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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
29 day of March, 1997, by and between US Xchange, L.L.C., a Michigan limited
liability company, of 00 Xxxxxx, X.X., Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxx 00000
("Company") and Xxxxx X. Xxxxxx, of 0000 Xxxx Xx., Xxxxx Xxx, Xxxxxxxxx 00000
("Pigeon").
Statement of Facts
Company is a telecommunications corporation engaged in the business of
establishing regional competitive local exchanges. Pigeon has significant
management experience and expertise which can benefit Company. Company wishes to
employ Pigeon and Pigeon wishes to be employed by Company. Therefore, this
Agreement is being entered into by the parties to provide the terms and
conditions under which Pigeon shall be employed by Company.
Agreement
IN CONSIDERATION OF THE FACTS STATED ABOVE AND THE MUTUAL COVENANTS
CONTAINED IN THIS AGREEMENT, THE PARTIES AGREE AS FOLLOWS:
1. Employment. Company hires and employs Pigeon as a key employee
in the operation by Company of its business. Pigeon accepts employment and
agrees to continue to render his expert services to Company during the term of
this Agreement. Pigeon shall have the title Vice President, Product Development-
Midwest Region.
2. Term. The term of this Agreement ("Employment Period") shall be
for a one year period, commencing on April 21, 1997, and ending April 20, 1998;
provided, however, that the term of this Agreement shall automatically renew for
successive one (1) year periods unless terminated by either party providing the
other with written notice of termination at least ninety (90) days prior to the
applicable anniversary of the date of this Agreement.
(a) Termination by Company. Company may terminate this
Agreement at any time.
(b) Termination by Pigeon. Pigeon may terminate this
Agreement prior to the expiration of the Employment Period by providing
Company with one hundred eighty (180) days prior written notice.
3. Compensation.
(a) Salary. For services rendered by Pigeon as an employee
pursuant to the provisions of this Agreement, Company shall pay Pigeon an
annual salary of not
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less than Eighty-five Thousand and 00/100 Dollars ($85,000.00). The annual
salary shall be paid bi-monthly with equal installments of Three Thousand
Five Hundred Forty-one and 67/100 Dollars ($3,541.67) payable on the
fifteenth (15th) and last day of each month during the Employment Period.
There shall be withheld from Pigeon's compensation such amount as Company
is required by law to withhold and such other deductions as Pigeon shall
authorize. Company agrees to conduct annual salary reviews for Pigeon. In
the event of early termination of this Agreement pursuant to Paragraph 2(a)
or 2(b) above, or the death of Pigeon prior to the expiration of the
Employment Period or any extension of this Agreement, Company shall have no
obligation to make further payment of compensation to Pigeon or his estate
under this Paragraph. However, in the event of early termination of this
Agreement, Pigeon shall continue to be subject to the provisions of
Paragraphs 6, 7 and 8 of this Agreement.
(b) Benefits. During the Employment Period, the Company
shall allow Pigeon to participate in the Company's health insurance plan
and pension plan, and receive an automobile allowance and other benefits on
the same basis and eligibility requirements as other similar executives of
Company.
(c) Bonus. During the Employment Period, Pigeon shall be
eligible to receive an annual bonus in such amount as is approved by
Company's management. The yearly bonus will be a maximum of Fifteen
Thousand Dollars ($15,000.00).
(d) Equity Share. Upon the first to occur of: (i) the sale
of Company's Wisconsin Region assets; (ii) the sale of all of Company's
assets or equity interests; (iii) the completion of an initial public
offering of Company's equity interests; or (iv) a merger of Company with
another entity where Company is not the surviving entity, Company agrees
to pay Pigeon a one percent (1%) share (the "Equity Share") of the total
net equity of the Wisconsin Region (after subtracting Company's
capitalization and outstanding debt related to the Wisconsin Region).
Notwithstanding the above, if Pigeon's employment by Company is
terminated for any reason during the initial five (5) year term of this
Agreement, Pigeon shall forfeit twenty percent (20%) of the Equity Share
for each year or partial year less than five (5) that Pigeon is employed
by Company.
4. Post-Sale Covenants. Upon the occurrence of any of the events
as set forth in paragraph 3(d) above collectively referred to as a
Triggering Event, Pigeon agrees to execute an employment agreement and
non-compete agreement with the purchaser for a period of not less than one
(1) year, provided that the salary to be paid Pigeon during such period
shall not be less than Pigeon's annual salary immediately prior to the
sale, and further provided that the employment agreement and non-compete
agreement shall be consistent with the terms and conditions of this
Agreement except for Paragraph 3(d) which shall be omitted.
5. Nature of Employment. Company is employing Pigeon as one of its
key employees. Pigeon will provide management services to Company pursuant to
Company's business requirements. Pigeon shall conscientiously and competently
perform all the duties of any position which he holds, including any additional
duties assigned to him. During the
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Employment Period, Pigeon shall devote his time and efforts as required in the
performance of his duties under this Agreement and shall use his best efforts to
promote the business and interests of Company.
