AM COMMUNICATIONS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 1,
2002, by and between AMC Services, Inc., a Delaware corporation ("Company") and
Xxxxxxx X. Xxxxxxx, an individual residing at 0000 Xxxxxx Xxx, Xxxxxx Xxxxx,
Xxxxxxx 00000 ("Employee").
WHEREAS, the Employee has substantial experience in the field of
construction related to cable, data and broadband systems and related services;
and
WHEREAS, the Company is in the business of construction related to
cable, data and broadband systems and related services; and
WHEREAS, the Company desires to employ the Employee and the Employee
desires to be employed by the Company, in the capacity and upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
agreed as follows:
1. Employment and Term. From the date hereof through the term of this
Agreement the Employee shall be employed as the President of the Company, which
is a wholly owned subsidiary of AM Broadband Services, Inc. ("XXXX"). XXXX is a
wholly-owned subsidiary of AM Communications. Inc. ("AM"). The initial term of
employment under this Agreement shall commence as of April 1, 2002, and expire
on March 31, 2005; provided, however, that this Agreement shall automatically
renew on March 31, 2005, and on March 31 of each succeeding year for renewal
terms of one year each unless either Employee or the Company gives contrary
written notice to the other party hereto not less than sixty (60) days before
the scheduled expiration of the Term of this Agreement. The initial term and the
renewal terms are collectively referred to herein as the "Term" of this
Agreement.
2. Duties. The Employee shall be responsible for the general management
of the Company, including oversight of all operations, with profit and loss
accountability. The Employee shall devote substantially all of his working time
and his best efforts to the Company and his position, which shall include such
duties as AM's CEO or the General Manager of XXXX may from time to time
reasonably direct that are reasonably consistent with the Employee's education,
experience and background. During the Term of this Agreement, Employee shall
report directly to the General Manager of XXXX and there shall be no material
increase or decrease in the duties and responsibilities of the Employee other
than as provided herein, unless the parties otherwise agree in writing.
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3. Other Business Activities. The Employee may engage, directly or
indirectly, during the Term, in other business activities or pursuits; provided,
however, that such activities shall not, other than in an incidental manner,
interfere with or detract from the performance of Employee's responsibilities
and obligations pursuant to this Agreement and shall not be related to the
Business of the Company in a manner that violates the provisions of Section 10
of this Agreement.
4. Compensation.
(a) Salary. The Company shall pay to the Employee during the Term of
this Agreement a base salary at an annual rate of Two Hundred Fifty Thousand
Dollars ($250,000) with such subsequent increases in salary during the Term of
this Agreement as may be authorized by the Compensation and Stock Option
Committee of the Board. In determining salary increases, the Compensation and
Stock Option Committee may compensate the Employee for increases in the cost of
living and may also provide for performance or merit increases. Participation in
deferred compensation, bonus, discretionary bonus, retirement and other employee
benefit plans in the fringe benefits shall not reduce the salary payable to the
Employee under this Section 4(a).
(b) Commissions. (i) At the end of each fiscal year during the initial
Term, Employee shall be paid a commission ("Annual Commission") based on the
adjusted annual gross revenue of the Company ("Adjusted Revenue") for each
fiscal year during the initial Term, provided, the Company achieves certain
annual financial performance objectives for earnings before the payment of
interest, taxes, depreciation and amortization ("EBITDA"). The Annual Commission
and the management fee (described below) shall be paid within ninety (90) days
following the end of the Company's fiscal year in which the commission is earned
and shall be calculated in accordance with the percentages and the other
criteria set forth on Schedule A attached hereto and made a part hereof. For
purposes of this Section 4, "Adjusted Revenue" shall mean the annual gross
revenue of the Company less any revenues of the Company attributable to projects
managed by the Company but which shall have been brought into the Company
primarily through another division of AM or XXXX ("Managed Projects"). For
managing the Managed Projects, Employee shall earn a management fee as set forth
on Schedule A.
(ii) The parties acknowledge that certain contracts to be performed by
Company were, and/or may be entered into in the name of XXXX in order to obtain
bonding, however all construction services under such contracts will be
performed by the Company. Accordingly, the parties agree that all revenue from
such contracts shall be treated as revenue of Company in computing EBITDA under
this Agreement. Also included in computation of EBITDA will be Company-specific
overhead expenses as well as the corporate overhead expenses of AM and/or XXXX
for corporate activities specifically related to the business of the Company.
(iii) Employee, at his option, may assign the right to receive payment
of any portion of the Annual Commission to key employees of the Company
("Assignees"). In order to make such an assignment, on or before the last day of
any fiscal year, Employee shall provide the Company with a schedule, signed by
Employee, indicating the names of the Assignees and the exact dollar amount to
be assigned to each of the Assignees. The Company shall have no obligation to
confirm the accuracy of the schedule, and upon the issuance of the Annual
Commission as set forth in the Schedule, including any unassigned balance to
Employee, Employee shall have no further rights against the Company regarding
the portions of the Annual Commission that have been paid in accordance with the
schedule.
