AGREEMENT, dated
as of the 25 th day of August, 2005, by and between WQN, INC., a
Delaware corporation with an office located at 14911 Quorom Drive,
Suite 140, Dallas, Texas 75254 (the “Company”),
and SCOTT W. HARTMAN, an individual (the
“Employee”).
WHEREAS, the Board
of Directors of the Company has determined that it is in the best
interests of the Company to employ the Employee and the Employee
desires to be employed by the Company; and
WHEREAS, the
Company and the Employee desire to set forth in this Agreement the
terms and conditions of the Employee’s employment.
NOW, THEREFORE, in
consideration of the premises and mutual covenants herein
contained, the parties hereto agree as follows:
The Company hereby
employs and engages the Employee to serve as the Chief Executive
Officer of the Company, and the Employee hereby accepts such
employment with the Company, on the terms and conditions herein set
forth. The Employee’s conduct and performance shall be
consistent with what would be expected of senior executives at
other institutions of similar size and type. Except as otherwise
provided herein, the Employee shall devote such business time,
attention, and skill to the business of the Company and perform
such responsibilities as are customary for an employee holding a
Chief Executive Officer position and that are assigned to the
Employee by the Board of Directors in accordance with the standards
and policies that the Company may from time to time establish. The
Employee shall use his reasonable best efforts to further the
interests of the Company, and to discharge diligently his duties
and responsibilities to the Company under this Agreement. As of the
date of this Agreement, the Employee represents that he is not
subject to any legal obligations or restrictions that would prevent
or limit the Employee from performing his responsibilities under
this Agreement. Notwithstanding the foregoing, this Agreement shall
not be construed or applied to prevent the Employee from engaging
in any other business or investment activities, including those
which may be similar to the investments or business of the
Company.
2.
COMMENCEMENT; TERM OF AGREEMENT
2.01
The term of employment hereunder shall commence effective as of the
date of the closing of the Company’s asset sale to VOIP, Inc.
(the “Commencement Date”), and shall continue until the
third anniversary of the Commencement Date (the “Employment
Period”) unless terminated sooner pursuant to the express
provisions hereof.
3.01
During the Employment Period, the Employee shall be employed in an
executive capacity as the Chief Executive Officer of the Company,
with the authority and responsibilities appropriate and customary
to such position.
3.02
The Employee shall report and be responsible to the Board of
Directors of the Company.
3.03
On the date hereof, and at each annual meeting of stockholders
during which the Employee is serving as the Chief Executive Officer
of the Company, the Company shall cause the Employee to be
nominated to the Board of Directors of the Company and shall use
its reasonable best efforts to have the Employee elected to the
Board of Directors of the Company.
4.01
The Employee shall be eligible to receive compensation in
accordance with resolutions adopted by the Board of Directors,
including fees payable to the members of the Board of Directors (so
long as, and to the extent that, Employee is a director of the
Company). Further, upon the Commencement Date, the Company shall
grant to the Employee, pursuant to the Company’s 2001 Stock
Option Plan, a 10-year stock option (“Option”) to
purchase 220,000 shares of the Company’s common stock at an
exercise price of $1.41 per share.
2
Such options
shall vest as follows: (i) one-third on the date hereof,
(ii) one-third on the first anniversary date of this
Agreement; provided that the Employee is then in the employ of the
Company, and (iii) the remainder on the second anniversary
date of this Agreement, provided that the Employee is then in the
employ of the Company. However, if the Employee’s employment
is terminated pursuant to Section 5.04 hereof or if the
Employee leaves the employ of the Company for Good Reason, the
Option shall fully vest and the Employee shall have one
(1) year thereafter to exercise the Option.
For purposes of
this Agreement, “Good Reason” shall mean the
following:
(a) a
material default or breach by the Company of any obligation,
representation, warranty, covenant or agre
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