EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
September 20, 2005 and shall be effective as of September 20, 2005 (the
"Effective Date") by and between Digicorp,
a Utah corporation,
with an office
located at 100 Wilshire Boulevard, Suite 1750, Santa Monica,
California 90401
(the "Company"), and Philip Gatch, an individual,
with an address 1650
Federal
Avenue, Los Angeles, California 90025
("Individual").
WHEREAS, the Company is in the business of
internet and digital media holdings
company and incubator; and
WHEREAS, Individual has had experience in the operations of businesses
doing
digital video production and pre-production
and internet and new media turn-key,
technology sourcing and development;
and
WHEREAS, the Company desires to retain the
services of Individual; and
WHEREAS, Individual is willing to be
employed by the Company.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the
parties agree as follows:
1. Employment. Individual is hereby
employed and engaged to serve the Company as
the Chief Technology Officer of the Company,
or such additional
titles as the
Company shall specify from time to time,
and Individual does hereby accept, and
Individual hereby agrees to such engagement
and employment.
2. Duties. Individual shall be responsible for the overall development and
operations of the Company's in-house
technology, business
technology operations
and internet platforms. In addition, Individual's duties shall be such
duties
and responsibilities as the Company shall specify from
time to time, and shall
entail those duties customarily performed by the Chief Technology
Officer of a
company with a sales volume and number of
employees commensurate
with those of
the Company. Individual shall have such authority, discretion, power and
responsibility, and shall be entitled to office, secretarial and other
facilities and conditions of employment,
as are customary or
appropriate to his
position. Individual shall diligently and faithfully
execute and perform
such
duties and responsibilities, subject to the general supervision
and control of
the Company's chief executive officer. Individual shall be responsible and
report only to the Company's chief executive officer. The Company's chief
executive officer, in its sole and absolute discretion, shall determine
Individual's duties and responsibilities and may assign or reassign
Individual
to such duties and responsibilities as it deems in
the Company's best interest.
Individual shall devote his full-time
attention, energy, and skill during normal
business hours to the business and affairs
of the Company and shall not, during
the Employment Term, as that term is defined
below, be actively
engaged in any
other business activity, except with the prior written
consent of the Company's
board of directors.
Nothing in this Agreement shall preclude Individual from devoting reasonable
periods required for:
(a)
serving as a
director or member of a committee of any organization
or corporation
involving no conflict of interest with the interests
of the Company;
(b)
serving as a
consultant
in his area of
expertise (in areas other
than in connection with the business of the Company), to
government,
industrial, and
academic panels where it does not conflict with the
interests of the Company; and
(c)
managing
his personal investments or engaging in any other
non-competing
business;
provided that
such activities do not
materially interfere
with the regular performance of his duties and
responsibilities under this Agreement as determined by the
Company.
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3. Best Efforts of Individual. During his employment hereunder, Individual
shall, subject to the direction and
supervision of the Company's chief executive
officer, devote his full business time,
best efforts, business
judgment, skill,
and knowledge to the advancement of the
Company's interests and to the discharge
of his duties and responsibilities hereunder. Notwithstanding the foregoing,
nothing herein shall be construed as
preventing Individual
from investing his
assets in any business.
4. Employment Term. Unless terminated
pursuant to Section 13
of this Agreement,
the term of this Agreement shall commence as of the Effective Date of this
Agreement and shall continue for a term of
thirty-six (36) months
(the "Initial
Term"), and shall be automatically renewed for successive one (1) year terms
(the "Renewal Term") unless a party hereto
delivers to the other
party written
notice of such party's intention not to
renew at least thirty (30) days prior to
the end of the Initial Term or the
applicable
Renewal Term, as the
case may be
(the terms "Initial Term" and "Renewal
Term" will
collectively
hereinafter be
referred to as the "Employment Term").
5. Compensation of Individual.
(a) Base
Compensation.
