EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
December ____, 1997 by and between Xxxx X. Xxxxx (the "Employee") and Xxxxx
Long Distance Service, Inc., a Kansas corporation (the "Company") (collectively
referred to as the "Parties") for the benefit of the Parties, 1+ USA V
Acquisition Corp., a Delaware corporation ("Acquisition Subsidiary"), Advanced
Communications Corp. ("Corp.") and Advanced Communications Group, Inc.
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger, as amended by
Amendment No. 1 thereto (as amended, the "Original Merger Agreement"),
Acquisition Subsidiary and Employee entered into an Employment Agreement dated
June 12, 1997 (the "Original Employment Agreement") which contemplated a merger
(the "Merger") between Xxxxx Long Distance Service, Inc. and the Acquisition
Subsidiary, which is a wholly owned subsidiary of Advanced Communications Corp.
(formerly named Advanced Communications Group, Inc.);
WHEREAS, the parties amended and restated the Original Merger
Agreement pursuant to an Agreement and Plan of Exchange dated as of October 6,
1997 by and among Advanced Communications Group, Inc., Advanced Communications
Corp., Acquisition Subsidiary, Xxxxx, Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx and
certain other stockholders of Xxxxx (the
"Restated Acquisition Agreement");
WHEREAS, the Restated Acquisition Agreement superseded all provisions
relating to the Merger and now provides for the acquisition of all of the
issued and outstanding shares of Xxxxx by a subsidiary of Advanced
Communications Corp. named Advanced Communications Group, Inc.;
WHEREAS, the parties wish to terminate the Original Employment
Agreement and replace it with the terms and provisions of this Agreement
effective upon the initial public offering of the common stock of Advanced
Communications Group, Inc.;
WHEREAS, all defined terms used herein that are not otherwise defined
herein shall have the meanings assigned them in the Restated Acquisition
Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by both parties, Company and Employee
agree as follows:
1. Termination of Employment.
1.1 The Original Employment Agreement and Employee's employment
pursuant thereto are hereby terminated, without any further
action by any of the parties, effective upon the consummation
of the initial public offering of common stock, $.0001 par
value, of Advanced Communications Group, Inc. (the
"Offering"). The parties acknowledge that Employee shall not
be entitled to any compensation or benefits whatsoever as a
result of his termination other than payment of his salary of
$1,000 per month accrued through the date of termination.
Accordingly, the parties agree that upon such termination,
Employee shall be deemed to have released and waived all his
claims, contingent or matured, known or unknown against
Acquisition Subsidiary or Corp. under the Original Employment
Agreement, except for any claims for unpaid salary accrued
prior to the termination of the Original Employment Agreement
and his employment.
1.2 In consideration of the mutual covenants and agreements
contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are
acknowledged by Employee and the Company, and effective upon
the Offering, the Company employs Employee, and Employee
accepts employment subject to the terms and conditions of
this Agreement. Unless the context otherwise clearly
requires, all references to ACG in this Agreement shall
include Advanced Communications Group, Inc., ACG Corp.,
Acquisition Subsidiary, and ACG's subsidiaries from time to
time, including Xxxxx.
2. Term.
This following provisions of this Agreement shall commence and become effective
on the Closing Date and shall end on the fifth anniversary thereof. Such term
of employment may be renewed for successive periods of one year thereafter upon
the mutual agreement of the Parties.
3. Compensation and other Benefits.
3.1 As compensation for his services to the Company under this
Agreement, the Company shall pay to Employee during the term
of this Agreement a base salary ("Base Salary") of not less
than $110,000 per annum, payable in equal semi-monthly
installments, subject only to such payroll and withholding
deductions as may be required by law and other deductions
applied generally to employees of ACG for any employee
benefit plans.
