Document:

<PAGE>   1
                                                                   EXHIBIT 10.59

                              ASSIGNMENT AGREEMENT

                This ASSIGNMENT AGREEMENT (this "AGREEMENT") is entered into by
and between the parties designated as Assignors ("ASSIGNORS") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agreement, as amended, supplemented or otherwise modified
to the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "CREDIT AGREEMENT", the terms defined
therein and not otherwise defined herein being used herein as therein defined).

                IN CONSIDERATION of the agreements, provisions and covenants
herein contained, the parties hereto hereby agree as follows:

SECTION 1. ASSIGNMENT AND ASSUMPTION.

                (a)     Effective upon the Settlement Date specified in Item 4
of the Schedule of Terms (the "SETTLEMENT DATE"), Assignors hereby sell and
assign to Assignee, without recourse, representation or warranty (except as
expressly set forth herein), and Assignee hereby purchases and assumes from
Assignors, (i) the principal amount of each Assignor's Series B Term Loans,
Series C Term Loans and Series A Revolving Loans set forth on Schedule I to the
Schedule of Terms which in the aggregate represents, as of the Settlement Date,
the percentage interest specified in Item 3 of the Schedule of Terms of all
rights and obligations of Lenders arising under the Credit Agreement and the
other Loan Documents with respect to the outstanding Loans (subject to the
restrictions on voting contained in subsection 9.6 of the Credit Agreement) (the
"ASSIGNED SHARE").

                (b)     In consideration of the assignment described above,
Assignee hereby agrees to pay to Administrative Agent, on behalf of and for
distribution to Assignors, on the Settlement Date, the aggregate principal
amount of the Loans set forth on Schedule I and included within the Assigned
Share, such payment to be made by wire transfer of immediately available funds
in accordance with the applicable payment instructions set forth in Item 5 of
the Schedule of Terms.

                (c)     Assignors hereby represent and warrant that Schedule I
to and Item 3 of the Schedule of Terms correctly sets forth the amount of the
outstanding Loans and the Pro Rata Share corresponding to the Assigned Share.

                (d)     Assignors and Assignee hereby agree that, upon giving
effect to the assignment and assumption described above, (i) Assignee shall be a
party to the Credit Agreement and shall have all of the rights and obligations
under the Loan Documents (subject to the restrictions on voting contained in
subsection 9.6 of the Credit Agreement), and shall be deemed to have made all of
the covenants and agreements contained in the Loan Documents, arising out of or
otherwise related to the Assigned Share, and (ii) Assignors shall be absolutely
released from any of such obligations, covenants and agreements assumed or made
by Assignee in respect of the Assigned Share. Assignee hereby acknowledges and
agrees that the agreement

<PAGE>   2

set forth in this Section 1(d) is expressly made for the benefit of Borrowers,
Administrative Agent, Assignors and the other Lenders and their respective
successors and permitted assigns.

                (e)     Assignors and Assignee hereby acknowledge and confirm
their understanding and intent that (i) this Agreement shall effect the
assignment by Assignors and the assumption by Assignee of Assignors' rights and
obligations with respect to the Assigned Share (subject to the restrictions on
voting contained in subsection 9.6 of the Credit Agreement), (ii) any other
assignments by Assignors of a portion of theirs rights and obligations with
respect to any outstanding Loans shall have no effect on the outstanding Loans
and the Pro Rata Share corresponding to the Assigned Share as set forth in Item
3 of the Schedule of Terms or on the interest of Assignee in any outstanding
Loans corresponding thereto, and (iii) from and after the Settlement Date,
Administrative Agent shall make all payments under the Credit Agreement in
respect of the Assigned Share (including all payments of principal and accrued
but unpaid interest with respect thereto) (1) in the case of any such interest
that shall have accrued prior to the Settlement Date, to Assignors, and (2) in
all other cases, to Assignee; provided that Assignors and Assignee shall make
payments directly to each other to the extent necessary to effect any
appropriate adjustments in any amounts distributed to Assignors and/or Assignee
by Administrative Agent under the Loan Documents in respect of the Assigned
Share in the event that, for any reason whatsoever, the payment of consideration
contemplated by Section 1(b) occurs on a date other than the Settlement Date.

SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

                (a)     Each Assignor severally represents and warrants that it
is the owner of the Loans included in the Assigned Share set forth opposite its
name on Schedule I, free and clear of any Lien created by Assignor or any
adverse claim.

                (b)     Assignors shall not be responsible to Assignee for the
execution, effectiveness, genuineness, validity, enforceability, collectibility
or sufficiency of any of the Loan Documents or for any representations,
warranties, recitals or statements made therein or made in any written or oral
statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by Assignors to Assignee
or by or on behalf of Borrowers or any of their Subsidiaries to Assignors or
Assignee in connection with the Loan Documents and the transactions contemplated
thereby or for the financial condition or business affairs of the Loan Parties
or any other Person liable for the payment of any Obligations, nor shall
Assignors be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or as to the use of the proceeds of the
Loans or as to the existence or possible existence of any Event of Default or
Potential Event of Default.

                (c)     Assignee represents and warrants that it has experience
and expertise in the making of or investing in loans such as the Loans; that it
has acquired the Assigned Share for its own account in the ordinary course of
its business and without a view to distribution of the Loans within the meaning
of the Securities Act or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of subsection 9.1 of the Credit
Agreement, the disposition of the Assigned Share or any interests therein shall
at all times

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remain within its exclusive control); and that it has received, reviewed and
approved a copy of the Credit Agreement (including all Exhibits and Schedules
thereto).

                (d)     Assignee represents and warrants that it has received
such financial information regarding Borrowers and their Subsidiaries as
Assignee has requested or has deemed necessary, that it has made its own
independent investigation of the financial condition and affairs of Borrowers
and their Subsidiaries in connection with the assignment evidenced by this
Agreement, and that it has made and shall continue to make its own appraisal of
the creditworthiness of Borrowers and their Subsidiaries. Assignors shall have
no duty or responsibility, either initially or on a continuing basis, to make
any such investigation or any such appraisal on behalf of Assignee or to provide
Assignee with any other credit or other information with respect thereto,
whether coming into its possession before the making of the initial Loans or at
any time or times thereafter, and Assignors shall not have any responsibility
with respect to the accuracy of or the completeness of any information provided
to Assignee.

                (e)     Each party to this Agreement severally represents and
warrants to the other parties hereto that it has full power and authority to
enter into this Agreement and to perform its obligations hereunder in accordance
with the provisions hereof, that this Agreement has been duly authorized,
executed and delivered by such party and that this Agreement constitutes a
legal, valid and binding obligation of such party, enforceable against such
party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity.

                (f)     Assignee acknowledges and agrees that as set forth in
subsection 9.6 of the Credit Agreement, neither Assignee nor any Affiliate of
Assignee as holder of any Loans included in the Assigned Share purchased by
Assignee pursuant to this Agreement shall have any voting rights under the
Credit Agreement or other Loan Documents or in respect of the Loans included in
the Assigned Share (including in any bankruptcy proceedings).

SECTION 3. MISCELLANEOUS.

                (a)     Each of the Assignors and Assignee hereby agrees from
time to time, upon request of the other such party hereto, to take such
additional actions and to execute and deliver such additional documents and
instruments as such other party may reasonably request to effect the
transactions contemplated by, and to carry out the intent of, this Agreement.

                (b)     Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except by an instrument in writing
signed by the party (including, if applicable, any party required to evidence
its consent to or acceptance of this Agreement) against whom enforcement of such
change, waiver, discharge or termination is sought.

                (c)     Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt

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of telefacsimile or telex, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed. For the purposes
hereof, the notice address of each of the Assignors and Assignee shall be as set
forth on Schedule II to the Schedule of Terms or, as to either such party, such
other address as shall be designated by such party in a written notice delivered
to the other parties. In addition, the notice address of Assignee set forth on
the Schedule of Terms shall serve as the initial notice address of Assignee for
purposes of subsection 9.7 of the Credit Agreement.

                (d)     In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

                (e)     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO INCONSISTENT CONFLICTS OF LAWS PRINCIPLES.

