Exhibit 10.13
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, made as of this 14th day of January, 1997, by
and between:
US WATS, Inc., a corporation having its business office at 000 Xxxxxxxxxxxx
Xxxxxxxxx, Xxxx Xxxxxx, XX 00000 (hereinafter referred to as "COMPANY").
AND
Xxxxx X. Xxxxx, an adult individual presently residing at 0000 Xxxxx Xxxx,
Xxxxxxxxxx Xxxxxx, XX 00000 (hereinafter referred to as "CONSULTANT").
WHEREAS, COMPANY desires to provide potential investors with the assurance
of continued availability of key personnel, on certain protective terms and
conditions, so as to provide business continuity;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
forebearances contained herein, and intending to be legally bound, the
parties have agreed as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT
(a) The parties hereby agree that the "Employment Agreement" dated
December 23, 1993 between the parties, and all amendments thereto, is
terminated effective this date and, further, that CONSULTANT shall no
longer be employed in any capacity with COMPANY.
(b) CONSULTANT agrees that he shall not, at any time in the future,
seek re-employment with COMPANY or any affiliated entity.
2. TERM
(a) This Agreement shall become effective as of the date
hereof.
(b) This Agreement shall continue and exist for an initial
period from the effective date to January 13, 2003.
(c) This Agreement shall be automatically renewed and
extended for an additional period of one (1) year, unless either party
serves upon the other written notice of its intent not to renew no later
than thirty (30) days prior to the expiration of the initial term.
(d) Notwithstanding the foregoing, the term of this Agreement
is otherwise subject to the termination provisions contained hereafter.
3. COMPENSATION
(a) For all services rendered under this Agreement, COMPANY
shall pay CONSULTANT the gross amount of $125,000.00 annually. Such
payment is to be made in equal installments at intervals no greater than
semi-monthly.
(b) This compensation shall be increased annually on January
14th of each year ("Anniversary Date"), beginning January 14th of 1998 as
follows:
(1) The index number of the Consumer Price Index - Urban
Consumer, All Items, U.S. Cities' Average (1982-4'100) published by the
Bureau of Labor Statistics of the United States for August, 1991, shall be
the denominator of a fraction. The numerator of the fraction shall be the
like index number for the August immediately preceding the applicable
Anniversary Date.
(2) Multiply said fraction, if in excess of 1.00, by the
then current annual compensation.
(3) The resulting amount shall be such compensation for
the following twelve month period.
(c) At the end of each calendar year, the Board of Directors
of COMPANY shall review the performance of CONSULTANT during the preceding
year and, based upon such evaluation, may establish any increase in the
amount payable to CONSULTANT for the succeeding calendar year. However,
COMPANY shall not be obligated to provide any increase.
4. DUTIES/STATUS AS INDEPENDENT CONTRACTOR
(a) CONSULTANT shall render only consulting services, limited
to telephonic consultations regarding investment banking, to COMPANY and
shall only render such consulting services as are from time to time
requested in writing by the President of the COMPANY. CONSULTANT agrees
and acknowledges that he is not to appear at the COMPANY'S workplaces,
without the prior written approval of the President of the COMPANY, and he
further agrees and acknowledges that he shall have no contact, of any
nature whatsoever, with any COMPANY employee, other than its President,
without the prior written approval of the President. CONSULTANT is not
authorized to act on behalf of the COMPANY or to represent the COMPANY to
third parties without the prior written approval of the President.
Notwithstanding the provisions of this subparagraph, CONSULTANT shall have
the same right as other shareholders to attend special and regular
shareholder meetings, so long as he remains a shareholder of the COMPANY.
(b) The CONSULTANT is an independent contractor and is not an
officer, director, employee or agent of the COMPANY for any purpose
whatsoever. The CONSULTANT does not have, nor shall he hold himself out as
having, any right, power or authority to create any contract or obligation,
express or implied, on behalf of, in the name of, or binding upon the
COMPANY, or to pledge the COMPANY's credit, or to extend credit in the
COMPANY's name, unless the COMPANY shall consent thereto, in advance, in
writing.
(c) As a result of his status as an independent contractor,
the CONSULTANT hereby acknowledges and agrees that he is not entitled to
any form of indemnification from the COMPANY for any actions taken or
omissions made by the CONSULTANT in connection with or pursuant to the
services to be performed by the CONSULTANT under this Agreement, whether
such indemnification may otherwise be available under applicable corporate
law, the COMPANY's charter or By-Laws, any insurance policy maintained by
the COMPANY, or any other agreement of the COMPANY, including without
limitation the Indemnity Agreement between the COMPANY and the CONSULTANT
dated as of August 1, 1990.
