EXHIBIT 10.4
CONSULTING SERVICES AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement"), is made and entered into as
of this l8th day of October, 2005 (the "Effective Date"), by and among VolP,
Inc., a Texas corporation (the "Company") and Xxxxxx Xxxxxxx (hereinafter
referred to as "Consultant"). The Company and Consultant are sometimes
collectively referred to as "Parties" or individually as a "Party".
RECITALS
WHEREAS, the Company is an a leading provider of. Voice over Internet
Protocol (VoIP) hosted communications solutions for service providers, resellers
and consumers worldwide; and
WHEREAS, Consultant has significant experience with the operation,
administration and financing of the Company; and
WHEREAS, the Company desires to utilize Consultant's business expertise
and Consultant desires to provide services to the Company.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the Parties agree as
follows:
AGREEMENT
ARTICLE I
APPOINTMENT
1.1 Appointment. The Company hereby engages Consultant to furnish the
services described in Article 3 of this Agreement, and Consultant hereby accepts
such engagement. The Consultant agrees to use his best efforts to perform his
duties, responsibilities, and obligations set forth in this Agreement.
1.2 Status of the Parties. It is expressly understood and agreed that in
the performance of services under this Agreement, Consultant shall, at all
times, be an independent contractor with respect to the Company, and not an
agent or employee of the Company. Further, it is expressly understood and agreed
by the Parties that nothing contained in this Agreement is intended to create a
joint venture, partnership, association or other affiliation or like
relationship between the Parties. In no event shall either Party be liable for
the debts or obligations of the other Party. Consultant understands that he will
not be treated as an employee for Federal tax purposes and that Consultant shall
be responsible for all taxes, Social Security and FICA payments and withholding.
Consultant shall not be entitled or eligible to receive xxxxxxx'x compensation
insurance, disability or unemployment insurance benefits or any other employee
benefits offered by the Company to its employees.
ARTICLE II
CONDITIONS AND TERMS OF AGREEMENT
The Company shall at all times retain and exercise full control over the
operations of the Company's business. Nothing in this Agreement shall be deemed
to delegate to Consultant any such control or responsibility. Consultant shall
perform only those functions set forth in this Agreement or otherwise delegated
by the Company, and shall be solely responsible for determining the manner in
which the services are rendered. The Company shall provide Consultant with
access to the Company's premises and its employees to enable Consultant to
perform his services hereunder at no time shall the company with hold access to
any of the company's premises no matter the location.
ARTICLE III
OBLIGATIONS OF CONSULTANT
Consultant shall devote his best efforts, skill and sufficient time and
attention to carry out his responsibilities under this Agreement. Consultant
shall report to the Chief Executive Officer of the Company (the "Chief Executive
Officer") and the Board of Directors of the Company (the "Board of Directors").
Consultant shall provide, at the reasonable request of the Chief Executive
Officer and the Board of Directors (the "Management"), general business
strategy, financing and product development advice. Consultant shall act in
substantial accordance with all reasonable instructions and directives of
Management Consultant shall comply with all written policies and procedures of
the Company that are furnished to him and which are applicable to Company
employees in general, in connection with the performance of services hereunder.
Consultant shall be available, at reasonable times and upon reasonable notice,
to consult with Management.
ARTICLE IV
PAYMENT
4.1 Consideration. In consideration of the services provided by Consultant
pursuant to this Agreement, the Company shall pay to Consultant $200,000 on an
annual (12 calendar month) basis payable in equal Bi-monthly installments
commencing on the Effective Date.
4.2 Reasonableness of Payments. The amounts paid to Consultant hereunder
have been determined by the Parties in good faith and through arms-length
negotiation and are intended to be based on fair market value for the services
rendered by the Consultant.
ARTICLE V
BUSINESS EXPENSES; ADDITIONAL BENEFITS
5.1 Reimbursement of Expenses. The Company shall reimburse Consultant for
business expenses reasonably incurred in the performance of his services
pursuant to this Agreement, including, without limitation, travel and
entertainment, and the use of a cellular phone. Requests for reimbursement must
be in writing and accompanied by appropriate documentation. Consultant must
obtain prior approval of the Chief Executive Officer to be reimbursed for
expenses incurred for travel outside of the State of Florida.
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5.2 Office Space. The Company shall, at its sole expense, provide
Consultant with a business office suitable for use by Consultant in the
performance of his services at the Company's executive offices or at a location
satisfactory to Consultant within a ten (10) mile radius of Consultant's address
(as stated in the notice section hereof) and the Company shall pay the costs
relating to the upkeep, maintenance, and use of such office together with
reasonable and customary administrative support at such office.
