EMPLOYMENT AGREEMENT
Exhibit
10.2
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 17th day
of May 2006 (the “Effective Date”) by and between VoIP, Inc., a Texas
corporation (the “Company”), and Xxxxxx X. Xxxxxx whose residence address is 000
X. Xxxxxxxxx Xxxx, Xxxx Xxxx, XX 00000 (the “Executive”).
This
Agreement shall become effective immediately upon the execution
hereof.
NOW,
THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereby agree as follows:
1. Employment.
1.1 Employment
and Term.
The
Company shall employ the Executive and the Executive shall continue to serve
the
Company, on the terms and conditions set forth herein, for the period (the
“Term”) from the Effective Date and expiring on the third anniversary of the
Effective Date, unless sooner terminated or extended as hereinafter set forth.
The Agreement will automatically renew for subsequent twelve-month period(s),
unless terminated at least 90 days prior to the expiration of each current
existing twelve-month period.
1.2 Duties
of Executive.
The
Executive shall serve as Chief Accounting Officer of the Company and shall
perform the duties of an executive commensurate with such position, shall
diligently perform all services and exercise such power and authority as may
from time to time be assigned or delegated to him by the Company’s Chief
Executive Officer, President, Board of Directors and Executive Committee. The
Executive shall devote all his working time and attention to the business and
affairs of the Company. The Executive’s responsibilities shall include, but not
be limited to, the following functions of the Company by performing the
following duties personally or through subordinates:
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Day-to-day
management of the Company’s financial, accounting, SEC financial reporting
compliance, and financial planning/budgeting
functions.
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Operating
and maintaining a coordinated financial management system to budget,
collect, control, and properly account for the Company’s revenues and cash
reserves.
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Frequent
reporting to the Company’s Board of
Directors
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Assisting
management and the Board of Directors in the development of strategic
plans, budgets and forecasts.
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Providing
accurate and timely preparation of Corporate, SEC and tax filings,
financial statements or other management reports, on a consistent
basis.
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1.3 The
Company.
As used
herein the term the “Company” shall be deemed to include any and all present and
future subsidiaries, divisions and affiliates of the Company.
2. Compensation.
2.1 Base
Salary.
During
the term, the Executive shall receive a base salary paid bi-weekly. The
Executive will receive an initial Base Salary equal to $11,666.67 per month.
On
January 1, 2007, the Executive’s base salary will increase to $12,916.67 per
month. The Board of Directors may increase these amounts at any other time
if
the Company has achieved the goals set by the Board. Once increased, the
Executive’s Base Pay will not be reduced. In addition, the Company’s Board of
Directors or Officers may elect to award the Executive performance bonuses
from
time to time based on the Executive’s performance or the performance of the
Company.
2.2 Equity.
Upon
the execution of this Agreement, the Company will issue to the Executive stock
options to purchase 100,000 shares of common stock of the Company (in addition
to the 100,000 of the Company’s stock options Executive has rights to prior to
execution of this Agreement) at the share closing price on the Effective Date
hereof. Such options shall become 25% vested upon execution of this Agreement,
and the balance shall become vested quarterly during the term of this Agreement.
In addition, the Company will issue the Executive Warrants (with minimum 5-year
term) to purchase 25,000 shares of Common Stock of the Company at the share
closing price on the Effective Date hereof at the end of each month during
the
first six months this Agreement remains in effect (i.e. warrants to purchase
up
to a maximum of 150,000 shares). These Warrants shall have full piggy-back
rights registration rights on the 1st anniversary date of their
issuance.
2.3 Stock
Option Grants.
The
Executive shall be entitled to receive a grant based on the Executive’s
performance during each year during the term of this Agreement, beginning with
2006. The amount of the stock option grant in any year shall be determined
by
reference to the profitability of the Company and such other measures as the
Board of Directors and the Executive may agree. The terms and conditions
relating to the stock option bonus shall be negotiated in good
faith.
3. Expense
Reimbursement and Other Benefits.
3.1 Expense
Reimbursement.
During
the Term, upon the submission of supporting documentation by the Executive,
and
in accordance with Company policies for its executives, the Company shall
reimburse the Executive for all expenses actually paid or incurred by the
Executive in the course of and pursuant to the business of the Company,
including expenses for travel, and entertainment.
