EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”), entered into this 11th day of May, 2007, by and
between WQN, INC., a Delaware corporation (the “Employer”), and XXXXXXX XXXXXXXX (“Employee”).
WITNESSETH
WHEREAS, the Employer desires to employ, and Employee desires to work for Employer;
WHEREAS, the Employer desires to provide fair and reasonable benefits to Employee on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, the Employer desires reasonable protection of their confidential business and
customer information which they will develop over the years at substantial expense and assurance
that Employee will not compete with the Employer for a reasonable period of time after termination
of his employment with the Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and
undertakings herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, each intending to be legally bound,
covenant and agree as follows:
1. Employment. Upon the terms and subject to the conditions set forth in this
Agreement, the Employer employs Employee as the Employer’s Chief Technology Officer and Employee
accepts such employment.
2. Positions. Employee agrees to serve as the Employer’s Chief Technology Officer and
to perform such duties in those offices as may reasonably be assigned to him by the Employer’s
Board of Directors not inconsistent with the nature of Employee’s position and such duties which
are of the character as those generally associated with such officer’s title.
3. Term. The term of this Agreement shall begin on May 10, 2007 (the “Effective
Date”) and shall end on the date which is one (1) year following such date; provided, however, that
such term shall be extended automatically for an additional year on each anniversary of the
Effective Date, unless either party hereto gives sixty (60) days written notice to the other party
not to so extend prior to an anniversary (such term, including any extension thereof shall herein
be referred to as the “Term”). Notwithstanding the foregoing, this Agreement shall automatically
terminate (and the Term of this Agreement shall thereupon end) without notice when Employee attains
65 years of age.
4. Salary. Employee shall receive a monthly minimum salary of Seven Thousand Dollars
($7,000.00) (“Base Compensation”) payable at regular intervals in accordance with the
Employer’s
normal payroll practices in effect from time to time. Employee shall be entitled to
receive a bonus of Twenty-Five Thousand Dollars U.S. ($25,000.00) per every One Million
Dollars U.S. ($1,000,000.00) up to a total of Five Million Dollars U.S. ($5,000,000.00) of annual
gross revenue generated by Employer as a result of software licenses related to the software
program “My Nabyoo” that Employer licenses during such period (the “Software Revenue”), and a bonus
of Fifty Thousand Dollars U.S. ($50,000.00) per every One Million Dollars U.S. ($1,000,000.00) of
Software Revenue in excess of Five Million Dollars U.S. ($5,000,000.00) of Software Revenue up to
total of Ten Million Dollars U.S. ($10,000,000.00) of Software Revenue. Additionally, Employee
will be eligible to participate in Employer’s stock option plan to the same extent as other
executives, officers and employees of Employer, and to receive stock options thereunder in such
amounts and at such times as the Board of Directors may determine in its discretion.
5. Benefit Programs. During the term of this Agreement, Employee shall be entitled to
participate in or receive benefits (collectively, the “Benefits”) comparable to the other employees
of the Employer, if such benefits are offered by the Employer. The foregoing does not obligate the
Employer to provide benefits of any type.
6. General Policies. All matters relating to the employment of Employee by the
Employer not specifically addressed in this Agreement shall be subject to the general policies
regarding employees of the Employer in effect from time to time.
7. Termination. Subject to the respective continuing obligations of the parties,
Employee’s employment by the Employer may be terminated prior to the expiration of the Term of this
Agreement as follows:
(a) The Employer, by action of its Board of Directors and upon written notice to Employee, may
terminate Employee’s employment with the Employer for cause. For purposes of this subsection
7(a), “cause” shall be defined as (i) Employee’s personal dishonesty of a material nature
affecting Employee’s ability to perform his duties under this Agreement, (ii) Employee’s
incompetence in the performance of his duties and obligations under this Agreement, (iii)
Employee’s willful misconduct or gross negligence, (iv) Employee’s breach of fiduciary duty
involving personal profit, (v) Employee’s intentional failure to perform stated duties, (vi)
Employee’s conviction of any criminal offense which involves dishonesty or breach of trust or
conviction of any felony, (vii) any requirement of a government agency or authority having
jurisdiction over the Employer, or (viii) any material violation by Employee of any material
provision or covenant of this Agreement not cured by Employee within thirty (30) days of Employee’s
receipt of notice from the Employer of such material violation.
