Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of October 31, 2003,
between Q COMM INTERNATIONAL, INC., a Utah corporation (the "Company"), having
its principal place of business at 0000 Xxxxx 0000 Xxxx, Xxxx Xxxx, 00000-0000,
and XXXXXXX X. XXXXXXXX, residing at 000 Xxxxxxxxxxx Xxx, Xxxxxx, Xxxx, 00000
(the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently employed by the Company and serves as
the Company's Chief Financial Officer; and
WHEREAS, the Company, recognizing the unique skills and abilities of the
Executive, wishes to insure that the Executive will continue to be employed by
the Company; and
WHEREAS, the Executive desires to continue in the employment of the Company
as President; and
WHEREAS, the parties desire to set forth the terms and conditions of the
employment relationship between the Company and the Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
in this Agreement, the Company and the Executive agree as follows:
1. Employment and Duties. The Company hereby employs the Executive as its
Chief Financial Officer on the terms and conditions provided in this Agreement
and Executive agrees to accept such employment subject to the terms and
conditions of this Agreement. The Executive shall be the chief financial and
chief accounting officer of the Company and shall perform the duties and
responsibilities that are customary for a chief financial officer of a public
company, including maintaining its books and records of the Company, supervising
the collection of revenues and the payment of expenses, preparing reports and
statements for management and the stockholders of the Company, preparing the
Company's quarterly and annual reports to be filed with the United States
Securities and Exchange Commission, representing the Company to the financial
community and structuring and executing financing and capital raising activities
on behalf of the company, and such other duties and responsibilities that are
reasonably determined from time to time by the Company's Board of Directors (the
"Board"). The Executive shall report to and be supervised by the Chief Executive
Officer of the Company and the Board. The Executive shall be based at the
Company's offices in Orem, Utah, or such other place which shall be within a
seventy-five mile radius thereof that shall constitute the Company's
headquarters and, except for business travel incident to his employment under
this Agreement, the Company agrees the Executive shall not be required to
relocate. The Executive agrees to devote substantially all his attention and
time during normal business hours to the business and affairs of the Company and
to use his reasonable best efforts to perform faithfully and efficiently the
duties and responsibilities of his position and to accomplish the goals and
objectives of the Company as may be established by the Chief Executive Officer
of the Company and the Board. Notwithstanding the foregoing, the Executive may
engage in the following activities (and shall be entitled to retain all economic
benefits thereof including fees paid in connection therewith) as long as they do
not interfere in any material respect with the performance of the Executive's
duties and responsibilities hereunder: (i) serve on corporate, civic, religious,
educational and/or charitable boards or committees, provided that the Executive
shall not serve on any board or committee of any corporation or other business
which competes with the Business (as defined in Section 10(a) below); (ii)
deliver lectures, fulfill speaking engagements or teach on a part-time basis at
educational institutions; and (iii) make investments in businesses or
enterprises and manage his personal investments; provided that with respect to
such activities Executive shall comply with any business conduct and ethics
policy applicable to employees of the Company.
2. Term. The term of this Agreement shall commence on November 1, 2003 (the
"Commencement Date"), and shall terminate on December 31, 2005, unless earlier
terminated in accordance with the terms of this Agreement (the "Termination
Date"). Such term of employment is herein sometimes referred to as the
"Employment Term".
3. Compensation. As compensation for performing the services required by
this Agreement, and during the term of this Agreement, the Executive shall be
compensated as follows:
(a) Base Compensation. The Company shall pay to the Executive an
annual salary ("Base Compensation") of $125,000 throughout the Employment
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Term. The Base Compensation shall be payable in equal installments pursuant
to the Company's customary payroll procedures in effect for its executive
personnel at the time of payment, but in no event less frequently than
monthly, subject to withholding for applicable federal, state, and local
income and employment related taxes.
(b) Cash Bonuses. In addition to Base Compensation, the Executive may
be entitled to receive additional compensation ("Cash Bonuses") as set
forth in this Section 3(b). All Cash Bonuses shall be subject to applicable
withholding for federal, state and local income and employment related
taxes.
(i) Signing Bonus. The Company shall pay the Executive $30,000
before November 30, 2003.
(ii) Incentive Bonus. With respect to each of calendar year 2004
and 2005, the Company shall pay Executive an Incentive Bonus of up to
an additional $40,000. The payment of such Incentive Bonus shall
depend on the Company and/or the Executive achieving certain
operational or performance benchmarks, which shall be determined by
the Company and the Executive.
