EXHIBIT 13.9
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT made as of the third day of March, 1997 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 Xxxxxxxxxxx Xxxxxxx, residing at 00000 Xxxxxxxx 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.
1.1 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.
1.2 This Agreement shall be effective only if executed and
delivered by all parties hereto on or before March 4, 1997.
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
Financial 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
Chief Executive Officer of the Company and which are commensurate with his
position as Chief Financial Officer.
3.2 The Executive agrees that, during the Term, unless the Chief
Executive Officer of the Company 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.
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4. Base Compensation. In consideration for services performed
hereunder, the Company shall pay to the Executive an annual base salary of
$156,000 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. The Compensation Committee shall determine, in its discretion,
which eligible participants in the Bonus Pool shall be entitled to bonus
payments thereunder. In addition to the Executive's bonus, additional
objectives will be established, jointly, that will result in eligibility to
additional stock options grants.
5.4 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 option to purchase an aggregate of
up to 350,000 shares of Common Stock of the Company (the "Option"). Under the
Option, 170,000 shares shall be immediately vested, and 60,000 shares shall
be vested on the first, second and third successive anniversaries of the date
of grant.
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).
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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
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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 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
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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. X'Xxxx, President
With a copy to: Xxxxx X. Xxxxxxx
Xxxxxxxx Xxxxxxxxx, P.C.
Two Xxxxx Square, 00xx Xxxxx
00xx & Xxxx
Xxxxxxxxxxxx, XX 00000
If to the Executive: Xxxxxxxxxxx Xxxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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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.
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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: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X'Xxxx
-----------------------------------
Xxxxx X'Xxxx, President
/s/ Xxxxxxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxxxxxx Xxxxxxx, individually
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