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(c) Retention Bonus. The Employee shall receive a retention bonus in
the amount of $500,000 payable in two installments. The first installment of
$250,000 shall be paid on July 1, 2002 and the second installment of $250,000
shall be paid on July 1, 2003. If Employee's employment with the Company is
terminated for any reason before the expiration of the initial Term, Employee
shall be responsible for the reimbursement to the Company of that portion of the
Retention Bonus that is proportionate to the remainder of the initial Term at
the time that Employee's employment is terminated. Employee's reimbursement
obligation shall be reflected in a promissory note substantially similar to the
one attached hereto as Exhibit A.
(d) Stock Option Awards. As of the effective date of this Agreement the
Employee shall be awarded 4,000,000 stock options. In addition, on April 1,
2003, the Employee shall be awarded 500,000 stock options, and on April 1, 2004,
the Employee shall be awarded 500,000 stock options. All stock options shall be
for shares of AM and be issued from an authorized stock option plan of AM, at an
exercise price which shall equal the fair market value of AM's stock as of the
date of issuance, which shall be determined in accordance with the provisions of
the stock option plan under which the options are issued. For purposes of this
paragraph 4(d) "fair market value of the AM's stock as of the date of issuance"
shall mean the average of closing bid price and ask price as quoted on the OTC
Bulletin Board of the NASD, Inc. on such date.
(e) Vehicle Allowance. During the Term, the Company shall provide
Employee with a vehicle allowance of $850 per month.
(f) Term Loan. Employee acknowledges that prior to the effective date
of this Agreement the Company has extended to Employee and his spouse a term
loan in the amount of $1,000,000. Employee and his spouse shall provide a
promissory note to the Company to reflect his obligation for such term loan
substantially similar to the form of promissory note attached hereto as Exhibit
B. Upon the execution of such promissory note, the Guaranty and Pledge Agreement
dated January, 2002 by and between Employee and AM shall be deemed to be
terminated without any further documentation.
5. Other Benefits and Perquisites; Business Expenses.
(a) Other Benefits and Perquisites. The Employee shall be entitled to
participate in any plan of the Company relating to stock options, pension,
profit sharing, group life insurance, medical or dental coverage, education or
other retirement or employee benefit plans or arrangements that the Company has
adopted or may adopt for the benefit of its employees or executive officers. The
Employee shall also be entitled to participate in, or enjoy the benefit of, any
other fringe benefits or prerequisites that are now or may be or become
applicable to the Company's executive employees.
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(b) Business Expenses. During the term of the Employee's employment by
the Company, the Company shall promptly reimburse the Employee for all
reasonable and customary expenses incurred by the Employee in performing
services for the Company, including all expenses of travel, food and lodging
expenses while away from home on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the reimbursement policies and procedures established by
the Company.
6. Voluntary Absences; Vacations. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Board
otherwise approves. The Employee shall be entitled to an annual paid vacation
equal to that accorded to other executive employees of the Company, or such
longer period as the Board may approve. The timing of paid vacations shall be
scheduled in a reasonable manner by the Employee.
7. Termination of Employment. The Employee's employment may be
terminated without any breach of this Agreement only under the following
circumstances:
(a) Death. The Employee's employment shall terminate upon his death.
(b) Disability. The Company may terminate the Employee's employment
because of disability. For this purpose, "Disability" shall mean the inability
of the Employee to perform his duties under this Agreement because of physical
or mental illness or incapacity for a continuous period of one hundred twenty
(120) days, or more that one hundred twenty (120) days in the aggregate during
any 365-day period, during which the Employee shall have been absent from his
duties under this Agreement on a substantially full-time basis.
(c) Cause. The Company may terminate the Employee's employment for
Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment only in the event of (1) the failure by the
Employee to substantially perform his duties hereunder (other than any such
failure resulting from the Employee's inability to perform such duties as a
result of physical or mental illness or incapacity) or any such actual or
anticipated failure after the delivery of a Notice of Termination, as defined in
Section 7(e) after delivery to the Employee of a written demand for substantial
performance that specifically identifies the manner in which the Company
believes that the Employee has not substantially performed his duties and a
reasonable opportunity to cure; (2) misconduct by the Employee that causes
substantial and material injury to the business and operations of the Company,
the continuation of which, in the reasonable judgment of the Board, will
continue to substantially and materially injure the business and operations of
the Company in the future; (3) habitual intoxication or drug addiction; or (4)
conviction of the Employee of a felony, which in the reasonable judgment of the
Board, will materially injure the business or reputation of the Company in the
future. The Employee shall not be deemed to have been terminated for Cause
unless the Employee shall have been provided with (i) a reasonable notice
setting forth the reasons that the Company believes constitute Cause for the
termination of his employment; and (ii) a Notice of Termination as defined in
Section 7(e), from the Company finding that, in the reasonable good faith
opinion of the CEO or such other executive officer designated by the Company,
Cause for the termination exists and specifying the particulars thereof in
reasonable detail.
