EMPLOYMENT AGREEMENT
Exhibit
10.3
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 15th day
of May, 2006 (the “Effective Date”) by and between VoIP, Inc., a Texas
corporation (the “Company”), and Xxxxx Xxx, whose residence address is 609 ½
Xxxxx Xxxxxx Xxxx., Xxx Xxxxxxx, XX 00000 (the “Executive”).
The
Company wishes to employ the Executive and the Executive wishes to enter into
the employ of the Company as corporate officer with the title of Vice President
- Corporate Planning of the Company.
This
employment agreement shall become effective immediately as of May 15, 2006
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 one year period(s), unless terminated
at
least 90 days prior to the expiration of the applicable one year
period.
1.2 Duties
of Executive.
The
Executive shall serve as Vice President - Corporate Planning and shall perform
the duties of an executive commensurate with such position and shall diligently
perform all services as may be assigned to him by the Company’s Chief Executive
Officer, Board of Directors and Executive Committee. Executive’s duties shall
include, but not be limited to financial and business planning, competitive
and
market analysis, strategy development, analysis of comparable companies
including their products, services, financing approaches; monitoring and
analyzing industry mergers and acquisitions and corporate investments and
partnerships, and developing useful contacts in the industry and related
financial markets.
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 and Bonuses.
During
the term, the Executive shall receive a base salary paid bi-weekly. The
Executive will receive an initial Base Salary equal to $8,500 per month. The
Board of Directors may increase this amount at any other time if the Company
has
achieved the goals set by the Board and agreed to by Executive and in any event
the Base Salary shall increase to $10,000 per month by no later than January
1,
2007. Once increased, the Executive’s Base Pay will not be reduced. In addition,
the Board of Directors may elect to award the Executive performance bonuses
from
time to time based upon the Executive’s performance or the performance of the
Company.
2.2 Equity.
Upon
the
execution of this agreement, the Company will issue Executive warrants
immediately exercisable to purchase 500,000 shares of common stock of the
Company at the closing price per share on the trading day immediately before
the
Effective Date, (which is $1.00 per share), and 500,000 non-qualified stock
options that will vest on a quarterly basis over the first year of this
agreement. All warrants and stock options shall have “cashless exercise”
features and otherwise have terms and conditions customary for these types
of
situations. In addition, all or a portion of the stock options may take the
form
of stock appreciation rights as determined by mutual agreement between Executive
and Company.
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 growth and 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.
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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. However, Executive
agrees not to take vacation for more than two weeks in any given
month.
4. Termination.
4.1 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 Executive
Committee or Board of Directors; insubordination or abandonment of position
(after written notice and a reasonable opportunity to cure of not less than
thirty (30) days); or (v) failure to comply in any material respect with the
terms of this Agreement (after written notice and a reasonable opportunity
to
cure of not less than thirty (30) days). 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.
4.2 Termination
Without Cause.
The
Company may terminate this Agreement without cause at any time prior to the
end
of the Term or any Term thereafter 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 fifty one thousands dollars ($51,000) or continued salary
at
Executive’s then-current rate for a period of six months in cash, and the Stock
Options, Warrants and Shares set forth in Section 2.2 which shall become fully
vested.
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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 Change
in Control of the Company Defined.
The
term
“Change in Control of the Company” shall mean (i) the approval by the
shareholders of the Company of a reorganization, merger, consolidation or other
form of corporate transaction or series of transactions, in each case, with
respect to which persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation or other transaction
do
not, immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated company’s then outstanding voting securities, or (ii) the
sale of all or substantially all of the assets of the Company or (iii) the
liquidation of the Company, or (iii) a change in the composition of the Board
of
Directors such that the present members do not constitute a majority of the
Board of Directors.
5.3 Change
in Control
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.
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(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, 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 Company
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, or for one year thereafter
unless terminated without cause, 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 or services, or planned product
or service, of the Company that is significant to the Company’s current or
forecasted business based on sales and/or profitability or strategic value
of
any such product or service 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
Company 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, Company is engaged or (if such is known to or ascertainable by
Executive) is considering engaging, Executive hereby agrees:
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(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 Company;
(b) to
disclose promptly to an authorized representative of Company 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 Company (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 Company 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 Company, and without expense to Executive, to execute such documents
and perform such other acts as Company deems necessary or appropriate, for
Company to obtain patents on such inventions in a jurisdiction or jurisdictions
designated by Company, and to assign to Company or its designee such inventions
and any and all patent applications and patents relating thereto.
(f) If
Executive’s employment location is in California, the provisions of the
foregoing paragraph do not apply to an invention which qualifies fully under
the
provisions of Section 2870 of the California Labor Code, which provides in
substance that provisions in an employment agreement providing that an employee
shall assign do not apply to an invention for which no equipment, supplies,
facility, or trade secret information of the employer was used and which was
developed entirely on the employee’s own time, and which (i) does not relate (a)
to the business of the employer, or (b) to the employer’s actual or demonstrably
anticipated research or development, or (ii) does not result from the work
performed by the employee for the employer.
7.6 Injunctive
Relief.
The
parties hereby acknowledge and agree that:
(a) Company
will be irreparably injured in the event of a breach by Executive of any of
his
obligations under this Section 7;
(b) monetary
damages will not be an adequate remedy for any such breach;
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(c) Company
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 7.
7.7 Non-Exclusivity
and Survival.
The
covenants of the Executive contained in this Section 7 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 the Company 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.
10. Governing
Law/Prevailing Party.
This
Agreement shall be construed in accordance with and governed for all purposes
by
the laws of the State of California applicable to contracts executed and to
be
wholly performed within such state without giving effect to any choice of law
or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any other
jurisdiction other than the State of California. This Agreement shall be subject
to the exclusive jurisdiction of the courts in the State of Texas. The parties
irrevocably waive, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement, or any judgment entered
by any court in respect hereof brought in the State of Texas, and further
irrevocably waive any claim that any suit, action or proceeding brought in
the
State of Texas has been brought in an inconvenient forum. The prevailing party
in any suit brought hereunder shall be entitled to reimbursement for legal
fees
and costs incurred in connection with such suit (and appeal).
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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 California, 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.
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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. | ||
| |
|
|
| By: | /s/ Xxxx Post | |
|
Xxxx Post, President and Chief Executive Officer |
||
| By: | /s/ Xxxxx Xxx | |
|
Xxxxx Xxx |
||
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