5.3 Vehicle. The Company shall provide Consultant with a vehicle, fuel and
mileage allowance of $2,500 monthly.
5.4 Stock Option Plan. In consideration of the execution by Consultant of
this Agreement and for services rendered hereunder, Consultant shall be eligible
for grants of stock options pursuant to the Company's Stock Option Plan in such
amounts as may from time to time be determined by the Board of Directors (or the
Stock Option/Compensation Committee), in its sole discretion.
5.5 Additional Benefits. Consultant shall be eligible to receive bonuses
in such amounts and at such times as may be determined by the Board of
Directors, in its sole discretion. During the term, the Company shall pay for
100% of the costs to provide the Consultant with "family" coverage for medical
and dental. The Consultant 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 Consultant as additional compensation. The cost of, such medical and
dental coverage will be pre-tax to the Consultant if the election to receive
cash or benefits is made in accordance with the Company's Internal Revenue Code
("Code") section 125 plan. Consultant 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.
ARTICLE VI
TERM AND TERMINATION OF AGREEMENT
6.1 Term. Subject to Section 6.2, the term of this Agreement shall be for
a period of three (3) years from the Effective Date. Subject to Section 6.2,
this Agreement shall automatically renew for a one (1) year period, unless at
least 60 days prior to the renewal period either Party gives written notice to
the other Party as provided in Section 9.2 hereof that this Agreement is not to
renew. This Agreement shall automatically terminate upon a Change of Control of
the Company, as defined below, and (i) Consultant shall be entitled to receive a
lump sum, payment from the Company, within five (5) days after such termination,
equal to the consideration, as defined in Section 4.1, due to Consultant for the
remaining term of this Agreement and (ii) any and all stock options granted to
Consultant shall immediately vest, and become exercisable in accordance with
their terms.
6.2 Termination: This Agreement may be terminated as follows:
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6.2.1 Termination by Mutual Consent. This Agreement may be
terminated at any time by mutual consent. in writing.
6.2.2 Termination by Company for Cause. The Company shall have the
right to immediately terminate this Agreement upon the happening of any of the
following:
(a) Consultant becomes disabled so as to be unable to perform
the duties required by this Agreement for a period of ninety (90)
consecutive days; or
(b) the willful failure to substantially perform reasonably
assigned duties in accordance with Article III which after written
notice that describes the non-performance or other failure
("Deficiency") remains uncured after seven (7) days unless such
Deficiency is incapable of being cured within such seven day period
and Consultant is diligently pursuing a cure.
6.2.3 Termination by Company Without Cause. If the Company
terminates this Agreement without cause, or in the event Consultant terminates
this Agreement as a result of the Company's breach of any of the terms hereof,
Consultant shall be entitled to receive a lump sum payment from the Company,
within five (5) days after such termination, equal to the consideration, as
defined in Section 4.1, due to Consultant for the remaining term of this
Agreement, including all automatically yearly renewals and any and all stock
options granted to Consultant shall immediately vest and become exercisable in
accordance with their terms.
6.3 Force Majeure. The inability of any Party to commence or complete its
obligations hereunder by the dates required resulting from delays caused by
strikes, walk-outs, insurrection, fires, floods, hurricane, freight embargoes,
epidemics, quarantine restrictions, any law, act, order, proclamation, decree,
regulation, ordinance or any other acts of any governmental or judicial
authority, acts of God, acts of terrorists, war, emergencies, equipment
failures, shortages or unavailability of materials, unavailability of necessary
utilities or other similar causes beyond the Party's reasonable control which
shall have been timely communicated to the other Party, shall extend the period
for the performance of the obligations for the period equal to the period(s) of
any such delays(s); provided that such Party shall continue to perform to the
extent feasible in view of such force majeure event.
6.4 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.
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6.5 Section 280G or 409. In the event Consultant is considered a
"specified employee" as defined in Internal Revenue Code ("Code") Section
409(A)(2)(B)(i), or in the event that any payment, benefit or compensation
(within the meaning of Sections 280G(b)(2) or 409A of the Code) to the
Consultant or for his benefit is paid or payable or distributed or distributable
pursuant to the terms of the this Agreement or otherwise in connection with, or
arising out of, his engagement by the Company or a change in ownership or
effective control of the Company or a substantial portion of its assets (a
"Payment" or "Payments"), would be subject to excise or additional tax or
interest imposed by Code section 4999 or required under Code section 409A(b)(1)
and/or any interest, tax or penalties are incurred by the Consultant with
respect to such excise or additional tax (such excise or additional tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then either (i) the Consultant shall promptly
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Consultant of all taxes (including any interest or
penalties, other than interest and penalties imposed by reason of the
Consultant's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Consultant retains an amount
of the Gross-Up Payment equal to the Excise Tax imposes upon the Payments, or
(ii) solely at the Company's election, any lump sum payment due to Consultant as
a result of the provisions of Section 6.1, 6.2.2 or 6.2.3, shall be paid to
Consultant 6 months after the date such payment is otherwise due, together with
interest at the rate of 8% per annum on such lump sum amount.