3.2 Other
Benefits.
During
the term, the Company shall pay for 100% of the costs to provide the Executive
with “family” coverage for medical and dental insurance as well as D&O
insurance.
3.3 Vacation.
Executive shall be entitled to three weeks of paid vacation during each calendar
year, taking into consideration the business needs of the Company.
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4. Termination
for Cause.
Notwithstanding anything contained in this Agreement to the contrary, the
Company may terminate this Agreement for Cause. As used in this Agreement
“Cause” shall mean (i) an act of fraud, embezzlement or theft of funds or
property of the Company or any of its clients/customers; (ii) any intentional
wrongful disclosure of proprietary information or trade secrets of the Company
or its affiliates or any intentional form of self-dealing detrimental to the
Interests of the Company; (iii) the habitual and debilitating use of alcohol
or
drugs; (iv) continued failure to comply with the reasonable written directives
of the CEO, Executive Committee or Board of Directors; insubordination or
abandonment of position (after written notice and a reasonable opportunity
to
cure); or (v) failure to comply in any material respect with the terms of this
Agreement (after written notice and a reasonable opportunity to cure). Upon
any
termination pursuant to this Section (4) the Company shall pay to the Executive
any unpaid Base Salary at the rate then in effect accrued through the effective
date of termination specified in such notice. Except as provided above, the
Company shall have no further liability hereunder other than for reimbursement
for reasonable business expenses incurred prior to the date of termination
outlined in Sections 3.1, and the vested portion of the equity set forth in
Section 2.2.
4.1 Termination
Without Cause.
The
Company may terminate this Agreement without cause at any time by giving
Executive sixty (60) day prior written notice of its desire to terminate. In
the
event the Company elects to terminate the Agreement pursuant to this
Section 4.1, the Company shall have no further liability hereunder other
than for the payment to Executive on the termination date of any unpaid Base
Salary through the termination date, reimbursement of reasonable business
expenses incurred prior to the termination date, a lump sum of seventy five
thousand dollars ($75,000) in cash, and the Stock Options and Warrants set
forth
in Section 2.2 which shall become fully vested.
4.2 Resignation
by Executive.
The
Executive upon delivery of notice may terminate this Agreement therefore upon
not less than 30 days prior notice of such termination. Upon receipt of such
notice, the Company may, in its sole discretion, release the Executive of his
duties and his employment hereunder prior to the expiration of the 30 day notice
period. Notwithstanding anything contained in this Agreement to the contrary,
in
the event of a termination by the Executive pursuant to this Section 4.1, the
Company shall have no further liability hereunder other than the vested portion
of the equity set forth in Section 2.2.
4.3 Disability.
Notwithstanding anything contained in this Agreement to the contrary, the
Company, by 30 days written notice to the Executive, shall at all times have
the
right to terminate this Agreement, and the Executive’s employment hereunder, if
the Executive shall, as the result of mental or physical incapacity, illness
or
disability, fail to perform his duties and responsibilities provided for herein
for a period of more than 60 days in any 12 month period. Upon the termination
pursuant to this Section, the Company shall continue (i) to pay to the Executive
Base Salary at the rates then in effect for a period of 6 months after the
effective date of termination (the “Severance Period”), (ii) employee benefit
programs as to the Executive for the Severance Period and (iii) the Company
shall be responsible for making payments on behalf of the Executive and his
family to maintain coverage of health and other benefits under COBRA, for the
maximum period allowed. Except as provided above, the Company shall have no
further liability hereunder (other than for reimbursement for reasonable
business expenses, incurred prior to the date of termination, subject, however
to the provisions of Section 3.1, and the vested portion of the equity set
forth
in Section 2.2.
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4.4 Changes
in Control.
For the
purposes of this Agreement, a “Change of Control” shall be deemed to have taken
place if : (i) any person, including a “group” as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, becomes the owner of beneficial
owner of Company securities, after the date of this Agreement, having 50% or
more of the combined voting power of the then outstanding securities of the
Company that may be cast for the election of directors of the Company or (ii)
the persons who were directors of the Company before such transactions shall
cease to constitute a majority of the Board of Directors of the Company, or
any
successor to the Company, as the direct or indirect result of or in connection
with, any cash tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the foregoing
transaction.
