EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
July 4, 2005 and shall be effective as of July 6, 2005 (the "Effective Date") by
and between IPEX, Inc., a Nevada corporation, with an office located at 0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000 (the "Company") and Sothi
Thillairajah, an individual with an address located at 000 Xxxx 00xx Xxxxxx,
Xxx. 0X, Xxx Xxxx, XX 00000 ("Thillairajah").
WHEREAS, the Company desires to retain the services of Thillairajah as the
Company's Chief Operating Officer and Thillairajah is willing to be employed by
the Company in such capacity.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Employment. Thillairajah is hereby employed and engaged to serve the Company
as the Company's Chief Operating Officer, or such additional titles as the
Company shall specify from time to time, and Thillairajah does hereby accept,
and Thillairajah hereby agrees to such engagement and employment.
2. Duties. Thillairajah's 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 Operating Officer of a company with a
business commensurate with those of the Company. Thillairajah 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. Thillairajah shall diligently and
faithfully execute and perform such duties and responsibilities, subject to the
general supervision and control of the Company's Chief Executive Officer.
Thillairajah shall be responsible and report to the Company's Chief Executive
Officer. The Company's Chief Executive Officer, in its sole and absolute
discretion, shall determine Thillairajah's duties and responsibilities and may
assign or reassign Thillairajah to such duties and responsibilities as it deems
in the Company's best interest. Thillairajah 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 Chief Executive Officer.
Nothing in this Agreement shall preclude Thillairajah 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.
3. Best Efforts of Thillairajah. During his employment hereunder, Thillairajah
shall, subject to the direction and supervision of the Company's Chief Executive
Officer, 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 Thillairajah from investing his
assets in any business.
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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 twelve (12) months (the "Initial
Term"), and shall be automatically renewed for an additional twelve (12) months
(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. (the terms "Initial Term" and "Renewal Term" will
collectively hereinafter be referred to as the "Employment Term").
5. Compensation of Thillairajah.
(a) Base Compensation. As compensation for the services provided by
Thillairajah under this Agreement, the Company shall pay Thillairajah an
annual salary of One Hundred Fifty Thousand Dollars ($150,000). The
compensation of Thillairajah under this Section shall be paid in
accordance with the Company's usual payroll procedures.
(b) Relocation Allowance. After signing this Agreement, the Company shall pay
Thillairajah Twenty Thousand Dollars ($20,000) as payment for any
necessary relocation expenses in connection with Thillairajah's employment
under this Agreement.
(c) Stock and Stock Options. After signing this Agreement, the Company: (i)
shall xxxxx Xxxxxxxxxxxx 40,000 shares of the Company's common stock,
which shares shall vest upon expiration of the Initial Term; (ii) shall
xxxxx Xxxxxxxxxxxx options to purchase 375,000 shares of the Company's
common stock with an exercise price equal to the closing price of the
Company's common stock on the Effective Date, which options shall vest
upon expiration of the Initial Term and shall expire five (5) years after
the Effective Date; and (iii) shall xxxxx Xxxxxxxxxxxx options to purchase
an additional 125,000 shares of the Company's common stock with an
exercise price equal to the closing price of the Company's common stock on
the Effective Date, which options shall vest upon expiration of the
Initial Term if the milestones described in Appendix A have been completed
at such time, and shall expire five (5) years after the Effective Date.
(d) Bonus. In addition to the base compensation in Section 5(a), Thillairajah
shall be eligible to receive an annual bonus determined by the Board of
Directors based on the performance of the Company.
6. Benefits. Thillairajah shall also be entitled to participate in any and all
Company benefit plans, from time to time, in effect for employees of the
Company, including, but not limited to, health, dental and vision insurance
plans available to the Company's senior management executives and their
dependents. Such participation shall be subject to the terms of the applicable
plan documents and generally applicable Company policies.
7. Vacation, Sick Leave and Holidays. Thillairajah shall be entitled to three
(3) weeks of paid vacation, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. In addition,
Thillairajah 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 Thillairajah for all
reasonable out-of-pocket business expenses incurred in performing Thillairajah's
duties and responsibilities hereunder in accordance with the Company's policies,
provided Thillairajah promptly furnishes to the Company adequate records of each
such business expense.
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9. Location of Thillairajah's Activities. Thillairajah's 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 Company's Chief Executive Officer.
Notwithstanding the preceding sentence, Thillairajah 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. Thillairajah 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. Thillairajah 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.
Thillairajah will protect the Confidential Information and treat it as strictly
confidential.
11. Non-Competition. Thillairajah 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,
Thillairajah 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 Thillairajah's 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 principal
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,
Thillairajah's employment hereunder shall terminate under the following
circumstances:
(a) Voluntary Termination by Thillairajah. Thillairajah 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 Thillairajah's
employment hereunder at any time after the Initial Term. Termination
of Thillairajah's employment pursuant to this Section 12(b) shall
not be effective unless the Company shall have first given
Thillairajah a written notice thereof at least thirty (30) days
prior to the effective date of such termination.
(c) Termination for Cause. The Company shall have the right to terminate
this Agreement and Thillairajah's employment hereunder at any time
for cause. As used in this Agreement, "cause" shall mean refusal by
Thillairajah to implement or adhere to lawful policies or directives
of the Company's Chief Executive Officer or the Company's Board of
Directors, breach of this Agreement, Thillairajah's 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 Thillairajah of funds from or
resources of the Company. Cause shall not be deemed to exist unless
the Company shall have first given Thillairajah 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
Thillairajah's employment hereunder, shall automatically terminate
upon Thillairajah's death or upon written notice to Thillairajah and
certification of Thillairajah's disability by a qualified physician
or a panel of qualified physicians if Thillairajah becomes disabled
beyond a period of twelve (12) months and is unable to perform the
duties contained in this Agreement.