(b) The Employer, by action of its Board of Directors, may terminate Employee’s employment
with the Employer without cause at any time; provided, however, that the “date of termination” for
purposes of determining benefits payable to Employee under subsection 8(b) hereof shall be
the date 30 days after Employee receives written notice of such termination.
(c) Employee, by written notice to the Employer, may terminate his employment with
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the
Employer immediately for good reason. For purposes of this subsection 7(c), “good reason”
shall be defined as any material violation by the Employer of any material provision or covenant
of this Agreement.
(d) Employee’s employment with Employer shall terminate in the event of Employee’s death or
disability. For purposes hereof, “disability” shall mean the physical or mental inability of
Employee to perform his obligations hereunder, provided that notice of any termination by the
Employer because of Employee’s “disability” shall have been given to Employee prior to the full
resumption by him of the performance of such duties.
(e) Nothing contained in this Agreement shall impair, affect or change any requirements
otherwise imposed upon the Employer or Employee by applicable statute, law, rule, regulation or
other legal requirement, including, without limitation, Employee’s COBRA rights upon termination of
employment.
8. Termination Payments. In the event of termination of Employee’s employment
pursuant to Section 7 hereof, compensation shall continue to be paid to Employee as
follows:
(a) In the event of termination pursuant to subsection 7(a), compensation provided for
herein (including Base Compensation) shall continue to be paid, and Employee shall continue to
participate in the benefit, retirement, and compensation plans and other perquisites as provided in
Sections 5 and 6 hereof, for the lesser of (i) for a period of 3 months after the date set
forth in the notice of termination, or (ii) for a period up to the remaining Term. Any benefits
payable under insurance, health, retirement and bonus plans as a result of Employee’s participation
in such plans through such date shall be paid when due under those plans.
(b) In the event of termination pursuant to subsection 7(b) or 7(c), compensation
provided for herein (including Base Compensation) at the rate in effect at the time of termination
shall continue to be paid to Employee and Employee shall continue to participate in the benefit,
retirement and compensation plans and other perquisites as provided in Sections 5 and 6
hereof, through the date of termination. Throughout the period during which Employee’s
compensation shall continue hereunder, the Employer shall continue to contribute the employer
portion toward the cost of such benefits and other perquisites in a manner consistent with the
applicable terms of the governing plan documents and if applicable, insurance contracts, and
otherwise in accordance with the procedures and policies in place prior to such termination through
the date such payments, benefit coverages and perquisites are to be continued hereunder. Payment
of compensation during this period, including Base Compensation, shall be made pursuant to the
applicable payroll practices then utilized by the Employer, and shall commence on the first payroll
payment date occurring after the date of termination of Employee’s employment.
(c) In the event of termination pursuant to subsection 7(d), compensation provided for
herein (including Base Compensation) shall continue to be paid and Employee shall continue to
participate in the benefit, retirement, and compensation plans and other perquisites as provided in
Sections 5 and 6 hereof in a manner consistent with the applicable terms of the governing
plan documents, (i) in the event of Employee’s death, through the date of death, or (ii) in the
event of
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Employee’s disability, through the date of proper notice of disability as required by
subsection 7(d). Any benefits payable under insurance, health, retirement and bonus plans
as a result of the Employer’s participation in such plans through such date shall be paid when due
under those
plans.
9. Notice of Termination. Any termination of Employee’s employment with Employer as
contemplated by Section 7 hereof, except in the circumstances of Employee’s death, shall be
communicated by written “Notice of Termination” by the terminating party to the other party hereto.
Any “Notice of Termination” pursuant to subsections 7(a), 7(c) or 7(d) shall indicate the
specific provisions of this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such termination.