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3.2 After the first twelve consecutive months of employment after
the Closing Date, and after every consecutive twelve-month
period thereafter, Employee shall be eligible to receive a
potential cash bonus up to 63% of Employee's Base Salary
("Bonus") to be based upon his performance as determined by
the Compensation Committee of the Board of Directors
("Compensation Committee") of ACG. The standards required to
be met by Employee to qualify for the cash bonus potential
will be communicated to Employee prior to the commencement of
such twelve-month period, beginning in 1998. Employee agrees
that the decision as to whether to award a Bonus and the
percentage amount thereof will be made by the Compensation
Committee and will be based upon the criteria set by such
committee.
3.3 Employee will be entitled to two weeks of paid vacation
annually during the term of this Agreement.
3.4 Pursuant to the Original Agreement, Employee was awarded
250,000 options to acquire common stock in ACG Corp. for a
price of $2.50 per share. These options are hereby canceled
and surrendered. In substitution therefor, the Acquisition
Subsidiary and Corp. will cause Advanced Communications
Group, Inc. to award Employee 250,000 options to acquire
Advanced Communications Group, Inc. common stock, par value
$.0001, having a term of ten years, and exercisable in
one-third increments according to the following schedule: (i)
1/3 shall vest as of July 22, 1998; (ii) the next 1/3 shall
vest on July 22, 1999; and (iii) the final 1/3 shall vest on
July 22, 2000. Accordingly, the options shall become fully
vested three years from July 22, 1997; provided, however,
that the vesting of such options will be accelerated in the
event of the termination of Employee's employment hereunder
pursuant to Section 6.1(d), and in the event of any other
termination no options shall vest after the date of
termination. The options shall, except as provided herein, be
granted pursuant to ACG's 1997 Stock Awards Plan, which is
substantively identical to the copy of Corp's 1997 Stock
Awards Plan heretofore delivered to Employee.
3.5 Employee shall receive benefits commensurate with his level
of employment under any health plan of ACG.
3.6 If ACG completes an initial underwritten public offering of
ACG common stock, par value $.0001 per share (the "IPO")
prior to January 31, 1998, the Company shall pay the Employee
a one-time bonus of $50,000 within two weeks after the
closing of the IPO.
4. Duties and Extent of Service.
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Employee shall hold the office of President of the Company. In addition,
Employee shall serve Advanced Communications Group, Inc. at no additional
compensation as its Vice President -- Kansas/Telecommunication Services Group.
Employee agrees to perform the duties incidental to his positions, as
determined from time to time by the Chief Executive Officer of Advanced
Communications Group, Inc. Employee shall devote such time, attention, and
energy to the business of ACG as are required to perform his duties and
responsibilities hereunder and shall not after the Closing Date and during the
remaining term of this Agreement be engaged, directly or indirectly, in any
other business activity if pursued for gain, profit, or other pecuniary
advantage without the prior written consent of the Chief Executive Officer of
Advanced Communications Group, Inc.; provided, however, that Employee shall be
permitted to continue to serve as a member of the Board of Directors of Xxxxx
Publications, Inc. and receive compensation for serving in such capacity. In
any event, after the Closing Date, Employee shall not take any action
inconsistent with Employee's relationship and responsibilities as an employee
of the Company and ACG or take any action which is intended, or may be
reasonably expected, to harm the reputation, business, prospects, or operations
of ACG.
5. Protection of Confidential Information and Employee Non-Competition.
5.1 Employee recognizes and acknowledges that he will have access
to certain confidential information and trade secrets of ACG
("Confidential Information"). Such Confidential Information
includes, but is not limited to: customer names; contracts;
products purchased by customers; production capabilities and
processes; customer account and credit data; referral
sources; computer programs and software; names and
information relating to potential acquisition candidates;
financing sources and other business relationships;
information relating to confidential or secret designs,
processes, formulae, plans, devices, or materials of ACG's
business and marketing plans, confidential information and
trade secrets relating to the distribution and marketing of
ACG's products and services; patents pending; confidential
characteristics of ACG's products and services; customer
comments; troubleshooting requirements; product and service
development; market development; manuals written by ACG;
management, accounting, and reporting systems, procedures,
and programs; off net contracts, leases, marketing
agreements, sales employee compensation information, plans,
and programs; marketing and financial analysis, plans,
research, programs, and related information and data; forms,
agreements, and legal documents; regulatory and supervisory
reports; correspondence; statements; corporate books and
records; and other similar information.