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(e) Effect of Termination.
(i) In the event that this Agreement and Thillairajah's employment
is voluntarily terminated by Thillairajah pursuant to Section 12(a),
or in the event the Company terminates this Agreement for cause
pursuant to Section 12(c), all obligations of the Company and all
duties, responsibilities and obligations of Thillairajah under this
Agreement shall cease. Upon such termination, the Company shall (i)
pay Thillairajah a cash lump sum equal to all accrued base salary
through the date of termination plus all accrued vacation pay and
bonuses, if any; and (ii) any shares of common stock or options
granted to Thillairajah by the Company which have not vested
pursuant to Section 5 hereof shall be terminated.
(ii) In the event that this Agreement and Thillairajah's employment
is voluntarily terminated by the Company pursuant to Section 12(b),
all obligations of the Company and all duties, responsibilities and
obligations of Thillairajah under this Agreement shall cease. Upon
such termination, the Company shall pay Thillairajah a cash lump sum
equal to all accrued base salary through the date of termination
plus all accrued vacation pay and bonuses, if any; and (ii) any
shares of common stock or options granted to Thillairajah by the
Company pursuant to Section 5 hereof shall become immediately
vested.
(iii) In the event this Agreement is terminated upon the death or
disability of Thillairajah pursuant to Section 12(d), Thillairajah
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
Thillairajah or Thillairajah's 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
Thillairajah.
13. Resignation as Officer. In the event that Thillairajah's employment with the
Company is terminated for any reason whatsoever, Thillairajah 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 California without
giving effect to any applicable conflicts of law provisions.
15. Business Opportunities. During the Employment Term Thillairajah agrees to
bring to the attention of the Company's Chief Executive Officer and the
Company's Board of Directors all written business proposals that come to
Thillairajah's attention and all business or investment opportunities of
whatever nature that are created or devised by Thillairajah 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. Thillairajah hereby represents
and warrants that he is not under any contractual obligation to any other
company, entity or individual that would prohibit or impede Thillairajah 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. Thillairajah 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 Thillairajah in this Section 16.
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17. Indemnification.
(a) The Company agrees that if Thillairajah 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
Thillairajah's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, Thillairajah 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 Nevada, 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 Thillairajah in connection therewith, and such indemnification shall
continue as to Thillairajah 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 Thillairajah's heirs, executors and administrators. The
Company shall advance to Thillairajah to the extent permitted by law all
reasonable costs and expenses incurred by his 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 Thillairajah 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.
(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 Thillairajah that indemnification of Thillairajah 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 Thillairajah has not met such applicable
standard of conduct, shall create a presumption that Thillairajah has not
met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and officers'
liability insurance policy covering Thillairajah to the extent the Company
provides such coverage for its other executive officers.
(d) Promptly after receipt by Thillairajah of notice of any claim or the
commencement of any action or proceeding with respect to which
Thillairajah is entitled to indemnity hereunder, Thillairajah 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 Thillairajah,
and (iii) pay the reasonable fees and expenses of such counsel.
Notwithstanding the preceding sentence, Thillairajah shall be entitled to
employ counsel separate from counsel for the Company and from any other
party in such action if Thillairajah 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 Thillairajah shall be paid by
the Company to the extent permitted by law.
(e) After the termination of this Agreement and upon the request of
Thillairajah, the Company agrees to reimburse Thillairajah 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 Thillairajah is
required to appear after termination of this Agreement at a judicial or
regulatory hearing in connection with Thillairajah's employment hereunder,
or Thillairajah's role in connection therewith, the Company agrees to pay
Thillairajah a sum, to be mutually agreed upon by Thillairajah and the
Company, per diem for each day of his appearance and each day of
preparation therefor.
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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: Thillairajah:
IPEX, Inc. 000 Xxxx 00xx Xxxxxx, Xxx. 0X
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxx Xxxx, XX 00000
Xxx Xxxxx, 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 Thillairajah and is not assignable or
delegable, in whole or in part, by Thillairajah. 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
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.
IPEX, INC.: SOTHI THILLAIRAJAH:
By: /s/ Xxxxxx Xxxx /s/ Sothi Thillairajah
--------------------------- ---------------------------
Name: Xxxxxx "Xxxx Xxxx, III Sothi Thillairajah
Title: Chief Executive Officer
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APPENDIX A
MILESTONES
The following three milestones are critical to this Agreement and must be
accomplished in accordance with the time frames set forth in Section 5(c)(iii)
of the Agreement:
(a) Completion of the Company's acquisition of certain intellectual
property assets pursuant to: (i) that certain Purchase Agreement, dated June 7,
2005, between the Company, RGB Channel SRL, Xxxxxxx Xxxxxxxxx, B Tech Ltd. and
Xxxxxxxx Xxxx; and (ii) that certain Purchase Agreement, dated June 7, 2005,
between the Company, B Tech Ltd., Xxxxxxx Xxxxxxxxx and Xxxxxxxx Xxxx;
(b) Completion of the Company's acquisition of all of the outstanding
capital stock of Vinculum Communications, Inc., a Delaware corporation; and
(c) Implementation of a corporate governance program which shall be in
compliance with all applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and all applicable rules of the
Securities and Exchange Commission promulgated under the Exchange Act,
including, but not limited to, Rule 13a-15 under the Exchange Act.
A-1
