**Exhibit 10.3**

 

**EXECUTIVE EMPLOYMENT AGREEMENT**

            This Agreement iseffective as of the 26th day of May, 2003 ("Agreement") and is madeby and between VillageEDOCS, a California corporation ("Company"),and H. Jay Hill, a resident of the State of Florida ("Executive'').

WITNESSETH:

          WHEREAS, theCompany desires to employ Executive in accordance with the terms and conditionscontained in this Agreement and to ensure the availability of the Executive'sservices to the Company;

          WHEREAS, theExecutive desires to accept such employment and render his services inaccordance with the terms and conditions contained in this Agreement;

          WHEREAS, theExecutive and the Company desire to enter into this Agreement which will fullyrecognize the contributions of the Executive and assure harmonious managementof the Company's affairs.

          NOW,THEREFORE, in consideration of the promises and the mutual covenants set forthin this Agreement, and intending to be legally bound, the Company and theExecutive agree as follows:

            1.         Employment

                        (a)        Offer/Acceptance/Effective Date.  The Company hereby offers employment to theExecutive and the Executive hereby accepts employment subject to the terms andconditions set forth in this Agreement.

                        (b)        Youremployment with the company is terminable at will, which means that you will befree to terminate your employment with the Company at any time for any or noreason, with or without notice. Similarly, the Company may terminate your employment at any time for anyreason or no reason, with or without notice. By accepting this offer of employment, you will be agreeing that youremployment is terminable at will, and acknowledge that no one has the authorityto promise you, either orally or in writing, anything to the contrary.

                        (c)        Position.  Employee shall be an executive officer ofthe Company and shall be the Executive Vice President of Corporate Development.

            2.         Duties.

                        (a)        Best Efforts.  The Executive covenants to use his bestefforts to perform his duties and discharge his responsibilities pursuant tothis Agreement in a competent, diligent and faithful manner.

                        (b)        Devotion of Time.  The Executive shall devote substantially allof his time, attention and energies during normal business hours to theCompany's affairs (exclusive of periods of sickness and disability and of suchnormal holiday and vacation periods as have been established by the Company).

                        (c)        Specific Responsibilities.  The Executive's specific responsibilitieswill include, but not be limited to, the following:  

                              Executive will assistthe Company in the development and growth of its business.
> 
Executive will assistthe Company in high-level strategic planning relating to the future growth ofthe Parent's group of  companies, including capital formation, mergers and acquisitions,and an alternate exit strategy either through a merger or initial publicoffering.

Executive will assistthe Company in the strategic planning, operational implementation, andexecution of the Company's sale and marketing. To include but not be limited to advising and mentoring the operationalsales and marketing leadership.

            3.         Compensationand Expenses.

                        (a)        Base Salary.  For the services of the Executive to berendered by him under this Agreement, the Company will pay the Executive anannual base salary of Sixty Thousand Dollars ($60,000.00).

                                    The Companyshall pay the Executive his Base Salary in equal installments no less thansemi-monthly.

                        (b)        Base Salary Adjustment.  The Base Salary may not be decreasedhereunder during the term of this Agreement, but may be increased upon reviewby, and at the sole discretion of, the Company's Board of Directors.

                        (c)        Bonus.  Executive shall be entitled to receive bonus compensation in anamount as approved by the Company's Board of Directors based upon mutuallyagreed performance criteria.

                        (d)        Expenses.  In addition to any compensation receivedpursuant to Section 3, the Company will reimburse the Executive for allreasonable, ordinary and necessary travel, educational, seminar, trade shows, entertainmentand miscellaneous expenses incurred in connection with the performance of hisduties under this Agreement, provided that the Executive properly accounts forsuch expenses to the Company in accordance with the Company's practices.