(c) Stock Options. The Company shall grant Executive stock options
covering 40,000 shares of the Company's common stock as follows:
(i) Immediately upon the signing of this Agreement, the Company
shall grant Executive stock options covering 20,000 shares of the
Company's common stock. Such options shall be granted pursuant to one
of the company's existing stock option plans, shall have an exercise
price equal to the closing price of a share of the Company's common
stock on the date of grant, shall have a term of ten (10) years and
shall vest ratably on the last day of each calendar quarter in 2004
and shall contain such other terms and conditions as are set forth in
the Company's standard stock option agreement.
(ii) Immediately upon the later of (A) the approval by the
Company's stockholder of a new stock option plan (or the amendment of
the Company's 2003 Stock Option Plan increasing the number of shares
reserved under such plan) or (B) January 1, 2004, the Company shall
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grant Executive stock options covering 20,000 shares of the Company's
common stock. Such options shall have an exercise price equal to the
closing price of a share of the Company's common stock on the date of
grant, shall have a term of ten (10) years and shall vest 10,000 at
such time as the Company shall report a Net Profit for two consecutive
calendar quarters and 10,000 at such time as the Company shall have
reported four quarters of Net Profits, whether or not consecutive and
shall contain such other terms and conditions as are set forth in the
Company's standard stock option agreement.
4. Employee Benefits. During the Employment Term the Executive and his
eligible dependents shall be entitled to such benefits (including but not
limited to, the right to participate in any retirement plans (qualified and
non-qualified), pension, insurance, health, disability or other benefit plan or
program that has been or is hereafter adopted by the Company (or in which the
Company participates), as shall be determined by the Board from time to time;
provided, however, that the Executive shall always be entitled to such benefits
as are generally made available to the senior executives of the Company.
5. Vacation. The Executive shall be entitled to the normal and customary
amount of paid vacation provided to senior executive officers of the Company,
but in no event less than three weeks during each calendar year. Upon any
termination of this Agreement for any reason whatsoever, any accrued and unused
vacation shall be dealt with in accordance with Company policy.
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6. Expenses. The Executive shall be promptly reimbursed against
presentation of vouchers or receipts for all reasonable and necessary expenses
incurred by him in connection with the performance of his duties hereunder.
7. Indemnification. The rights of the Executive to indemnification from the
Company for acts or omissions in connection with his employment by the Company
are set forth in the Indemnification Agreement, dated October 10, 2001, between
the company and the Executive (the "Indemnification Agreement").
8. Termination and Termination Benefits.
(a) Termination by the Company.
(i) For Cause. Notwithstanding any provision contained herein,
the Company may terminate this Agreement at any time during
the Employment Term for "Cause". For purposes of this subsection
8(a)(i), "Cause" shall mean (x) the willful failure by the Executive
to substantially perform his duties hereunder for any reason other
than total or partial incapacity due to physical or mental illness,
(y) a conviction of Executive of any crime (other than a routine
traffic violation) that constitutes a felony in the jurisdiction in
which the crime was committed or the conviction of Executive of any
act that constitutes moral turpitude or (z) Executive having committed
any act constituting fraud, theft or conversion of property as
determined by a court of competent jurisdiction or by the Board after
due investigation. Termination pursuant to clause (x) of this
subsection 8(a)(i) shall be effective immediately 15 days after
delivering written notice thereof from the Company to the Executive
specifying the acts or omissions constituting the failure and
requesting that they be remedied, but only if the Executive has not
cured such failure within such 15 day period. In the event of a
termination pursuant to this subsection 8(a)(i), the Executive shall
be entitled to payment of his Base Compensation and the benefits
pursuant to Section 4 hereof up to the effective date of such
termination and it is also the intention and agreement of the Company
that Executive shall not be deprived by reason of termination for
Cause of any payments, options or benefits which have been vested or
have been earned or to which Executive is entitled as of the effective
date of such termination.
(ii) Disability. If due to illness, physical or mental
disability, or other incapacity, the Executive shall fail, for a total
of any six consecutive months ("Disability"), to substantially perform
the principal duties required by this Agreement, the Company may
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terminate this Agreement upon 30 days' written notice to the
Executive. In such event, the Executive shall be (1) paid his Base
Compensation until the Termination Date, and (2) provided with
employee benefits pursuant to Section 4, to the extent available, for
the remainder of the Employment Term; provided, however, that any
compensation to be paid to the Executive pursuant to this subsection
8(a)(ii) shall be offset against any payments received by the
Executive pursuant to any policy of disability insurance the premiums
of which are paid for by the Company.
