Exhibit 10.08
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT made as of the 16th day of December
1996, by and between US WATS, INC., a New York corporation, with offices at
000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000 (the
"Company"), and XXXXX X. X'XXXX, residing at 00 Xxxxxxxxxxxx Xxxxx,
Xxxxxxxxxx, XX 00000 (the "Executive").
W I T N E S E T H:
WHEREAS, the Company desires to employ the Executive, and the
Executive is willing to be employed by the Company, upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Employment. The Company agrees to and does hereby employ the
Executive, and the Executive agrees to and does hereby accept employment by
the Company, subject to the terms and conditions herein set forth.
2. Term. The term of the Executive's employment hereunder shall
commence on the date hereof (the "Effective Date") and shall terminate
three (3) years thereafter (such period hereinafter referred to as the
"Term").
3. Duties.
3.1 During the Term, the Executive shall be employed as Chief
Executive Officer of the Company and any successors thereto or to its
business, and shall be in charge of and responsible for the general and
supervisory duties normally and customarily attendant to such office and
shall render such other lawful services, and exercise such powers, which
are from time to time requested of him, assigned to him or vested in him by
the Board of Directors of the Company (the "Board") and which are
commensurate with his position as Chief Executive Officer.
3.2 The Executive at his discretion shall also serve as a member
of the Board of Directors of the Company and as a member of the Company's
Compensation Committee.
3.3 The Executive agrees that, during the Term, unless the Board
shall otherwise consent, he will devote such amount of his time, energies,
labor and skills to the business of the Company and to the duties and
responsibilities specified in Section 3.1 as shall be reasonably necessary.
4. Base Compensation. In consideration for services performed
hereunder, the Company shall pay to the Executive an annual base salary of
$200,000 in installments payable in accordance with the Company's customary
payroll practices, but in no event less than one time per month. On each
anniversary of the Effective Date of this Agreement, the Executive's base
salary shall be increased, at a minimum, by an amount equal to the base
salary then in effect multiplied by the percentage increase in the consumer
price index from the preceding year. In addition, the Company shall
reimburse the Executive for all expenses reasonably incurred by him in
connection with the performance of his duties hereunder and the business of
the Company upon the submission to the Company of appropriate receipts
therefor.
5. Benefits and Cash Bonus.
5.1 Throughout the Term, the Executive shall be eligible to
participate in any pension, profit-sharing, stock option or similar plan or
program of the Company now existing or established hereafter for the
benefit of its employees generally, to the extent that he is eligible under
the general provisions thereof. The Executive shall also be entitled to
participate in any group insurance, hospitalization, medical, health and
accident, disability or similar or nonsimilar plan or program of the
Company now existing or established hereafter for the benefit of its
employees or executives generally, to the extent that he is eligible under
the general provisions thereof.
5.2 The Company shall provide the Executive with a policy of
term life insurance in an amount equal to not less than two (2) times his
yearly salary hereunder, payable to such beneficiary or such beneficiaries
as shall be designated in writing by the Executive.
5.3 The Executive shall participate in the Company's profit
sharing bonus pool (the "Bonus Pool") to be implemented by the Compensation
Committee, of which the Executive shall be a member. As currently
contemplated, the Bonus Pool shall provide for the award of cash bonuses to
the Company's executive employees in an amount which, in the aggregate,
shall not exceed 7% of the Company's annual net pre-tax income. The
Compensation Committee shall determine, in its discretion, which eligible
participants in the Bonus Pool shall be entitled to bonus payments
thereunder.
5.4 If the Bonus Pool is not implemented, before the first
anniversary of the Term, or such sooner time as bonus payments have
traditionally been determined and distributed by the Company, then in such
event the Executive shall be entitled to receive a cash bonus equal to 3.5%
of the Company's net pre-tax income.
5.5 The Company shall provide Executive an automobile allowance
of $600 per month to cover Executive's use of his vehicle for business
purposes.
6. Stock Option Grant. Contemporaneously with the execution hereof,
the Company is granting to the Executive, pursuant to the Company's Stock
Option Plan as amended and restated effective August 13, 1996 (the
"Plan"), five (5) year options to purchase an aggregate of up to 1,100,000
shares of Common Stock of the Company. The options shall be granted
pursuant to two (2) separate Option Agreements, one of which shall cover an
aggregate of 600,000 shares of Common Stock (the "First Option"), and the
second one of which shall cover 500,000 shares of Common Stock (the "Second
Option"). Under the First Option, 300,000 shares shall be immediately
vested, and 150,000 shares shall be vested on each successive anniversary
of the date of grant. Under the Second Option, an aggregate of up to
500,000 shares of Common Stock shall vest in 125,000 share increments in
accordance with certain performance criteria contained in the option
agreement relating thereto.