                (f)     This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

                (g)     This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

                (h)     This Agreement shall become effective upon the date (the
"EFFECTIVE DATE") upon which all of the following conditions are satisfied: (i)
the execution of a counterpart hereof by each of the Assignors and Assignee;
(ii) the execution of a counterpart hereof by Administrative Agent as evidence
of its acceptance hereof in accordance with subsection 9.1B(ii) of the Credit
Agreement; (iii) the receipt by Administrative Agent of originals or
telefacsimiles of the counterparts described above and authorization of delivery
thereof; and (iv) the recordation by Administrative Agent in the Register of the
pertinent information regarding the assignment effected hereby in accordance
with subsection 9.1B(ii) of the Credit Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, such execution being made as of the Effective Date in the applicable
spaces provided on the Schedule of Terms.

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<PAGE>   6

                                SCHEDULE OF TERMS

1.      BORROWERS: e.spire COMMUNICATIONS, INC. and e.spire FINANCE CORPORATION.

2.      NAME AND DATE OF CREDIT AGREEMENT: First Amended and Restated Credit
        Agreement, dated as of September 19, 2000 (as amended or otherwise
        modified through the date hereof), by and among e.spire Communications,
        Inc., e.spire Finance Corporation, the financial institutions listed
        therein as Lenders, Goldman Sachs Credit Partners L.P., as Sole Lead
        Arranger and Syndication Agent, First Union National Bank, as
        Documentation Agent, CIT Lending Services Corporation, as Collateral
        Agent, and The Bank of New York, as Administrative Agent.

3.      AMOUNTS:

<TABLE>
<CAPTION>
                                                        Re: Series A           Re: Series B            Re: Series C
                                                      Revolving Loans           Term Loans              Term Loans
                                                      ---------------           ----------              ----------
        <S>     <C>                                   <C>                      <C>                    <C>
        (a)     Aggregate Loans of all Lenders:        $35,000,000.00          $3,536,955.25          $98,203,209.75
        (b)     Assigned Share/Pro Rata Share:             0.00%                  100.00%                 21.14%
        (c)     Amount of Assigned Share                   $0.00               $3,536,955.25          $20,763,044.75
</TABLE>

4.      SETTLEMENT DATE: December 8, 2000

5.      PAYMENT INSTRUCTIONS:

<TABLE>
        <S>                                   <C>
        ASSIGNORS:                            ASSIGNEE:
        The Bank of New York                  The Bank of New York
        ABA 021000018                         DDA# 890-0259-868
        A/C 803-329-7689                      ABA# 021-000-018
        Special Financial Products            Attention: Jerry Faulstich, 212-635-4920
        Re: E.spire Communications            Reference: Bankers Life & Casualty Company,
                                                         A/C# 014814

6.      NOTICE ADDRESSES:

        ASSIGNORS: See Schedule II hereto.    ASSIGNEE:
                                              The Huff Alternative Income Fund, L.P.
                                              c/o WR Huff Asset Management
                                              1776 on the Green
                                              67 Park Place
                                              Morristown, New Jersey  07960
</TABLE>

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<PAGE>   7

7.         SIGNATURES:

ASSIGNEE:

THE HUFF ALTERNATIVE INCOME FUND, L.P., as Assignee

By: [SIG]
    ------------------------------
    Name:
    Title:

ASSIGNORS:

THE BANK OF NEW YORK                         CONSECO ANNUITY ASSURANCE COMPANY

By:                                          By:
   -------------------------------              --------------------------------
   Name:                                        Name:
   Title:                                       Title:

BANKERS LIFE AND CASUALTY COMPANY            DEUTSCHE BANK AG NEW YORK BRANCH

By:                                          By: /s/ COLLEEN ROUX
   -------------------------------              --------------------------------
   Name:                                        Name: Colleen Roux
   Title:                                       Title: Director

                                             By: /s/ KELVIN CHENG
                                                --------------------------------
                                                Name: Kelvin Cheng
                                                Title: Associate

CARGILL FINANCIAL SERVICES CORPORATION       FOOTHILL CAPITAL CORPORATION

By: /s/ KELLY SCHREURS                       By:
   -------------------------------              --------------------------------
   Name: Kelly Schreurs                         Name:
   Title: Controller                            Title:

CIT LENDING SERVICES CORPORATION             FRANKLIN FLOATING RATE TRUST

By: /s/ JOHN P. SIRICO, II                   By:
   -------------------------------              --------------------------------
   Name: Jogn P. Sirico, II                     Name:
   Title: Vice President                        Title:

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<PAGE>   8

MERRILL LYNCH GLOBAL                         MERRILL LYNCH SENIOR
INVESTMENT SERIES-INCOME                     FLOATING RATE FUND INC.
STRATEGIES PORTFOLIO

By: Merrill Lynch Investment Managers,       By: /s/ ANDREW C. LIGGIO
L.P., as Investment Advisor                     --------------------------------
                                                Name: ANDREW C. LIGGIO
                                                Title: AUTHORIZED SIGNATORY

By: /s/ ANDREW C. LIGGIO
   -------------------------------
   Name: ANDREW C. LIGGIO
   Title: AUTHORIZED SIGNATORY

Consented to and accepted in accordance
with subsections 9.1B(i) and (ii) of the
Credit Agreement:

THE BANK OF NEW YORK,
as Administrative Agent

By: /s/ GERRY GRANOVSKY
   -------------------------------
   Name: Gerry Granovsky
   Title: Vice President

                                       8<PAGE>   1

                                                                   EXHIBIT 10.60

                        e.spire(TM) COMMUNICATIONS, INC.
                              EMPLOYMENT AGREEMENT

        This Employment Agreement (the "Employment Agreement"), made as of this
29th day of December, 2000 by and between e.spire(TM) Communications, Inc., a
Delaware corporation, having its principal place of business at 12975 Worldgate
Drive, Herndon, Virginia 20170 (which, together with any affiliates or
subsidiaries are hereinafter collectively referred to as "Company") and George
F. Schmitt, an individual residing at 240 Estates Drive, Incline Village, Nevada
89450 (hereinafter referred to as "Executive").

                                   WITNESSETH

        WHEREAS, the Company desires to employ the services of Executive as its
Chairman and Acting Chief Executive Officer under the terms and conditions set
forth herein; and

        WHEREAS, Executive desires to provide services as Chairman and Acting
Chief Executive Officer for the Company under the terms and conditions set forth
herein,

        NOW, THEREFORE, in consideration of the promises and of the mutual
covenants undertaken herein, and with the intent to be legally bound hereby, the
Company and Executive hereby agree as follows:

1.      Employment. The Company hereby agrees to employ Executive and Executive
hereby agrees to said employment in accordance with the terms and conditions
hereinafter set forth.

2.      Term. Employment hereunder shall be deemed to have commenced as of
December 29, 2000 (the "Effective Date") and continue through December 29, 2001,
unless terminated earlier pursuant to section 10, or renewed by written
agreement upon such terms and conditions as are then mutually acceptable to the
Executive and the Company.

3.      Location.  The Company shall provide office space, administrative
support (including secretarial assistance, telephone, computer support,
transportation) and related costs for Executive in Incline Village, Nevada, as
well as at the Company's headquarters in Herndon, Virginia.

4.      Duties. Executive shall serve as Chairman and Acting Chief Executive
Officer of the Company, with duties and responsibilities established by the
Company's Board of Directors. Executive shall serve under the general
supervision of the Board. The Board will not appoint or approve any individual
to a position senior to Executive, or to a position that will interfere with
Executive's relationship with the Board, without Executive's express permission,
which he may withhold for any reason. The Executive shall devote the majority of
his business time, attention and efforts to his duties hereunder, except as
otherwise provided in this Employment Agreement. As an officer of the Company,
the Executive shall be entitled to all of the benefits and

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protections to which all other officers and executives of the Company are
entitled pursuant to the Company's Amended By Laws.

5.      Compensation.

        (a)     Base Salary. Executive shall be compensated by the payment of
$70,000 per annum (as such amount may be increased from time to time, ("Base
Salary")), paid bi-weekly. Executive understands that all salary, regardless of
form, paid to Executive under this Employment Agreement shall be subject to the
usual and customary federal and state tax withholding and other employment taxes
as required by law. Executive will receive a review of his base salary on the
anniversary of this Employment Agreement. Additional or increased compensation,
in the form of salary or other compensation, will be based on the Company's
performance as well as his individual contribution to that performance, and
shall be determined at the sole discretion of the Board of Directors.

