EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
February 1, 2003 (the "Effective Date") by and between iDial Networks, Inc., a
Nevada corporation, with an office located at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
Xxx Xxxxxxxxx, XX 00000 (the "Company") and Xxxxxx X. Xxxxxxx, an individual
with an address 00000 Xxxxx Xxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 ("Xxxxxxx").
WHEREAS, the Company provides enhanced telecommunication services using
voice-over-internet technology; and
WHEREAS, Xxxxxxx has had experience in the financial management of businesses
developing Internet applications, and providing Internet and wireless services;
and
WHEREAS, the Company desires to retain the services of Xxxxxxx; and
WHEREAS, Xxxxxxx is willing to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. Employment. Xxxxxxx is hereby employed and engaged to serve the Company as
the Chief Financial Officer of the Company, or such additional titles as the
Company shall specify from time to time, and Xxxxxxx does hereby accept, and
Xxxxxxx hereby agrees to such engagement and employment. At all times during the
term of Xxxxxxx'x employment, he shall remain a member of the Board of Directors
of the Company.
2. Duties. Xxxxxxx shall be responsible for the financial management of the
Company. In addition, Xxxxxxx'x duties shall be such duties and responsibilities
as the Company shall specify from time to time, and shall entail those duties
customarily performed by the Chief Financial Officer of a company with a sales
volume and number of employees commensurate with those of the Company. Xxxxxxx
shall have such authority, discretion, power and responsibility, and shall be
entitled to office, secretarial and other facilities and conditions of
employment, as are customary or appropriate to his position. Xxxxxxx shall
diligently and faithfully execute and perform such duties and responsibilities,
subject to the general supervision and control of the Company's board of
directors. Xxxxxxx shall be responsible and report only to the Company's board
of directors. The Company's board of directors, in its sole and absolute
discretion, shall determine Xxxxxxx'x duties and responsibilities and may assign
or reassign Xxxxxxx to such duties and responsibilities as it deems in the
Company's best interest. Xxxxxxx shall devote his full-time attention, energy,
and skill during normal business hours to the business and affairs of the
Company and shall not, during the Employment Term, as that term is defined
below, be actively engaged in any other business activity, except with the prior
written consent of the Company's board of directors.
Nothing in this Agreement shall preclude Xxxxxxx from devoting reasonable
periods required for:
(a) serving as a director or member of a committee of any
organization or corporation involving no conflict of interest
with the interests of the Company;
(b) serving as a consultant in his area of expertise (in areas other
than in connection with the business of the Company), to
government, industrial, and academic panels where it does not
conflict with the interests of the Company; and
(c) managing his personal investments or engaging in any other
non-competing business; provided that such activities do not
materially interfere with the regular performance of his duties
and responsibilities under this Agreement as determined by the
Company.
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3. Best Efforts of Xxxxxxx. During his employment hereunder, Xxxxxxx shall,
subject to the direction and supervision of the Company's board of directors,
devote his full business time, best efforts, business judgment, skill, and
knowledge to the advancement of the Company's interests and to the discharge of
his duties and responsibilities hereunder. Notwithstanding the foregoing,
nothing herein shall be construed as preventing Xxxxxxx from investing his
assets in any business.
4. Employment Term. Unless terminated pursuant to Section 12 of this Agreement,
the term of this Agreement shall commence as of the Effective Date of this
Agreement and shall continue for a term of thirty-six (36) months (the "Initial
Term"), and shall be automatically renewed for successive one (1) year terms
(the "Renewal Term") unless a party hereto delivers to the other party written
notice of such party's intention not to renew at least thirty (30) days prior to
the end of the Initial Term or the applicable Renewal Term, as the case may be.
(the terms "Initial Term" and "Renewal Term" will collectively hereinafter be
referred to as the "Employment Term").
5. Compensation of Xxxxxxx.
(a) Base Compensation. As compensation for the services provided by
Xxxxxxx under this Agreement, the Company shall pay Xxxxxxx an
annual salary of One Hundred Eighty Thousand Dollars ($180,000)
during the first year of the Employment Term, One Hundred Ninety
Thousand Dollars ($190,000) during the second year of the
Employment Term and Two Hundred Thousand Dollars ($200,000)
during the third year of the Employment Term. Upon each
subsequent one (1) year renewal of Xxxxxxx'x employment in
accordance with Section 4, the Company shall increase Xxxxxxx'x
annual salary by ten percent (10%). The compensation of Xxxxxxx
under this Section shall be paid in accordance with the Company's
usual payroll procedures.
