EXHIBIT 10.29
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of this 1st
day of January, 1999 by and between KMC TELECOM HOLDINGS, INC., a Delaware
corporation with its principal place of business located at 0000 Xxxxx 000,
Xxxxx 000, Xxxxxxxxxx, X.X. 00000 ("KMC"), and XXXXXX X. XXXXXX, an individual,
residing at 00 Xxxxxx Xxxx, Xxxxxxx, X.X. 00000 ("Xx. Xxxxxx").
W I T N E S S E T H :
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WHEREAS, KMC is engaged in, among other things, the business of a
competitive local exchange carrier providing telecommunications services in Tier
III Markets, including but not limited to providing on-net special access and
private line and Internet access services and, primarily on a resale basis,
switchboard-based local and long distance services; and
WHEREAS, KMC and Xx. Xxxxxx wish to enter into an agreement
pursuant to which Xx. Xxxxxx will continue to serve as the Chairman of the Board
of Directors of KMC.
NOW, THEREFORE, in consideration of the mutual promises,
agreements and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged, KMC
and Xx. Xxxxxx agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
"BUSINESS" shall mean the business conducted by KMC or a
subsidiary, affiliate or joint venturer thereof in the past and as of the date
of execution of this Agreement, including business activities under substantial
review or in developmental stages, all other business activities which emanate
therefrom by a reasonable expansion of the present activities of KMC
or a subsidiary, affiliate or joint venturer thereof during the Term (as defined
in Section 2(a) hereof), and all business activities which may hereafter be
developed by KMC or a subsidiary, affiliate or joint venturer thereof, including
without limitation: providing telecommunications and data services to business,
government and institutional end users and Internet service providers, long
distance companies and wireless service providers (including without limitation
providing on-net special access and private line and Internet access services,
switch-based local and long distance services, Centrex-type, frame relay ISDN
and ATM services for applications including LAN-to-LAN interconnect, Internet
access, WAN and high speed video conferencing).
"PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, governmental agency or authority,
court, tribunal, arbitrator or other entity.
Wherever from the context it appears appropriate, each word or
phrase stated in either the singular or the plural shall include the singular
and the plural, and each pronoun stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
2. EMPLOYMENT AND DUTIES.
(a) EMPLOYMENT AND TERM. KMC hereby agrees to employ Xx. Xxxxxx,
and Xx. Xxxxxx hereby agrees to be employed by KMC, as Chairman of the Board of
Directors of KMC (the "KMC Board"), upon and subject to the terms and conditions
set forth herein. The term of Xx. Xxxxxx'x employment hereunder (the "Term")
shall become effective as of January 1, 1999 and, unless earlier terminated in
accordance with this Agreement, shall continue for a period of four (4)
consecutive years, ending on December 31, 2002.
(b) DUTIES AND RESPONSIBILITIES. As Chairman of the KMC Board, Xx.
Xxxxxx shall report and be accountable to the KMC Board. Xx. Xxxxxx shall have
such duties
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and responsibilities as may from time to time be assigned by the KMC Board,
including without limitation the responsibility and authority to:
(i) provide overall strategic and business direction for all
aspects of the Business with a view to meeting KMC's short-term and long-term
targets;
(ii) perform such other duties and responsibilities as are
usually attendant upon the Chairman of the Board of Directors; and
(iii) assist in planning for and raising of debt or equity
financing or capital for KMC or its subsidiaries, affiliates or joint venturers.
(c) PERFORMANCE OF SERVICES. During the term of his employment
hereunder, Xx. Xxxxxx shall
(i) perform and discharge, faithfully, diligently and
competently the duties and responsibilities assigned to him hereunder to the
best of his ability;
(ii) devote a reasonable amount (at least fifty percent
(50%)) of his time and attention to the performance and discharge of such duties
and responsibilities. The parties acknowledge that Xx. Xxxxxx is involved in
substantial business activities and personal investment activities unrelated to
KMC or the Business, and that he will continue to devote a significant amount of
time and attention to such unrelated business activities and personal investment
activities to the extent not inconsistent with this Agreement;
(iii) not engage, without the prior written approval of KMC,
in any activities which interfere or are reasonably likely to interfere with the
proper performance and discharge of such duties or responsibilities, other than
passive, personal investments in a Person (A) all of whose business or
activities are not in competition with the Business; provided that if such
Person is engaged in any such business or activity, this clause (A) shall not
preclude Mr.
