THIS ENGAGEMENT AGREEMENT made and dated the 8th day of July, 1999.
BETWEEN:
XXXXXXX XXXX, a United States citizen, residing at 00000 Xxxxx
Xxxxx Xxxxxxx, Xxxxx X, xx the City of Fremont, State of
California, U.S.A.
(hereinafter referred to as "Yang")
OF THE FIRST PART
AND:
ePHONE TELECOM, INC., a body corporate, incorporated under the
laws of the State of Florida, United States of America and having
its Registered Office at 0000 Xxxxx Xxxx Xxxxxx Xxxx, Xxxxxxxxxx,
Xxxxx xx Xxxxxxx, X.X.X.
(hereinafter referred to as "ePhone")
OF THE SECOND PART
WHEREAS:
A. ePhone, being a publicly traded United States company, is subject to all of
the applicable securities laws and regulations of the United States and its
various States (collectively herein called the "Act") and to the Rules,
Regulations and policies of the United States Securities and Exchange
Commission ("SEC").
B. ePhone wishes to engage the full-time services of Yang.
NOW THEREFORE, this Agreement witnesseth:
1. Engagement
1.1 ePhone hereby engages Yang as its President and Chief Operating
Officer ("COO") on the terms hereinafter set forth for a period of 4
years from the effective date of this Agreement, and Yang hereby
accepts such engagement. The date of commencement of the engagement
and the Effective Date of this Agreement shall be July 8, 1999. Within
30 days of the Effective Date, Yang shall become a member of the Board
of Directors of ePhone ("Board") and shall remain on the Board so long
as he is engaged under this Agreement.
1.2 As used in this Agreement, the term "ePhone" means and includes all
other subsidiaries and divisions of ePhone now existing or later
organized, unless the context clearly indicates otherwise. When used
in this Agreement the terms "engagement" and "engagement with (or by)
ePhone" shall mean and include engagement with all subsidiaries and
divisions of ePhone, now existing or later organized.
2. Duties
2.1 Yang will render services in such executive, supervisory and general
administrative capacities as the Board shall from time to time
reasonably determine. Without limiting the foregoing, Yang will serve
as COO and President of ePhone and such of its subsidiaries as the
Board shall from time to time determine. Yang shall, as COO and
President, have primary responsibility for and active charge of the
management and supervision of the business and affairs of ePhone and
the execution of the policies and directives of the Board, and shall
in each case report directly to the Board of Directors, or as may be
directed by the Board, to ePhone's Chief Executive Officer. Without
limiting the generalities or specifics of the foregoing Yang will have
the following authority and responsibilities:
- Primary responsibility for directing the technological and network
development of ePhone
- Recommending to the Board actions and policies which require Board
approval, including the long-term development
of ePhone
- Directing the day-to-day operations of ePhone, including the
operations centre, with authority to hire personnel
- Management of the relationships with ePhone's strategic and network
partners
- Responsibility for preparation of budgets for Board approval and
implementation of approved budgets
- Overall direction of marketing and sales for ePhone, with,
particularly, a lead role to be played in ePhone's efforts in Asia
- Assist in contracts with partners, and key personnel
- Liaison with shareholders, lawyers, accountants, brokers and market
makers, as required
2.2 Yang acknowledges that his engagement by ePhone hereby is based on
expectations by ePhone that it will be able to pursue and will
reasonably achieve the objectives set forth in ePhone's Business Plan
to be finalized by August 31, 1999 ("Business Plan"), subject to
ePhone's acknowledgment that such expectations may not be achievable
on the basis to be described in the Business Plan. ePhone will provide
Yang with an opportunity to provide input into the Business Plan, to
review it and to vote as a Director on its acceptance. Yang agrees
that in carrying out his duties, and notwithstanding the provisions of
Clause 2.1, he will focus his activities and exercise the authority of
his position with ePhone with a view to achieving the objectives set
forth in the Business Plan - except and to the extent that he may be
otherwise directed by the Board.
2.3 Yang acknowledges that ePhone is intended to serve primarily as a
holding company and be publicly traded, while research, development
and operations will also be carried out by subsidiaries ePhone expects
to acquire or organize. Yang agrees to serve, as may be directed by
the Board, as COO and Director of both ePhone and one or more of its
subsidiaries and to properly discharge the duties and responsibilities
owed to all these companies during the term of this Agreement, for the
compensation set forth under Section 5. Should Yang be asked to serve
as officer or director of any other subsidiary, related company or
venture of ePhone, no additional compensation will be owed for such
service.