(a) The
Company and Executive hereby agree that, if Executive is affiliated with the
Company on the date on which a Change of Control occurs, (the “Change of Control
Date”), and this Agreement is in full force and effect, the Company (or, if
Executive is affiliated with a subsidiary, the subsidiary) will continue to
retain Executive and Executive will remain affiliated with the Company (or
subsidiary), subject to the terms and conditions of this Agreement, for the
period commencing on the Change of Control Date and ending on the first
anniversary of such date (this anniversary date shall then become the “Change of
Control Termination Date”) to exercise such authority and perform such executive
duties as are commensurate with the authority being exercised and duties being
performed by the Executive immediately prior to the Change of Control Date.
If
after the Change of Control, Executive is requested, and, in his sole and
absolute discretion, consents to change his principal business location, which
is the Orlando, Florida metropolitan area including the current Caerus, Inc.
office, the Company will reimburse the Executive for his reasonable relocation
expenses, including, without limitation, moving expenses, temporary living
and
travel expenses for a reasonable time while arranging to move his residence
to
the changed location, closing costs, if any, associated with the sale of his
existing residence and the purchase of a replacement residence at the changed
location, plus an additional amount representing a gross-up of any state or
federal taxes payable by Executive as a result of any such reimbursement. If
the
Executive shall not consent to change his business location, the Executive
may
continue to provide the services required of him hereunder from his then
residence and/or business address until the Change of Control Termination Date,
at which time this Agreement shall terminate, unless sooner terminated or
extended as set forth herein.
(b) During
the remaining term hereof after the Change of Control Date, the Company (or
subsidiary) will (i) continue to pay Executive a salary and benefits at not
less
than the level applicable to Executive on the Change of Control Date, (ii)
pay
Executive bonuses as set forth herein, and (iii) continue employee benefit
programs as to Executive at levels in effect on the Change of Control Date
(but
subject to such reductions as may be required to maintain such plans in
compliance with applicable federal law regulating employee benefit
programs).
(c) The
Company hereby agrees that, if Change of Control occurs prior to the termination
of this Agreement, the Executive’s Stock Options referred to in Section 2.2 of
this Agreement shall become fully vested and the Warrants referred to in Section
2.2 of this Agreement shall be deemed fully earned and issuable.
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(d) Death.
In the
event of the death of the Executive during the Term of his employment hereunder,
the Company shall pay to the personal representative of the estate of the
deceased Executive any unpaid Base Salary accrued through the date of his death.
Except as provided above, the Company shall have no further liability hereunder
other than for reimbursement for reasonable business expenses incurred prior
to
the date of the Executive’s death, subject, however to the provisions of Section
3.1, and the vested portion of the equity set forth in Section 2.2.
5. Consolidation,
Merger or Sale of Assets»
.
Nothing
in this Agreement shall preclude the Company from consolidating or merging
into
or with, or transferring all or substantially all of its assets to, another
corporation which assumes this Agreement, and all obligations of the Company
hereunder, in writing. Upon such consolidation, merger, or transfer of assets
and assumption, the term “the Company” as used herein, shall mean such other
corporation and this Agreement shall continue in full force and
effect.
6. Restrictive
Covenants.
6.1 Nondisclosure.
During
the Term and following termination of the Executive’s employment with the
Company, Executive shall not divulge, communicate, use to the detriment of
the
Company or for the benefit of any other person or persons, or misuse in any
way,
any Confidential Information (as hereinafter defined) pertaining to the business
of the Company. Any Confidential Information or data now or hereafter acquired
by the Executive with respect to the business of the Company (which shall
include, but not be limited to, information concerning the Company’s financial
condition, prospects, technology, customers, suppliers, methods of doing
business and promotion of the Company’s products and services) shall be deemed a
valuable, special and unique asset of the Company that is received by the
Executive in confidence and as a fiduciary. For purposes of this Agreement
“Confidential Information” means information disclosed to the Executive or known
by the Executive as a consequence of or through his employment by the Company
(including information conceived, originated, discovered or developed by the
Executive) prior to or after the date hereof and not generally known or in
the
public domain, about the Company or its business. Notwithstanding the foregoing,
nothing herein shall be deemed to restrict the Executive from disclosing
Confidential Information to the extent required by law.