5.2 Employee acknowledges and agrees that this Confidential
Information constitutes valuable, special, and unique
property of ACG.
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5.3 Employee will not, at any time during or after the term of
this Agreement or his employment with ACG, disclose any
Confidential Information to any person, firm, corporation,
association, or other entity for any reason or purpose.
5.4 The foregoing restrictions shall not apply to: (a) any
information in Employee's possession before its disclosure to
Employee by ACG or the Company or (b) information that is or
shall lawfully be published or become part of the general
knowledge through no act or omission of Employee. The
Confidential Information disclosed to Employee under this
Agreement is not within the foregoing exceptions merely
because such information is embraced by more general
information in the public domain or in Employee's possession
or merely because portions thereof are in the public domain
or in Employee's possession.
5.5 To protect the confidentiality of the Confidential
Information, Employee further agrees that while employed by
ACG and for a period of three years immediately after the
termination of this Agreement or his employment with ACG,
regardless of whether such termination of employment is
voluntary or involuntary, he will not, for himself, or on
behalf of any other person, firm, partnership, company, or
corporation (i) generally compete in any manner whatsoever
with ACG or solicit, accept, divert, or take away from ACG
the business of any person, company, or business; (ii)
directly or indirectly induce or attempt to influence any
employee, officer, director, consultant, agent, vendor or
other entity related to ACG to terminate his or her
employment or association in any manner whatsoever with ACG;
or (iii) engage in any commercial or technical activity
involving the development, formulation, manufacture,
production, distribution, marketing or sale of any product
and services that ACG designs, produces, manufactures,
distributes, markets or sells during the term of this
Agreement or Employee's employment with ACG. The prescribed
territory in which Employee shall not compete with ACG as
outlined in this Paragraph 5.5 shall consist of all of those
areas of the United States in which ACG is doing business at
the time of Employee's termination of employment.
Notwithstanding anything to the contrary in this Paragraph
5.5, the provisions of this Paragraph 5.5 shall not apply to
Employee (a) until the Closing Date and (b) if the Company
declines to renew this Agreement upon the expiration of its
stated term. The obligations of Employee pursuant to this
Agreement are additional to the obligations described in
Sections 12 and 13 of the Restated Acquisition Agreement.
5.6 Employee understands and acknowledges that, due to the unique
nature of the products and services provided by ACG and the
need for sales personnel to
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have a relatively high degree of technical knowledge
concerning these products and services, employment by ACG,
including the special training, knowledge, and confidential
information that will be acquired in the course of such
employment, will give Employee distinct and substantial
advantages for potential sales activities concerning such
products and services. Employee further understands and
acknowledges that: because of the definition of products and
services covered by this Agreement, the highly specialized
nature of those products and services, the limited size and
number of business entities in the business of developing
and/or selling those products and services, and the much more
numerous opportunities for Employee to work in his trade with
respect to products and services not covered by this
Agreement, the limitations as to time and geographic area
contained in Paragraph 5.5 are reasonable and are not unduly
onerous on Employee. Employee therefore agrees that the
limitations as to time, geographic area, and scope of
activity contained in Paragraph 5.5 do not impose a greater
restraint than is necessary to protect the Confidential
Information, goodwill, and other business interests of ACG.
Employee also agrees that in light of the facts acknowledged
above, the substantial investment of ACG in developing its
business and providing special training to Employee, and the
certain and substantial harm that ACG would suffer if
Employee were to engage in any of the activities described in
Paragraph 5.5, ACG's need for the protection afforded by
Paragraph 5.5 is greater than any hardship Employee might
experience by complying with its terms. Employee also agrees
that, if any provision of the covenant set forth in Paragraph
5.5 is found to be invalid in part or whole, ACG may elect,
but shall not be required, to have such provision reformed,
whether as to time, geographic area, scope of activity, or
otherwise, as and to the extent required for its validity
under applicable law, and, as so reformed, such provisions
shall be enforceable.