3. Head Office
The operations head office of ePhone, at which Yang will be primarily
providing his services to ePhone, will be established at a location which will
be in the "Silicon Valley" or "Bay" areas of the State of California. ePhone may
change the said office location to anywhere within the said general Silicon
Valley or Bay areas. Yang will render services away from the said office from
time to time on a temporary basis and travel wherever ePhone may reasonably
require. In connection with all such trips Yang will be entitled to reasonable
travel and hotel accommodations.
4. Exclusivity
Yang will devote all of his working time to performing his duties under
this Agreement, and during his engagement with ePhone Yang will not:
(a) act for his own account in any manner which is competitive with any of the
business of ePhone or which would interfere with the performance of his
duties under this Agreement, or
(b) serve as an officer, director or employee of or advisor to any other
business entity, without prior full disclosure to the Board of the nature
and extent of such service, which the Board must approve in advance, it
being agreed that such approval will not be unreasonably withheld, or
(c) invest or have any financial interest, direct or indirect, in any business
competitive with any of the business of ePhone, provided, however, that
notwithstanding the foregoing, Yang may own up to 1% of the outstanding
equity securities of any company engaged in any such competitive business
whose shares are listed on a national securities exchange or NASDAQ
National Market System. Yang will be deemed to have an indirect financial
interest in any business in which any financial interest is held by Yang's
spouse, or a corporation 50% or more of the shares of which are held by
Yang and/or his spouse.
5. Compensation
5.1 For the period ending September 30, 1999, Yang will be paid $7,500 per
month payable as of the 1st day of each such month, provided that for
the first month the period will commence on the 8th of July.
5.2 For the period between October 1, 1999 and March 31, 2000, Yang will
be paid a fee of $10,500 per month payable on the 1st day of each such
month.
5.3 For the period April 1, 2000 to June 30, 2000, Yang will be paid a fee
of $17,500 per month payable as of the 1st day of each such month.
5.4 For the second, third and fourth years of Yang's engagement his annual
compensation will be bona fide reviewed by ePhone and with him, but in
any event, his annual compensation for each such year will be
increased by not less than 15% over and above the amount paid in the
preceding year of his engagement.
5.5 Yang will not be entitled to overtime or other additional compensation
as a result of services performed during evenings, weekends, holidays
or at other times.
5.6 ePhone will deduct and withhold from any compensation payable to Yang
under this Agreement such amounts as ePhone is required to deduct and
withhold by law. ePhone may also deduct and withhold from any such
compensation, to the extent permitted by law, such amounts as Yang may
owe to ePhone.
6. Share Purchase Options
6.1 As further compensation and incentive to Yang, ePhone hereby grants to
him options to purchase 500,000 voting common shares (hereinafter
called "shares") in ePhone's capital, exercisable on the following
terms at $0.50 per share (shares being purchased by Yang pursuant
hereto being hereinafter called "Option Shares").
6.2 The options granted Yang will vest in his favour and become
exercisable by him, so long as this Engagement Agreement is still in
force and effect, to the extent of the following numbers of shares
from and after the following dates:
(a) 100,000 shares from and after the execution of this Agreement by
Yang;
(b) 200,000 shares after September 30, 1999;
(c) 200,000 shares after December 31, 1999.
6.3 The Option Shares shall not be registered under the Act when issued on
the grounds that the issuance of the Option Shares is a transaction
not involving any public offering, and all certificates issued
evidencing the Option Shares shall, until removed in accordance with
law, bear a customary form of investment legend, and a stop order
shall be placed in respect of all such shares in ePhone's transfer
records. However, ePhone will at its expense attempt to register the
Option Shares prior to their issuance under the Act on SEC Form S-8
for issuance to Yang.
6.4 If this Agreement shall be terminated by either Party for whatever
cause Yang may exercise any Options which have become vested as of the
date of termination, within 90 days after the date of termination.
6.5 Any options which have not been exercised by Yang as of the close of
business on June 30, 2003 will expire and thereafter no longer be
exercisable by Yang notwithstanding that his engagement by ePhone may
have been extended beyond that date.
7. Expenses
ePhone will reimburse Yang for all proper, normal and reasonable expenses
incurred by Yang in performing his obligations under this Agreement upon Yang's
furnishing ePhone with satisfactory evidence of such expenditures. Yang will not
incur any unusual or major expenditures greater than $2,000 without ePhone's
prior written approval. Without limiting the foregoing, Yang will not, without
ePhone's prior written approval, incur any travel expenses (including the cost
of transportation, meals and lodging) in excess of $2,000 in the aggregate for
any one trip.
8. Benefits
8.1 If made available to employees of ePhone, ePhone will provide Yang, at
ePhone's expense, with life insurance, major medical, hospitalization
and surgical insurance, eyeglass insurance, dental insurance, salary
continuance and long-term disability insurance and any other benefits
which are not less favourable than those which it provides to any
employee of ePhone.
