable notice to Employee and
an opportunity for Employee, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Employee was
guilty of conduct set forth in this paragraph 1(f) and specifying the
particulars thereof in reasonable detail.
(g) "TERMINATION WITHOUT CAUSE" shall mean that the Company, in its
sole discretion, terminates the Employee's employment not for any reason that
would constitute a Termination For Cause, nor as a result of any Change In
Control, nor as a result of the Employee's Voluntary Termination of Employment
with the Company.
(h) "VOLUNTARY TERMINATION OF EMPLOYMENT BY THE EMPLOYEE" shall mean
that the Employee, at his volition, leaves his employment with the Company not
under a circumstance involving a Termination Without Cause, a Termination For
Cause, nor a Termination of Employee's Employment in the Event of a Change In
Control.
2. COVENANT NOT TO COMPETE. Employee hereby covenants and agrees
that, while employed by the Company during the term of this Agreement and for
three years following the occurrence of ANY Event of Termination hereunder:
(a) He will not, for himself or on behalf of any other person, firm,
partnership or corporation call upon any customer of the Company for the
purpose of soliciting or providing to such customer any products or services
which are the same as or substantially similar to those provided to customers
by the Company. For purposes of this Agreement, "Customers of the Company"
shall include, but not be limited to, all customers contacted or solicited by
the Company or the Employee prior to the occurrence of any Event of
Termination;
(b) Employee will not, directly or through another person or entity,
for himself or on behalf of any other person, firm, partnership or corporation,
directly or indirectly, seek to persuade any director, officer, or employee of
the Company to discontinue that individual's status or employment with the
Company; and
(c) Employee will not, directly or indirectly, alone or as an employee,
independent contractor of any type, partner, officer, director, creditor,
substantial (i.e., 5% or greater) stockholder or holder of any option or right
to become a substantial stockholder in any entity or organization, engage in
Company Business; nor for the same period of time shall the Employee advance
credit, lend money, or give advice, directly or indirectly, to any person,
corporation or business entity of any kind (other than the Company) with
respect to Company Business or for the purpose of assisting such person,
corporation or business entity to compete with the Company with respect to
Company Business; provided, however, that nothing contained in this paragraph
shall prevent or inhibit Employee from investing in corporate securities of
companies that are competitors of the Company that are traded on a national
securities exchange or other recognized stock market (subject to a 5% ceiling
on any such investment as referenced in the first sentence of this
subparagraph). For purposes of this Agreement, "Company Business" shall mean
the business of the transport or resale of local, intrastate, interstate and
international TELECOMMUNICATION SERVICES in, and only in, the following market
segments: VOICE SERVICES, PACKET-SWITCHED DATA TRANSMISSION SERVICES
(including frame relay services), TELEX SERVICES, TELEGRAPH SERVICES, and
FACSIMILE SERVICES in or between the geographic areas of New York,
Massachusetts, Canada, the United Kingdom and any other state or territory of
the United States or any other country in which the Company has generated $1
million or more in gross originating traffic revenues during the fiscal year
immediately preceding an Event of Termination. The underlined terms in this
paragraph shall have the same definition as that attributed to them by the
United States trade representatives in the "U.S. Offer and Basic
Telecommunications Services" dated July 31, 1995, prepared in connection with
the GATS negotiations, attached as Exhibit A hereto. The Employee further
agrees that during the term of this covenant not to compete, he will not make
any offers to acquire any corporation or other entity which the Company is
attempting to acquire.
(d) If any of the restrictions on competitive activities contained in
this Paragraph 2 shall for any reason be held by a court of competent
jurisdiction to be excessively broad as to duration, geographical scope,
activity or subject, such restrictions shall be construed so as to thereafter
be limited or reduced to be enforceable to the extent compatible with
applicable law as it shall then exist; it being understood that by the
execution of this Agreement the parties hereto regard such restrictions as
reasonable and compatible with their respective rights and expectations.
(e) Additionally, if any conduct which would otherwise be prohibited by
this Paragraph 2 is approved by ACC Corp.'s Board of Directors, then such
conduct shall not constitute a breach of this Agreement.