5.7 Employee acknowledges that a violation or attempted violation
on his part of any provision in this Paragraph 5 may cause
irreparable damage to ACG. Accordingly, in the event of a
breach or threatened breach by Employee of the provisions of
this Paragraph 5, Employee agrees that ACG shall be entitled
as a matter of right to an injunction, out of any court of
competent jurisdiction, restraining any violation or further
violation of such agreements by Employee or his agents,
without showing any evidence of actual monetary loss
resulting from such breach, including, but not limited to,
restraining Employee from using or disclosing, in whole or in
part, such Confidential Information or trade secrets;
rendering any services to any person, firm, corporation, or
other entity to whom any of such information may have been
disclosed or is threatened to be disclosed; and/or violating
the non-
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competition provision. Nothing herein shall be construed as
prohibiting ACG from pursuing any other remedies available to
it for such breach or threatened breach, including the
recovery of damages and attorneys' fees from Employee.
6. Termination of Employment.
6.1 Employee's employment under this Agreement shall terminate on
the occurrence of any of the following events:
(a) End of Term: If the term of employment under the
Agreement or any term of renewal ends.
(b) Death or Disability of Employee: If Employee dies or
becomes disabled such that he no longer is
reasonably able to perform his duties as
contemplated by this Agreement, the Company shall
pay to Employee, or to the estate of Employee if he
dies, that part of his Base Salary which would
otherwise be payable to Employee through the end of
the month in which his death or disability occurs,
after giving effect to accrued sick leave benefits
and accrued vacation time, if any. Upon such
payment, as well as applicable insurance benefits,
if any, all obligations of ACG to the Employee or
his estate shall be fully satisfied, and this
Agreement shall terminate.
(c) Resignation of Employee: If Employee resigns prior
to the end of the term of this Agreement, this
Agreement shall terminate immediately, and the
Company shall pay to Employee that part of his Base
Salary which would otherwise be payable to Employee
through the effective date of his resignation. Upon
such payment, all obligations in any manner
whatsoever of ACG to Employee shall be fully
satisfied.
(d) Change in Ownership, Management, or Employee's
Responsibilities: If there is a change in the
ownership or management of ACG after the Closing
Date, and either of these changes significantly
alters Employee's job responsibilities or
compensation, Employee may resign from his positions
within 60 days of such a change. If Employee resigns
pursuant to this paragraph, the Company will
continue to provide Employee with his monthly
compensation for a period of one year after the
initial date of any such change. Employee is not
entitled to receive any Bonus if he resigns as
provided in this paragraph. For the period after
Employee's resignation during which Employee will be
paid, Employee will not have any authority to act on
behalf of the Company.
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(e) Termination by the Company "With Cause" If Employee
(i) violates any provision of this Agreement; (ii)
fails to perform the services required of him
pursuant to this Agreement; (iii) commits acts of
fraud or dishonesty against ACG; (iv) is convicted
of a crime other than a routine traffic violation;
and/or (v) violates any policies of ACG as outlined
in any ACG policy handbook, ACG may terminate the
employment of Employee with cause. If Employee is
terminated "with cause," Employee shall not be
entitled to receive any further salary or benefits
under this Agreement other than payment for that
part of Employee's compensation that would otherwise
be payable to Employee through the last date of his
employment with ACG. Upon such payment, all
obligations of ACG to Employee shall be fully
satisfied, and this Agreement will terminate.
Employee shall not be entitled to receive any Bonus
or accrued vacation pay if his termination is "with
cause."
(f) Termination by the Company Without Cause. In the
event the Company terminates Employee's employment
for any reason other than described in (e) above,
Employee shall be entitled to that part of the Base
Salary payable to Employee through the last date of
his employment and such compensation shall continue
thereafter for a period of six (6) months from
termination.
6.2 Termination of this Agreement shall not relieve Employee of
any continuing obligations expressly provided in this
Agreement, including, without limitation, those set forth in
Paragraphs 5.1 through 5.6.