8.2 Yang will be entitled to 10 business days vacation during each
calendar year (January 1 to December 31) in addition to any holidays
which ePhone observes. Vacation time must be used during each calendar
year and if it is not used it will be forfeited. No payment will be
made for unused vacation time.
8.3 Yang's compensation, commissions and other rights and benefits under
this Agreement will not be suspended or terminated because Yang is
absent from work due to illness, accident or other disability; but
ePhone may deduct from Yang's compensation under Section 5 any payment
received by Yang under any disability insurance which ePhone provides
Yang pursuant to Clause 8.1.
8.4 Yang will be entitled to 5 business days paid sick leave during each
calendar year. Sick leave must be used during each calendar year and
if it is not used, it will be forfeited. No payment will be made for
unused sick time.
9. Acquisition of General-Tel , Inc. ("General Tel")
9.1 It is a material term of ePhone and Yang, in entering into this
Agreement, that ePhone will acquire 100% of the issued shares of
General Tel and affiliated companies, from Yang (and any members of
his family who may hold any of such shares) free of all charges,
obligations and debts. Yang shall forthwith supply all relevant
information that ePhone would expect to have for its due diligence
review of General Tel.
9.2 Procedures will be initiated forthwith after the Effective Date for
the acquisition of General Tel.
9.3 The consideration for the acquisition of General Tel shall be
1,500,000 shares of ePhone (the "Consideration Shares"). The
Consideration Shares shall be subject to a non-trading or hold period
of at least 1 year as it is anticipated they will be subject to the
SEC's Rule 144. As per the time limit specified in section 9.2 these
are required to be issued to Yang and the other shareholders of
General Tel within 20 business days after the signing of this
Agreement.
9.4 When General Tel is acquired by ePhone it shall be a condition of
ePhone's continued ownership of General Tel that it raise, alone or
with General Tel, at least $1,100,000 within 6 months of the closing
of the acquisition of General Tel for the funding of ePhone's ongoing
business development. Funds received by ePhone after the Effective
Date from the sale of its securities will be included in the
calculation of the monies raised by ePhone. Failing the raising of
such monies Yang will have an option, exercisable by notice to ePhone
given within 60 days after the expiry of the said 6 months, to acquire
General Tel and all of the assets that ePhone contracted to acquire
and, in consideration thereof, 1,350,000 Consideration Shares shall be
transferred to ePhone or its designated nominee.
9.5 The $1,100,000 financing to be raised by or for ePhone may be through
equity offerings by ePhone, including the Regulation S financing
currently being raised by ePhone, or debt or other types of funding.
10. Performance Related Escrowed Shares
10.1 ePhone will, within 20 business days of the signing of this Agreement
by Yang, issue and allot 2,000,000 shares, registered in the name of
Yang or his nominee, without any consideration being paid therefor by
Yang (such shares being hereinafter called the "Escrowed Shares"). The
Escrowed Shares will be released to Yang on a performance related
basis as described below.
10.2 The certificates for the Escrowed Shares will be lodged in an escrow
which will be established with ePhone's lawyers, Xxxxxx Jonsson &
Yeadon, or as may be otherwise mutually agreed. The lawyers will be
instructed to release 25% of the Escrowed Shares, namely 500,000
Escrowed Shares, to Yang by delivering to him appropriate share
certificates upon ePhone and its subsidiaries achieving, on a
consolidated basis each of the following:
(a) net sales revenues of $5,000,000;
(b) aggregate cumulative net sales revenues of $12,000,000;
(c) aggregate cumulative net sales revenues of $30,000,000;
(d) aggregate cumulative net sales revenues of $50,000,000;
Provided however that the above minimum net revenues figures must
involve a minimum of 35% of the gross sales figures being generated
from sales in each of Europe and Asia.
10.3 If this Agreement shall be terminated for any reason, whether through
the expiry of the 4-year term hereof or otherwise, any of the Escrowed
Shares which have not yet become due to be released to Yang will
thereafter be returned to ePhone for cancellation and Yang will have
no further rights to receive any of them.
10.4 Net sales for the purpose of this Section, and determining releases of
Escrowed Shares to Yang, will be the gross amounts received by ePhone
from the sale of its products and services less the amounts lost or
credited by ePhone on sales which have been returned or cancelled or
which ePhone is unable to collect due to the defaults of purchasers.
Subject to the foregoing definitions net sales revenues shall be as
calculated and audited by ePhone's auditors on a consolidated basis as
of the end of the calendar quarter in which the relevant net sales
level is reached, using United States generally accepted accounting
principles ("GAAP").
