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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as
of the 27th day of February, 1997, by and between US Xchange, L.L.C., a Michigan
limited liability company, of 20 Monroe, N.W., Suite 450, Grand Rapids, Michigan
49503 ("Company") and Daniel Fabry, of 808 Spooner Court, DePere, Wisconsin
54115 ("Fabry").
Statement of Facts
Company is a telecommunications corporation engaged in the
business of establishing regional competitive local exchanges. Fabry has
significant marketing experience and expertise which can benefit Company.
Company wishes to employ Fabry and Fabry wishes to be employed by Company.
Therefore, this Agreement is being entered into by the parties to provide the
terms and conditions under which Fabry 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 Fabry as a key
employee in the operation by Company of its business. Fabry accepts employment
and agrees to continue to render his expert services to Company during the term
of this Agreement. Fabry shall have the title Vice-President of Marketing.
2. Term. The term of this Agreement ("Employment
Period") shall be for a period of five (5) years, commencing on
March 31, 1997, and ending March 31, 2002; 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 Fabry. Fabry 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 Fabry as an
employee pursuant to the provisions of this Agreement, Company shall
pay Fabry an annual salary of not less
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than One Hundred Twenty Thousand and 00/100 Dollars ($120,000.00). The
annual salary shall be paid bi-monthly with equal installments of Five
Thousand Dollars ($5,000.00) payable on the fifteenth (15th) and last
day of each month during the Employment Period. There shall be withheld
from Fabry's compensation such amount as Company is required by law to
withhold and such other deductions as Fabry shall authorize. Except as
provided in Paragraph 3(d) below, in the event of early termination of
this Agreement pursuant to Paragraph 2(a) or 2(b) above, or the death
of Fabry 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 Fabry or his estate under this
Paragraph. However, in the event of early termination of this Agreement
by Fabry or due to any event described in Paragraph 3(d)(i), 3(d)(ii)
or 3(d)(iii) below, Fabry 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 Fabry 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, Fabry shall
be eligible to receive an annual bonus in such amount as is approved by
Company's management. It is anticipated that the yearly bonus will be a
minimum of Twenty Thousand and 00/100 Dollars ($20,000.00).
(d) Salary Guarantee. Notwithstanding Paragraph 3(a),
above, in the event Company terminates this Agreement for any reason
other than just cause, Company shall continue to pay Fabry's salary and
provide Fabry's benefits for a period of one (1) year following the
date of termination. Just cause for the purposes of this Agreement
shall be defined as any of the following (i) failure of Fabry to
perform competently any duty assigned to him which nonperformance
rises, to the level of the industry standard for just cause
termination, (ii) failure of Fabry to perform any provision under this
Agreement, or (iii) Fabry's dishonesty or fraud. Company may not
terminate this Agreement for just cause under Paragraph 3(d)(i) or
3(d)(ii) without having provided Fabry with written notice of such
cause and a period of sixty (60) days to take corrective action. This
salary guarantee shall also be personally guaranteed by Ronald Vander
Pol.
(e) Equity Guarantee. 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 (individually, a "Triggering Event"), Company agrees to pay
Fabry the first $500,000.00 of net equity of the Wisconsin Region
(after subtracting Company's capitalization and outstanding debt
related to the Wisconsin Region) ("Equity Guarantee"). Company also
agrees to pay Fabry a 2% share (the "Equity share") of the total net
equity (as defined above) following the occurrence of a Triggering
Event, it being the parties' intent that the $500,000.00 payment
described above be included in
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calculating the 2% share. Notwithstanding the above, if Fabry's
employment by Company is terminated for any reason during the initial
five (5) year term of this Agreement, Fabry shall forfeit twenty
percent (20%) of the Equity Guarantee and twenty percent (20%) of the
Equity Share for each year or partial year less than five (5) that
Fabry is employed by Company.
4. Post-Sale Covenants. Upon the occurrence of a Triggering
Event, Fabry 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 Fabry during such period shall not be less than Fabry'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(e) which shall be omitted.
5. Nature of Employment. Company is employing Fabry as one of
its key employees. Fabry will provide marketing management services to Company
pursuant to Company's business requirements. Fabry shall conscientiously and
competently perform all the duties of any position which he holds, including any
additional duties assigned to him. During the Employment Period, Fabry 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. Following termination of this
Agreement by expiration of the Employment Period, or in the event of termination
by Fabry or due to any event described in Paragraph 3(d)(i), 3(d)(ii) or
3(d)(iii) above, Fabry 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"),
Fabry 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, Fabry 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
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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.
7. Use of Information Obtained During Employment Period.
Without limiting the general provisions set forth in Paragraph 6, Fabry 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 Company, which Fabry uses, prepares or
comes in contact with shall remain the sole property of Company. Upon
termination of employment, Fabry shall promptly return all such materials in
Fabry's possession or control to Company. Further, Fabry shall promptly inform
Company of all inventions, discoveries and improvements made by Fabry
individually or in conjunction with others during the course of Fabry's
employment, which relate to Company's business. Fabry shall assign to Company
all of Fabry'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 Fabry 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 Fabry would cause Company
irreparable injury and damage. Fabry 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. Location. During the Employment Period, Fabry shall not be
required by Company to relocate his residence from DePere, Wisconsin.
11. 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.
12. Anticipation of Compensation. Fabry 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.
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13. Assignment. This Agreement shall not be assignable by
Fabry without the written consent of Company. This Agreement shall be freely
assignable by Company.
14. 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.
15. Governing Law. This Agreement will be governed by and
construed under and in accordance with the laws of the State of Michigan.
16. Headings. Paragraph headings contained in this Agreement
are for convenience only and will not be considered for any purpose in
construing this Agreement.
17. 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.
18. 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.
19. 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.
20. 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 Fabry's employment by Company; no modification or
waiver of any of the provisions of this Agreement will be valid and binding
unless in writing.
21. 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/ Ronald VanderPol
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Its CEO
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/s/ Daniel Fabry
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Daniel Fabry
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Personal Guarantee
The undersigned, Ronald VanderPol, is executing this
Agreement for the sole purpose of personally guaranteeing the payments required
by Paragraph 3(d).
/s/ Ronald VanderPol
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Ronald VanderPol
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