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(d) Termination by the Employee. The Employee may terminate his
employment at any time without cause by giving sixty (60) days prior written
notice to the Company. The Employee may terminate his employment for cause only
in the event of a material default by Company under the provisions of this
Agreement and the failure of Company to cure such default within a reasonable
period of time after Company has received written notice of such asserted
default.
(e) Notice of Termination. Any termination of the Employee's employment
by the Company or by the Employee (other than termination pursuant to Section
7(a) or 7(b) hereof) shall be communicated to the other party by a written
Notice of Termination. Any Notice of Termination given by a party shall specify
the particular termination provision of this Agreement relied upon by such party
and shall set forth in reasonable detail the facts and circumstances relied upon
as providing a basis for the termination under the provision so specified.
(f) Termination Date. The Termination Date shall mean (1) if the
Employee's employment is terminated by his death, the date of his death; (2) if
the Employee's employment is terminated pursuant to Section 7(b) hereof, the
date specified in the Notice of Termination, which shall be after the expiration
of the 120-day period specified in that subsection; (3) if the Employee's
employment is terminated by the Company for Cause, the date specified in the
Notice of Termination; (4) if terminated by Employee under Section 7(d), sixty
(60) days following the date on which the Notice of Termination is given; or (5)
if the Employee's employment is terminated for any other reason, thirty (30)
days following the date on which the Notice of Termination is given.
8. Compensation Upon Termination of Employment.
(a) Termination because of Death, for Cause or by Employee. If the
Employee's employment is terminated because of his death, by the Company for
Cause or by the Employee, the Company shall pay the Employee his salary and
provide the applicable benefits through the Termination Date and the Company
shall have no further obligation to the Employee hereunder.
(b) Termination because of Disability. If the Employee's employment is
terminated by the Company because of Disability under Section 7(b) hereof, the
Company shall pay the Employee his salary and provide the applicable benefits
through the Termination Date and the Company shall have no further obligation to
the Employee hereunder.
(c) Termination without Cause. If (i) in breach of this Agreement, the
Company shall terminate the Employee's employment other than (A) for Cause or
(B) because of Disability; or (ii) if this Agreement is terminated by the
Employee for cause as set forth in Section 7(d); then:
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(1) The Company shall pay the Employee his salary through the
Termination Date and all other unpaid and pro rata amounts to which the Employee
is entitled as of the Termination Date under any compensation plan or program of
the Company, including, without limitation, any incentive bonus payable under an
incentive bonus plan for executive officers adopted by the Company or any other
discretionary bonus approved by the Board, and all accrued vacation time;
(2) The Company shall make severance payments to the Employee in
lieu of any further salary payments hereunder for periods after the Termination
Date equal to the Employee's then current salary and payable in installments in
accordance with the Company's normal payroll practice for a period which is the
lesser of: (i) twelve (12) months after the Termination Date, or (ii) the
remaining Term of the Agreement;
(3) In addition to the severance payments to the Employee, the
following shall apply: (A) the Employee shall continue to participate in, and
accrue benefits under, all retirement, pension, profit sharing and other
deferred compensation plans of the Company for a period which is the lesser of:
(i) twelve (12) months after the Termination Date, or (ii) the remaining Term of
the Agreement, as if the termination of employment of the Employee had not
occurred (with the Employee being deemed to receive for the purposes of such
plans the Employee's then current salary (at the time of his termination) under
Section 4(a) of this Agreement), except to the extent that such continued
participation and accrual is expressly prohibited by law, or to the extent such
plan constitutes a "qualified plan" under Section 401 of the Internal Revenue
Code of 1986, as amended ("Code"), by the terms of the plan, in which case the
Company shall provide the Employee a substantially equivalent, unfunded,
non-qualified benefit; (B) the Employee shall be entitled to continue to receive
all other employee benefits and then existing fringe benefits referred to in
Section 5(a) hereof for a period which is the lesser of: (i) twelve (12) months
after the Termination Date, or (ii) the remaining Term of the Agreement as if
the termination of employment had not occurred; and (C) all insurance or other
provisions for indemnification, defense or hold-harmless of officers or
directors of the Company that are in effect on the date the Notice of
Termination is sent to the Employee shall continue for the benefit of the
Employee with respect to all of his acts and omissions while an officer or
director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions; and
(4) The liquidated amount and other benefits provided for in this
Section 8(c) shall not be reduced by any compensation or benefits that the
Employee may receive for other employment with another employer or through
self-employment after termination of employment with the Company.
(d) Cost of Enforcement. In the event the Employment of the Employee is
terminated by the Company because of Disability or without Cause, and the
Company fails to make timely payment of the amounts owed to the Employee under
this Agreement, the Employee shall be entitled to reimbursement for all
reasonable costs, including attorney's fees, incurred by the Employee in taking
action to collect such amounts or otherwise to enforce this Agreement. Such
reimbursement shall be in addition to all rights to which the Employee is
otherwise entitled under this Agreement.