11. Bonus for Sales of Wireless Local Loop
11.1 It is the mutual expectation of the Parties entering into this
Agreement that Yang will be able to bring to ePhone and negotiate on
behalf of ePhone, with himself or others potentially involved, one or
more agreements to sell, or provide services with respect to, Wireless
Local Loop ("WLL") to buyers or users - potentially in Vietnam but not
restricted to Vietnam.
11.2 If ePhone, under the guidance of Yang, shall succeed in developing an
agreement for the sale of WLL to one or more purchasers brought to
ePhone by Yang or where Yang plays a leading role in securing a
contract or contracts even though the specific business opportunity
may have been first identified by another party, Yang will receive
further compensation therefore by way of up to 1,000,000 shares, to be
issued and allotted on the following schedule:
(a) 300,000 of the said shares will be issued, allotted and delivered
to Yang upon the completion of the signing of a Memorandum of
Understanding with a purchaser of WLL, acceptable to and approved
by the Board, such approval to not be unreasonably withheld;
(b) 300,000 shares upon the completion of the signing of a formal
contract for the sale of WLL, acceptable to the Board;
(c) 400,000 shares upon the completion, closing and receipt of
payment for the first sale of WLL in a gross amount of not less
than $500,000;
11.3 Further, Yang will, if one or more sales of WLL are completed as
anticipated by this Section, receive, in addition to all other
benefits and compensation under this Agreement, monies equal to 10% of
the gross profits earned by ePhone from the said sale or sales or from
agreements signed to provide WLL related services.
11.4 Where shares have been earned by Yang pursuant to this Section by
virtue of his performance in securing sales of WLL the shares will be
issued and delivered to Yang within 20 business days of the
satisfaction of the applicable condition described in Clause 11.2.
12. Commission Based Bonuses
12.1 If and to the extent that ePhone shall, during the term of this
Agreement, effect sales of equipment to purchasers in China, Vietnam
or Taiwan, or receive revenues from telecom services and traffic
originating in China, Vietnam or Taiwan, and so long as ePhone's gross
profit margin from such sales or traffic, on a monthly basis, is 20%
or more, Yang will be paid 5% of such gross profits margin.
12.2 For the purposes of this Clause, ePhone's gross profit margin will be
calculated using GAAP, on a calendar monthly basis and if monies are
payable to Yang for any calendar month they shall be paid within 30
days after the end of such month, accompanied by a statement showing
the calculations.
12.3 If in any calendar month ePhone's gross profit margin is less than 20%
then no commissions shall be payable hereunder to Yang for such month.
Within 30 days after the end of any such month Yang shall be supplied
with a copy of the calculations showing the gross profit margin to be
below the said 20%.
12.4 For all countries except China, Vietnam and Taiwan, where ePhone pays
sales commissions to representatives or agents in such country, Yang
will be paid monies equal to 1% of the gross sales in those countries.
In the case of China, Vietnam and Taiwan where Clause 12.3 applies
(that is, when ePhone's profit margin is less than 20%) then Yang will
be entitled to a commission equal to 1% of the gross sales in those
countries.
13. Change of Control of ePhone
13.1 In the event that the voting control of ePhone shall change as a
result of the acquisition of at least 51% of the issued voting common
shares of ePhone by a person or group of persons acting in concert,
who do not presently own at least 51% of the issued voting common
shares of ePhone, excluding consideration of any shares Yang or his
nominees or the shareholders of General Tel receive as anticipated by
this Agreement, Yang shall be entitled to the full vesting of all
outstanding options, plus the release of all escrowed shares not
previously released.
13.2 If there shall be a change of control of ePhone as defined in Clause
13.1, the person or persons acquiring control shall be entitled to buy
out some or all of the commissions earnable by Yang pursuant to
Sections 11 and 12 above by paying to him an amount of money which
shall be equal to the discounted present value of those future
commissions, using a discount rate equal to the U.S. Federal Reserve
bank interest rate last published prior to the purchasers giving
notice to Yang of their intention to exercise their buyout rights,
plus 5%.
14. Death and Disability
14.1 If Yang dies prior to expiration of the term of his engagement, all
obligations of ePhone to Yang will cease as of the date of Yang's
death; Provided it is agreed that:
(a) shares that Yang has received or other rights that have vested in
Yang will continue to be the assets of Yang and his estate;
(b) the right to shares, or the release of shares from escrow,
bonuses or commissions that have not matured and vested at the
date of death will be cancelled as it is acknowledged that all
such benefits are incentive benefits which will have no
application after Yang's death;
(c) the percentage of gross profits Yang's estate shall be entitled
to pursuant to Clause 11.3 hereof shall be reduced from 10% to
5%, effective as of the date of Yang's death.