        (b)     Stock.

                (i)     The Company agrees to sell to the Executive one million
five hundred thousand (1,500,000) shares of common stock of e.spire TM
Communications, Inc. ("Company Stock"), $.01 par value per share, at a per share
price equal to the closing price of the Company Stock on the Effective Date of
this Agreement. The Executive shall pay the purchase price for such shares by
the delivery of a check in the amount of $15,000, representing the par value of
the shares, and by the delivery of a full recourse promissory note for the
remaining amount to be fully repaid within twelve (12) months.

                (ii)    Executive shall be obligated to execute a Subscription
Agreement, a Restricted Stock Purchase Agreement and a Promissory Note and
Pledge Agreement with respect to such shares.

        (c)     Special Bonus. The Executive shall receive a special bonus in
the amount of one million dollars ($1,000,000) contingent on the Company's
achieving EBITDA positive financial results for the third quarter of 2001. Such
bonus shall be payable in cash within fifteen (15) business days following the
publication of the Company's third quarter financial results.

6.      Fringe Benefit Plans. Executive shall be entitled to all benefits
accorded to Company officers in general. Executive shall also be entitled to
participate in fringe benefit plans, including, but not limited to, the
Company's medical and dental insurance, disability insurance, stock option
plans, 401(k) plan, employee stock purchase plan or other benefit plans which
may be adopted or amended by the Company from time to time during the term of
this Employment Agreement to the same extent and in the same manner as other
officers and executives similarly situated, as permitted by law. Except in the
case of terminations pursuant to sections 10(a) or 10(b), the Company agrees to
continue Executive's employment, with regard to payment of salary and
eligibility for benefits only, after the termination or expiration of this
Employment

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Agreement so that he may participate in the Company's fringe benefit plans in
the same manner as other employees, to the extent permitted by those plans, for
a period of five years. Notwithstanding the foregoing, Executive will not
participate in the Company's life insurance plan. Instead, the Company will pay
the annual premium on Executive's existing $2 million life

insurance policy during the term of this Employment Agreement and for two annual
premium periods thereafter.

7.      Executive and Company Representations. Executive hereby represents and
warrants to the Company that: (a) the execution, delivery and performance of
this Employment Agreement by Executive does not and will not conflict with,
breach, violate or cause a default under any contract, agreement, instrument,
order, judgement or decree to which Executive is a party or is presently bound;
and (b) Executive is not a party to or bound by any employment agreement or
non-competition agreement with any other person or entity that has not been
disclosed to Company. Company will not ask Executive to take any action that
will cause him to violate the terms of his termination agreement with
Voicestream or its successors, a copy of which has been provided to Company.

8.      Business Expenses. The Company shall reimburse Executive for all
reasonable business and professional expenses, including travel, incurred by
Executive in connection with his employment within thirty (30) days of the
Company's receipt of vouchers, receipts or other appropriate documentation which
conform to the requirements of the Company's expense reimbursement procedures.
"Reasonable expenses" include all travel expenses between Incline Village,
Nevada and Herndon, Virginia on a bi-weekly basis. "Reasonable expenses" also
include Executive's living expenses, such as housing and transportation, during
the periods he is located at the Company's headquarters at Herndon, Virginia.

9.      Financial Planning Expenses. The Company shall reimburse Executive for
the fees paid to his financial adviser and tax planner, up to a maximum of
$15,000 per year, in addition to reasonable expenses associated with
professional assistance utilized for negotiation of this agreement.

10.     Termination of Employment

        (a)     Termination Due to Death or Disability. In the event that the
Executive's employment terminates due to death or is terminated by the Employer
due to the Executive's Disability, the Company shall have no further obligations
under this Agreement. No post-termination benefits will be payable to Executive
except that, in the event of termination due to Disability, post-termination
life insurance premiums will be paid as provided in section 6, and Executive may
continue to participate in Company's other benefit plans as permitted by the
terms of those plans. For purposes of this Agreement, "Disability" means (i) a
disability as defined in the Company's insurance plan, or (ii) a physical or
mental illness, disability or

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incapacity that prevents the Executive from performing the essential functions
of his position, if the disability has existed continuously for a period of more
than three (3) consecutive months.