(f) Nothing contained in this Agreement or in a certain Salary
Continuation and Deferred Compensation Agreement between the Employee and the
Company of even date herewith shall prohibit Employee from participating, alone
or as an employee, independent contractor, partner, officer, director,
creditor, or substantial (I.E. greater than 5%) owner (by reason of stock
ownership or otherwise) in any entity whose business is the design, development
and/or market distribution of computer systems software and/or applications
software useful to any industry, including the telecommunications industry.
3. CONSIDERATION FOR COVENANT NOT TO XXXXXXX.Xx consideration for the
terms of the Covenant Not To Compete contained in this Agreement, upon the
execution of this Agreement, the Company shall pay to Employee the sum of
$750,000, by certified or cashier's check payable to the order of Employee or
by wire transfer of funds in accordance with instructions given by Employee.
4. INJUNCTIVE RELIEF. Because the Employee currently possesses and
shall acquire by reason of his continued employment and association with the
Company an extensive knowledge of the Company's trade secrets, customers,
procedures, and other confidential information, the parties hereto recognize
that in the event of a breach or threat of breach by the Employee of the terms
and provisions contained in this Agreement, compensation alone to the Company
would not be a adequate remedy for a breach of the terms and provisions hereof.
Therefore, it is agreed that in the event of a breach or threat of a breach of
any of the provisions of this Agreement by the Employee, the Company shall be
entitled to an immediate injunction from any court of competent jurisdiction
restraining the Employee from committing or continuing to commit a breach of
such provisions without the showing or proving of actual damages.
5. SUPERSEDING OF OUTSTANDING NON-COMPETITION AGREEMENT. Upon its
execution, this Agreement shall automatically supersede and terminate the terms
of the current Covenant Not To Compete between the parties hereto, dated as of
February 8, 1994, and each party hereto hereby waives and releases any claims
it may have against the other arising under that Agreement.
6. GENERAL TERMS.
(a) NOTICES. Any notice required or desired to be given hereunder
shall be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal
Service as certified mail, return receipt requested and postage prepaid, or
(iii) on the first day following delivery to a recognized overnight courier
service, fee prepaid, return receipt or other confirmation of delivery
requested. Any such notice shall be delivered or directed to a party at its
address previously set forth in this Agreement or to such other address as a
party may specify by notice given to the other party hereto in accordance with
the provisions of this paragraph.
(b) BENEFIT. This Agreement and the rights and obligations contained
herein shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and upon the Employee, his legal representatives, heirs
and distributees.
(c) WAIVER. The waiver of any party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach.
(d) ENTIRE AGREEMENT. This Agreement may not be altered, amended or
terminated except by an instrument in writing signed by the parties hereto.
(e) PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(f) APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within New York State, without giving effect to
conflict of laws principles.
(g) HEADINGS. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each one of which will be deemed an original and all of which
shall constitute one and the same instrument.
(i) ASSIGNMENT. The Employee may not assign any of his rights, duties
or obligations hereunder without the prior written consent of ACC Corp.
Likewise, ACC Corp. may not assign any of its rights, duties or obligations
hereunder without the prior written consent of the Employee except in the event
of a merger or other acquisition of ACC Corp. in which ACC Corp. is not the
surviving entity or the purchase of all or substantially all its assets,
provided that such merger, acquisition or purchase is for a valid business
purpose not involving this Agreement.
(j) REMEDIES. All rights and remedies of the Company, whether provided
for herein or by operation of law, are cumulative and may be exercised
singularly or concurrently, and the exercise of any such remedy shall not be
deemed an election of remedies so as to preclude the election of any other
remedy.
(k) JURISDICTION AND VENUE. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, the parties hereto specifically consent and agree that the courts of
the State of New York and/or the Federal Courts located in the State of New
York shall have jurisdiction over each of the parties hereto and over the
subject matter of any such proceedings, and the venue of any such action shall
be in Monroe County, New York and/or the U.S. District Court for the Western
District of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of October 6, 1995.
EMPLOYEE: ACC CORP.
/s/ Xxxxxxx X. Aab By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Aab
Title: EVP & CFO
Note: The Registrant agrees to furnish supplementally to the Commission a copy
of any omitted schedule or exhibit to this Agreement upon request.