14.2 If Yang is unable to perform substantially all of his duties under
this Agreement because of illness, accident or other disability
(collectively referred to as "Disability"), and the Disability
continues for more than three consecutive months or an aggregate or
more than six months during any 12-month period, then ePhone may
suspend its obligations to Yang under Section 5 on or after the
expiration of the 3- or 6-month period until ePhone terminates such
suspension as hereinafter provided. ePhone will terminate any such
suspension after the Disability has, in fact, ended and after it has
received written notice from Yang that the Disability has ended and
that he is ready, willing and able to perform fully his services under
this Agreement. Termination of the suspension will be no later than
one week after ePhone has received such notice from Yang.
14.3 If a Disability of Yang shall continue for 6 consecutive months ePhone
may at any time prior to termination of the then current period of
suspension, give notice to Yang terminating Yang's engagement
hereunder.
14.4 If ePhone suspends its obligations under Clause 14.2, then for each
year ending December 31 during which such suspension is in effect, any
bonuses or compensation, if any, in addition to salary will be
prorated based upon the number of suspension days.
14.5 If Yang or ePhone asserts at any time that Yang is suffering a
Disability, ePhone may cause Yang to be examined by a doctor or
doctors selected by ePhone, and Yang will submit to all required
examinations and will cooperate fully with such doctor or doctors and,
if requested to do so, will make available to them his medical
records. Yang's own doctor may be present.
14.6 If ePhone terminates Yang's engagement pursuant to Clause 14.2 such
termination will have exactly the same effect as if Yang died on the
effective date of such termination.
15. Results Of Yang's Services
15.1 ePhone will be entitled to and will own all the results and proceeds
of Yang's services under this Agreement including, without limitation,
all rights throughout the World to any copyright, patent, trademark or
other right and to all ideas, inventions, products, programmes,
procedures, formats and other materials of any kind created or
developed or worked on by Yang during his engagement by ePhone; the
same shall be the sole and exclusive property of ePhone; and Yang will
not have any right, title or interest of any nature or kind therein.
Without limiting the foregoing, it will be presumed that any
copyright, patent, trademark or other right and any idea, invention,
product, programme, procedure, format or material created, developed
or worked on by Yang at any time during the term of his engagement
will be a result or proceed of Yang's services under this Agreement.
Yang will take such action and execute such documents as ePhone may
request to warrant and confirm ePhone's title to and ownership of all
such results and proceeds and to transfer and assign to ePhone any
rights which Yang may have therein.
15.2 Yang acknowledges that the violation of any of the provisions of
Clause 15.1 or Section 24 will cause irreparable loss and harm to
ePhone which cannot be reasonably or adequately compensated by damages
in an action at law and, accordingly, that ePhone will be entitled to
injunctive and other equitable relief to enforce the provisions
thereof; but no action for any such relief shall be deemed to waive
the right of ePhone to an action for damages.
16. Use of Yang's Name
ePhone is hereby granted the sole and exclusive right during the term of
Yang's engagement to make use of and to permit others to make use of Yang's
name, pictures, photographs and other likenesses, and voice, in connection with
the advertising, publicity and exploitation of any of its products, or in
connection with the use of implementation of any of Yang's services hereunder.
This right shall continue in perpetuity as a on-exclusive and non-compensable
right after termination of his engagement for any reason whatsoever including,
without limitation, termination by either party for cause or wrongful
termination by either party. No additional compensation shall be due Yang for
any such use by ePhone or a subsidiary. In no event, however, shall Yang,
directly or indirectly, be represented as endorsing any product or commodity
without Yang's written consent.
17. Insurance
If ePhone desires at any time or from time to time to apply for, in its own
name or otherwise, at its expense, life, health, accident or other insurance
cover Yang, ePhone may do so and may take out such insurance for any sum that it
deems desirable. Yang will have no right, title or interest in or to such
insurance or the proceeds thereof. Yang nevertheless will assist ePhone in
procuring the same by submitting from time to time to the customary medical,
physical and other examinations, and by signing such applications, statements
and other instruments as any reputable insurer may require.
18. Negative Covenants
18.1 Yang will not, during or after the term of this Agreement, disclose to
any third person or use or take any personal advantage of any
confidential information or any trade secret of any kind or nature
obtained by him during the term hereof or during his engagement by
ePhone, Subsidiary or other entity controlled by ePhone.
18.2 To the full extent permitted by law, Yang will not for a period of one
year following the termination of this Agreement:
(a) attempt to cause any person, firm or corporation which is a
customer of or has a contractual relationship with ePhone at the
time of the termination of his engagement to terminate such
relationship with ePhone, and this provision shall apply
regardless of whether such customer has a valid contractual
arrangement with ePhone;
(b) attempt to cause any employee of ePhone to leave such employment;
(c) engage any person who was an employee of ePhone at the time of
the termination of his engagement or cause such person otherwise
to become associated with Yang or with any other person,
corporation, partnership or other entity with which Yang may
thereafter become associated.