                        (e)        Subsidiary and Affiliate Payments.  In recognition of the fact that in thecourse of the performance of his duties hereunder, the Executive may providesubstantial benefits to the Company's subsidiaries or affiliated companies, theExecutive and the Company may at any time and from time to time agree that allor any portion of the compensation due the Executive hereunder may be paiddirectly to the Executive by one or more of the Company's subsidiaries oraffiliated companies.  In addition,Executive may direct that any payments under this Agreement be made to anentity controlled by Executive.

                        (f)         Stock Options.  Simultaneously herewith, Executive will beentitled to receive:  (i) options toacquire up to one million five hundred thousand (1,500,000) shares of theCompany's Common Stock exercisable at $0.18 per share.  These options will vest in equal incrementsover a four (4) year term.  The optionswill be exercisable for a period of ten (10) years.  The options will be subject to immediate vesting in the event ofa Material Transaction, as defined in the underlying Stock Option Agreement,and (ii) Executive shall be issued options to acquire 1,000,000 shares of theCompany's Common Stock.  These optionswill have an exercise price of $0.10 per share, which is the current marketprice as of the date of this Agreement. 250,000 of these options shall be immediately vested and subject toexercise.  The remaining options(750,000) will vest on a quarterly basis from the third to eighth quarter ofemployment at a rate of 125,000 shares per quarter.  Options will vest at the beginning of each quarter.

                        (g)        Performance Incentive Compensation.  The Company will pay Executive PerformanceIncentive compensation in consideration of the Executives successful executionof responsibilities. The Executive agrees incentive compensation for alltransactions will be 2% and shall be paid in kind.  Should the transaction involve an entity with exceptional EBITDA,a bonus of 1% to be paid in kind shall apply. Should the transaction involve an entity with exceptional cash reserves,a bonus of 1% to be paid in cash shall apply. If the Executive and the Company cannot agree to an appropriate bonus,it will be submitted to binding AAA arbitration in Orange County, California.

               4.       Benefits.

                        (a)        Vacation.  For each calendar year during which theExecutive is employed, the Executive shall be entitled to three (3) weeks (120hours) vacation (which shall accrue and vest, except as may be hereafterprovided to the contrary, throughout the year at the rate of 5 hours persemi-monthly pay period without loss of compensation or other benefits to whichhe is entitled under this Agreement

                                    TheExecutive shall take his vacation at such times as the Executive may select andthe affairs of the Company or any of its subsidiaries or affiliates may permit.

                        (b)        Employee Benefit Programs.  In addition to the compensation to which theExecutive is entitled pursuant to the provisions of Section 3 hereof, theExecutive will be entitled to participate in any stock option plan, stockpurchase plan, pension or retirement plan, and insurance or other employeebenefit plan that is maintained at that time by the Company for its employees,including programs of life, disability, basic medical and dental, andsupplemental medical and dental insurance.

            5.         Termination.

                        (a)        Death or Disability.  This Agreement and the Company's obligationshereunder will terminate upon the death or disability of the Executive.  For purposes of this Section 5(b),"disability" shall mean that for a period of six (6) months in anytwelve-month period, the Executive is incapable of substantially fulfilling theduties set forth in this Agreement because of physical, mental or emotionalincapacity resulting from injury, sickness or disease as determined by anindependent physician mutually acceptable to the Company and theExecutive.  Upon any termination of thisAgreement due to death or disability, the Company will pay the Executive or hislegal representative, as the case may be, his Base Salary (which may includeany accrued but unused vacation time) at such time pursuant to Section 3(a)through the date of such termination of employment (or, if terminated as aresult of a disability, until the date upon which the disability policymaintained pursuant to Section 4 (b) (ii) begins payment of benefits) plus anyother compensation that may be due and unpaid. In the event of death or disability of the Executive, any obligationsthat the Executive may owe the Company for repayment of loans or other amountsshall be forgiven.

                        (b)        Voluntary Termination.  Prior to any other termination of thisAgreement, the Executive may, terminate his employment with the Company.  Upon any such termination, the Company shallpay the Executive his Base Salary at such time pursuant to Section 3(a) throughthe date of such termination of employment (which shall include any vested andaccrued but unused vacation time).

