Exhibit 10.13
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made as of the 21st day of February,
2005 by and between ITC^DeltaCom Inc., a Delaware corporation
(“Employer” or the “Company”), and Richard
E. Fish, Jr. (“Employee”).
RECITALS
WHEREAS, the Company desires to
employ Employee as provided herein; and
WHEREAS, Employee desires to be
employed by Employer as provided herein;
NOW, THEREFORE, in consideration of
the mutual covenants and agreements contained herein, the parties
agree as follows:
1. EMPLOYMENT . The Company
agrees to employ Employee and Employee hereby agrees to be employed
on a full-time basis by the Company, and by such of its subsidiary
corporations as determined by the Board of Directors of the Company
(the “Board”) in such position with such corporations
as is designated by the Board, for the period and upon the terms
and conditions hereinafter set forth.
2. DUTIES . Employee shall
serve as Chief Administrative Officer of the Company. During his
employment, Employee shall perform the duties and bear the
responsibilities commensurate with such position and any other
position to which he may be appointed by the Board within sixty
(60) days after the Effective Date (as defined below), and shall
report directly to the Chief Executive Officer. During the Term (as
defined below) of the Agreement, and excluding any periods of
vacation, holiday, personal leave and sick leave to which Employee
is entitled, Employee shall devote Employee’s full business
time, attention and ability to the business and affairs of the
Company.
3. COMPENSATION AND BENEFITS
.
(a) Base Salary . The Company
shall pay Employee during the Term of this Agreement a base salary
at an annual rate of three hundred twenty-five thousand dollars
($325,000), which shall be payable bi-weekly or otherwise in
accordance with the Company’s regular payroll practices.
Employee’s base salary, as in effect at any time, is
hereinafter referred to as the “Base Salary.” The Base
Salary may be increased from time to time in accordance with normal
business practices of the Company and, if so increased, shall not
thereafter be reduced unless any such reduction occurs on a
proportionate across-the-board basis among all executive employees
of the Company (the “Key Employees”), provided that in
no event shall the Base Salary as a result of any such reduction be
reduced to an annual rate below three hundred twenty-five thousand
dollars ($325,000) without the consent of Employee. Compensation of
Employee by salary payments shall not be deemed exclusive and shall
not prevent Employee from participating in any other compensation,
bonus or benefit plan of the Company. The salary payments hereunder
shall not in any way limit or reduce any other obligation of the
Company
hereunder, and no other
compensation, benefit or payment hereunder shall in any way limit
or reduce the obligation of the Company to pay Employee’s
salary hereunder.
(b) Benefits . In addition to
salary as provided above, the Company shall provide Employee,
during the Term of this Agreement, with the benefits of such
insurance plans, benefit plans, hospitalization plans and other
perquisites as shall be generally provided to Key Employees and for
which Employee may be eligible under the terms and conditions
thereof. In the event that Employee is not permitted to commence
participation in the Company’s medical insurance plan as of
the Effective Date as a result of waiting periods imposed under the
terms of such plan, then the Company shall reimburse Employee for
any COBRA (as defined below) premium paid by Employee between the
Effective Date and the time Employee becomes eligible to
participate in any Company medical insurance plan.
(c) Annual Bonus . For each
of the Company’s fiscal years (each, a “Fiscal
Year”) that occurs during the Term of this Agreement,
beginning with the Fiscal Year ending December 31, 2005, Employee
shall be eligible to earn an annual cash bonus (the
“Bonus”) in a maximum amount equal to one hundred
percent (100%) of Base Salary in respect of such Fiscal Year based
upon the achievement by the Company of such performance goals for
such Fiscal Year as are established by the Compensation Committee
of the Board (the “Compensation Committee”), provided
that, for the Fiscal Years ending December 31, 2005 and December
31, 2006, payment of the Bonus shall be based upon the achievement
of the performance goals for such Fiscal Years set forth in Exhibit
A. In addition to the terms and conditions for payment of any Bonus
(including the terms and conditions set forth in Exhibit A), the
Compensation Committee may, in its discretion, approve the payment
of an additional cash Bonus (the “Additional Bonus”)
for any Fiscal Year in a maximum amount equal to twenty-five
percent (25%) of Base Salary in effect in respect of such Fiscal
Year, so that, in the aggregate, the Bonus and the Additional Bonus
in respect of any Fiscal Year shall be in a maximum amount equal to
one hundred twenty-five percent (125%) of Base Salary for such
Fiscal Year. The Bonus and Additional Bonus, if any, payable to
Employee in respect of any Fiscal Year shall be paid at the same
time that bonuses are paid to other Key Employees, but in any event
within seventy-five (75) days after the conclusion of such Fiscal
Year.