ARTICLE VII
COVENANTS
7.1 Confidentiality. Consultant shall (a) not disclose or reveal any
confidential information (as herein defined) to any person other than those who
are actively and directly participating in the services rendered by Consultant
under this Agreement and (b) not use any confidential information regarding the
Company for any purposes other than in connection with the services to be
rendered by Consultant hereunder, and (c) take all steps as are normally used by
Consultant in protecting confidential information to assure adherence to the
terms of this Agreement. In the event that Consultant is requested pursuant to,
or required by, applicable law or regulation or by legal process to disclose any
confidential information regarding the Company, Consultant agrees that it will
provide the Company with prompt notice of such request(s) to enable the Company
to seek an appropriate protective order and/or waive compliance by Consultant
with the provisions of this Section. "Confidential Information" means all
information about the Company, in any form, however and whenever acquired, that
is not generally known to business competitors or the general public, and which
is treated as confidential by the Company, including, without limitation: price
lists, customer lists, vendor or supplier lists, procedures, improvements,
modifications, enhancements, concepts and ideas, business plans and proposals,
business methods, technical plans and proposals, research and development,
know-how, budgets and projections, sales techniques, market studies, competitive
analyses, accounts receivable or payable, billing methods and other non-public
financial information, information regarding the skills and compensation of
employees, technical memoranda, reports, designs and specifications, product and
user manuals, software (whether or not reduced to writing and whether or not
proteetable by patent or copyright registration), in both object code and source
code, engineering, hardware configuration information, new product and service
developments, and other information, data and documents now existing or later
acquired, regardless of whether any of such information, data or documents
qualify as "trade secrets" under applicable Federal or state law.
Notwithstanding the foregoing, "confidential information" does not include
information which is generally known in the trade or industry, or which is not
gained as a result of a breach of a duty to maintain the secrecy of the
Company's confidential information. The phrase "generally known" shall mean
readily accessible to the public in a written publication.
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7.2 Non-Competition. Consultant expressly covenants and agrees that during
the term of this Agreement and for a period of one (1) year after termination of
this Agreement (unless such termination is without cause), Consultant shall not
directly or indirectly, either as a principal, agent, employee, employer,
stockholder, co-partner or in any other individual or representative capacity
whatsoever, engage in the Company's business, anywhere in the United States.
However, Consultant may acquire up to five percent (5%) of any publicly traded
company, even if engaged in competition with the Company.
7.3 Non-Solicitation of Employees. Consultant agrees that during the term
of this Agreement and for a period of one (1) year after termination of this
Agreement, Consultant shall, (i) not solicit, entice, persuade, or induce any
employee of the Company or any of its subsidiaries to leave the employ of such
entity, and (ii) refrain from recruiting or hiring, or attempting to recruit or
hire, directly or by assisting others, any individual who is employed by the
Company, or any of its subsidiaries at the time of the attempted recruiting or
hiring.
7.4 Non-Solicitation of Customers. Consultant agrees that during the term
of this Agreement and for a period of one (1) year after termination of this
Agreement, Consultant shall refrain from soliciting, or attempting to solicit,
directly or by assisting others, any business from any of the customers of the
Company or its subsidiaries.
7.5 Work Product. Consultant shall disclose promptly to the Company any
and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, that are conceived or made by
the Consultant, solely or jointly with another, during the term of this
Agreement and that are directly related to the business or activities of Company
and that Consultant conceives as a result of the Consultant's independent
contractor relationship with the Company. Consultant hereby assigns and agrees
to assign all the Consultant's interests therein to the Company or its nominee.
Consultant agrees that all such inventions, improvements and valuable
discoveries that the Consultant develops or conceives and/or documents during
the term of this Agreement shall be deemed works made-for-hire for the Company
within the meaning of the copyright laws of the United States or any similar or
analogous law or statute of any other jurisdiction and, accordingly, the Company
shall be the sole and exclusive owner for all purposes for the distribution,
exhibition, advertising and exploitation of such materials or any part of them
in all media and by all means now known or that may hereafter be devised,
throughout the universe in perpetuity.
