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EXHIBIT 10.24
EMPLOYMENT AND NON-DISCLOSURE AGREEMENT
THIS EMPLOYMENT AND NON-DISCLOSURE AGREEMENT ("Agreement") is made as of
this 4th day of January, 1996, by and between UStel, Inc., ("Employer"), and Xxx
X. Xxxx, an individual ("Employee"), with reference to the following facts:
R E C I T A L S
WHEREAS Employee has been employed under an informal employment agreement
with Employer since June, 1995;
WHEREAS the parties hereto wish to formalize the employment relationship as
more fully set forth herein;
WHEREAS, as a result of Employee's employment with Employer, Employee has
acquired knowledge of Employer's trade secrets, including confidential
information concerning product and service marketing plans and strategy, pricing
policies, customer needs and peculiarities and customer lists and detailed
information regarding Employee's technology incorporated in Employer's products
and services (the "Trade Secrets");
WHEREAS, Employer desires that Employee be employed as set forth herein,
such employment to become effective on the date first set forth above; and
WHEREAS, Employee is willing to be employed by Employer as described under
the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, and for other good and valuable consideration, it is
hereby agreed by and between the parties hereto as follows:
1. Employment, Services, and Duties
1.1 Employer hereby employs Employee and Employee hereby agrees to
perform the services of General Counsel with the duties consistent therewith.
Employee agrees to devote 75% of his working time to rendering the services for
which Employee has been hired. Employee may provide services in relation to his
outside personal business, including, but not limited to Micro Xxxx. Employee
shall render his services to Employer by and subject to the instructions and
directions of Employer's Chief Executive Officer to whom Employee shall directly
report.
1.2 Employee shall be entitled to perform his services at Employer's
Los Angeles office and Employer shall provide an
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appropriate office, secretarial staff and equipment in Los Angeles to enable
Employee to adequately perform his duties therein during the term of this
Agreement.
2. Term and Termination
2.1 Unless sooner terminated pursuant to Paragraph 2.2 hereof,
Employee's employment shall commence on the date first set forth above and shall
continue for a period of three (3) years unless extended by the mutual agreement
of Employer and Employee (the "Term").
2.2 Employee's employment shall terminate prior to the expiration of
the Term upon the happening of any of the following events:
(a) Upon the death of Employee;
(b) For cause by the Employer, that is to say only:
(i) if Employee is convicted of (or pleads nolo contenders
to) or at any time prior to employment by Employer has been convicted of (or
pled nolo contenders to) a crime of dishonesty or breach of trust or crime
leading to incarceration of more than ninety (90) days (including, without
limitation, embezzlement or theft from Employer) or the payment of a penalty or
fine of $10,000, or more;
(ii) upon a determination by Employer that Employee has
engaged in willful misconduct in the performance of his duties under this
Agreement or has refused to perform the services which he has been hired to
perform, or has committed an act of fraud, theft or dishonesty against Employer;
(iii) if Employee has materially breached any of the terms
of this Agreement or any other material legal obligation to Employer including,
without limitation, a breach of trust or fiduciary duty involving Employer or a
material violation of policies or procedures of Employer and has not cured any
such breach within thirty (30) days after having been given written notice
thereof by Employer; or
(iv) Any determination of "cause" as used in this Section
2.2(c) shall be made only in good faith by an affirmative majority vote of the
Board of Directors of the Employer;
(d) By mutual agreement between Employer and Employee; or
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(e) Without cause, by Employer or at Employee's option upon a
change in control of Employer (e.g. there is a change in the beneficial
ownership of the controlling equity of Employer sufficient to elect a majority
of the Board of Directors.)
2.3 Except for the remaining obligations set forth in Sections 7, 8,
9 and 10 herein, in the event that Employee's employment is terminated pursuant
to Sections 2.2(a), (b), (c), or (d) herein, neither Employer nor Employee shall
have any remaining duties or obligations hereunder, except that Employer shall
pay to Employee, or his representatives, on the date of termination of
employment ("Termination Date"),
(i) such compensation as is due pursuant to Section 3.1(a)
herein, prorated through the Termination Date; and
(ii) expense reimbursements and car allowances due and owing
to Employee as of the Termination Date.