6.2 Books
and Records.
All
books, records, accounts and similar repositories of Confidential Information
of
the Company, whether prepared by the Executive or otherwise coming into the
Executive’s possession, shall be the exclusive property of the Company and shall
be returned immediately to the Company on termination of this
Agreement.
6.3 Certain
Activities.
The
Executive shall not, while employed by the Company and for a period of one
(1)
year following the date of termination, directly or indirectly, hire, offer
to
hire, entice away or in any other manner persuade or attempt to persuade any
officer, employee, agent, lessor, lessee, licensor, licensee or supplier of
Employer or any of its subsidiaries to discontinue or alter his or its
relationship with Employer or any of its subsidiaries.
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6.4 Non-Competition.
The
Executive shall not, while employed by the Company and for a period of one
(1)
year following the date of termination, engage or participate, directly or
indirectly (whether as an officer, director, employee, partner, consultant,
shareholder, lender or otherwise), in any business that manufactures, markets
or
sells products that directly competes with any product of the Employer that
is
significant to the Employer’s business based on sales and/or profitability of
any such product as of the date of termination. Nothing herein shall prohibit
Executive from being a passive owner of less than 1% of any publicly-traded
class of capital stock of any entity directly engaged in a competing business.
Given that a significant portion of the Executive’s recent financial management
experience has been in the telecommunications industry, and recognizing that
financial management by its nature is generally in much less of a position
to
directly compete than a sales or marketing management position, this section
6.4
shall not be intended to preclude the Executive from seeking gainful employment
in a financial management role in the telecommunications industry.
6.5 Property
Rights; Assignment of Inventions.
With
respect to information, inventions and discoveries or any interest in any
copyright and/or other property right developed, made or conceived of by
Executive, either alone or with others, at any time during his employment by
Employer and whether or not within working hours, arising out of such employment
or pertinent to any field of business or research in which, during such
employment, Employer is engaged or (if such is known to or ascertainable by
Executive) is considering engaging, Executive hereby agrees:
(a) that
all
such information, inventions and discoveries or any interest in any copyright
and/or other property right, whether or not patented or patentable, shall be
and
remain the exclusive property of the Employer;
(b) to
disclose promptly to an authorized representative of Employer all such
information, inventions and discoveries or any copyright and/or other property
right and all information in Executive’s possession as to possible applications
and uses thereof;
(c) not
to
file any patent application relating to any such invention or discovery except
with the prior written consent of an authorized officer of Employer (other
than
Executive);
(d) that
Executive hereby waives and releases any and all rights Executive may have
in
and to such information, inventions and discoveries, and hereby assigns to
Executive and/or its nominees all of Executive’s right, title and interest in
them, and all Executive’s right, title and interest in any patent, patent
application, copyright or other property right based thereon. Executive hereby
irrevocably designates and appoints Employer and each of its duly authorized
officers and agents as his agent and attorney-in-fact to act for him and on
his
behalf and in his stead to execute and file any document and to do all other
lawfully permitted acts to further the prosecution, issuance and enforcement
of
any such patent, patent application, copyright or other property right with
the
same force and effect as if executed and delivered by Executive;
and
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(e) at
the
request of Employer, and without expense to Executive, to execute such documents
and perform such other acts as Employer deems necessary or appropriate, for
Employer to obtain patents on such inventions in a jurisdiction or jurisdictions
designated by Employer, and to assign to Employer or its designee such
inventions and any and all patent applications and patents relating
thereto.
6.6 Injunctive
Relief.
The
parties hereby acknowledge and agree that (a) Employer will be irreparably
injured in the event of a breach by Executive of any of his obligations under
this Section 6; (b) monetary damages will not be an adequate remedy for any
such
breach; (c) Employer will be entitled to injunctive relief, in addition to
any
other remedy which it may have, in the event of any such breach; and (d) the
existence of any claims that Executive may have against Employer, whether under
this Agreement or otherwise, will not be a defense to the enforcement by
Employer of any of its rights under this Section 6.
6.7 Non-Exclusivity
and Survival.