        (b)     Termination by the Employer for Cause. The Executive may be
terminated for "Cause" by the Employer. "Cause" will mean (i) the failure of the
Executive substantially to perform his duties hereunder (other than any such
failure due to the Executive's Disability) within a reasonable period after a
written demand for substantial performance is delivered to the Executive by the
Board, which written notice identifies in reasonable detail the manner in which
the Board believes that the Executive has not substantially performed his
duties; (ii) the Executive's engaging in serious misconduct that is or is
expected to be injurious to the Employer or any of its affiliates, including but
not limited to an act of dishonesty, fraud, embezzlement or theft; (iii) the
Executive's conviction of, or entering a plea of nolo contendere to a crime that
relates to the performance of the Executive's duties under this Agreement, to
any felony or to any crime of moral turpitude, with the exception of conviction
for vicarious liability; (iv) the material breach of the Executive of any
material obligations hereunder, or the material breach by the Executive of any
written covenant or agreement with the Employer or its affiliates not to
disclose any information pertaining to the Employer or not to compete or
interfere with the Employer or any of its affiliates, including without
limitation, the provisions of Sections 14-17 hereof, or (v) the Executive's
refusal to perform specific directives of the Board that are consistent with the
scope and nature of the Executive's duties. In the event of termination of
Executive for Cause, Company shall have no further obligations of any kind under
this Agreement.

        (c)     Notice of Termination. Any termination by the Employer pursuant
to Section 10(a) or 10(b), will be communicated by a written "Notice of
Termination" addressed to Executive. The Notice of Termination will state that
the Executive's employment hereunder has been or will be terminated, and
reference the specific termination provisions in this Agreement relied upon and
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for such termination of employment.

        (d)     Termination by Executive With Cause. Executive may terminate
this Agreement for cause, which shall include a change in reporting relationship
described in paragraph 4, breach of contract by the Employer, significant
reduction in Executive's responsibilities, or a failure of a successor company
to assume this Agreement. Any termination by Executive pursuant to this
subsection will be communicated by a written "Notice of Termination" addressed
to the Board of Directors. The Notice will reference the specific termination
provision in this Agreement relied upon and set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such termination.

        (e)     Termination Without Cause. A termination "Without Cause" will
mean a termination of employment by the Employer or Executive other than
termination due to death, Disability or Cause. Termination Without Cause shall
be at the option of either Company or Executive, and may be for any reason
whatsoever, provided that the terminating party gives

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written notice to the other party not later than 90 days prior to the scheduled
expiration of the term of the Agreement.

        (f)     Effect of Termination under subsections (d) and (e), or of
non-renewal. In the event that either party terminates pursuant to subsection
(d) or (e), or this agreement is not renewed at the end of its term pursuant to
section 2, the terms of paragraph 6 shall apply. If Executive has not yet
satisfied the conditions for the special bonus pursuant to section 5(c), he
shall be entitled to a pro rata share.

        (g)     Date of Termination. As used in this Agreement, the term "Date
of Termination" will mean the last date of the Employment Period and will refer
(i) if the Executive's employment is terminated by his death; to the date of his
death, (ii) if the Executive's employment is terminated by the Employer for
Cause, to the date on which Notice of Termination is given; (iii) if the
Executive's employment is terminated by the Employer due to the Executive's
Disability to the date that is thirty (30) days after the date on which Notice
of Termination is given; and (iv) if the Executive's employment is terminated
Without Cause, or by action of the Executive for good cause, to the date that is
ninety (90) days after the date on which Notice of Termination is given, or, if
no such Notice is given, thirty (30) days after the date of termination of
employment.

        (h)     Excise Tax on Change of Control Event. In the event Executive is
subject to any excise or similar taxes under IRC Sections 4999 and 280g for any
compensation associated with a change of control event, e.spire shall pay to or
reimburse Executive the amount of any such excise tax as well as any further
federal, state and local income taxes payable by Executive with respect to such
excise amounts received by Executive from Company.

11.     Purchase of e.spire(TM) Communications, Inc. Securities. The Executive,
for his own account or the accounts of his immediate family, shall have the
right to participate in any private equity offerings in which the Huff
Alternative Income Fund, or any of its affiliates ("Huff") participate, on no
less favorable terms than Huff, subject to all applicable laws including
applicable securities laws and stock exchange requirements.