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9. Confidentiality. In consideration of the willingness of the Company
to employ the Employee and the compensation to be paid and benefits to be
received therefor, and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Employee agrees as follows:
(a) The Company Owns All of the Employee's Work. All improvements,
discoveries, inventions, designs, documents, licenses and patents, or other data
devised, conceived, made, developed, obtained, filed, perfected, acquired, or
first reduced to practice, in whole or in part, or in the regular cause of
employment by the Employee during the term of this Agreement, and related in any
way to the Business, including development and research, of the Company or any
subsidiary or affiliate engaged in business substantially similar to that of the
Company shall be promptly disclosed to the Company. The Employee hereby assigns
and transfers to the Company all his right, interest and title thereto, and such
improvements, discoveries, inventions, designs, documents, licenses and patents,
or other data shall become the property of the Company. During the term of this
Agreement and at any time thereafter, upon request of the Company, the Employee
will join and render assistance in any proceedings and execute any papers
necessary to file and prosecute applications for, and to acquire, maintain and
enforce, letters patent, trademarks, registrations and/or copyrights, both
domestic and foreign, with respect to such improvements, discoveries,
inventions, designs, documents, licenses and patent, or other data as required
for vesting and maintaining title to same in the Company.
(b) Non-Disclosure of Confidential Information. The Employee agrees and
acknowledges that the term "Confidential and Proprietary Information" shall mean
any and all information not in the public domain, in any form, emanating from or
relating to the Company and its subsidiaries and affiliates, including, but not
limited to, trade secrets, technical information, costs, designs, drawings,
processes, systems, methods of operation and procedures, formulae, test data,
know-how, improvements, price lists, financial data, code books, invoices and
other financial statements, computer programs, discs and printouts, sketches,
and plans (engineering, architectural or otherwise), customer lists, telephone
numbers, names, addresses, information about equipment and processes (including
specifications and operating manuals), or any other complication of information
written or unwritten that is used in the business of the Company or any
subsidiary or affiliate that gives the Company or any subsidiary or affiliate
any opportunity to obtain an advantage over competitors of the Company who do
not know or use such information. The Employee agrees and acknowledges that all
Confidential and Proprietary Information, in any form, and all copies and
extracts thereof, is and are and shall remain the sole and exclusive property of
the Company and, upon termination of his employment with the Company, the
Employee hereby agrees to return to the Company the originals an all copies of
any Confidential and Proprietary Information provided to or acquired by the
Employee during the period of his employment. Except as ordered by a court of
competent jurisdiction, the Employee expressly agrees never to utilize or
disclose to any person (except to other Company employees, and then only on a
"need to know" basis) or entity any Confidential and Proprietary Information
either during the term of this Agreement or at any time after termination of his
employment, except with the express written authorization and consent of the
Company.
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(c) Customer's Information. The Employee understands and acknowledges
that each customer of the Company or its subsidiaries or affiliates will
disclose information that will be within the Company's control in connection
with the Company's furnishing of services to its customer. The Employee
covenants and agrees to hold such information in the strictest confidence and
shall treat such information in the same manner and be obligated by the
provisions of this Agreement as if such information were Confidential and
Proprietary Information, as defined in Section 9(b) hereof.
10. Covenant Not to Compete; Non-solicitation. In consideration of
Employee's compensation and benefits to be received hereunder, any for other
good and valuable consideration from Company, the receipt and adequacy of which
is hereby acknowledged, the Employee agrees as follows:
(a) Non-Compete. The During the term of employment and for a period of
eighteen (18) months after the termination of the Employee's employment by the
Company, the Employee shall not directly or indirectly own, manage, operate,
control or be employed by or participate in the ownership, management, operation
or control of any business in the United States which performs services for, or
seeks to perform services for any Customer Project (as defined in Paragraph
10(b). The Employee shall not, during the term of this Agreement, have any other
paid employment other than with a subsidiary of the Company, except with the
prior approval of the Board. The Employee may hold not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded
securities of a company that is engaged in activities referenced in this
Section 10.
(b) Non-Solicitation. For a period of eighteen (18) months after the
termination of the Employee's employment by the Company, the Employee will not
solicit or service, directly or indirectly, business on Employee's own behalf,
or on behalf of any person or legal entity with whom Employee may be associated
as employee, partner, associate, principal, agent or in any other capacity, from
any Customer Project, whether or not Employee had significant dealings with that
Customer Project. This paragraph prohibits solicitation of, and sales to,
Customer Projects of any and all products or services that would compete with
those normally provided by the Company at the time Employee leaves the Company.