(c)              InvoluntaryTermination .  Upon involuntary termination, the Companyshall pay the Executive his Base Salary at such time pursuant to Section 3(a)through the date of such termination of employment and for three months afterfinal date of employment. In the event there is an involuntary termination as aresult of a Change in Control, the provisions of paragraph 7(b) shall apply.

(d)              SeveranceCompensation.  In the event there is an involuntarytermination, excluding change of control (Section 7), upon termination theExecutive will be entitled to options to acquire 250,000 shares of the Company'sCommon Stock at an exercise price of $0.10 per share.  Such options will have a term of ten (10) years from the date ofthis Agreement.  The form of the StockOption Agreement for these options will be substantially the same as the formof Stock Option Agreement entered into by the Executive in connection with thisAgreement.  

            6.         RestrictiveCovenants.

                        (a)        Competition with the Company.  The Executive covenants and agrees that,during Executive's employment with the Company and for a one (1) year periodthereafter, the Executive will not, without the prior written consent of theCompany, directly or indirectly (whether as a sole proprietor, partner,stockholder, director, officer, employee or in any other capacity as principalor agent), compete with the Company in the electronic document delivery, faxservice, or fax server industries. Notwithstanding this restriction, Executive shall be entitled to investin stock of other competing public companies so long as his ownership is lessthan 5% of such company's outstanding shares. Upon a sale of the Company, Executive agrees to be bound by the samerestrictive covenants required by the buyer as imposed upon other members ofthe Company's senior management.  Thiscovenant shall only apply in the event the Executive is currently employed bythe Company as of the date of the sale of the Company.

                        (b)        Disclosure of ConfidentialInformation.  The Executiveacknowledges that during his employment he will gain and have access toconfidential information regarding the Company and its subsidiaries andaffiliates.  The Executive acknowledgesthat such confidential information as acquired and used by the Company or anyof its subsidiaries or affiliates constitutes a special, valuable and uniqueasset in which the Company or any of its subsidiaries or affiliates, as thecase may be, holds a legitimate business interest.  All records, files, materials and confidential information (the"Confidential Information") obtained by the Executive in the courseof his employment with the Company shall be deemed confidential and proprietaryand shall remain the exclusive property of the Company or any of itssubsidiaries or affiliates, as the case may be.  The Executive will not, except in connection with and as requiredby his performance of his duties under this Agreement, for any reason use forhis own benefit or the benefit of any person or entity with which he may beassociated, disclose any Confidential Information to any person, firm,corporation, association or other entity for any reason or purpose whatsoeverwithout the prior written consent of the Board of Directors of the Company,unless such information previously shall have become public knowledge throughno action by or omission of the Executive.

                        (c)        Subversion, Disruption orInterference.  At no time duringExecutive's employment with the Company shall the Executive, directly orindirectly, interfere, induce, influence, combine or conspire with, or attemptto induce, influence, combine or conspire with, any of the employees of, orconsultants to, the Company to terminate their relationship with or competewith or ally against the Company or any of its subsidiaries or affiliates inthe business in which the Company or any of its subsidiaries or affiliates isthen engaged in.

                        (d)        Enforcement of Restrictions.  The parties hereby agree that any violationby Executive of the covenants contained in this Section 6 will likely causeirreparable damage to the Company or its subsidiaries and affiliates and may, asa matter of course, be restrained by process issued out of a court of competentjurisdiction, in addition to any other remedies provided by law.