(b) Bonus. In addition to the above base compensation, Xxxxxxx shall
be eligible to receive an annual bonus determined by the Board of
Directors based on the performance of the Company.
(c) Stock and Stock Options. Xxxxxxx shall also be eligible to
receive shares of the Company's authorized stock and options to
purchase shares of the Company's authorized stock from time to
time as determined by the Board of Directors.
6. Benefits. Xxxxxxx shall also be entitled to participate in any and all
Company benefit plans, from time to time, in effect for employees of the
Company. Such participation shall be subject to the terms of the applicable plan
documents and generally applicable Company policies.
7. Vacation, Sick Leave and Holidays. Xxxxxxx shall be entitled to four (4)
weeks of paid vacation, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. In addition, Xxxxxxx
shall be entitled to such sick leave and holidays at full pay in accordance with
the Company's policies established and in effect from time to time.
8. Business Expenses. The Company shall promptly reimburse Xxxxxxx for all
reasonable out-of-pocket business expenses incurred in performing Xxxxxxx'x
duties and responsibilities hereunder in accordance with the Company's policies,
provided Xxxxxxx promptly furnishes to the Company adequate records of each such
business expense.
9. Location of Xxxxxxx'x Activities. Xxxxxxx'x principal place of business in
the performance of his duties and obligations under this Agreement shall be at a
place to be determined by the Board of Directors. Notwithstanding the preceding
sentence, Xxxxxxx will engage in such travel and spend such time in other places
as may be necessary or appropriate in furtherance of his duties hereunder.
10. Confidentiality. Xxxxxxx recognizes that the Company has and will have
business affairs, products, future plans, trade secrets, customer lists, and
other vital information (collectively "Confidential Information") that are
valuable assets of the Company. Xxxxxxx agrees that he shall not at any time or
in any manner, either directly or indirectly, divulge, disclose, or communicate
in any manner any Confidential Information to any third party without the prior
written consent of the Company's board of directors. Xxxxxxx will protect the
Confidential
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Information and treat it as strictly confidential.
11. Non-Competition. Xxxxxxx acknowledges that he has gained, and will gain
extensive knowledge in the business conducted by the Company and has had, and
will have, extensive contacts with customers of the Company. Accordingly,
Xxxxxxx agrees that he shall not compete directly or indirectly with the
Company, either during the Employment Term or during the one (1) year period
immediately after the termination of Xxxxxxx'x employment under Section 12 and
shall not, during such period, make public statements in derogation of the
Company. For the purposes of this Section 11, competing directly or indirectly
with the Company shall mean engaging, directly or indirectly, as principle
owner, officer, partner, consultant, advisor, or otherwise, either alone or in
association with others, in the operation of any entity engaged in a business
similar to that of the Company's.
12. Termination. Notwithstanding any other provisions hereof to the contrary,
Xxxxxxx'x employment hereunder shall terminate under the following
circumstances:
(a) Voluntary Termination by Xxxxxxx. Xxxxxxx shall have the right to
voluntarily terminate this Agreement and his employment hereunder
at any time during the Employment Term.
(b) Voluntary Termination by the Company. The Company shall have the
right to voluntarily terminate this Agreement and Xxxxxxx'x
employment hereunder at any time after the Employment Term.
Termination of Xxxxxxx'x employment pursuant to this Section
12(b) shall not be effective unless the Company shall have first
given Xxxxxxx a written notice thereof at least thirty (30) days
prior to the annual anniversary of Xxxxxxx'x employment under
this Agreement.
(c) Termination for Cause. The Company shall have the right to
terminate this Agreement and Xxxxxxx'x employment hereunder at
any time for cause. As used in this Agreement, "cause" shall mean
refusal by Xxxxxxx to implement or adhere to lawful policies or
directives of the Company's board of directors, breach of this
Agreement, Xxxxxxx'x conviction of a felony, other conduct of a
criminal nature that may have a material adverse impact on the
Company's reputation, breach of fiduciary duty or the criminal
misappropriation by Xxxxxxx of funds from or resources of the
Company. Cause shall not be deemed to exist unless the Company
shall have first given Xxxxxxx a written notice thereof
specifying in reasonable detail the facts and circumstances
alleged to constitute "cause" and thirty (30) days after such
notice such conduct has, or such circumstances have, as the case
may be, not entirely ceased and not been entirely remedied.