Any dealings in products or services that are not competitive with those
normally provided by the Company are not prohibited by this paragraph. Employee
will not solicit or seek to influence, directly or indirectly, any employee,
contractor, or agent of the Company to terminate his relationship with the
Company. For purposes of this Section 10, "Customer Project" shall mean any
project which: (i) the Company has an existing contract to perform services
under at the time of the termination of this Agreement; (ii) the Company has bid
to obtain a contract for in the 12 months preceding the termination of this
Agreement, or (iii) the Company had formed an intention to submit a bid to
perform services for any time prior to the termination of this Agreement and
which the Company actually submits a bid for within the 120 day period following
termination of this Agreement. Following termination of this Agreement, if
Employee, or a person or an entity that directly or indirectly employs Employee
enters into a contract for a Customer Project to provide products or services
that would compete with those normally provided by Company, it will be deemed
prima facie evidence of a violation of this paragraph 10(b).
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(c) Enforcement. In the event the Company seeks enforcement in the
courts of any of the covenants contained in this Section 10, the term of the
provisions of Paragraphs 10(a) and 10(b) shall continue in effect, and the
eighteen (18) month period of post-employment restrictions referred to above as
to the specific covenants violated by Employee shall be extended by a period of
time equal to that period beginning when any violation of the provisions of this
Section 10 began and ending when the activities constituting such violation
shall have finally terminated in good faith, or when there has been a final
adjudication by the trial court as to the enforcement of the covenants,
whichever is earlier.
11. Indemnity. Employee agrees to hold harmless, defend and indemnify
the Company, any and all of its subsidiaries, affiliates, and their respective
officers, shareholders and directors, from and against any and all demands,
claims, actions or causes of action by any governmental body or any other third
party, and any and all losses, damages, settlements, awards, judgments and
defense costs and expenses, including attorney's fees, brought against the
Company or any of its subsidiaries, affiliates, or their respective officers,
shareholders and directors as a result of:
(a) Employee's failure to file correct and accurate personal federal
and state tax returns and/or the nonpayment or incorrect payment
of the appropriate amount of taxes, or other governmental
assessments; or
(b) Employee's actual or alleged breach of any agreement between the
Employee, or an entity formerly or presently owned or controlled
by Employee, and any third party, including, but not limited to,
any former employer of Employee.
12. Amendments or Additions; Action by Board. No amendments or
additions to the Agreement shall be binding unless in writing and signed by all
parties thereto. The prior approval by a majority affirmative vote of the full
Board shall be required in order for the Company to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this agreement including any
Notice of Termination.
13. Litigation; Arbitration.
(a) Consent to Suit. Subject to the provisions of Section 13(b), any
legal proceeding arising out of or relating to this Agreement shall be
instituted in a state or federal court of general jurisdiction located in the
Commonwealth of Pennsylvania, and the Employee hereby consents to the personal
and exclusive jurisdiction of such court and hereby waives any objection that
the Employee may have to the laying of venue of any such proceeding and any
claim or defense of inconvenient forum. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorney's fees, costs and disbursements. In the event the Company institutes
litigation in connection with the enforcement of the terms and provisions of
this Agreement, and in the event that the Company obtains a preliminary or
permanent injunction or a judgment for damages, the Company, in addition to any
other sums or equitable relief to which it may be entitled, shall be entitled to
an award against the Employee in an amount equal to all fees and costs incurred
by the Company in connection with such litigation, including without limitation
all court costs, costs of investigation and reasonable attorneys' fees incurred
in connection with the litigation
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(b) Arbitration. Subject to the last sentence of this Section 13(b), if
any dispute arises over the terms of this Agreement between the parties to this
Agreement, either Employee or the Company may submit the dispute to binding
arbitration within thirty (30) days after such dispute arises, to be governed by
the evidentiary and procedural rules of the American Arbitration Association
(Commercial Arbitration). Employee and Company shall mutually select one (1)
arbitrator within ten (10) days after a dispute is submitted to arbitration. In
the event that the parties do not agree on the identity of the arbitrator within
such period, the arbitrator shall be selected by the American Arbitration
Association. The arbitrator shall hold a hearing on the dispute in Philadelphia,
Pennsylvania within thirty (30) days after having been selected and shall issue
a written opinion within fifteen (15) days after the hearing. The arbitrator
shall also decide on the allocation of the costs of the arbitration to the
respective parties, but Employee and Company shall each be responsible for
paying the fees of their own legal counsel, if legal counsel is obtained. Either
Employee or Company, or both parties, may file and seek enforcement of the
decision of the arbitrator as a final, binding and unappealable judgment in a
court of appropriate jurisdiction. Notwithstanding the foregoing provisions of
this Section 13(b) to the contrary, matters in which an equitable remedy or
injunctive relief is sought by a party shall not be required to be submitted to
arbitration, if the party seeking such remedy or relief objects thereto, but
shall instead be subject to the provisions of Section 13 (a) above.
14. Miscellaneous.
(a) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be personally delivered or mailed by first class registered
or certified mail, postage prepaid, return-receipt-requested, sent by express
delivery with a nationally-recognized courier service, or transmitted by
facsimile, telegram or telex, addressed to the Company or the Employee at the
address set forth below or at such other addresses as such party may designate
by five business day advance written notice to the other party.