2.4 Except for the remaining obligations set forth in Sections 7, 8,
9 and 10 herein, in the event that Employee's employment is terminated pursuant
to Section 2.2(e) (without cause or pursuant to Employee's option upon a change
in control), neither Employer nor Employee shall have any remaining duties or
obligations hereunder, except that Employer shall pay to Employee, or his
representatives, on the Termination Date,
(i) in one lump sum, all such compensation as is due
pursuant Section 3.1(a)(1),(2) and (3) through the Term;
(ii) whatever non-discretionary bonus or incentive
compensation is provided by any plan for the year of termination, prorated
through the Termination Date; and
(iii) expense reimbursements, if any, due and owning to
Employee as of the Termination Date.
2.5 There is no Section 2.5.
2.6 There is no Section 2.6.
2.7 This Agreement shall not be terminated by any:
(a) Merger, whether the Employer is or is not the surviving
corporation; or
(b) Transfer of all or substantially all of the assets or
capital stock of the Employer.
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2.8 In the event of any merger, transfer of assets or capital stock,
dissolution, liquidation, or consolidation, the surviving corporation or
transferee, as the case may be, shall be bound by and shall have the benefits
of this Agreement, and the Employer shall take all action to ensure that such
corporation or transferee is bound by the provisions of this Agreement,
provided however, that upon a change of control Employee may terminate his
employment pursuant to Section 2.2(e) above.
3. Compensation
3.1 As the total consideration for the services which Employee
agrees to render hereunder, Employee is entitled to the following:
(a) A salary ("Salary") of
(1) Sixty Thousand Dollars ($60,000) in year one of the
Agreement, payable in equal installments monthly on those days when Employer
normally pays its employees, said Salary to be subject to annual review;
(2) Ninety-six Thousand Dollars ($96,000) in year two of
the Agreement commencing August 15, 1996 through August 15, 1997, payable in
equal installments monthly on those days when Employer normally pays its
employees, said Salary to be subject to annual review; and
(3) One Hundred Thirty-two Thousand Dollars ($132,000)
from August 15, 1997 through October 31, 1998, payable in equal installments
monthly on those days when Employer normally pays its employees, said Salary
to be subject to annual review.
(b) Employee shall be entitled to standard vacations based on
number of years of employment with Employer. Employee's vacation shall be under
Employer's usual policies applicable to all employees and Employee shall
further be entitled paid vacation for the Jewish Holidays;
(c) Employer agrees to provide Employee with insurance
coverages and other benefits available to all employees of Employer under its
group plans; and
(d) Such other benefits as the Board of Directors of Employer,
in its sole discretion, may from time to time provide.
(e) This Agreement will automatically renew for successive one
year periods unless terminated in writing 90 days prior to any expiration date
of this Agreement.
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3.2 Employer shall have the right to deduct from the compensation
due to Employee hereunder any and all sums required for social security
and withholding taxes and for any other federal, state, or local tax or charge
which may be in effect or hereafter enacted or required as a charge on the
compensation of Employee.
4 Options and Stock Grant
4.1 Employee shall be entitled to participate in either Employer's
1993 Stock Option Plan or a separate plan consistent herewith (in which case
this Section 4 shall constitute such separate plan), pursuant to which Employee
shall receive the following incentive stock options in year one of the
Agreement:
(a) As a finder's fee for introducing Employer to Cruttenden
Xxxx, Inc., X.X. Xxxxx & Company and Coast Business Credit, 50,000 shares of
Employer's common stock, at an exercise price of Five Dollars ($5.00) per
share, vested on October 1, 1995;
(b) As a finder's fee for introducing Employer to Cruttenden
Xxxx, Inc., X.X. Xxxxx & Company and Coast Business Credit, 50,000 shares of
Employer's common stock at an exercise price of Five Dollars ($5.00) per
share, to vest as of August 15, 1996;
(c) 100,000 shares of Employer's common stock at an exercise
price of Five Dollars ($5.00) per share, to vest as of the date of the closing
of the Coast Business Credit funding or any other financing introduced by
Employee (collectively, "Financing Sources");
(d) In addition, Employer hereby grants to Employee as a
finders fee for introducing Employer to the Financing Sources, Thirty Two
Thousand (32,000) shares of common stock for a consideration of $.01 per share.