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Kamine from beneficially owning or controlling not more than two percent (2%) of
any class of securities issued by such Person which class is registered under
Section 12 of the Securities Exchange Act of 1934, as amended, and (B) in which
Xx. Xxxxxx has no managerial or active role; and
(iv) if requested by the KMC Board, perform the
responsibilities assigned to him hereunder or related services for the benefit
of joint venturers, subsidiaries or affiliates of KMC, or other Persons with
which KMC may have a business relationship, including without limitation acting
as an officer or director thereof.
(d) PLACE OF EMPLOYMENT. The principal place of employment of Xx.
Xxxxxx shall be in or in the vicinity of Bedminster, New Jersey.
3. COMPENSATION; BENEFITS.
As full compensation to Xx. Xxxxxx, KMC shall pay or provide,
or cause to be paid or provided, to Xx. Xxxxxx the following compensation and
benefits:
(a) BASE SALARY. Xx. Xxxxxx shall receive base salary (the "Base
Salary") at the rate of $450,000 per year which shall be earned by and payable
to Xx. Xxxxxx in arrears in consecutive semi-monthly installments, each of which
shall be approximately equal, in accordance with KMC's standard payroll
practices, as such practices may be amended from time to time.
(b) BONUS. In addition to the Base Salary, Xx. Xxxxxx shall be
entitled to be eligible and considered for a cash bonus or other consideration
from time to time in the sole discretion of the KMC Board.
(c) GROUP PLANS. Xx. Xxxxxx shall be eligible to participate, on
terms and conditions at least comparable with all other senior executives of
KMC, in (i) KMC's 401(k)
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plan for salaried employees of KMC, subject to eligibility requirements thereof,
(ii) KMC's group life, medical, dental, hospitalization or accident/disability
insurance plans and health programs, but in all events, subject to applicable
terms of the plans and (iii) any other benefits generally accorded to employees
of KMC.
(d) REIMBURSEMENT OF EXPENSES. KMC shall pay or reimburse Xx.
Xxxxxx for all ordinary, necessary, reasonable and proper expenses (including
the use of an automobile) actually incurred or paid by him during the Term in
the performance and discharge of his duties and responsibilities under this
Agreement in accordance with the policies and procedures established by KMC from
time to time. As part of such policies and procedures, the KMC Board may from
time to time require prior approval for individual expense items in excess of
pre-established aggregate amounts for a fixed period or in excess of
pre-established amounts for any type of expenditure during any fixed period. Xx.
Xxxxxx will not incur expenses other than in accordance with KMC's policies and
procedures both as to the nature and amount of such expenses.
4. KEY MAN LIFE POLICY.
In addition to any life insurance policy provided by KMC for the
benefit of Xx. Xxxxxx pursuant to Section 3, KMC shall be permitted, at its own
expense, to maintain a "key man life insurance policy", in such amount and on
such terms as KMC shall in its sole discretion determine, on the life of Xx.
Xxxxxx for so long as this Agreement remains in effect. Xx. Xxxxxx shall fully
cooperate with and assist KMC in obtaining or maintaining any such insurance,
including without limitation submitting to medical examinations and providing
information to insurance brokers, agents or carriers. Any proceeds from any such
"key man" policy shall be payable solely to KMC; Xx. Xxxxxx, his legal
representatives, heirs, successors,
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assigns and beneficiaries shall have no rights with respect thereto. Xx. Xxxxxx
represents and warrants that to the best of his knowledge he is in good health
and has no reason to believe that such insurance will not be available to KMC at
standard rates.
5. REPRESENTATIONS AND WARRANTIES BY XX. XXXXXX.
Xx. Xxxxxx hereby represents and warrants, the same being part of
the essence of this Agreement, that he is not, and during the Term will not be,
a party to any agreement, contract or understanding, and that he has no
knowledge of any physical or mental illness, condition, impairment, restriction
or incapacity, which in any way restrict or prohibit him from undertaking or
performing or discharging any of his duties and responsibilities under this
Agreement.