               7.       Change of Control.

                        (a)        For the purposes of this Agreement, a"Change of Control" shall be deemed to have taken place if any personother than Al or Joan Williams, collectively or immediately, including a"group" as defined in Section 13(d)(3) of the Securities Exchange Actof 1934, as amended, becomes the owner or beneficial owner of the Company'ssecurities, after the date of this Agreement, having more than 50% of thecombined voting power of the then outstanding securities of the Company thatmay be cast for the election of directors of the Company (other than as aresult of an issuance of securities specifically approved by Executive andspecifically excluded from the provisions of this Section 8 by subsequentwritten agreement of the Executive); provided, however, that a Change ofControl shall not be deemed to have occurred if the person who becomes theowner of more that 50% of the combined voting power of the Company is theExecutive or an entity (or entities) controlled by the Executive.

                        (b)        If the Executive's employment isinvoluntarily terminated by the Company as a result of a Change of Control, theExecutive shall be entitled to receive, subject to the provisions ofsubparagraph (c) below, a severance package consisting of twelve months ofExecutive's base salary and full vesting of any outstanding stock options.  The twelve salary payments will be madeduring the first twelve consecutive months after Executive's termination.

                        (d)        In the event of a proposed Change inControl, the Company will allow the Executive to participate in all meetingsand negotiations related thereto.

            8.         Assignability.  Therights and obligations of the Company under this Agreement shall inure to thebenefit of and be binding upon the successors and assigns of the Company,provided that such successor or assign shall acquire all or substantially allof the assets and business of the Company.

 

            9.         Severability.  If any provision of this Agreement is deemedto be invalid or unenforceable or is prohibited by the laws of the state orjurisdiction where it is to be performed, this Agreement shall be considereddivisible as to such provision and such provision shall be inoperative in suchstate or jurisdiction and shall not be part of the consideration moving fromeither of the parties to the other.  Theremaining provisions of this Agreement shall be valid and binding.

            10.       Notice.  Notices given pursuant to the provisions of this Agreement shallbe sent by certified mail, postage prepaid, or by overnight courier, ortelecopier to the following addresses:

                        To the Company:       VillageEDOCS

                                                         Attn:  Office of the President

                                                         14471Chambers Road, Suite 105

                                                         Tustin,CA  92780

 

                        To the Executive:       H. Jay Hill

                                                         2910Philippe Pkwy

                                                         SafetyHarbor, FL  34695

                        Either party may, fromtime to time, designate any other address to which any such notice to it or himshall be sent.  Any such notice shall bedeemed to have been delivered upon the earlier of actual receipt or four daysafter deposit in the mail, if by certified mail.

            11.       Miscellaneous.

                        (a)        Governing Law.  This Agreement shall be governed by and construedand enforced in accordance with the internal, substantive laws of the State ofCalifornia without giving effect to the conflict of laws rules thereof.

                        (b)        Waiver/Amendment.  The waiver by any party to this Agreement ofa breach of any provision hereof by any other party shall not be construed as awaiver of any subsequent breach by any party. No provision of this Agreement may be terminated, amended, supplemented,waived or modified other than by an instrument in writing signed by the partyagainst whom the enforcement of the termination, amendment, supplement, waiveror modification is sought.

                        (c)        Attorney's Fees.  In the event any action is commenced, theprevailing party shall be entitled to reasonable attorneys' fee, costs andexpenses.

                        (d)        Entire Agreement.  This Agreement represents the entireagreement between the parties with respect to the subject matter hereof andreplaces and supersedes any prior agreements or understandings.

                        (e)        Counterparts.  This Agreement may be executed in counterparts,all of which shall constitute one and the same instrument.

          IN WITNESSWHEREOF, the Company and the Executive have executed this Agreement as of theday and year first above written.

                                                                        COMPANY:

                                                                        VillageEDOCS,a California corporation

                                                                        By:  /s/ K. Mason Conner                               

                                                                        Its:President and CEO                                   

                                                                                             

                                                                       EXECUTIVE:

                                                                         H. Jay Hill                                                       

                                                                        Typedor Printed Name

 

                                                                          /s/ H. Jay Hill                                                 

                                                                        Signature

 

39707.99297

5/14/2003 6:58 AM