Each notice or communication that shall have been transmitted in the
manner described above, or that shall have been delivered to a telegraph
company, shall be deemed sufficiently given, served, sent or received for
purposes at such time as it is sent to the addressee (with the return receipt,
delivery receipt or (with respect to a telex) the answer back being deemed
conclusive, but not exclusive, evidence of such sending) or at such time as
delivery is refused by the addressee upon presentation. Notices shall be sent to
the following:
(i) if to the Company, to:
AM Communications, Inc.
0000 XX Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
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(ii) if to the Employee, to:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Telecopier:
(b) Severability. Nothing in this Agreement shall be construed so as to
require the commission of any act contrary to law and wherever there is any
conflict between any provision of this Agreement and any law, statute,
ordinance, order or regulation, the latter shall prevail, but in such event any
necessary action will be taken to bring it within applicable legal requirements.
If any provision of this Agreement should be held invalid or unenforceable, the
remaining provisions shall be unaffected by such a holding.
(c) Complete Agreement. This Agreement contains the entire Agreement
and understanding between the parties relating to the subject matter hereof, and
supersedes any prior understandings, agreements or representations by or between
the parties, written or oral, relating to the subject matter hereof.
(d) Successors or Assigns. This Agreement and the rights and
obligations of the parties hereto shall bind and inure to the benefit of any
successor or successors of the Company by way of reorganization, merger or
consolidation and any assignee of all or substantially all of its business
assets, but except as to any such successor or assignee of the Company, neither
this Agreement nor any rights or benefits hereunder may be assigned by the
Company or the Employee. However, in the event of the death of the Employee all
rights to receive payments hereunder shall become rights of the Employee's
estate.
(e) Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
(g) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
(h) Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.
15. Employee Acknowledgement. EMPLOYEE REPRESENTS THAT HE HAS HAD AMPLE
OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH LEGAL COUNSEL AND A TAX
ADVISOR IN REGARD TO THIS AGREEMENT AND THAT HE HAS READ AND UNDERSTANDS THIS
AGREEMENT. EMPLOYEE ACKNOWLEDGES THAT HE UNDERSTANDS THAT IT CONTAINS IMPORTANT
CONDITIONS OF THE EMPLOYMENT AND THAT IT EXPLAINS POSSIBLE CONSEQUENCES, BOTH
FINANCIAL AND LEGAL, IF EMPLOYEE BREACHES THE AGREEMENT. EMPLOYEE IS FULLY AWARE
OF THE LEGAL EFFECT OF THIS AGREEMENT AND HAS ENTERED INTO IT FREELY AND
VOLUNTARILY AND BASED ON HIS OWN JUDGMENT AND NOT ON ANY REPRESENTATIONS OR
PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the day and year first above written.
AMC SERVICES INC. EMPLOYEE
by AM COMMUNICATIONS, INC.
By: _____________________________ By:________________________
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxx
Chairman & CEO
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JOINDER
The undersigned hereby joins in the execution of this Agreement to
agree with the provisions of Section 4(d) and Section 4(f).
AM COMMUNICATIONS, INC.
By:_________________________
Xxxxx X. Xxxxxx
Chairman & CEO
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SCHEDULE A
Annual Commission
Commission
Fiscal Year Percentage*
----------- -----------
FYE March 31, 2003 7%
FYE March 31, 2004 5%
FYE March 31, 2005 5%
* If the Company achieves EBITDA that is at least 20% of the Company's Adjusted
Revenue for the fiscal year, Employee shall be paid the full Annual Commission
percentage for that fiscal year. If the Company does not achieve at least 20%
EBITDA, the commission percentage shall be reduced by one percentage point (or
portion thereof) for each percentage point (or portion thereof) by which the
Company falls short of 20% EBITDA (i.e. if in FYE March 31, 2003, the Company
has EBITDA of 17%, the Annual Commission paid to Employee for that fiscal year
would be 4% of the Company's Adjusted Revenue).
Management Fee
If the Company achieves EBITDA that is at least 16% of the Company revenue on
any Managed Project, Employee shall be paid a management fee equivalent to 1% of
the Company's revenue on such Managed Project.
Exhibit A
PROMISSORY NOTE
US $500,000.00 May ___, 2002
FOR VALUE RECEIVED, the undersigned, Xxxxxxx X. Xxxxxxx, an individual
residing at 0000 Xxxxxx Xxx, Xxxxxx Xxxxx, Xxxxxxx 00000 (the "Maker"), promises
to pay to AMC Services, Inc., a Delaware corporation (the "Payee"), at such
place as the Payee may later designate in writing, in lawful money of the United
States, the principal sum of Five Hundred Thousand United States dollars
($500,000.00) and to pay interest from the date hereof on such principal amount
as is from time to time outstanding, in accordance with the terms set forth
herein.
This Note is being executed and delivered pursuant to Section 4(c) of
the Employment Agreement between Maker and the Payee dated ___________, 2002
(the "Agreement.