(d) The CONSULTANT hereby agrees to indemnify and hold
harmless the COMPANY, and its affiliates, and their respective officers,
directors, agents, and employees, and their respective successors and
assigns (collectively, the "Indemnified Parties"), from and against any and
all claims, demands, loss, cost, liability or expense (including reasonable
attorneys' fees, fees for appeals, and settlement payments), whenever
arising or asserted, incurred as a result of (i) the breach of any
representation, warranty or covenant made by the CONSULTANT herein or the
breach of any provision of this Agreement by the CONSULTANT; (ii) the
performance by the CONSULTANT of any of his obligations hereunder; or (iii)
the acts or omissions of the CONSULTANT taken pursuant to this Agreement,
including without limitation any employment-related claim asserted by an
employee or agent of the CONSULTANT or the COMPANY.
(e) In the event that an Indemnified Party receives a claim
or notice of suit likely to give rise to a request for indemnification
hereunder, the Indemnified Party shall give the CONSULTANT prompt notice of
such action, proceeding, claim or liability, and upon receiving such
notice, the CONSULTANT agrees to defend against such action, proceeding,
claim or liability at the CONSULTANT's sole expense. If the CONSULTANT,
prior to the expiration of thirty (30) days after receipt of notice of any
claim by an Indemnified Party under this section, has not assumed the
defense thereof, the Indemnified Party may thereupon undertake the defense
thereof on behalf of, and at the risk and expense of, the CONSULTANT, with
all costs and expenses of such defense to be paid by the CONSULTANT. An
Indemnified Party shall not settle such a claim without the consent of the
CONSULTANT.
(f) The parties acknowledge that the provisions set forth in
subparagraphs 4(a) through 4(e) are material terms of this Agreement and
that the breach thereof by CONSULTANT will give the COMPANY the right to
terminate this Agreement immediately and without prior notice, at the
COMPANY's sole discretion.
5. WORKING FACILITIES
CONSULTANT shall not be granted an office or other working space
at any of the COMPANY's workplaces and/or facilities, nor shall he receive
clerical help, telephone services or other facilities for the performance
of his services hereunder. CONSULTANT shall be solely responsible for
furnishing all working facilities needed for the performance of his
services hereunder and shall bear the full cost thereof.
6. EXPENSES
CONSULTANT is not authorized to incur expenses on behalf of, or
chargeable to, COMPANY without the express prior written approval of the
President. The parties agree and acknowledge that it is their intent that,
except in extraordinary circumstances, all expenses incurred by CONSULTANT
in connection with his provision of services hereunder shall be the
responsibility solely of CONSULTANT.
7. NONDISCLOSURE OF INFORMATION
CONSULTANT recognizes and acknowledges that, during the course of
this Agreement, he may have access to valuable proprietary information,
including, but not limited to: contractual arrangements and compensation
arrangements with subcontractors and customers of COMPANY; compensation
arrangement with subcontractors, vendors, and outside personnel; estimating
and bidding methods, procedures, and amounts; management and operating
procedures and software; management information systems, etc., marketing
plans and strategy; personnel policies and contractual arrangement,
including job assignments and compensation; customer leads; customer lists;
and that such information constitutes unique assets of the business of
COMPANY. CONSULTANT will not, during or after the term of this Agreement,
personally use or disclose all, or any part of, such proprietary
information to any person, firm, corporation, association, agency, or other
entity except as properly required in the conduct of the business of the
COMPANY, or except as authorized in writing by COMPANY. CONSULTANT will
not publish, disclose or authorize anyone else to publish or disclose, any
secret or confidential matter relating to any aspect of the business of the
COMPANY with which CONSULTANT's service may in any way have acquainted
CONSULTANT. In the event of a breach, or threatened breach, by CONSULTANT,
of the provisions of this Paragraph, COMPANY shall be entitled to a
preliminary, temporary and permanent injunction restraining CONSULTANT from
disclosing in whole or in part, any such proprietary information and/or
from rendering any such services to any person, firm, corporation,
associations, agency, or other entity to whom such information, in whole or
in part, has been disclosed or is threatened to be disclosed. Furthermore,
nothing herein shall be construed as prohibiting COMPANY from pursuing any
other equitable or legal remedies available to it for such breach or
threatened breach, including the recovery of damages from CONSULTANT.
8. NONSOLICITATION COVENANT
(a) During, and for a period of eighteen (18) months after
the termination of, this Agreement (including any extension thereof) (the
"Post Termination Period"), CONSULTANT shall not solicit, directly or
indirectly, by any means, any of the clients, account, employees or "leads"
of COMPANY during the Post Termination Period.
