Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
22nd day of November, 2005 (the "Effective Date") by and between VoIP, Inc., a
Texas corporation (the "Company"), and Xxx Xxxxx, whose residence address is
00000 Xxx Xxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Executive").
The Company wishes to employ the Executive and the Executive wishes to
enter into the employee of the Company as President of the Company.
This Agreement shall become effective immediately upon the execution
hereof.
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereby agree as follows:
1. Employment.
(a) 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.
(b) Duties of Executive. The Executive shall serve as President 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.
(c) 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.
(a) 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 $13,750.00 per month which will be increased to
$15,000.00 per month on January 1, 2006. 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.
Equity. Upon the execution of this Agreement, the Company will issue
to the Executive 1,000,000 Warrants with a term of not less than five years to
purchase shares of common stock of the Company at $1.50 per share, and
non-qualified stock options to purchase 500,000 shares of common stock of the
Company at $1.56 per share. Options granted will vest according to the Company's
employee stock option program. The Warrants referred to above will have full
piggy back registration rights after a period of six months from the date
hereof.
(b) 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.
(a) 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 approved 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.
(b) Other Benefits and Indemnification. 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 and in accordance
with the bylaws of the Company.
(c) 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 (4) 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, and the vested portion of the equity set forth in Section 2.2.
(a) 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 ninety thousand dollars ($90,000) 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 Sections 3.1, and the vested portion of the
equity set forth in Section 2.2.
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(a) 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 set forth in Section 2.2.
(b) 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). 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
expiration date of this Agreement (which 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.
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..
The Company hereby agrees that, if Change of Control occurs prior to the
termination of this Agreement or any extension or modification thereof, the
Executive's Stock Options and Warrants referred to in section 2.2 shall become
fully vested and registered, and the Company shall issue to Executive a bonus of
1,000,000 shares of the Company's common stock ("Shares"). The Stock Options,
Warrants and Shares referred to herein shall be included with the Company's
shares sold or otherwise exchanged in conjunction with any Change of Control.
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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, 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.
(a) 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) 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.
(b) 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.
(c) 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.
(d) 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 as an employee 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.
(e) 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:
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(i) 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;
(ii) 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;
(iii) 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);
(iv) 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
(v) 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.
(f) Injunctive Relief. The parties hereby acknowledge and agree that (a)
Employer will be irreparably injured in the event of a breach by
Executive under this Section 7; (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 7.
(g) 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 contractor by law , 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.
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.
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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:
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B. Xxxxxxx Xxxxx,
CEO
By:
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Xxx Xxxxx
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