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ARTICLE VIII
PIGGYBACK REGISTRATION RIGHTS
8.1 If the Company (or any successor entity into or with which the Company
may have been merged, consolidated or otherwise combined) proposes to register
any of its capital stock under the securities laws on behalf of any shareholder,
and the registration form to be used may be used for the registration of
Consultant's shares, the Company shall give prompt written notice to Consultant,
by registered or certified mail, at least twenty (20) days prior to the filing
of each such registration statement, of its intention to effect such a
registration and, at Consultant's election, shall include in such registration
the Consultant's shares of Company common stock, at the Company's cost and
expense and at no cost, expense or other liability to Consultant, except for the
fees of any separate counsel retained by Consultant, provided that if such
registration involves an underwritten public offering, Consultant must sell the
shares to the underwriters selected by the Company on the same terms and
conditions as applicable to other shareholders and must execute all documents
reasonably required by the underwriter in connection therewith.
8.2 Notwithstanding anything to the contrary contained in Section 8.1, if
in the reasonable opinion of Management it is necessary to limit the number of
shares of capital stock to be included in an offering to ensure that the
securities can be marketed (i) at a price reasonably related to their then
current market value and (ii) without otherwise materially adversely affecting
the entire offering, Consultant agrees to participation with other shareholders
in such registration pro rata based upon their respective total ownership of
shares of capital stock of the Company.
ARTICLE IX
MISCELLANEOUS
9.1 Indemnification. To the fullest extent permitted by law, the Company
shall promptly indemnify Consultant for all amounts (including, without
limitation, judgments, fines, settlement payments, losses, damages, costs and
expenses (including reasonable attorneys' fees)) incurred or paid by Consultant
in connection with any action, proceeding, suit or investigation arising out of
or relating to the performance by Consultant of his services pursuant to this
Agreement. This indemnification shall also apply to Consultant's prior
activities as an officer and director of the Company. The Company shall use its
best efforts to include Consultant as an insured under any insurance policy
covering its officers, directors and employees.
9.2 Notice. Any notice, request or demand given pursuant to this Agreement
shall be in writing and either hand delivered, or sent by certified or
registered U.S. mail, return receipt requested. Notice shall be deemed given
upon receipt and delivered to the respective addresses set out below, or to such
other address as a Party shall specify in the manner required by this Section,
as follows:
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IF TO COMPANY:
VoIP, Inc.
00000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx, CEO
IF TO CONSULTANT:
Xxxxxx Xxxxxxx
0000 Xxxxxxxxx Xxx
Xxxxxx, XX 00000
9.3 Assignment. Consultant may only assign any of its rights under this
Agreement to an entity controlled by Consultant. The Agreement may not be
assigned by the Company without Consultant's prior written consent.
9.4 In the event of termination the company shall pay the consultants
"NOTE" from the company in full within 72 hours.
9.5 Legal Fees. The Company shall pay Consultant's legal fees with respect
to the formation and review of this Agreement, up to a maximum of $5,000.
9.6 Observation Rights. In consideration of the execution by Consultant of
this Agreement, Consultant shall have the right to attend any and all meetings
of the Board of Directors until October 18, 2008 or the date of termination of
this agreement whichever occurs first.
9.7 Governing Law/Prevailing Party. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida 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 Florida or any other jurisdiction) that
would cause the application of the laws of any other jurisdiction other than the
State of Florida. This Agreement shall be subject to the exclusive jurisdiction
of the courts of the State of Florida located in Broward County, Florida or the
United States District Court for the Southern District of Florida. The parties
to this Agreement agree that any breach of any term or condition of this
Agreement shall be deemed to be a breach occurring in the State of Florida by
virtue of a failure to perform an act required to be performed in the State of
Florida and irrevocably and expressly agree to submit to the jurisdiction of
such courts in the State of Florida for the purpose of resolving any disputes
among the parties relating to this Agreement or the transactions contemplated
hereby. 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 Broward County,
Florida, and further irrevocably waive any claim that any suit, action or
proceeding brought in Broward County, Florida 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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9.8 Entire Agreement. This Agreement contains the entire agreement of the
Parties and supersedes all prior agreements, contracts and understandings,
whether written or otherwise, between the Parties relating to the subject matter
hereof and may not be modified except by an amendment signed by the Parties.
9.9 Severability. If any provision of this Agreement shall be determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If any provisions shall be determined by a court of competent
jurisdiction to be unenforceable because excessively broad or vague as to
duration, activity or subject, it shall be construed by limiting, reducing or
defining it, so as to be enforceable.
9.10 Waiver. Neither the failure nor delay on the part of either Party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver hereof. No waiver shall be effective unless it is in writing
and is signed by the Party asserted to have granted such waiver.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date and year set forth on the first page of this Agreement.
VOIP, INC.
Date: October 18, 2005 By: /s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx, CEO
CONSULTANT
Date: October 18, 2005 By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
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