(d) Business Expenses .
Throughout the Term of this Agreement, the Company shall promptly
reimburse Employee for all reasonable out-of-pocket expenses
incurred by Employee in connection with the business of the
Company, including, without limitation, expenses incurred in
traveling between Denver, Colorado and the Company’s
headquarters until the Employee is required to relocate to the
vicinity of the Company’s headquarters in accordance with the
terms of Section 3(e) hereof, and the performance of his duties
under this Agreement upon presentation to the Company by Employee
of a reasonably itemized accounting of such expenses with
reasonable supporting data.
(e) Relocation . The Company
shall pay or reimburse Employee for the reasonable costs and
expenses of relocating from Denver, Colorado to the vicinity of the
Company’s headquarters up to an aggregate amount not to
exceed two hundred fifty thousand dollars ($250,000) (before any
tax gross-up). Such expenses shall include (i) travel,
transportation, meals, temporary lodging and similar related moving
expenses and (ii) closing costs, real estate commissions,
attorney’s fees and other similar costs incurred in
connection with
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the relocation. All expenses subject
to income tax shall be grossed up such that the state and federal
tax effect to Employee is zero. Employee shall not be required to
relocate to the vicinity of the Company’s headquarters until
his home in Denver, Colorado is sold and the Company consummates a
Debt Restructuring (as defined below).
4. TERM . The Term of this
Agreement shall commence on February 21, 2005 (the ”Effective
Date”) and shall continue until the second anniversary of the
Effective Date, unless terminated earlier pursuant to Section 6
hereof (the “Term”), provided, however, that the Term
of this Agreement shall be automatically extended for successive
one-year periods after the second anniversary of the Effective Date
unless either party notifies the other in writing of the notifying
party’s intention not to so extend the Term of this Agreement
(a “Notice of Non-Renewal). Any Notice of Non-Renewal must be
given to the other party not later than the first anniversary of
the Effective Date to terminate the Term of this Agreement as of
the second anniversary of the Effective Date, and after such first
anniversary not later than any subsequent anniversary of the
Effective Date to terminate the Term of this Agreement as of the
immediately succeeding anniversary date.
5. EQUITY PARTICIPATION
.
(a) Restricted Stock . The
Company is contemplating a restructuring of its capital structure
upon terms that will be approved by the Board (the “Debt
Restructuring”) in which Employee is expected to play a
critical role. To induce Employee to accept employment with the
Company, promptly following consummation of the Debt Restructuring
(if any), Employee shall receive a grant of restricted shares (the
“Restricted Shares”) representing one and one-quarter
percent (1.25%) of each class or series of equity securities of the
Company as herein provided (each such class or series, a
“Class”) outstanding immediately following the
completion of the Debt Restructuring and after giving effect to
such grant and to any other similar grant (a “Parallel
Inducement Grant”) to any other officer of the Company,
calculated on a Fully Diluted Basis, as determined in good faith by
the Board or an authorized committee thereof. For purposes of this
Section 5(a), a Class of Restricted Shares shall include common
stock, each class or series of preferred stock, and each class or
series of warrants to purchase preferred stock, but only if such
class or series of warrants is in-the-money as of the date of
determination. To the extent reasonably practicable, any grant of
common stock shall be made in the form of restricted stock units
containing terms consistent with the terms of this Section 5(a). If
the Debt Restructuring shall be accomplished in more than one
transaction, Employee shall receive a grant of Restricted Shares of
each new Class, if any, authorized and issued in connection with,
and outstanding immediately following the consummation of, such
subsequent transaction promptly following such consummation so
that, immediately following such consummation and after giving
effect to such grant and any Parallel Inducement Grant, the
Restricted Shares of such new Class granted to Employee shall equal
one and one-quarter percent (1.25%) of such new Class on a Fully
Diluted Basis, as determined in good faith by the Board or an
authorized committee thereof. For purposes of this Section 5(a),