(iii) Without Cause. The Company may terminate the Executive's
employment hereunder at any time without Cause. If the
Company terminates the Executive's employment hereunder without Cause,
other than due to death or Disability, the Executive shall be paid:
(i) his Base Compensation at the rate in effect at the time of
termination for a period ending on the earlier of (A) the one-year
anniversary of the Termination Date or (B) December 31, 2005; (ii) any
Incentive Bonus that he would have earned had the Company not
terminated this Agreement without Cause and (iii) continuation until
the expiration of the Employment Term of the health and welfare
benefits of the Executive and any long-term disability insurance
generally provided to senior executives of the Company (as provided
for by Section 4 of this Agreement); provided, however, if the
Executive obtains new employment and such employment makes the
Executive eligible for health and welfare or long-term disability
benefits which are equal to or greater in scope then the benefits then
being offered by the Company, then the Company shall no longer be
required to provide such benefits to the Executive.
(b) Termination by the Executive. The Executive may terminate this
Agreement at any time upon ninety (90) prior written notice to the Company.
Unless such termination is for Good Reason (as defined below), in such
event the Company's sole obligation to the Executive shall be to pay the
Executive his Base Compensation and the benefits described in Section 4
hereof, up to the date of such termination. If the Executive terminates
this Agreement for Good Reason, it shall be treated as if the Company
terminated this Agreement without Cause and the provisions of Section
8(a)(iii) shall apply.
As used herein, "Good Reason" means and shall be deemed to exist if,
without the prior express written consent of the Executive, (a) the Company
breaches this Agreement in any material respect; (b) the Company fails to
obtain the full assumption of this Agreement by a successor; or (c) the
Company purports to terminate the Executive's employment for Cause and such
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purported termination of employment is not effected in accordance with the
requirements of this Agreement; provided, however, that with respect to
items (a) and (c) above, within fifteen (15) days of written notice of
termination by the Executive, the Company has not cured, or commenced to
cure, such failure or breach.
(c) Vesting of Stock Grants and Stock Options. In the event of any
termination of this Agreement, Executive's rights with regard to any stock
grants or stock options shall be as set forth in the respective agreement
containing the terms and conditions pertaining thereto. Notwithstanding the
foregoing, in the event that the Executive is terminated for reasons other
than for "Cause" or in the event the Executive terminates this Agreement
for "Good Reason," or in the event this Agreement is terminated by reason
of Executive's death, any stock options then held by the Executive shall
immediately vest in the Executive and shall remain exercisable for the
period specified in the grant agreement notwithstanding any provision
therein to the contrary.
(d) Death Benefit. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of the Executive's
death. In such event the Company shall continue to pay Executive's Base
Compensation and any Incentive Bonus that he would have earned had he not
died to his wife, if she survives him, or, if she does not survive him, to
his estate, through the end of the twelfth month following the month in
which such death occurs.
9. Company Property. All advertising, promotional, sales, suppliers,
manufacturers and other materials or articles or information, including without
limitation data processing reports, customer lists, customer sales analyses,
invoices, product lists, price lists or information, samples, or any other
materials or data of any kind furnished to the Executive by the Company or
developed by the Executive on behalf of the Company or at the Company's
direction or for the Company's use or otherwise in connection with the
Executive's employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during or at or after the termination of the Executive's employment,
the Executive shall immediately deliver the same to the Company.
10. Covenant Not To Compete.
(a) Covenants Against Competition. As of the date of this Employment
Agreement (i) the Company is engaged in the business of selling prepaid
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products and servics and selling or licensing an integrated electronic
point of sale activation system (the "Business"); (ii) the Company's
Business is conducted currently throughout the United States, Canada and in
certain countries in Europe and Asia and may be expanded to other
locations; (iii) the Executive's employment with the Company will have
given him access to confidential information concerning the Company; and
(iv) the agreements and covenants contained in this Agreement are essential
to protect the business and goodwill of the Company. Accordingly, the
Executive covenants and agrees as follows:
(i) Non-Compete. Without the prior written consent of the Board,
the Executive shall not during the Restricted Period (as defined
below) within the Restricted Area (as defined below) (except in the
Executive's capacity as an officer of the Company or any of its
affiliates), (a) engage or participate in the Business; (b) enter the
employ of, or render any services (whether or not for a fee or other
compensation) to, any person engaged in the Business; or (c) acquire
an equity interest in any such person; provided, further, that during
the Restricted Period the Executive may own, directly or indirectly,
up to 5%, solely as a passive investment, of the securities of any
company traded on any national securities exchange or on the National
Association of Securities Dealers Automated Quotation System.