1. Principal. The principal balance of this Note shall become due and
payable in three equal, annual installments of thirty-three percent (33%) each
with payment of each installment to be made on April 1 of each year, commencing
April 1, 2003 (each installment date individually referred to as an "Anniversary
Date")
2. Interest. Interest shall accrue on the unpaid principal balance of
this Note at the minimum per annum rate in effect on the date of this Note that
is required to avoid the imputation of compensation income to Maker under
sections 7872 and 1274(d) of the Internal Revenue Code of 1986, as amended.
Interest shall be paid annually and at maturity if not forgiven as provided
herein.
3. Application of Payment. Each payment hereunder shall be made in
lawful tender of the United States and shall be applied first to any accrued but
unpaid interest on this Note and the balance to the unpaid principal. Prepayment
of the principal balance of this Note, together with any accrued and unpaid
interest, may be made in whole or in part at any time without penalty.
4. Employment Requirement. The benefit of the forgiveness of principal
and interest as provided for in Section 5 of this Note while Maker remains in
the employment of the Payee is not transferable by Maker and is conditioned upon
the future performance of substantial services by Maker. For purposes of this
Note, Maker shall be considered to remain in the employment of the Payee for so
long as Maker renders services as a full-time employee of the Payee and is not
in breach of the Employment Agreement.
5. Loan Forgiveness. Notwithstanding any other provision of this Note
the principal balance and accrued but unpaid interest on this Note shall be
subject to forgiveness as follows: as long as Maker continues in employment with
the Payee, the principal balance and accrued but unpaid interest on this Note
shall be forgiven proportionate to the percentage of Term of the Agreement that
has been completed (as measured on a daily basis). Provided the Maker remains
employed continuously by the Payee until March 31, 2005, the entire principal
amount and accrued interest shall be forgiven on such date. In addition, the
entire outstanding principal balance and all accrued but unpaid interest on this
Note shall be forgiven upon termination of Maker's employment with the Payee
before the end of the term of the Note: (y) by reason of his death or disability
(as provided in Section 7(a) or Section 7(b) of the Employment Agreement) or (z)
termination of Maker's employment as provided in Section 8(c) of the Employment
Agreement.
6. Events of Acceleration, Following the Maker's cessation of
employment with the Payee for a reason that does not require forgiveness
pursuant to Section 5 hereof, the entire unpaid principal sum of this Note shall
become immediately due and payable upon one or both of the following events:
(a) The failure of Maker to pay any installment of principal and
accrued interest when due and the continuation of such default for thirty (30)
days; or
(ii) The insolvency of Maker, the commission of any act of
bankruptcy by Maker, the execution by Maker of a general assignment for the
benefit of creditors, the filing by or against Maker of any petition and in
bankruptcy or any petition for relief under the provisions of the Federal
Bankruptcy Act or any other state or fedora] law for the relief of debtors and
the continuation of such petition without dismissal for a period of (30) days or
more, the appointment of a receiver or trustee to take possession of any
property or assets of Maker, or the attachment of or execution against any
property ox- assets of Maker.
7. Collection. Maker shall pay all costs of collection and reasonable
attorneys' fees and other professional fees and expenses paid or incurred by any
holder hereof or any other person incurring the same in enforcing the
obligations of Maker hereunder.
8. Notice. Whenever any notice is required or is desired to be given
pursuant to this Note by any holder hereof the same shall be deemed sufficiently
effected when delivered in accordance with the Agreement.
9. Binding Effect. The provisions of this Note shall be binding upon
Maker and his heirs, administrators, executors and successors, and shall inure
to the benefit of the holder(s) from time to time of this Note, and such
holder's successors and assigns. This promissory note cannot be assigned by
Maker.
10. Waiver. No previous waiver and no failure or delay by the Payee in
acting with respect to the term of this Note shall constitute a waiver of any
breach, default, or failure of condition under this Note or the obligations
secured thereby. A waiver of any term of this Note or of any of the obligations
secured thereby must be made in writing and shall be limited to the express
terms of such waiver. Maker hereby waives presentment, demand for payment, and
diligence in taking any action to collect any sums owing under this Note or in
proceeding against any of the rights or interests in or to properties securing
payment of this Note.
11. Conflicting Agreements. In the event of any inconsistencies between
the terms of this Note and the terms of any other document related to the loan
evidenced by this Note, the terms of this Note shall prevail.
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12. Governing Law This Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without reference
to the conflict of law provisions thereof.
IN WITNESS WHEREOF, the Makers have caused this Note to be executed as of the
day and year first above written.
------------------------------
Xxxxxxx X. Xxxxxxx
ATTEST:
By:_____________________________
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Exhibit B
PROMISSORY NOTE
US $1,000,000.00 May __, 2002
FOR VALUE RECEIVED, the undersigned, Xxxxxxx X. Xxxxxxx and Xxxxx
Xxxxxxx, individuals residing at 0000 Xxxxxx Xxx, Xxxxxx Xxxxx, Xxxxxxx 00000
(the "Makers"), jointly and severally promise to pay to AMC Services, Inc., a
Delaware corporation (the "Payee"), at such place as the Payee may later
designate in writing, in lawful money of the United States, the principal sum of
One Million United States dollars ($1,000,000.00) and to pay interest from the
date hereof on such principal amount as is from time to time outstanding, in
accordance with the terms set forth herein.