As compensation for the services provided by
Individual
under this
Agreement,
the Company
shall pay Individual an
annual
salary of Ninety-five
Thousand Dollars
($95,000) plus
Forty-five
Thousand
Dollars ($45,000) in a restricted stock grant during each year
of
the
Employment
Term, all grants vesting quarterly each year. The
compensation of Individual under this Section shall be paid
in accordance
with the
Company's usual payroll procedures.
(b) Bonus.
In addition to the above base compensation, Individual shall be
eligible
to receive an annual
bonus determined by the chief executive
officer
based on the performance of the Company.
(c) Stock
and Stock Options.
Individual shall also be eligible to receive
shares of
the Company's authorized stock and options to purchase shares
of
the
Company's authorized stock from time to time as
determined
by the
chief
executive officer, but specifically contained hereto as two
hundred
fifty
thousand (250,000)
options, vesting annually over 3 years (i.e.,
83,334
vesting on September
20, 2005, 83,333 vesting on September 20,
2006,
and 83,333
vesting on September
20, 2007), at a strike price of
twenty-five cents ($0.25).
(d)
Buy-back. In the first year of the
employment
term, if Individual
cannot
sell stock in the open
market, the Company
will purchase fifty
thousand
($50,000) in stock back from Individual.
6. Voting/Veto Rights. Individual shall have and obtain the veto
rights for
three (3) years to (i) veto a chief
executive officer
candidate as
replacement
to Milton "Todd" Ault, III and (ii) veto a
decision to sell the Company, or any
of its core assets or technologies related to iCode as outlined in the Asset
Purchase Agreement being executed concurrently herewith, in the event the
Company sells for less than fifty million
dollars ($50,000,000).
If termination
occurs for any reason, Individual will
forfeit the right to this veto power.
7. Benefits. Individual shall also be entitled to
participate in any and
all
Company benefit plans, from time to time, in effect for employees of the
Company. Such participation shall be
subject to the terms of the applicable plan
documents and generally applicable Company
policies.
8. Vacation, Sick Leave and Holidays.
Individual shall be
entitled to three (3)
weeks of paid vacation, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. In addition,
Individual shall be entitled to such sick leave and
holidays at full pay in
accordance with the Company's policies established and in effect from
time to
time.
9. Business Expenses. The Company shall promptly
reimburse Individual for all
reasonable out-of-pocket business expenses
incurred in performing
Individual's
duties and responsibilities hereunder in
accordance with the Company's policies,
provided Individual promptly furnishes to the Company
adequate records of each
such business expense.
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10. Location of Individual's Activities. Individual's principal place of
business in the performance of his duties
and obligations
under this
Agreement
shall be at a place to be mutually
determined by the chief executive officer and
Individual. Notwithstanding the preceding
sentence, Individual will engage in
such travel and spend such time in other places as may be necessary or
appropriate in furtherance of his duties
hereunder.
11. Confidentiality. Individual recognizes that the Company has
and will have
business affairs, products, future plans, trade secrets, customer lists, and
other vital information (collectively "Confidential Information") that are
valuable assets of the Company.
Individual agrees that
he shall not at any time
or in any manner, either directly or indirectly, divulge, disclose, or
communicate in any manner any Confidential Information to any third party
without the prior written consent of the Company's board of directors.
Individual will protect the Confidential Information and treat it as
strictly
confidential.
12. Non-Competition. Individual acknowledges that he
has gained, and will gain
extensive knowledge in the business conducted by the Company and has
had, and
will have, extensive contacts with customers of the Company. Accordingly,
Individual agrees that he shall not compete
directly or indirectly with the
Company, anywhere in Los Angeles
County, either during the Employment Term
or
during the three (3) year period immediately after the termination of
Individual's employment under Section 13
and shall not, during such period, make
public statements in derogation of the
Company. For the purposes of this Section
12, competing directly or indirectly with the Company shall mean engaging,
directly or indirectly, as principal owner, officer, partner, consultant,
advisor, or otherwise, either alone or in association with others, in the
operation of any entity engaged in a business similar to that of the
Company's
which uses the iCodemedia or similar suite of
we