(d) Termination Upon Death or for Disability. This Agreement and
Xxxxxxx'x employment hereunder, shall automatically terminate
upon Xxxxxxx'x death or upon written notice to Xxxxxxx and
certification of Xxxxxxx'x disability by a qualified physician or
a panel of qualified physicians if Xxxxxxx becomes disabled
beyond a period of twelve (12) months and is unable to perform
the duties contain in this Agreement.
(e) Effect of Termination. In the event that this Agreement and
Xxxxxxx'x employment is voluntarily terminated by Xxxxxxx
pursuant to Section 12(a), or in the event the Company
voluntarily terminates this Agreement pursuant to Section 12(b)
or for cause pursuant to Section 12(c), all obligations of the
Company and all duties, responsibilities and obligations of
Xxxxxxx under this Agreement shall cease. Upon such termination,
the Company shall (i) pay Xxxxxxx a cash lump sum within 48 hours
equal to (x) all accrued base salary through the date of
termination plus all accrued vacation pay and bonuses, if any,
plus (y) as severance compensation, an amount equal to the
greater of (A) twelve (12) months of Xxxxxxx'x base salary (at
the highest rate in effect during the Employment Term of this
Agreement), or (B) Xxxxxxx'x then base salary for the remaining
Employment Term of this Agreement; (ii) the Company shall obtain
the release of any assets that have been pledged by Xxxxxxx as
collateral (the "Xxxxxxx Collateral") on the Company's behalf
within 5 business days and if the Company is not able to obtain
such release then the Company shall replace such assets (the
"Replacement Assets"); provided, however, in the event that the
Xxxxxxx Collateral is returned to Xxxxxxx, then the Replacement
Assets shall be returned to the Company; (iii) provide, at the
Company's expense, coverage to Xxxxxxx under the life, accident
and disability insurance policies available to the senior
management executives of the Company and to Xxxxxxx and his
dependents under the health, dental and vision insurance plans
available
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to the Company's senior management executives and their
dependents or, in the event any of such life, accident,
disability, health, dental or vision insurance are not continued
or Xxxxxxx is not eligible for coverage thereunder due to his
termination of employment, the Company shall pay for the premiums
for equivalent coverage, in any event, for a period of twelve
(12) months after the date of termination; (iv) provide an
office, secretarial support and access to equipment and supplies
for a period of six (6) months after the date of termination; and
(v) provide Xxxxxxx reasonable outplacement services. In the
event this Agreement is terminated upon the death or disability
of Xxxxxxx pursuant to Section 12(d), Xxxxxxx shall be entitled
to all compensation pursuant to Section 5 for the period between
the effective termination date to the end of the Employment Term
pursuant to Section 4. Payment will be made to Xxxxxxx or
Xxxxxxx'x appointed trustee. In the event of a merger,
consolidation, sale, or change of control, the Company's rights
hereunder shall be assigned to the surviving or resulting
company, which company shall then honor this Agreement with
Xxxxxxx.
13. Resignation as Officer. In the event that Xxxxxxx'x employment with the
Company is terminated for any reason whatsoever, Xxxxxxx agrees to immediately
resign as an Officer and/or Director of the Company and any related entities.
For the purposes of this Section 13, the term the "Company" shall be deemed to
include subsidiaries, parents, and affiliates of the Company.
14. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas without giving
effect to any applicable conflicts of law provisions.
15. Business Opportunities. During the Employment Term Xxxxxxx agrees to bring
to the attention of the Company's board of directors all written business
proposals that come to Xxxxxxx'x attention and all business or investment
opportunities of whatever nature that are created or devised by Xxxxxxx and that
relate to areas in which the Company conducts business and might reasonably be
expected to be of interest to the Company or any of its subsidiaries.
16. Employee's Representations and Warranties. Xxxxxxx hereby represents and
warrants that he is not under any contractual obligation to any other company,
entity or individual that would prohibit or impede Xxxxxxx from performing his
duties and responsibilities under this Agreement and that he is free to enter
into and perform the duties and responsibilities required by this Agreement.
Xxxxxxx hereby agrees to indemnify and hold the Company and its officers,
directors, employees, shareholders and agents harmless in connection with the
representations and warranties made by Xxxxxxx in this Section 16.