10. Regulatory Oversight. All obligations under this Agreement may be terminated
except to the extent determined that the continuation of the Agreement is necessary for the
continued operation of the Employer by order of any state or federal regulatory agency with
supervision of the Employer, unless stayed by appropriate proceedings, and the Employer shall be
under no obligation to perform any of its obligations hereunder if it is informed in writing by any
state or federal regulatory agency with supervision of the Employer that performance of its
obligations would constitute an unsafe or unsound business practice.
11. Death. Should Employee die after termination of his employment with the Employer
while any amounts are payable to him hereunder, this Agreement shall inure to the benefit of and be
enforceable by Employee’s executors, administrators, heirs, distributees, devisees and legatees and
all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to
Employee’s devisee, legatee or other designee or, if there is no such designee, to his estate.
12. Notices. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given when delivered or
mailed by United States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employee: | Xxxxxxx Xxxxxxxx | |||
xxxxxxxxxx@xxxxxxxxx.xx.xxx | ||||
If to the Employer: | WQN, Inc. | |||
Attn: B. Xxxxxxx Xxxxx | ||||
00000 Xxxxxx Xxxxx, Xxxxx 000 | ||||
Xxxxxx, XX 00000 | ||||
Facsimile: 972.980.3739 |
or to such other address as either party hereto may have furnished to the other party in writing in
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accordance herewith, except that notices of change of address shall be effective only upon receipt.
13. Governing Law. The validity, interpretation, and performance of this Agreement
shall be governed by the laws of the State of Texas, without reference to the choice of law
principles or rules thereof, except to the extent that federal law shall be deemed to apply.
14. Modification. No provision of this agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Employer and Employee. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a wavier of dissimilar provisions or conditions at the same or
any prior subsequent time. No agreements or representation, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
15. Validity. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this Agreement which
shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
agreement.
17. Assignment. This Agreement is personal in nature and neither party hereto shall,
without consent of the other, assign or transfer this Agreement or any rights or obligations
hereunder except as provided in Section 11 above. Without limiting the foregoing,
Employee’s right to receive compensation hereunder shall not be assignable or transferable, whether
by pledge, creation of a security interest or otherwise, other than a transfer by his will or by
the laws of descent or distribution as set forth in Section 11 hereof, and in the event of
any attempted assignment or transfer contrary to this paragraph, Employer shall have no liability
to pay any amounts so attempted to be assigned or transferred.
18. Enforcement. If any provision of this Agreement is invalid in part or in whole,
it will be deemed to have been amended, whether as to time, area covered or otherwise, as and to
the extent required for its validity under applicable law and, as so amended, will be enforceable.
The parties will execute all documents necessary to evidence such amendment.
19. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance with the rules then
in effect of the district office of the American Arbitration Association (“AAA”) nearest to the
home office of the Employer, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise reach a mutual
settlement of such issue.
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20. Document Review. Employer and Employee hereby acknowledge and agree that each (i)
has read this Agreement in its entirety prior to executing it, (ii) understands the provisions and
effects of this Agreement, (iii) has consulted with such attorneys, accountants and financial and
other advisors as it or he has deemed appropriate in connection with their respective execution of
this Agreement, and (iv) has executed this Agreement voluntarily and knowingly. EMPLOYEE HEREBY
UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT HAS BEEN PREPARED BY LEGAL COUNSEL TO THE EMPLOYER AND THAT HE HAS
NOT RECEIVED ANY ADVICE, COUNSEL OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT FROM SUCH
COUNSEL.
21. Entire Agreement This Agreement and the Employee Proprietary Information and
Inventions Agreement dated as of the date hereof together with any understanding or modifications
thereof as agreed to in writing by the parties, shall constitute the entire agreement between the
parties hereto.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have caused the Agreement to be executed and delivered as of
the date first written above.
EMPLOYER: | ||||||
WQN, INC. | ||||||
By: | /s/ B. Xxxxxxx Xxxxx | |||||
B. Xxxxxxx Xxxxx, | ||||||
Chief Executive Officer | ||||||
EMPLOYEE: | ||||||
/s/ Xxxxxxx Xxxxxxxx | ||||||
Xxxxxxx Xxxxxxxx |
[Signature Page to WQN Employment Agreement]