Provided however, if Employee quits his employment prior to the expiration
of the restrictions on the stock set forth in paragraph (f) below, he shall
resell such shares to Employer for $.01 per share.
(e) Employee shall grant an irrevocable proxy for three (3)
years in favor of Xxxx Xxxxxxxx on any shares derived from the exercise of
the options granted pursuant to this Section 4.1 of this Agreement;
(f) Employee shall not sell, transfer or hypothecate any shares
derived from the exercise of the options and stock grants granted pursuant to
this Section 4.1 unless and until Employer files a registration statement
under the
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appropriate SEC form (S-1 or S-3) in which case shares shall be included in
such registration, such Form shall be filed on the sooner of when management
options are registered with the SEC or two (2) years from the date hereof;
(g) All shares derived from the exercise of options and stock
grants granted pursuant to this Section 4.1 will be restricted and subject to
Rule 144. The options granted hereunder shall be non-transferable except by will
or descent to the estate of Employee.
(h) The aggregate number of shares subject to the options and
stock grants granted pursuant to this Section 4.1 shall be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Stock of Employer resulting from a subdivision or consolidation of shares or any
other capital adjustment or the payment of a stock dividend or any other
increase or decrease in the number of such shares effected without the
Employer's receipt of consideration therefor in money, services or property, in
the case of options for so long as the options remain outstanding, and in the
case of the stock grants, for so long as the grant is subject to forfeiture as
set forth in paragraph 4(d). Employee may utilize "net exercise" benefits, i.e.
paying for the exercise of his options by cancelling an aggregate number of
options having a "spread value" equal to the aggregate exercise price of the
shares as to which Employee chooses to exercise his options. "Spread value"
shall mean the difference between the option exercise price and the NASDAQ
closing price of the Company's shares on the date before the exercise. Employee,
at his choice, may pay the exercise price of the shares subject to the herein
options, via a two year promissory note, bearing interest at the prime rate,
with interest to accrue and be payable at maturity. All of the options granted
to Employee shall be for a period of five years.
(i) Shares derived from the exercise of the options and stock
grants granted pursuant to this Section 4.1 will have piggyback registration
rights.
(j) All options granted hereunder and all restrictions thereon
and on the stock granted hereunder as set forth in Section 4.1(d)(e) and (f)
above shall vest and all restrictions as set forth in Section 4.1(d)(e) and (f)
above shall terminate upon a change of control or upon the occurrence of any
event described in Section 2.8 above or the event Employee is terminated without
cause pursuant to Section 2(e) above.
4.2 Notwithstanding Sections 3.1(b)(1), Employee shall be entitled to
participate in Employee incentive stock options, such options to be determined
by the Board of Directors in their discretion.
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5. Expenses
5.1 Employer shall reimburse Employee for all travel, lodging,
entertainment and other miscellaneous out-of-pocket expenses reasonably incurred
by him in connection with the performance of the services to be rendered
hereunder. Such reimbursement shall be promptly made upon presentation to
Employer, provided that:
(a) Each such expenditure is of a nature qualifying it as a
proper deduction of the Federal and State Income Tax Return of Employer; and
(b) Employee furnishes to Employer adequate records and other
documentary evidence required by Federal and State statutes and regulations
issued by the appropriate taxing authorities for the substantiation of each
such expenditure as an income tax deduction.
5.2 Employee shall be entitled to expense reimbursement in the
amount of Three Hundred Fifty Dollars ($350) per month for car expenses plus car
insurance and reasonable cellular phone expenses. Such reimbursement shall be
promptly made upon presentation to Employer.
6. Additional Finder's Fee
(a) For services rendered in connection with obtaining the
Financing Sources, Employee shall receive a finder's fee in the amount of two
percent (2%) of the aggregate amount raised by the Financing Sources in notes or
equity or both. Such finder's fee to be paid in cash at the closing of each
financing.
(b) Notwithstanding Section 5.1, Employee may at Employer's
sole discretion receive a bonus at the end of each year during the term of this
Agreement.