As used herein, "Restricted Period" shall mean the period
commencing on the Effective Date and ending on the first anniversary
of the Executive's termination of employment.
"Restricted Area" shall mean any place within the United States
and any other country in which the Company is then actively has an
ongoing Business relationship or is actively negotiating Business.
(ii) Confidential Information; Personal Relationships. The
Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect confidential
information. The Executive agrees that, during and after the
Restricted Period, without the prior written consent of the Board, the
Executive shall keep secret and retain in strictest confidence, and
shall not knowingly use for the benefit of himself or others all
confidential matters relating to the Company's Business including,
without limitation, operational methods, marketing or development
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plans or strategies, business acquisition plans, joint venture
proposals or plans, and new personnel acquisition plans, learned by
the Executive heretofore or hereafter (such information shall be
referred to herein collectively as "Confidential Information");
provided, that nothing in this Agreement shall prohibit the Executive
from disclosing or using any Confidential Information (A) in the
performance of his duties hereunder, (B) as required by applicable
law, (C) in connection with the enforcement of his rights under this
Agreement or any other agreement with the Company, or (D) in
connection with the defense or settlement of any claim, suit or action
brought or threatened against the Executive by or in the right of the
Company. Notwithstanding any provision contained herein to the
contrary, the term Confidential Information shall not be deemed to
include any general knowledge, skills or experience acquired by the
Executive or any knowledge or information known or available to the
public in general. Moreover, the Executive shall be permitted to
retain copies of, or have access to, all such Confidential Information
relating to any disagreement, dispute or litigation (pending or
threatened) involving the Executive.
(iii) Employees of the Company and its Affiliates. During
the Restricted Period, without the prior written consent of the
Board of the Company, the Executive shall not, directly or
indirectly, hire or solicit, or cause others to hire or solicit,
for employment by any person other than the Company or any
affiliate or successor thereof, any employee of, or person
employed within the two years preceding the Executive's hiring or
solicitation of such person by, the Company and its affiliates or
successors or encourage any such employee to leave his
employment. For this purpose, any person whose employment has
been terminated involuntarily by the Company shall be excluded
from those persons protected by this Section for the benefit of
the Company.
(iv) Business Relationships. During the Restricted Period,
the Executive shall not, directly or indirectly, request or
advise a person that has a business relationship with the Company
to curtail or cancel such person's business relationship with the
Company.
(b) Rights and Remedies Upon Breach. If the Executive breaches,
threatens to commit a breach of, any of the provisions contained in Section
10 of this Agreement (the "Restrictive Covenants"), the Company shall have
the following rights and remedies, each of which rights and remedies shall
be independent of the others and severally enforceable, and each of which
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is in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
(i) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the
Company and that money damages would not provide an adequate remedy to
the Company.
(ii) Accounting. The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of
Restrictive Covenants.
(c) Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby
be affected and shall be given full effect without regard to the invalid
portions. The provisions set forth in Section 10 above shall be in addition
to any other provisions of the business conduct and ethics policy
applicable to employees of the Company and its subsidiaries during the term
of Executive's employment.
(d) Saving Clause. If the period of time or the area specified in
subsection (a) above should be adjudged unreasonable in any proceeding,
then the period of time shall be reduced by such number of months or the
area shall be reduced by the elimination of such portion thereof or both so
that such restrictions may be enforced in such area and for such time as is
adjudged to be reasonable. If the Executive violates any of the
restrictions contained in the foregoing subsection (a), the restrictive
period shall not run in favor of the Executive from the time of the
commencement of any such violation until such time as such violation shall
be cured by the Executive to the satisfaction of Company.
11. Executive's Representation and Warranties. Executive represents and
warrants that he has the full right and authority to enter into this Agreement
and fully perform his obligations hereunder, that he is not subject to any
non-competition agreement other than with the Company, and that his past,
present and anticipated future activities have not and will not infringe on the
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proprietary rights of others. Executive further represents and warrants that he
is not obligated under any contract (including, but not limited to, licenses,
covenants or commitments of any nature) or other agreement or subject to any
judgment, decree or order of any court or administrative agency which would
conflict with his obligation to use his best efforts to perform his duties
hereunder or which would conflict with the Company's business and operations as
presently conducted or proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business as
officer and employee by Executive will conflict with or result in a breach of
the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument to which Executive is currently a party.