17. Indemnification.
(a) The Company agrees that if Xxxxxxx is made a party, or is
threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a
director, officer or employee of the Company or is or was serving
at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether or not the basis of
such Proceeding is Xxxxxxx'x alleged action in an official
capacity while serving as a director, officer, member, employee
or agent, Xxxxxxx shall be indemnified and held harmless by the
Company to the fullest extent permitted or authorized by the
Company's certificate of incorporation or bylaws or, if greater,
by the laws of the State of Texas, against all cost, expense,
liability and loss (including, without limitation, attorney's
fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or
suffered by Xxxxxxx in connection therewith, and such
indemnification shall continue as to Xxxxxxx even if he has
ceased to be a director, member, employee or agent of the Company
or other entity and shall inure to the benefit of Xxxxxxx'x
heirs, executors and administrators. The Company shall advance to
Xxxxxxx to the extent permitted by law all reasonable costs and
expenses incurred by him in connection with a Proceeding within
20 days after receipt by the Company of a written request, with
appropriate documentation, for such advance. Such request shall
include an undertaking by Xxxxxxx to repay the amount of such
advance if it shall ultimately be determined that he is not
entitled to be indemnified against such costs and expenses.
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(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or stockholders) to have
made a determination prior to the commencement of any proceeding
concerning payment of amounts claimed by Xxxxxxx that
indemnification of Xxxxxxx is proper because he has met the
applicable standard of conduct, nor a determination by the
Company (including its board of directors, independent legal
counsel or stockholders) that Xxxxxxx has not met such applicable
standard of conduct, shall create a presumption that Xxxxxxx has
not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering Xxxxxxx to the
extent the Company provides such coverage for its other executive
officers.
(d) Promptly after receipt by Xxxxxxx of notice of any claim or the
commencement of any action or proceeding with respect to which
Xxxxxxx is entitled to indemnity hereunder, Xxxxxxx shall notify
the Company in writing of such claim or the commencement of such
action or proceeding, and the Company shall (i) assume the
defense of such action or proceeding, (ii) employ counsel
reasonably satisfactory to Xxxxxxx, and (iii) pay the reasonable
fees and expenses of such counsel. Notwithstanding the preceding
sentence, Xxxxxxx shall be entitled to employ counsel separate
from counsel for the Company and from any other party in such
action if Xxxxxxx reasonably determines that a conflict of
interest exists which makes representation by counsel chosen by
the Company not advisable. In such event, the reasonable fees and
disbursements of such separate counsel for Xxxxxxx shall be paid
by the Company to the extent permitted by law.
(e) After the termination of this Agreement and upon the request of
Xxxxxxx, the Company agrees to reimburse Xxxxxxx for all
reasonable travel, legal and other out-of-pocket expenses related
to assisting the Company to prepare for or defend against any
action, suit, proceeding or claim brought or threatened to be
brought against the Company or to prepare for or institute any
action, suit, proceeding or claim to be brought or threatened to
be brought against a third party arising out of or based upon the
transactions contemplated herein and in providing evidence,
producing documents or otherwise participating in any such
action, suit, proceeding or claim. In the event Xxxxxxx is
required to appear after termination of this Agreement at a
judicial or regulatory hearing in connection with Xxxxxxx'x
employment hereunder, or Xxxxxxx'x role in connection therewith,
the Company agrees to pay Xxxxxxx a sum, to be mutually agreed
upon by Xxxxxxx and the Company, per diem for each day of his
appearance and each day of preparation therefor.
18. Notices. All demands, notices, and other communications to be given
hereunder, if any, shall be in writing and shall be sufficient for all purposes
if personally delivered, sent by facsimile or sent by United States mail to the
address below or such other address or addresses as such party may hereafter
designate in writing to the other party as herein provided.
Company: Xxxxxxx:
iDial Networks, Inc. Xxxxxx Xxxxxxx
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000 00000 Xxxxx Xxx Xxxxx
Xxx Xxxxxxxxx, XX 00000 Xxxxxx, Xx 00000
19. Entire Agreement. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement,
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties. This Agreement may be modified or amended, if
the amendment is made in writing and is signed by both parties. This Agreement
is for the unique personal services of Xxxxxxx and is not assignable or
delegable, in whole or in part, by Xxxxxxx. This Agreement may be assigned or
delegated, in whole or in part, by the Company and, in such case, shall be
assumed by and become binding upon the person, firm, company, corporation or
business organization or entity to which this Agreement is assigned. The
headings contained in this Agreement are for reference only and shall not in any
way affect the meaning or interpretation of this Agreement. If any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, the
remaining provisions shall continue to be valid and enforceable. The failure of
either party to enforce any provision of this Agreement shall not be construed
as a waiver or limitation of that party's right to subsequently enforce and
compel strict compliance with every provision of this Agreement. This Agreement
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may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument
and, in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
IDIAL NETWORKS, INC.: XXXXXX X. XXXXXXX:
By: ______________ __________________
Name: Xxxx X. Xxxx Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer and Chairman
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