6. TERMINATION.
(a) This Agreement, and Xx. Xxxxxx'x employment, shall terminate
prior to the scheduled termination date set forth in SECTION 2(A) hereof upon
the following terms and conditions:
(i) If Xx. Xxxxxx dies or becomes permanently disabled,
this Agreement shall terminate effective upon his death or when his Disability
(as hereinafter defined) is deemed to have become permanent. If Xx. Xxxxxx is
unable to perform his normal duties for KMC and/or its subsidiaries, affiliates
or joint venturers because of Disability for a period of at least 90 consecutive
days, or for shorter periods totaling more than 120 days during any period of
365 or fewer consecutive days for the same cause, the KMC Board may at its
option deem such Disability to have become permanent. For purposes of this
Agreement, the term "Disability" shall mean the physical or mental illness,
condition, impairment, restriction or incapacity of Xx. Xxxxxx, such that Xx.
Xxxxxx shall be substantially unable to perform and
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discharge his duties and responsibilities under this Agreement, as certified by
a physician, psychiatrist or other medical practitioner satisfactory to KMC if
KMC so requests.
(ii) KMC may terminate this Agreement for Cause
(as defined below), by notice to KMC. The term "Cause" shall mean any of the
following: (A) Xx. Xxxxxx commits malfeasance towards KMC and/or any of its
subsidiaries, affiliates or joint venturers (including without limitation
misappropriation of funds, acts of fraud or dishonesty, or a material violation
of corporate policy), or is convicted of any crime or offense involving
dishonesty, or improper taking of monies or other property, or any felony
offense, or any crime of moral turpitude, or commits fraud or embezzlement, or
any other violation of law which materially impairs his ability to perform and
discharge his duties or responsibilities hereunder or which otherwise materially
adversely affects KMC and/or its subsidiaries, affiliates or joint venturers;
(B) Xx. Xxxxxx has breached any of his duties to KMC and/or its subsidiaries,
affiliates or joint venturers or otherwise violated any other material provision
of this Agreement or has made a misrepresentation which breach, violation or
misrepresentation adversely affects the business of KMC and/or its subsidiaries
or affiliates or joint venturers and, if such breach, violation or
misrepresentation can reasonably be expected to be cured within 10 days, such
breach, violation or misrepresentation has not been cured to KMC's satisfaction
within 10 days after it notifies Xx. Xxxxxx thereof; or (C) Xx. Xxxxxx has
neglected or failed to discharge any of his material duties or responsibilities
under this Agreement or failed to obey appropriate directions from KMC and/or
its subsidiaries, affiliates or joint venturers consistent with this Agreement,
and if such neglect or failure can reasonably be expected to be cured within 10
days, such neglect or failure has not been cured to KMC's satisfaction within 10
days after it notifies Xx. Xxxxxx thereof.
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(iii) Xx. Xxxxxx may terminate this Agreement by notice
to KMC if KMC has breached any of its material duties to Xx. Xxxxxx or otherwise
violated any other material provision of this Agreement or has made a material
misrepresentation which breach, violation or misrepresentation adversely affects
Xx. Xxxxxx and, if such breach, violation or misrepresentation can reasonably be
expected to be cured within 10 days, such breach, violation or misrepresentation
has not been cured to Xx. Xxxxxx'x satisfaction within 10 days after he notifies
KMC thereof.
(b) Upon any termination pursuant to this SECTION 6, all rights of
Xx. Xxxxxx under this Agreement shall cease to be effective as of the date of
termination, Xx. Xxxxxx shall be removed from his position and Xx. Xxxxxx shall
have no right to receive any payments or benefits hereunder except for (i)
installments of Base Salary which have been earned in accordance with SECTION
3(A) hereof up to the effective date of such termination, (ii) reimbursement of
ordinary, reasonable and necessary expenses incurred in accordance with SECTION
3(F) hereof up to the effective date of such termination and (iii) if the
termination is pursuant to SECTION 6(A)(I) or Section 6(A)(III), KMC shall pay
to Xx. Xxxxxx a xxxxxxxxx payment in an amount equal to the lesser of (A) two
times the annual Base Salary and (B) the aggregate unpaid Base Salary which
would have been paid to him during the remaining balance of the Term after his
termination became effective had he remained employed by KMC for the originally
scheduled duration of the Term as set forth in SECTION 2(A), subject to a
minimum of one-half of the annual Base Salary. One-half of any severance payment
pursuant to SECTION 6(B)(III) will be payable in a lump sum on the date the
termination becomes effective, with the balance being payable in arrears in
approximately equal consecutive semi-monthly installments in accordance with
KMC's standard payroll practices, as such practices may be
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amended from time to time, over the period beginning on KMC's first payroll
payment date after the termination becomes effective and ending on the earlier
of (x) the first anniversary of such date and (y) December 31, 2002.