7. Termination of Executive's Employment.
7.1 Notwithstanding any provisions contained herein to the
contrary, the Executive's employment may be terminated by the Company upon
the Executive's death or disability (as defined below); or for Cause (as
defined below); or upon a Change in Control (as defined below).
7.2 For purposes of this Agreement, "disability" shall mean the
Executive is mentally or physically disabled from properly and fully
performing his duties and responsibilities hereunder for a period of 120
consecutive days or for 180 days, even though not consecutive, within a
360-day period, all as evidenced by the written certification of a
qualified medical doctor agreed to by the Company and the Executive or, in
the absence of such agreement, by a doctor selected by the agreement of a
qualified medical doctor selected by each of the Company and the Executive.
7.3 For purposes of this Agreement, "Cause" shall mean: (i) the
conviction of the Executive of a felony by a federal or state court of
competent jurisdiction; (ii) gross misconduct relating to the Company;
(iii) intentional misappropriation of funds; or (iv) deliberate and
premeditated acts against the interest of the Company. In the case of any
of the foregoing, the Company shall have the right, following notice and a
reasonable opportunity to cure of not less than sixty (60) days (except in
the case of clauses (i) and (iii) hereunder), to terminate this Agreement
without further obligation to the Executive.
7.4 In the event that the Executive's employment hereunder is
terminated as a result of death, disability or for Cause by the Company,
then the Company shall have no further obligations or liabilities to the
Executive hereunder, such that all benefits and salary provided for within
this Agreement shall terminate simultaneously with the termination of the
Executive's employment except for benefits and salary earned and accrued
through the date of such termination. Nothing in this Section 7.4 shall
supersede any rights of the Executive to receive any amounts or benefits
otherwise due to him upon the occurrence of any of the events described in
the immediately preceding sentence, whether such rights are created by this
Agreement or otherwise.
7.5 In the event that the Executive's employment hereunder is
terminated for reasons other than Cause, then the Company shall be
obligated to pay the Executive an amount equal to the balance of the
Executive's base salary which would have been earned for the remainder of
the Term.
8. Covenants of the Executive.
8.1 Confidentiality. The Executive acknowledges that his
employment by the Company will throughout his employment bring him into
close contact with many confidential affairs of the Company, including
information about costs, profits, markets, sales, key personnel, pricing
policies, operational methods, and other business affairs, methods and
information, including plans for future developments, not readily available
to the public. The Executive further acknowledges that the services to be
performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character, and that the Company currently
competes or intends to compete with other organizations that are located in
all of the states of the United States. In recognition of the foregoing,
the Executive covenants and agrees that: (i) he will not knowingly
divulge any material confidential matters of the Company which are not
otherwise in the public domain and will not intentionally disclose them to
anyone outside of the Company during his employment by the Company
hereunder or following the expiration or termination of his employment with
the Company for any reason; (ii) he will deliver promptly to the Company at
the end of Term, or at any other time the Company may so request, at the
Company's expense, all memoranda, notes, records, reports and other
documents (and all copies thereof) relating to the businesses of the
Company which he obtained while employed by, or otherwise serving or acting
on behalf of, the Company, or any its subsidiaries or affiliates, and which
he may then possess or have under his control; and (iii) during the Term
and any additional period during which the Executive may be employed by the
Company (whether or not such employment shall be pursuant to written
agreement) the Executive will not, unless the Board shall otherwise
consent, along or together with any other person, firm, partnership,
corporation or other entity whatsoever (except any subsidiaries or
affiliates of the Company), directly or indirectly, whether as an officer,
director, stockholder, partner, proprietor, associate, employee,
representative, public relations or advertising representative, management
consultant or otherwise: (A) engage in or (B) become or be interested in
or associated with any other person, corporation, firm, partnership or
other entity whatsoever engaged in any business which is competitive with
any business conducted or contemplated by the Company.
8.2 Anti-Raiding. Executive agrees that during the term of his
employment hereunder, and, thereafter for a period of six (6) months, he
will not, as a principal, agent, employee, employer, consultant, director
or partner of any person, firm, corporation or business entity other than
the Company, or in any individual or representative capacity whatsoever,
directly or indirectly, without the prior express written consent of the
Company approach, counsel or attempt to induce any person who is then in
the employ of the Company to leave the employ of the Company or employ or
attempt to employ any such person or persons who at any time during the
preceding six months was in the employ of the Company.
8.3 Notwithstanding the provisions of Section 8.1(iii), the
Executive may own, as a passive investor, securities of a corporation
engaged in a competitive line of business whose equity securities are
registered under Section 12(b) or 12(g) of the Exchange Act, so long as
his beneficial ownership in any one such corporation shall not in the
aggregate constitute more than five percent (5%) of any class of equity
securities of such corporation.