7. Return of ACG Property.
7.1 All data, drawings, documents, contracts, computerized data,
information printouts, and tapes, tape recordings, documents,
data, accounting records, personnel files, computer
terminals, equipment, and other records and written material
prepared or compiled by Employee or furnished to Employee
while in the employ of ACG shall be the sole and exclusive
property of ACG, and none of such data, drawings or other
records and written material, or copies thereof, shall be
retained by Employee upon termination of his employment. This
ACG property shall not be removed from ACG premises without
ACG's prior written consent.
7.2 Upon termination of this Agreement or whenever requested by
ACG, Employee immediately shall deliver to ACG all of the ACG
property or any of ACG's documents in Employee's possession
or under Employee's control,
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including, but not limited to, all documents or data,
Confidential Information, accounting records, computer
terminals, data, discs, printouts and tapes, accounting
machines, and all office furniture and fixtures, supplies,
equipment, and other personal property placed in the office
of ACG. No copies of any such data shall be retained by
Employee.
8. Notices.
Any notice required or permitted to be given under this Agreement shall be in
writing and addressed to Employee at 10201 Peppertree, Xxxxxxx, Xxxxxx 00000,
and to the Company, c/o Xxx X. Xxxxxxxxx, 0000 Xxxx Xxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, or to such other address as either party shall designate
by written notice to the other. Notices may be sent by messenger or by
registered or certified mail, postage prepaid, addressed to the party or
parties to be notified, with return receipt requested. Notices sent by
messenger shall be deemed received upon their actual receipt of the party to
whom they are directed. Notices sent by registered or certified mail shall be
deemed received on the third day following their deposit with the United States
Postal Service.
9. Arbitration.
Exclusive jurisdiction with respect to any dispute, controversy, or claim
brought by ACG or Employee concerning the subject matter contained in this
Agreement, including, but not limited to, Employee's employment, termination
from, and/or affiliation with ACG, shall be settled by arbitration in Houston,
Texas, in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. In reaching his or
her decision, the arbitrator shall have no authority to change or modify any
provision of this Agreement. Any and all charges that may be made for the cost
of the arbitration and the fees and expenses of the arbitrator shall be borne
equally by the parties; attorneys' fees and witness expenses shall be borne by
the party incurring them.
10. Miscellaneous.
10.1 The rights and obligations of ACG under this Agreement shall
inure to the benefit of and shall be binding upon the
successors and assigns of ACG. This Agreement shall be
binding upon the Employee and his agents, heirs, executors,
administrators and legal representatives. The rights and
obligations of Employee hereunder shall not be assignable by
Employee.
10.2 This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
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10.3 This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original and all of which shall
constitute one instrument.
10.4 This Agreement contains the entire agreement of the parties
pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and
discussions, whether oral or written, and there are no other
warranties, representations, covenants or agreements among
ACG, the Employee and Xxx X. Xxxxxxxxx in connection with the
subject matter hereof.
10.5 The waiver by ACG of a breach of any provision of this
Agreement by Employee shall not operate or be construed as a
waiver by ACG of any subsequent breach by Employee.
10.6 If a court of competent jurisdiction shall adjudge to be
invalid any clause, sentence, subparagraph, paragraph or
section of this Agreement, such judgment or decree shall not
affect, impair, invalidate, or nullify the remainder of this
Agreement, but the effect thereof shall be confined to the
clause, sentence, subparagraph, paragraph, or section so
adjudged to be invalid.
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The Parties have executed this Agreement to be effective as of the day
and year first above written.
XXXXX LONG DISTANCE SERVICE, INC.
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By: Xxxx X. Xxxxx Xxxx X. Xxxxx
Its: President
"COMPANY" "EMPLOYEE"
The following corporations execute this Agreement to evidence their awareness
of and consent to its terms:
ADVANCED COMMUNICATIONS GROUP, INC.
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Name: Xxx X. Xxxxxxxxx
Title: Chairman
ADVANCED COMMUNICATIONS CORP.
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Name: Xxx X. Xxxxxxxxx
Title: Chairman
1+ USA ACQUISITION V CORP.
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Name: Xxx X. Xxxxxxxxx
Title: Chairman
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