7. ASSIGNABILITY; SUCCESSORS. The obligations of Xx. Xxxxxx
hereunder are personal and may not be delegated, assigned or transferred by him
to any Person in any manner whatsoever. Any such purported delegation,
assignment or transfer shall be null and void. This Agreement may be assigned by
KMC to any parent, subsidiary or affiliate of KMC or any Person which succeeds
to the business of KMC, if the obligations of KMC hereunder are expressly
assumed by, and shall be binding upon such Person, and such Person is or will
then be engaged in the Business. Subject to the foregoing, this Agreement shall
be binding on and inure to the benefit of the legal representatives, heirs and
permitted successors and assigns of the parties hereto.
8. WITHHOLDING. All payments made by KMC under this Agreement
shall be net of any tax or other amounts required to be withheld by KMC under
any applicable law or legal requirement.
9. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement constitutes
the entire agreement of KMC and Xx. Xxxxxx with respect to the subject matter
hereof and supersedes all prior written and oral agreements and understandings
with respect to such subject matter, except for (to the extent not inconsistent
with this Agreement) stock options granted in connection with KMC's Stock Option
Plan and stock option agreements entered in connection therewith. Neither this
Agreement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by both
parties. No failure or delay of KMC in exercising any right or remedy under this
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Agreement or at law or equity shall operate as a waiver hereof or thereof, nor
shall any single or partial exercise of any such right or remedy, or any
abandonment or discontinuance of steps to enforce such a right or remedy,
preclude any other or further exercise thereof or the exercise of any other
right or remedy.
10. NOTICES. Any notice, request or communication required or
permitted to be given hereunder shall be deemed to have been properly given if
it is given in writing and is delivered personally or sent by registered or
certified mail, return receipt requested. If to Xx. Xxxxxx, such notice shall be
sent to him at the address set forth in the first paragraph hereof. If to KMC,
such notice shall be directed to the attention of Xxxxxx X. Xxxxxx at the
address of KMC set forth in the first paragraph hereof, with a copy to Xxxxxxx
X. Xxxxx, Esq., Xxxxxx Xxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. Either party may change the address to which notices, requests or
communications are to be directed by a notice to the other party in accordance
with this Section 10.
11. SEVERABILITY. Any provision of this Agreement that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, KMC and Xx. Xxxxxx hereby waive any provision of law that
renders any provision hereof prohibited or unenforceable in any respect.
12. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAW
(EXCLUDING PRINCIPLES OF CONFLICTS OF LAW
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TO THE EXTENT APPLICATION THEREOF WOULD RESULT IN THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION) OF THE STATE OF NEW JERSEY.
13. COUNTERPARTS. This Agreement may be executable in
counterparts, each of which, for all purposes, shall be deemed an original.
14. AMBIGUITY IN DRAFTING. Each party shall be deemed to have
participated equally in the drafting of this Agreement and any ambiguity in this
Agreement shall not be construed against any purported author thereof. Xx.
Xxxxxx acknowledges that he is capable of evaluating the merits of entering into
this Agreement from a professional and financial perspective and has been given
the opportunity to make such inquiries and investigations as Xx. Xxxxxx has
deemed appropriate under the circumstances and that, at all times during the
course of the negotiations and execution of this Agreement, Xx. Xxxxxx has been
advised by counsel.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
EMPLOYEE EMPLOYER
KMC TELECOM HOLDINGS, INC.
By:
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Title:
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Xxxxxx X. Xxxxxx
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