The
covenants of the Executive contained in this Section 6 are in addition to,
and
not in lieu of, any obligations that Executive may have with respect to the
subject matter hereof, whether by contract, as a matter of law or otherwise,
and
such covenants and their enforceability shall survive any termination of the
Employment Term by either party and any investigation made with respect to
the
breach thereof by Employer at any time.
7. Withholding.
Anything to the contrary notwithstanding, all payments required to be made
by
the Company hereunder to the Executive or the Executive’s estate or
beneficiaries shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or
regulation.
8. Arbitration.
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in accordance herewith, and
judgment upon the award rendered by the arbitrators may be entered in any Court
having jurisdiction thereof. Venue of the arbitration shall be in Broward
County, Florida. Any controversy or claim shall be submitted to three
arbitrators selected from the panels of the arbitrators of the American
Arbitration Association. The arbitrators, in addition to any award made, shall
have the discretion to award the prevailing party the costs of the proceedings,
together with reasonable attorneys’ fees, provided that absent such award, each
party shall bear the costs of its own counsel and presentation of evidence,
and
each party shall share equally the cost of such arbitration proceeding. Any
award made hereunder may be docketed in a court of competent jurisdiction in
Broward County, Florida, and all parties hereby consent to the personal
jurisdiction of such court for purposes of the enforcement of the arbitration
award.
9. Binding
Effect. Except as herein otherwise provided, this Agreement shall inure to
the
benefit of and shall be binding upon the parties hereto, their personal
representatives, successors, heirs and assigns. The Executive may not assign
his
rights or benefits, or delegate any of his duties, hereunder without the prior
written consent of the Company.
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10. Further
Assurances. At any time, and from time to time, each party will take such action
as may be reasonably requested by the other party to carry out the intent and
purposes of this Agreement.
11. Entire
Agreement. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. It supersedes all prior
negotiations, letters and understandings relating to the subject matter
hereof.
12. Amendment.
This Agreement may not be amended, supplemented or modified in whole or in
part
except by an instrument in writing signed by the party or parties against whom
enforcement of any such amendment, supplement or modification is
sought.
13. Choice
of
Law. This Agreement will be interpreted, construed and enforced in accordance
with the laws of the State of Florida, without giving effect to the application
of the principles pertaining to conflicts of laws.
14. Effect
of
Waiver. The failure of any party at any time or times to require performance
of
any provision of this Agreement will in no manner affect the right to enforce
the same. The waiver by any party of any breach of any provision of this
Agreement will not be construed to be a waiver by any such party of any
succeeding breach of that provision or a waiver by such party of any breach
of
any other provision.
15. Construction.
The parties hereto and their respective legal counsel participated in the
preparation of this Agreement; therefore, this Agreement shall be construed
neither against nor in favor of any of the parties hereto, but rather in
accordance with the fair meaning thereof.
16. Severability.
The invalidity, illegality or unenforceability of any provision or provisions
of
this Agreement will not affect any other provision of this Agreement, which
will
remain in full force and effect, nor will the invalidity, illegality or
unenforceability of a portion of any provision of this Agreement affect the
balance of such provision. In the event that any one or more of the provisions
contained in this Agreement or any portion thereof shall for any reason be
held
to be invalid, illegal or unenforceable in any respect, this Agreement shall
be
reformed, construed and enforced as if such invalid, illegal or unenforceable
provision had never been contained herein.
17. No
Third-Party Beneficiaries. No person shall be deemed to possess any third-party
beneficiary right pursuant to this Agreement. It is the intent of the parties
hereto that no direct benefit to any third party is intended or implied by
the
execution of this Agreement.
18. Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed an original.
19. Notice.
Any notice required or permitted to be delivered hereunder shall be in writing
and shall be deemed to have been delivered when hand delivered, sent by
facsimile with receipt confirmed or when deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt requested, or
by
overnight courier, addressed to the parties at the addresses first stated
herein, or to such other address as either party hereto shall from time to
time
designate to the other party by notice in writing as provided
herein.
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IN
WITNESS WHEREOF, this Agreement has been duly signed by the parties hereto
on
the day and year first above written.
| VoIP, Inc. | ||
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| By: | /s/ Xxx X. Xxxxx | |
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Xxx X. Xxxxx, President |
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| By: | /s/ Xxxxxx X. Xxxxxx | |
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Xxxxxx X. Xxxxxx |
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