7. Non-competition
(a) With the exception of Micro Xxxx'x products or services,
during the term of this Agreement, Employee shall not, directly or indirectly,
engage or participate in, prepare or set up, assist or have any interest in any
person, partnership, corporation, firm, association, or other business
organization, entity or enterprise (whether as an employee, officer, director,
agent, security holder, creditor, consultant or otherwise) that engages in any
activity, which is the same as, similar to, or competitive with any activity
now engaged in by Employer or in any way relating to the business currently
conducted by Employer in those geographic areas where Employer conducts its
business.
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(b) Nothing contained in this Agreement shall be
deemed to preclude Employee from purchasing or owning, directly or
beneficially, as a passive investment, one percent (1%) or less of
any class of a publicly traded security of any entity, if he does not
actively participate in or control, directly or indirectly, any
investment or other decisions with respect to such entity.
8. Confidentiality
Employee shall keep all Trade Secrets confidential; use
Trade Secrets only in the course of his duties hereunder; maintain in
trust, as Employer's property, all documents concerning Employer's
business, including his own work papers of any kind including
telephone directories and notes, and any and all copies thereof in
his possession or under his control; and transfer to Employer all
documents that belong to Employer and any and all copies that are in
his possession or under his control when his Employment terminates,
or at any other time upon request by Employer.
9. Injunctive Relief
Employee hereby acknowledges and agrees that it would
be difficult to fully compensate Employer for damages resulting from
the breach or threatened breach of Sections 4 and 5 herein and,
accordingly, that Employer shall be entitled to temporary and
injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages therewith.
This provision with respect to injunctive relief shall not, however,
diminish Employer's right to claim and recover damages or enforce any
other of its legal and/or equitable rights or defenses.
10. Severable Provisions
The provisions of this Agreement are severable and if
any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining
provisions, and any partially unenforceable provisions to the extent
enforceable, shall nevertheless be binding and enforceable.
11. Binding Agreement
This Agreement shall inure to the benefit of and shall
be binding upon Employer, its successors and assigns.
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12. Captions
The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement
or the intent of any provisions hereof.
13. Entire Agreement
This Agreement contains the entire agreement of the parties relating
to the subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth otherwise herein. This Agreement supersedes any and all
prior agreements, written or oral, between Employee and Employer and its
affiliates. No modification of this Agreement shall be valid unless made in
writing and signed by the parties hereto and unless such writing is made by an
executive officer of Employer. The parties hereto agree that in no event
shall an oral modification of this Agreement be enforceable or valid.
14. Governing Law
This Agreement shall be governed and construed in accordance with the
laws of the State of California.
15. Notices.
All notices and other communications under this Agreement shall be in
writing (including, without limitation, telegraphic, telex, telecopy or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered by hand or by a nationally recognized courier service guaranteeing
overnight delivery to a party at the following address (or to such other
address as such party may have specified by notice given to the other party
pursuant to this provision):
If to the Employer, to:
Xxxx Xxxxxxxx, President
UStel, Inc.
0000 Xxxxx Xxxxxxx Xxxx.
Xxx Xxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Employee, to:
Xxx Xxxx
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
All such notices and communications shall, when mailed, telegraphed,
telexed, telecopied, cabled or delivered, be effective three days
after deposit in the mails, delivered to the telegraph company,
confirmed by telex answerback, telecopied with confirmation of
receipt, delivered to the cable company, delivered by hand to the
addressee or one day after delivery to the courier service.
16. Attorney's Fees.
In the event that any party shall bring an action or
proceeding in connection with the performance, breach or
interpretation hereof, then the prevailing party in such action as
determined by the court or other body having jurisdiction shall be
entitled to recover from the losing party in such action, as
determined by the court or other body having jurisdiction, all
reasonable costs and expense of litigation or arbitration, including
reasonable attorney's fees, court costs, costs of investigation and
other costs reasonably related to such proceeding.
IN WITNESS WHEREOF, this Employment Agreement is executed as
of the day and year first above written.
"EMPLOYER"
USTEL, INC.
By: _________________________
Name: Xxxx Xxxxxxxx
Title: President
"EMPLOYEE"
_____________________________
Xxx Xxxx
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