18.3 Yang acknowledges that the violation of any of the provisions of this
Section 18 will cause irreparable loss and harm to ePhone which cannot
be reasonably or adequately compensated by damages in an action at
law, and accordingly, that ePhone will be entitled to injunctive and
other equitable relief to prevent or cure any breach or threatened
breach thereof, but no action for any such relief shall be deemed to
waive the right of ePhone to an action for damages.
19. Governing Law; Remedies
19.1 This Agreement has not been executed in any specific State but it
shall be governed by and construed in accordance with the laws of the
State of California as if both parties have participated equally in
its drafting.
19.2 Section headings are for purposes of convenient reference only and
will not affect the meaning or interpretation of any provision of this
Agreement.
19.3 Except as otherwise expressly provided in this Agreement, any dispute
or claim arising under or with respect to this Agreement will be
resolved by arbitration in San Francisco, California in accordance
with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association before a panel of three (3)
arbitrators, one appointed by Yang, one appointed by ePhone, and the
third appointed by said Association. The decision or award of a
majority of the arbitrators shall be final and binding upon the
parties. Any arbitral award may be entered as a judgement or order in
any court of competent jurisdiction.
19.4 Notwithstanding the provisions for arbitration contained in this
Agreement, ePhone will be entitled to injunctive and other equitable
relief from the courts as provided in Sections 15 and 24 and as the
courts may otherwise determine appropriate, and Yang agrees that it
will not be a defence to any request for such relief that ePhone has
an adequate remedy at law. For purposes of any such proceeding ePhone
and Yang submit to the non-exclusive jurisdiction of the courts of the
State of California and of the United States located in the County of
Alameda, State of California, and each agrees not to raise and waives
any objection to or defence based on the venue of any such court or
forum non conveniens.
19.5 A court of competent jurisdiction, if it determines any provision of
this Agreement to be unreasonable in scope, time or geography, is
hereby authorized to enforce the provision in such narrower scope,
shorter time or lesser geography as such court determines to be
reasonable and proper under all the circumstances.
19.6 ePhone will also have such other legal remedies as may be appropriate
under the circumstances including, inter alia, recovery of damages
occasioned by a breach. ePhone's rights and remedies are cumulative
and the exercise or enforcement of any one or more of them will not
preclude ePhone from exercising or enforcing any other right or
remedy.
20. Termination
20.1 ePhone may terminate Yang's engagement for cause or other material
breach of this Agreement. As used in this Section, "cause" means a
breach of a fiduciary duty or a duty of loyalty to ePhone,
misappropriation or wasting of any asset or opportunity of ePhone,
failure to perform one's duties (other than because of ePhone's
failure to pay compensation as provided in this Agreement, or because
of illness, accident or other disability to the extent permitted by
this Agreement), failure to perform duties in a competent manner or in
a specific manner directed by ePhone, any other material breach of
this Agreement, or indictment for any felony irrespective of whether
the charge relates to ePhone. As described in Clause 2.1, Yang
acknowledges that the performance of his duties in a competent manner
will include using his best efforts to achieve the objectives set
forth in the ePhone Business Plan, as approved by the Board -except
and to the extent that he may be otherwise directed by the Board.
20.2 If Yang voluntarily quits his engagement or terminates this Agreement
without cause, or if his engagement is terminated by ePhone for cause
or other material breach of this Agreement, then Yang shall be
entitled to all salary and other compensation earned or due through
the date of termination, but no severance pay shall be owed, and all
options then remaining unexercised shall expire as of the time of
termination.
20.3 If Yang voluntarily quits his engagement or terminates this Agreement
without cause, or if his engagement is terminated by ePhone without
cause, the percentage of profits Yang shall be entitled to pursuant to
Clause 11.3 shall be reduced from 10% to 5% effective as of the date
of termination.
21. Indemnity
To the extent permitted by law, ePhone will indemnify Yang against any
claim or liability and will hold Yang harmless from and pay any expenses
(including, without limitation, legal fees and court costs), judgements, fines,
penalties, settlements and other amounts arising out of or in connection with
any act or omission of Yang performed or made in good faith on behalf of ePhone
pursuant to this Agreement, regardless of negligence. ePhone will not be
obligated to pay Yang's legal fees and related charges of counsel during any
period that ePhone furnishes, at its expense, counsel to defend Yang; but any
counsel furnished by ePhone must be reasonably satisfactory to Yang. The
foregoing provisions will survive termination of Yang's employment with ePhone
for any reason whatsoever and regardless of fault.