12.     Loyalty. Executive represents that he has disclosed to the Company in
writing all obligations to third parties that might limit his ability to perform
services under this Employment Agreement. The performance of services hereunder
shall be Executive's exclusive employment relationship and Executive shall
devote the majority of his business time and best efforts to the performance of
services under this Employment Agreement. During the term of this Employment
Agreement, Executive shall not at any time or place whatsoever, either directly
or indirectly, engage in business or render services to any extent whatsoever to
any third party, unless expressly agreed upon by the parties. This paragraph
shall not prohibit Executive from continuing to serve on the Boards of Directors
of up to five corporate entities other than Company. Neither shall this
paragraph preclude Executive from providing consulting services to other
organizations, provided that such services do not interfere with his duties to
e.spire(TM).

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<PAGE>   6

13.     Confidential Information. Executive acknowledges that the proprietary
information, observations and data obtained by Executive while employed by the
Company concerning the business or affairs of the Company or any affiliate or
subsidiary thereof ("Confidential Information") are the property of the Company.
Therefore, Executive agrees not to disclose to any unauthorized person or use
for the Executive's account any Confidential Information without the prior
written consent of the Company unless and to the extent that the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive's acts or omissions. Upon request, Executive shall
deliver to the Company at the termination of this Employment Agreement, or at
any other time the Company may request, all memoranda, notes, plans, records,
reports, and other documents (and copies thereof) relating to the Confidential
Information or the business of the Company. This provision shall not apply to

information (other than Confidential Information even if obtained prior to this
Employment Agreement) deemed to be known by Executive at the time of the
execution of the Employment Agreement, including information gained by virtue of
his past experience and know-how, or to his general expertise.

14.     Work Product. Executive agrees that all methods, analyses, reports,
plans and all similar or related information which: (a) relate to the Company or
any of its affiliates or subsidiaries and which (b) are conceived, developed or
made by Executive in the course of his employment by the Company ("Work
Product") belong to the Company. Executive will promptly disclose such Work
Product to the Company and perform all actions reasonably requested by the
company to establish and confirm such ownership by the Company.

15.     Covenant Not to Solicit. For one (1) year following termination of
employment under the terms of this Employment Agreement, Executive covenants and
agrees with the Company not to, either directly or indirectly, whether acting on
behalf of himself or a corporation, partnership, joint venture or some other
entity:

        (a)     induce or attempt to induce any employee of the Company to leave
the Company's employ, or in any way interfere with the relationship between the
Company and any employee thereof; and/or

        (b)     hire directly or through another entity any person who was an
employee of the Company at any time during the twelve (12) months preceding
Executive's termination.

16.     Covenants Not to Compete or Solicit. For one (1) year following the
termination of Executive's employment with the Company, Executive covenants and
agrees with the Company not to engage, either directly or indirectly, as an
equity owner or personally as an officer, director, employee, partner,
consultant or agent, in the rendering of any of the same services as are
provided by the Company at the time Executive's employment with the Company is
terminated, or which the Company has targeted to provide in its written business
plan which has been approved by the Board of Directors as of the time of such
termination, in any of the market

                                       6
<PAGE>   7

areas in which the Company has targeted to provide such services in its business
plan at the time of such termination, provided that Executive may own up to 2%
of the outstanding equity securities of any publicly-traded company regardless
of whether any such company is a competitor of the Company, so long as
Executive's relationship to any such company is that of a strictly passive
investor.

17.     Specific Performance. The Executive acknowledges that the services to be
rendered by him are of a special, unique and extraordinary character, and in
connection with such services, the Executive will have access to confidential
information vital to the company's business. Therefore, the Executive agrees
that if he violates any of the foregoing paragraphs 14-17, the Company would
sustain irreparable injury and that monetary damages would not provide adequate
remedy to the Company. The Executive hereby agrees that the Company shall be
entitled to have those paragraphs specifically enforced (including, without
limitation, by injunction and restraining order) by any court having equity
jurisdiction, and Executive agrees to subject himself to the jurisdiction of
said court. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages from the Executive.