8.4 The parties agree that the remedy at law for any breach or
threatened breach of any covenant contained in this Section 8 will be
inadequate and that either party, in addition to such other remedies as may
be available to it, and/or them, at law or in equity, shall be entitled to
injunctive relief without bond or other security.
9. Change in Control. A "Change in Control" of the Company shall
mean a change in control of the Company or any entity controlling the
Company (referred to collectively in this Section 8 as the Company) of a
nature that would be required to be reported in response to Item 1 of a
Current Report on Form 8-K, pursuant to Section 13 or 15(d) of the Exchange
Act; provided that, without limitation, such a Change in Control shall be
deemed to have occurred at such time as (a) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than a person
who or which is a shareholder of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the Company's outstanding
securities ordinarily having the right to vote at elections of directors;
or (b) individuals who constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's shareholders was approved by a
vote of at least three quarters of the directors comprising the Incumbent
Board, shall be, for purposes of this clause (b), considered as though he
were a member of the Incumbent Board; or (c) a sale by the Company of all
or substantially all of its assets occurs. Notwithstanding anything in the
foregoing to the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transactions which
result in the acquisition by the Executive, or by a group of persons which
includes the Executive, directly or indirectly, of a majority of either the
outstanding shares of common stock of the Company or the voting securities
of any corporation which acquires all or substantially all of the assets of
the Company, whether by way of merger, consolidation, sale of such assets
or otherwise. Notwithstanding anything contained in this Agreement to the
contrary, if, while the Executive is employed by the Company, a Change in
Control shall occur, with or without the prior approval of the Board, and
Executive's employment hereunder shall be terminated, then the Company
shall be obligated to pay the Executive an amount equal to the balance of
the Executive's base salary which would have been earned for the remainder
of the Term. In the event that this Agreement is terminated as a result of
a Change in Control, then all options granted to the Executive pursuant to
Section 6 hereof, shall, notwithstanding any provisions contained in the
respective Option Agreements, immediately vest and become exercisable by
the Executive.
10. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York applicable to
contracts executed in and to be performed solely within such state.
11. Notices. All notices required or permitted to be given by either
party hereunder, including notice of change of address, shall be in writing
and delivered by hand, or mailed, postage prepaid, certified or registered
mail, return receipt requested, to the other party as follows:
If to the Company: U.S. WATS, Inc.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Chairman of the Board
With a copy to: Xxxxxx X. XxXxxxx, Esq.
Herten, Burstein, Sheridan,
Cevasco, Xxxxxxxxxx & Xxxx
00 Xxxx Xxxxxx, 0xx xxxxx
Xxxxxxxxxx, XX 00000
If to the Executive: Xxxxx X. X'Xxxx
00 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
With a copy to:
12. Miscellaneous.
12.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior oral or written agreements and understandings;
however, this Agreement shall not supersede, diminish or modify any rights
of the Executive under any employee benefit plans of the Company. There
are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof or in effect among the parties. This Agreement may not be
amended, and no provision hereof shall be waived, except by a writing
signed by the Company and the Executive, or in the case of a waiver, by the
party waiving compliance therewith, which states that it is intended to
amend or waive a provision of this Agreement. Any waiver of any rights or
failure to act in any one instance shall not be regarded as an agreement to
waive any rights or failure to act in any other instance, whether or not
similar.
12.2 Further Acts. The parties hereto agree that, after the
execution of this Agreement, they will make, do, execute or cause to be
made, done or executed all such further and other lawful acts, deeds,
things, devices, conveyances and assurances in law whatsoever as may be
required to carry out the true intention and to give full force and effect
to this Agreement.
12.3 Severability. Should any provision of this Agreement be
held by a court of competent jurisdiction to be unenforceable or prohibited
by an applicable law, this Agreement shall be considered divisible as to
such provision, which shall be inoperative, and the remainder of this
Agreement shall be valid and binding as though such provision were not
included herein.
12.4 Successors and Assigns. This Agreement shall inure to
the benefit of, and be binding upon, the Company and any corporation with
which the Company merges or consolidates or to which the Company sells all
or substantially all of its assets, and upon the Executive and his
executors, administrators, heirs and legal representatives.
12.5 Headings. All headings in this Agreement are for
convenience only and are not intended to affect the meaning of any
provision hereof.
12.6 Counterparts. This Agreement may be executed in two or
more counterparts with the same effect as if the signatures to all such
counterparts were upon the same instrument, and all such counterparts shall
constitute but one instrument.
IN WITNESS WHEREOF, the Executive has executed this Agreement and the
Company has caused this Agreement to be executed by its duly authorized
officer as of the day and year first above written.
Attest US WATS, INC.
By:____________________________ By:_______________________________
Xxxxx X. Xxxxx, Chairman
__________________________________
[corporate seal] Xxxxx X. X'Xxxx, individually