22. D & O Insurance
ePhone will, to the extent provided to other directors and executive
officers of ePhone, provide Yang with officers' and directors' liability
insurance covering acts or omissions by Yang in the performance of his duties to
ePhone under this Agreement.
23. Miscellaneous Provisions
23.1 Amendment. This Agreement may be amended only by an instrument in
writing signed by ePhone and Yang.
23.2 Assignment. This Agreement shall be binding upon the parties and their
respective successors and permitted assigns. ePhone may, without
Yang's consent, transfer or assign any of its rights and obligations
under this Agreement to any corporation which, directly or indirectly,
controls or is controlled by ePhone or is under common control with
ePhone or to any corporation succeeding to all or a substantial
portion of ePhone's business and assets, provided that ePhone shall
not be released from any of its obligations under this Agreement, and
provided further that any such transferee or assignee agrees in
writing to assume all the obligations of ePhone hereunder. Control
means the power to elect a majority of the directors of a corporation
or in any other manner to control or determine the management of a
corporation. Except as provided above, neither ePhone nor Yang may,
without the other's prior written consent, transfer or assign any of
its or his rights or obligations under this Agreement, and any such
transfer or assignment or attempt thereat without such consent shall
be null and void.
23.3 Severability of Provisions. If any provision of this Agreement or the
application of any such provision to any person or circumstance is
held invalid, the remainder of this Agreement, and the application of
such provision other than to the extent it is held invalid, will not
be invalidated or affected thereby.
23.4 Waiver. No failure by ePhone to insist upon the strict performance of
any term or condition of this Agreement or to exercise any right or
remedy available to it will constitute a waiver. No breach or default
of any provision of this Agreement will be waived, altered or
modified, and ePhone may not waive any of its rights, except by a
written instrument executed by ePhone. No waiver of any breach or
default will affect or alter any term or condition of this Agreement,
and such term or condition will continue in full force and effect with
respect to any other then existing or subsequent breach or default
thereof.
23.5 Notices
(a) Any notice which is required to be given hereunder shall be given
in writing and will be effectively given if the same is:
(i) delivered or mailed by prepaid registered or certified post
to the address of the intended recipient set forth at the
top of this agreement;
(ii) delivered to a director of officer of the intended
recipient; or
(iii)sent be telecopier (fax) to the intended recipient at the
following numbers:
ePhone: (000) 000-0000
Yang: (000) 000-0000
Provided that any Party may give notice to the other Party of new
addresses or new fax numbers to be used for the purpose of this
Clause;
(b) any notice which is delivered shall be deemed to have been given
on the date of delivery. Any notice which is sent by telecopier
shall be deemed to be given on the first weekday following the
date upon which the telecopied message is transmitted. Any notice
that is sent by prepaid mail shall be deemed to have been given
on the 5th weekday after the date upon which the notice is mailed
from a Post Office in continental Canada or the United States.
23.6 Share Splits. In all cases where numbers of shares are specified
in this agreement these shares will be adjured pro rata with all
other common shares of ePhone in cases of forward or backward
splits of shares after the date of signing this agreement.
23.7 Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes any and all prior agreements or
understandings between them.
24. Confidentiality
24.1 Yang acknowledges that as a result of his engagement by ePhone, he may
become aware of or familiar with processes, formulae, procedures,
materials or Technical Information (as hereinafter defined) which
ePhone has spent time and money to develop, which are essential to the
business of ePhone, and which comprise confidential information and
trade secrets of ePhone (collectively called "Trade Secrets"). The
term "Trade Secret" does not include any process, formula, procedure,
information or material which is currently in the public domain or
which hereafter becomes public knowledge in a way that does not
involve a breach of an obligation of confidentiality. Yang
acknowledges and agrees that any process, formula, procedure,
information or material of which he becomes aware during his
engagement by ePhone is presumed to be a Trade Secret unless ePhone
advises him in writing that it is not a Trade Secret.
24.2 Yang agrees that he will not during his engagement, and for a period
of one year after the termination of this Agreement, either directly
or indirectly, use or disclose to anyone any Trade Secret, except that
while he is engaged by ePhone, he may use Trade Secrets in the
performance of his services to ePhone, and may disclose Trade Secrets
to employees or agents of ePhone who need to know them in the
performance of their services for ePhone and who are bound by
confidentiality agreements. Yang also agrees that ePhone will be
entitled to and will own all the results and proceeds of his services
for ePhone including, without limitation, all rights throughout the
world to any copyright, patent, trademark or other right and to all
ideas, inventions, products, programmes, procedures, formats and other
materials of any kind created, developed or worked on by him during
his engagement by ePhone.