18.     Reasonableness. The Parties agree that paragraphs 14-18 impose a
reasonable restraint on the Executive in light of the activities and business of
the Company on the date of execution of this Employment Agreement and the
current plans of the Company. Executive acknowledges that the covenants in these
paragraphs shall not prevent him from earning a livelihood upon the termination
of his employment, but merely prevent unfair competition with the Company for a
limited period of time Notwithstanding the foregoing, it is the intent of the
Company and the Executive that such covenants be construed and enforced in
accordance with the changing activities, business and locations of the Company
throughout the term of these covenants. All of these covenants shall be
construed as an agreement independent of any other provision in this Employment
Agreement, and the existence of any claim or cause of action of the Executive
against the Company shall not constitute a defense to the enforcement by the
Company of such covenants. These covenants shall survive the termination or
expiration of this Employment Agreement.

19.     Non-Assignability. Neither this Employment Agreement nor any right or
interest hereunder hall be assignable or subject to any encumbrance, pledge,
hypothecation, attachment, or anticipation of any kind by Executive, his spouse
or his legal representatives, without the company's written consent but shall
inure to the benefit of and be binding upon Executive's estate. If Executive
should die while any amounts would still be payable to Executive under this
Employment Agreement, all such amounts will be paid in accordance with this
Employment Agreement to Executive's estate.

20.     Entire Agreement. This Employment Agreement shall be the entire
agreement and understanding of the parties relating to the subject matter
hereof, and any prior negotiations, promises, agreements, representations,
warranties, or understandings relating to the same subject matter, and except as
specifically provided herein, shall be subject to subsequent modification

                                       7
<PAGE>   8

only by another mutually signed written instrument which by its terms evidences
an intention to modify or amend the provisions hereof.

21.     Choice of Law. This Employment Agreement shall be construed in
accordance with the laws of the State of Delaware without regard to the conflict
of law provisions thereof. For purposes of this Employment Agreement, the
parties consent to jurisdiction in the State of Delaware.

22.     Cost of Enforcement. Each party shall bear its own costs and attorney's
fees in connection with any suit or proceeding against the other to enforce any
provision of this Employment Agreement or to recover damages resulting from a
breach hereof, however, the party which prevails in any such suit or proceeding
shall be entitled to receive from the non-prevailing party the costs and
reasonable attorneys' fees of the prevailing party incurred in such suit or
proceeding.

23.     Severability. In the event that any provision hereof is determined to be
illegal or unenforceable, such determination shall not affect the validity or
enforceability of the remaining provisions hereof, all of which shall remain in
full force and effect.

24.     Waiver. The waiver by either party of a breach of any provision of this
Employment Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by such party.

25.     Counterparts. This Employment Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Employment Agreement
shall become effective upon the execution of a counterpart hereof by each of the
parties hereto.

26.     Notices. Any notice, request, claim, demand, document and other
communication hereunder to either party shall be effective upon receipt (or
refusal of receipt) and shall be in writing and delivered personally or sent by
telex or telecopy (with such telex or telecopy confirmed promptly in writing
sent by first class mail) or other similar means of communications, as follows:

        (i)     If to the Company, addressed to e.spire(TM) Communications
                Services, Inc.,

                      12975 Worldgate Drive
                      Herndon, Virginia 20170
                      Attention:  General Counsel;

                                       8
<PAGE>   9

        (ii)    If to Executive, addressed to him at:

                      240 Estates Drive
                      Incline Village, Nevada 89450

or, in each case, to such other address or telex or telecopy number as such
party may designate in writing to the other by written notice given in the
manner specified herein.

        All such communications shall be deemed to have been given, delivered or
made when so delivered personally or sent by telex or telecopy (confirmation
received), or five business days after being so mailed.

                                       9
<PAGE>   10

        INTENDING TO BE LEGALLY BOUND BY THIS EMPLOYMENT AGREEMENT, the parties
have signed below as of the date first written above.

EXECUTIVE:                                  EMPLOYER:

/s/ GEORGE F. SCHMITT                        /s/ JULIETTE PRYOR
--------------------------------            ---------------------------------
George F. Schmitt                           e.spire(TM) Communications, Inc.

     1-2-01                                     2-26-01
---------------------                       ---------------------
Date                                        Date

                                       10

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