“Fully Diluted Basis” shall mean, with respect to
shares of each Class as of the date of determination, the sum of
(x) the number of shares of such Class outstanding as of such date
of determination plus (y) the number of shares of such Class
issuable as of such date of determination upon the exercise,
conversion or exchange of all then-outstanding options, stock
units, indebtedness or other rights (other than preferred stock or
warrants exercisable, convertible or exchangeable for or into such
Class that are separately
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granted to Employee hereunder)
exercisable for or convertible or exchangeable into, directly or
indirectly, shares of such Class, whether at the time of issuance
or upon the passage of time or upon the occurrence of vesting or
other future event, provided that such options, stock units,
indebtedness or other rights are in-the-money as of such date of
determination, but excluding the number of shares of such Class, if
any, issuable as of such date of determination in payment of
accrued and unpaid dividends on such Class. If the holders of any
Class shall agree in any subsequent transaction involving the Debt
Restructuring to exchange such Class for a new Class, or to accept
cancellation of such Class in consideration for the issuance of a
new Class, Employee’s right hereunder to receive a grant
representing one and one-quarter percent (1.25%) of such new Class,
calculated on a Fully Diluted Basis, promptly following the
consummation of such transaction shall be conditioned on the
concurrent surrender by Employee to the Company of such
Employee’s ownership of the Class so exchanged or canceled
or, as the case may be, the number of shares of common stock that,
upon grant to Employee hereunder, were calculated based on the
Class so exchanged or canceled. Notwithstanding the foregoing, if
the Board determines in good faith, after consulting with Employee,
that it is not practicable to issue a particular Class of
Restricted Shares to Employee, the Board shall grant Restricted
Shares of a different Class (the “Replacement Restricted
Shares”) to Employee in lieu of the Restricted Shares not
granted to Employee. The Replacement Restricted Shares shall be
economically equivalent to the Class of Restricted Shares in
respect of which they are being granted, as determined in good
faith by the Board or an authorized committee thereof. For purposes
of determining economic equivalence, no value shall be ascribed to
the voting rights of the Restricted Shares in respect of which the
Replacement Restricted Shares are being granted. To the extent that
the Debt Restructuring is accomplished by means of a sale of all or
substantially all of the Company’s assets, or a merger or
stock sale as a result of which there are no shares of any Class
outstanding following consummation of the Debt Restructuring, in
lieu of the Restricted Shares, Employee shall receive upon
consummation of the Debt Restructuring consideration equal to one
and one-quarter percent (1.25%) of the consideration received by
all Classes in the Debt Restructuring (i) to the extent practicable
under the terms of the transaction, in the same form and proportion
as received by each such Class, and (ii) to the extent not
practicable under the terms of the transaction, in cash equal to
the fair market value of such consideration as determined in good
faith by the Compensation Committee, forty percent (40%) of which
shall vest immediately and sixty percent (60%) of which shall vest
on the same schedule on which the Restricted Shares would have
vested pursuant to Section 5(b).
(b) Vesting of Restricted
Shares . Subject to the immediately following sentence and
acceleration of vesting as set forth in Section 6(a) hereof, the
Restricted Shares shall vest as follows: (i) sixty percent (60%) of
each Class of the Restricted Shares shall vest ratably over three
(3) years on each anniversary of the Effective Date (collectively,
the “Time Vested Stock”); (ii) twenty percent (20%) of
each Class of the Restricted Shares shall vest on the Performance
Achievement Date (as defined below) upon achievement of $90 million
of EBITDA (as defined below) for any EBITDA Performance Period (as
defined below); and (iii) twenty percent (20%) of each Class of the
Restricted Shares shall vest on the Performance Achievement Date
upon achievement of $105 million of EBITDA for any EBITDA
Performance Period. Notwithstanding the foregoing, if
payment-in-kind dividends in shares of any Class (“PIK
Shares”) shall be payable in respect of such Class, vesting
of the Restricted Share