6. Non-Compete Agreement. Pigeon agrees as follows:
(a) That his services and responsibilities are unique in
character and are of particular significance to Company, that
Company is a competitive business and his continued and exclusive
service to the Company under this Agreement is of a high degree of
importance to the Company. Therefore, during the Employment Period and
for a period of one (1) year thereafter (the "Non-Compete Period"),
Pigeon shall not, directly or indirectly, as owner, partner, joint
venturer, employee, broker, agent, corporate officer, principal,
licensor, shareholder (unless as owner of no more than five percent
(5%) of the issued and outstanding capital stock of such entity if such
stock is traded on a major securities exchange) or in any other
capacity whatsoever, engage in or have any connection with any business
which is competitive with the Company, and which operates anywhere in
the Midwest Region as defined by Company. For purposes of this
Agreement, a business will be deemed to be competitive with the Company
if it is engaged in the same business that the Company is engaged in on
the date hereof or on the date of termination.
(b) During the Non-Compete Period, Pigeon shall not:
(i) directly or indirectly, by initiating
contact or otherwise, induce, influence, combine or conspire with,
any of the officers, employees or agents of Company to terminate
their employment or relationship with or to compete against Company;
(ii) directly or indirectly, by initiating
contact or otherwise, divert or attempt to divert any or all of any
customers' or suppliers' business with Company.
(c) This paragraph 6 shall not apply if Pigeon is
terminated by Company without cause.
7. Use of Information Obtained During Employment Period.
Without limiting the general provisions set forth in Paragraph 6, Pigeon shall
not for any reason, except in the ordinary course of business, use or divulge to
any other person or party, except an officer or director of Company, any trade
secrets or private business information of Company, including, without
limitation, the names and/or records of any customer of Company, the names of
any companies which are providing any services to Company, and correspondence or
any other confidential or proprietary information relating to Company's business
which may harm Company in any way.
8. Ownership of Documents, Inventions, Discoveries and
Improvements. All records, files, plans, sketches, notes, notebooks, letters or
the like relating to the business of
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Company, which Pigeon uses, prepares or comes in contact with shall remain the
sole property of Company. Upon termination of employment, Pigeon shall promptly
return all such materials in Pigeon's possession or control to Company. Further,
Pigeon shall promptly inform Company of all inventions, discoveries and
improvements made by Pigeon individually or in conjunction with others during
the course of Pigeon's employment, which relate to Company's business. Pigeon
shall assign to Company all of Pigeon's rights to such inventions, discoveries
and improvements, and Company shall have a royalty-free right to use such
inventions, discoveries and improvements in its business.
9. Equitable Relief. The covenants of Pigeon contained in this
Agreement represent special, unique and extraordinary consideration of an
immeasurable value which cannot be reasonably or adequately compensated by
damages in an action at law, and a breach by Pigeon would cause Company
irreparable injury and damage. Pigeon agrees that Company will be entitled to a
remedy of injunction, specific performance or other equitable relief which will
prevent the breach or breaches of the covenants contained in this Agreement, and
this relief shall not constitute the waiver of any rights which Company may have
for other damages.
10. Legal Expenses. In the event suit shall be brought by a
party due to the breach of any term or condition of this Agreement, all expense
incurred in connection with such suit (including attorney's fees) shall be
awarded to the prevailing party in such suit.
11. Anticipation of Compensation. Pigeon shall have no power to
transfer, assign, anticipate or otherwise encumber any payment required to be
made under this Agreement, nor will any such payment be subject to seizure for
the payment of any debt or judgment or be transferable by operation of law in
the event of bankruptcy, insolvency or otherwise.
12. Assignment. This Agreement shall not be assignable by
Pigeon without the written consent of Company. This Agreement shall be freely
assignable by Company.
13. Miscellaneous. No waiver by either party of any breach of this
Agreement will be deemed a waiver of any preceding or succeeding breach of the
same or any other provision hereof. Each and all of the several rights,
remedies and options of either party under this Agreement will be construed as
cumulative and no one of them is exclusive of the other or of any right, remedy
or priority allowed by law or in equity.
14. Governing Law. This Agreement will be governed by and
construed under and in accordance with the laws of the State of Michigan.
15. Headings. Paragraph headings contained in this Agreement are
for convenience only and will not be considered for any purpose in
construing this Agreement.
16. Notices. All notices and other communications provided for
in this Agreement shall be in writing and shall be deemed to have been given
when delivered in person to the recipient or 48 hours after depositing the same
in the United States Mail, by certified mail, postage prepaid, addressed to the
party at its address set forth above.
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17. Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of, and shall be
enforceable by the respective heirs, beneficiaries, personal representative,
successors and assigns of the parties to this Agreement.
18. Third Parties. This Agreement is for the benefit of the
parties, their successors and assigns, and is not for the benefit of any third
party.
19. Entire Agreement. This Agreement cancels and supersedes all
prior negotiations and understandings between the parties relating to its
subject matter, and contains all of the terms, conditions and promises of the
parties in connection with Pigeon's employment by Company; no modification or
waiver of any of the provisions of this Agreement will be valid and binding
unless in writing.
20. Severability. The unenforceability of any provision of this
Agreement shall not affect the enforceability of the remaining provisions of
this Agreement.
WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE
DATE FIRST WRITTEN ABOVE.
US XCHANGE, L.L.C.
By /s/ Xxxxxxx Xxxxxx
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Its CEO
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/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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