1. Rate of Interest
The outstanding principal balance due under this Note shall bear
interest at the rate of five percent (5%) per annum with interest accruing, from
and including the date hereof, on a cumulative, compounding basis. Interest
shall be calculated on a daily basis upon the unpaid principal balance on the
actual number of days elapsed over a base year of 365 days.
2. Repayment
Principal and interest due under this Note shall be due and payable as
follows: interest shall be paid in quarterly installments beginning on July 1,
2002, and the principal balance and any accrued and unpaid interest shall be due
and payable on April 1, 2005, provided no earlier Event of Default shall occur.
The Makers shall have the right to prepay at any time and from time to time, in
advance of maturity, without premium or penalty, all or part of the principal
amount of this Note. Each payment shall be applied first to accrued interest and
next to principal.
3. Late Charge
In the event that any payment or part thereof due under this Note shall
become overdue for a period in excess of ten (10) days after delivery to Makers
of written notice from the holder, Makers shall pay to Payee a late charge of
five percent (5%) of the amount of such payment.
4. Events of Default
The following shall constitute Events of Default hereunder:
(a) If Makers default in the payment of any amount due on this Note
when due and payable hereunder and such default shall continue for a period of
ten (10) days after delivery to Makers of written notice from the holder;
(b) If Makers default in the payment of any payment of interest or
principal due under any other promissory note issued by Makers to Payee when due
and payable, and such default shall continue for a period in excess of ten (10)
days after delivery to Makers of written notice from the holder; and
(c) If either Maker shall (i) make a general assignment for the benefit
of creditors, or (ii) apply for or consent to the appointment of a receiver,
trustee or liquidator for itself or all or a substantial part of its assets, or
(iii) be adjudicated a bankrupt or insolvent, or (iv) file a voluntary petition
in bankruptcy or file a petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether Federal or state) relating to relief of debtors, or admit (by answer,
by default or otherwise) the material allegations of a petition filed against it
in any bankruptcy, reorganization, insolvency or other proceeding (whether
Federal or state) relating to relief of debtors, or (v) suffer or permit to
continue unstayed and in effect for sixty (60) consecutive days any judgment,
decree or order entered by a court of competent jurisdiction, which approves an
involuntary petition seeking reorganization of Makers or appoints, pursuant to
such a petition, a receiver, trustee or liquidator for it or all or a
substantial part of its assets.
5. Remedies
(a) Upon the happening of an Event of Default, Payee may, in Payee's
sole and absolute discretion and without notice or demand to Makers, declare the
entire amount of principal and interest thereon remaining outstanding hereunder
immediately due and payable, whereupon, the same shall forthwith become and be
due and payable without any presentment, demand or notice of any kind, all of
which are expressly waived by Makers.
(b) If an Event of Default shall occur, the Makers shall pay the Payee,
on demand by the Payee, all reasonable costs and expenses incurred by the Payee
in connection with the collection and enforcement of this Note, including
reasonable attorneys' fees.
6. Miscellaneous
(a) This Note shall be deemed to be made and entered into under the
laws of the Commonwealth of Pennsylvania and for all purposes shall be construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
(b) This Note shall be binding upon Makers and the Makers' successors
and assigns and shall inure to the benefit of Payee and Payee's successors and
assigns; and each reference herein to Makers or to Payee shall, except where the
context shall otherwise require, be deemed to include its respective successors
and assigns. Notwithstanding the foregoing, Makers shall not have any right to
assign his obligations hereunder without Payee's prior written consent.
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(c) Any failure by Payee to exercise any right or remedy hereunder
shall not constitute a waiver of the right to exercise the same or any other
right or remedy at any subsequent time, and no single or partial exercise of any
right or remedy shall preclude other or further exercise of the same or any
other right or remedy.
(d) None of the terms and provisions hereof may be waived, altered,
modified, or amended except by an agreement in writing signed by Makers and
Payee.
(e) Regardless of any provision contained herein, or in any document
executed in connection herewith, the Payee or any other holder hereof shall
never be entitled to receive, collect or apply, as interest hereon, any amount
in excess of the maximum non-usurious rate of interest permitted under
applicable federal or Pennsylvania state law (whichever shall permit the higher
lawful rate) from time to time in effect; and in the event the Payee or any
holder hereof ever receives, collects or applies, as interest, any such excess,
such amount shall be deemed as a partial payment of principal, and, if the
principal hereof is paid in full, any remaining excess shall forthwith be
refunded to Makers.
IN WITNESS WHEREOF, the Makers have caused this Note to be executed as
of the day and year first above written.
------------------------------
Xxxxxxx X. Xxxxxxx
ATTEST:
By:_____________________________
------------------------------
Xxxxx. Xxxxxxx
ATTEST:
By:_____________________________
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