EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
18th day of October, 2005 (the "Effective Date") by and between VoIP, Inc., a
Texas corporation (the "Company"), and B. Xxxxxxx Xxxxx, whose residence address
is 00000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxx, 00000 (the "Executive").
The Company wishes to employ the Executive and the Executive wishes to
enter into the employee of the Company as Chief Operating Officer of the
Company.
This employment agreement shall become effective immediately upon the
signing of this contract.
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 as hereinafter set forth. The agreement will automatically renew for
subsequent six month period(s), unless terminated at least 90 days prior to the
expiration of the applicable six month period.
1.2 Duties of Executive. The Executive shall serve as Chief
Executive Officer of the Company and shall perform the duties of an executive
commensurate with such position, shall diligently perform all services as may be
assigned to him by the Board of Directors and Executive Committee. The Executive
shall devote his working time and attention to the business and affairs of the
Company, directing the operations and business development functions of the
company by performing the following duties personally or through subordinate
supervisors: establishing, recommending or implementing operational decisions on
all aspects operations, business development, and strategic planning. The
Executive shall report to the Board of Directors and Executive Committee.
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 $12,000.00 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.
2.2 Equity. Upon the execution of this agreement, the Company will
issue 500,000 shares of R144 VOII stock that after a period of six months will
have full piggy back registration rights. In addition, the Company will issue
500,000 Warrants and to purchase shares of common stock of the Company at $1.50
per share and 500,000 non-qualified stock options to purchase shares of common
stock of the Company at $1.56 per share. Options granted will vest according to
the 2005 employee option program.
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,
entertainment and fuel cost.
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 personal D&O insurance. The Executive may elect not
to receive the medical and dental coverage in which case an amount equal to the
cost of said coverage will be paid to the Executive as additional compensation.
The cost of such medical and dental coverage will be pre-tax to the Executive if
the election to receive cash or benefits is made in accordance with the
Company's Internal Revenue Code ("Code") section 125 plan. In addition to the
D&O coverage set forth above, Executive shall be indemnified by the Company for
his duties hereunder to the fullest extent allowed by law in accordance with the
bylaws of the Company.
3.3 Vacation. Executive shall be entitled to four weeks of paid
vacation during each calendar year, taking into consideration the business needs
of the Company.
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 (a) 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, 3.2 and the vested
portion of the equity granted in Section 2.2.
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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 one hundred eighty thousand dollars ($190,000) in cash, and
the Stock Options, Warrants and Shares set forth in Section 2.2 which shall
become fully vested.
5. 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 4.2, 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 Section 3.1 and
the vested portion of the equity granted in Section 2.2.
5.1 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 granted in Section 2.2.
5.2 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 (excluding the purchasers of the
Company's common stock in the proposed round of financing led by Xxxxxxxxxxx &
Co.) 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 (not including the currently proposed realignment of the Board of
Directors).
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5.3 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
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, 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.
(a) 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.
(b) The Company hereby agrees that, if Change of Control occurs
prior to the termination of this Agreement, the Executive's Stock Options,
Warrants and Shares referred to in section 2.2 shall become fully vested and
registered.
6. 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, during the
Severance Period, subject, however to the provisions of Section 3.1 and the
vested portion of the equity set forth in Section 2.2.
7. Restrictive Covenants.
7.1 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.
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7.2 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.
7.3 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.
7.4 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.
7.5 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;
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(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
(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.
7.6 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.
7.7 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.
8. 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.
9. Section 4999 or 409. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive ("Anticipated
Benefit") (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise) would be subject to the excise tax
imposed by Section 4999 or Section 409A of the Internal Revenue Code or any
interest or penalties are incurred by the Executive with respect to such excise
taxes (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive from the Company an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including, without limitation, any interest or penalties with respect to such
taxes and any income or Excise Taxes imposed upon the Gross-Up Payment), the
Executive will net an amount equal to the Anticipated Benefit minus applicable
income tax related to the Anticipated Benefit.
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10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
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17. 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.
18. 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.
19. 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.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
21. 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.
IN WITNESS WHEREOF, this Agreement has been duly signed by the parties
hereto on the day and year first above written.
VoIP, Inc.
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, CEO
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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