25. Representations of Xxxx
Xxxx represents and warrants to ePhone that he has not taken any trade
secret or confidential or proprietary information from any employer, that he has
not used and will not use any trade secret or confidential or proprietary
information of any employer to solicit or acquire business for ePhone or to
perform his services for ePhone, that he has not solicited or acquired any
business for ePhone while engaged by anyone else, and that he is not violating
and will not violate any agreement or obligation by his being engaged by ePhone
or by performing his services for ePhone. Yang acknowledges ePhone is relying on
these representations and warranties in entering into this Agreement and
engaging him.
26. Protection of Technical Information and Knowhow
26.1 For the purposes of this Clause and this Agreement the following words
and expressions have the following meanings:
(a) "Technical Information" includes but is not limited to any and
all patents, patent applications, trademarks, designs, design
patents, industrial designs, design applications, know-how, trade
secrets, documents, drawings, prototypes, components, controls
and associated hardware, computer stored information and copies
thereof, financial information, brochures, customer information,
distributor information, source of supply information, product
and component knowledge, other written and recorded material
including plans, diagrams and instruction manuals and any other
information relating to products or services.
(b) "Modifications" shall mean any improvements, changes,
modifications, designs and/or additions arising from or made in
connection with products or services developed subsequent to the
execution of this Agreement.
(c) "Technical Information" shall further include, but not be limited
to potential markets, potential purchasers or users as previously
contacted by ePhone within areas of potential market, and
information developed about potential market-places or purchasers
or users resulting from their unique cultural language or ethnic
backgrounds.
(d) "Know-how": is as defined in Article 1(7)(1) of European Economic
Community Regulation 556/89 which defines "know-how" as:
1(7)(1) ... a body of technical information that is secret,
substantial and identified in any appropriate form;
1(7)(2) ... "secret" means that the know-how package as a body or
in the precise configuration and assembly of its components is
not generally known or easily accessible, so that part of its
value consists in the lead-time the licensee gains when it is
communicated to him; it is not limited to the narrow sense that
each individual component of the know-how should be totally
unknown or unobtainable outside the licensor's business;
1(7)(3) ... "substantial" means that the know-how includes
information which is of importance for the whole or a significant
part of (i) a manufacturing process, or (ii) a product or
service, or (iii) for the development thereof and excludes
information which is trivial. Such know-how must thus be useful,
i.e. can reasonably be expected at the date of conclusion of the
agreement to be capable of improving the competitive position of
the licensee, for example by helping him to enter a new market or
giving him an advantage in competition with other manufacturers
or providers of services who do not have access to the licensed
secret know-how or other comparable secret know-how;
1(7)(4) ... "identified" means that the know-how is described or
recorded in such a manner as to make it possible to verify that
it fulfils the criteria of secrecy and substantiality and to
ensure that the licensee is not unduly restricted in his
exploitation of his own technology. To be identified the know-how
can either be set out in the licence agreement or in a separate
document or recorded in any other appropriate form at the latest
when the know-how is transferred or shortly thereafter, provided
that the separate document or other record can be made available
if the need arises.
(e) "ePhone's Technical Information" shall mean all of the technical
information and modifications owned or held by ePhone or its
directors and officers as of the date of this Agreement or as may
be developed or acquired by ePhone and its directors and officers
during the term of this Agreement.
(f) "Yang's Technical Information" means the technical information
that Yang has as of the date of this Agreement.
Provided however that no knowledge or technical information of
any nature or kind whatsoever shall be considered, at any time,
to be Technical Information if it is, at such point in time,
already in the public domain - that is to say, available to or
known to the public in the United States of America or elsewhere;
Provided also that no Party shall be denied the right to use any
information or knowledge which would otherwise be considered
Technical Information if such information and knowledge was
communicated to such Party other than by a person or company with
an obligation or confidentiality to the other Party hereto except
Technical Information which is covered by any patent, trademark
or other formal registration which is designed to, inter alia,
protect knowhow or proprietorial information.
26.2 During the term of this Agreement Yang shall use for the benefit of
ePhone all of Yang's Technical Information.
26.3 If Yang shall terminate this Agreement other than for cause he shall
not, for a period of two years following the date of such termination,
use any of ePhone's Technical Information for his personal profit or
benefit.
26.4 If ePhone shall terminate this Agreement prior to the end of its
prescribed term it shall not be entitled to, for a period of two years
from the effective date of such termination, be entitled to use Yang's
Technical Information for its profit or benefit.
27. Further Acts
The Parties agree to do such further acts and execute such further
documents as may be necessary to carry out the true intent and meaning of this
Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first above written.
Xxxxxxx Xxxx
-----------------
/s/Xxxxxxx Xxxx
Witness
Per: /s/Xxxxxx Xxxxxx
-------------------
Xxxxxx Xxxxxx,
Chairman & CEO