(b) COMPANY and CONSULTANT agree that if any court of
competent jurisdiction shall, for any reason conclude that any portion of
this covenant shall be too restrictive, the court shall determine and apply
lesser restrictions, it being the intent of the parties that some such
restrictions shall be applicable for the protection of COMPANY and its
shareholders.
(c) This covenant has been given to induce COMPANY to enter
into this Agreement.
9. DISABILITY AND DEATH
(a) If the CONSULTANT is unable to perform his services by
reason of illness or incapacity for a period of more than twenty-one (21)
consecutive work days, or more than four (4) weeks in any two-month period,
the amounts otherwise payable to him thereafter during the continued period
of such illness or incapacity may, at the option of the COMPANY be reduced
by twenty percent (20%).
(b) In the event that the CONSULTANT dies prior to the
expiration of the term of the Agreement, the compensation which would have
been paid to him will be paid to CONSULTANT's spouse, and may, at the
option of the COMPANY, be reduced by twenty percent (20%).
10. TERMINATION
This Agreement shall cease and terminate upon the occurrence of
any one of the following events:
(a) The expiration of this Agreement's term under paragraph 2
herein;
(b) "For cause" which shall be defined as (i) breach by the
CONSULTANT of any material term or provision of this Agreement as
determined in the good faith judgment of the Board of Directors of the
COMPANY; (ii) any conduct of CONSULTANT within the course of the provision
of services hereunder or otherwise which would adversely affect the
COMPANY's reputation in the community or with the public, as determined in
the good faith judgment of the Board of Directors; (iii) dishonesty, fraud,
misappropriation or embezzlement by CONSULTANT in connection with the
COMPANY's business, as determined in the good faith judgment of the Board
of Directors.
(c) The COMPANY's exercise of its rights to terminate this
Agreement shall be without prejudice to any other remedy which the COMPANY
may be entitled to at law, in equity, or under any other provision of this
Agreement. Nothing in this subparagraph or paragraph shall affect
CONSULTANT's obligations under paragraphs 8 and 9 of this Agreement.
11. RELEASE.
In consideration of the signing of this Agreement, CONSULTANT and
his beneficiaries, heirs, successors and assigns, release forever the
COMPANY and its officers, directors, employees, agents, predecessors,
successors and assigns, from all actions, suits, claims and demands in law
or equity, that he ever had, now has, or hereafter may have, resulting from
anything which has happened up until now, including but not limited to any
and all claims relating in any way to his employment relationship, the
termination thereof, his removal from the position of Chairman of the Board
of Directors of the COMPANY, his removal from the Board of Directors of the
COMPANY, or the execution of this Agreement with the COMPANY. This
Release includes, but is not limited to, any claims arising under the
Employee Retirement Income Security Act, The Pennsylvania Human Relations
Act, Title VII of the Civil Rights Act of 1964, as amended, The Americans
With Disabilities Act, The Age Discrimination in Employment Act, The
Pennsylvania Constitution, the parties' previous Employment Agreement, and
all amendments thereto, or any other federal, state or local law or
ordinances, and any common law claims under tort, contract, or any other
theories now or hereafter recognized.
12. WAIVER OF BREACH
The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
13. BENEFIT
The rights and obligations of COMPANY under this Agreement shall
inure to the benefit of, and shall be binding upon, its successors and
assigns.
14. NOTICES
Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing, and if sent by certified mail to his
residence in the case of CONSULTANT, or to its principal office in the case
of COMPANY.
15. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by final and binding
arbitration in the County of Philadelphia, State of Pennsylvania, in
accordance with the rules then in effect of the American Arbitration
Association - Philadelphia Regional Office, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof, except
that the Company shall have the option of seeking remedy for any alleged
breach or threatened breach of paragraph 8 or 9 hereof in any court of
competent jurisdiction. The arbitrator shall have the power to make
CONSULTANT whole for any breach of this Agreement by COMPANY.
16. ENTIRE AGREEMENT
This instrument contains the entire agreement of the parties and
supersedes any other discussions, representations, and agreements prior to
and contemporaneous with the execution of this agreement and may be
modified only by agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
17. APPLICABLE LAW
This Agreement shall be governed for all purposes by the laws of
the Commonwealth of Pennsylvania. If any provision of this Agreement is
declared void, such provision shall be deemed severed from this Agreement,
which shall otherwise remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto set their hands and seals as of the day and year hereinabove
written.
US WATS, INC.
BY:________________________________________
XXXXX X. X'XXXX
President and Chief Executive Officer
__________________________________________
XXXXX X. XXXXX