12. Miscellaneous.
(a) Integration; Amendment. This Agreement and the Indemnity Agreement
constitutes the entire agreement between the parties hereto with respect to
the matters set forth herein and supersedes and renders of no force and
effect all prior understandings and agreements between the parties with
respect to the matters set forth herein. No amendments or additions to this
Agreement shall be binding unless in writing and signed by both parties.
Notwithstanding the foregoing, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided or maintained by the
Company and for which the Executive may qualify, nor shall anything herein
limit or otherwise prejudice such rights as the Executive may have under
any other existing or future agreements with the Company. Except as
otherwise expressly provided for in this Agreement, amounts which are
vested benefits or which the Executive is otherwise entitled to receive
under any plans or programs of the Company at or subsequent to the date of
termination shall be payable in accordance with such plans or programs.
(b) Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable law or regulations, such
provision shall be inapplicable and deemed omitted to the extent so
contrary, prohibited, or invalid, but the remainder of this Agreement shall
not be invalid and shall be given full force and effect so far as possible.
(c) Waivers. The failure or delay of any party at any time to require
performance by the other party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of
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that provision or to exercise any right, power, or remedy hereunder, and
any waiver by any party of any breach of any provision of this Agreement
shall not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power, or remedy under this Agreement. No notice to or demand on any
party in any case shall, of itself, entitle such party to other or further
notice or demand in similar or other circumstances.
(d) Power and Authority. The Company represents and warrants to the
Executive that it has the requisite corporate power to enter into this
Agreement and perform the terms hereof; that the execution, delivery and
performance of this Agreement by it has been duly authorized by all
appropriate corporate action; and that this Agreement represents the valid
and legally binding obligation of the Company and is enforceable against it
in accordance with its terms.
(e) Burden and Benefit; Survival. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and assigns. In
addition to, and not in limitation of, anything contained in this
Agreement, it is expressly understood and agreed that the Company's
obligation to pay Termination Compensation as set forth herein shall
survive any termination of this Agreement.
(f) Governing Law; Headings. This Agreement and its construction,
performance, and enforceability shall be governed by, and construed in
accordance with, the laws of the State of Utah. Headings and titles herein
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
(g) Jurisdiction. Except as otherwise provided for herein, each of the
parties (a) submits to the exclusive jurisdiction of any state court
sitting in Utah County, Utah or federal court sitting in Utah in any action
or proceeding arising out of or relating to this Agreement, (b) agrees that
all claims in respect of the action or proceeding may be heard and
determined in any such court, (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court
and (d) waives any right such party may have to a trial by jury with
respect to any action or proceeding arising out of or relating to this
Agreement. Each of the parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of any other party with
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respect thereto. Any party may make service on another party by sending or
delivering a copy of the process to the party to be served at the address
and in the manner provided for giving of notices in Section 12(i). Nothing
in this Section, however, shall affect the right of any party to serve
legal process in any other manner permitted by law.
(h) Notices. All notices called for under this Agreement shall be in
writing and shall be deemed given upon receipt if delivered personally or
by confirmed facsimile transmission and followed promptly by mail, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at their respective addresses (or at such other
address for a party as shall be specified by like notice; provided that
notices of a change of address shall be effective only upon receipt
thereof) as set forth in the preamble to this Agreement or to any other
address or addressee as any party entitled to receive notice under this
Agreement shall designate, from time to time, to others in the manner
provided in this subsection 12(i) for the service of notices.
Any notice delivered to the party hereto to whom it is addressed shall
be deemed to have been given and received on the day it was received;
provided, however, that if such day is not a business day then the notice
shall be deemed to have been given and received on the business day next
following such day. Any notice sent by facsimile transmission shall be
deemed to have been given and received on the business day next following
the day of transmission.
(i) Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls
on a Saturday, Sunday or holiday on which federal banks are or may elect to
be closed, then the final day shall be deemed to be the next day which is
not a Saturday, Sunday or such holiday.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
Q COMM INTERNATIONAL, INC.
By: -----------------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Executive Officer
-----------------------------------
XXXXXXX X. XXXXXXXX
