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EMPLOYMENT AGREEMENT
Employment Agreement made as of March 7, 2002 (the "Effective Date")
by and between VoiceFlash Network, Inc., a Florida corporation
(the "Company"), and Xxxxxx X. Xxxxx ("Employee").
WITNESSETH:
WHEREAS, Employee wishes to be employed by the Company with the duties
arid responsibilities as hereinafter described, and the Company desires to
assure itself of the availability of Employee's services in such capacity.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and Employee hereby agree as follows;
1. Employment. The Company hereby agrees to employ Employee, arid
Employee hereby agrees to serve the Company, upon the terms arid conditions
hereinafter set forth.
2. Term. The employment of Employee by the Company pursuant to this
Agreement shall be for a three (3) year period commencing on the Effective Date
(the "Term").
3. Duties. Employee shall serve as, and have all power and authority inherent in
the offices of (Thief Financial Officer and Executive Vice President and shall
he responsible for those areas in the conduct of the business reasonably
assigned to him by the Chief Executive Officer ("CEO") and President of the
Company. Employee shall devote substantially all his business time and efforts
to the business of the Company; provided, however, that it is understood and
agreed that, while Employee may devote time to other business matters in which
he has an interest, in the event of a conflict, Employee's first and primary
responsibility shall be to the performance of his duties for the Company.
4. Compensation and Other Provisions. Employee shall he entitled
to the compensation and benefits hereinafter described in subparagraphs (a)
through (e) (such compensation and benefits being hereinafter referred to as
"Compensation Benefits").
(a) Base Salary. The Company shall pay to Employee an initial bane salary of (i)
$110,000 per annum for the first year of this Agreement; (ii) $125,000 per annum
for the second year of this Agreement, and (iii) $150,000 for the third year of
this Agreement ("Base Salary"). The Base Salary and Employee's other
compensation may be increased (but riot decreased) from time to time as the CEO
and President may determine.
(b) Participation in Benefit Plans. During the Term, Employee shall be eligible
to participate in all employee benefit plans and arrangements now in effect or
which may hereafter he established, including, without limitation, all life,
group insurance and medical care plans and all disability, retirement and other
employee benefit plans of the Company. Additionally, Employee shall be added as
an insured to any director and officer insurance policy which the Company now
has or hereafter procures.
(c) Other Provisions. Employee shall he entitled to three (3) weeks paid
vacation per annum. Further, Employee shall be reimbursed for all reasonable
expenses incurred by him in the performance of his duties, including, but not
limited to, cellular telephone, entertainment, travel and other expenses deemed
reasonably necessary by the CEO and President.
(d) Discretionary Bonuses. Employee shall be entitled to receive annual arid/or
interim cash bonuses and/or other bonuses when and in such amounts as may he
determined by the CEO and President in his sole and reasonable discretion based
upon Employee's performance, the Company's performance and/or other factors.
(e) Common Stock Grant. The Company and Employee shall enter into the Stock
Purchase Agreement attached hereto as Exhibit A pursuant to which the Company
shall issue and self to Employee 375,000 outs shares of common stock (the
"Common Stock") upon such terms arid conditions set forth herein. The Company
covenants and agrees that it will use its best efforts to register the Common
Stock by means of an available registration statement as soon as is reasonably
practicable.
(f) Guaranteed Bonuses. Employee shall receive a guaranteed bonus payable on
each anniversary date of this Agreement sufficient to cover all of Employee's
tax obligations arising from the forgiveness of any portion of any indebtedness
(inclusive of principal and accrued interest) required under any promissory note
executed by Employee in connection with the Common Stock grant set forth in
Section 4(e) hereinabove (the "Guaranteed Bonus"). In addition, Employee shall
receive a supplemental guaranteed bonus on each anniversary date of' this
Agreement sufficient to cover all of Employee's tax obligations arising from the
foregoing Guaranteed Bonus (the "Supplemental Guaranteed Bonus").
(g) Stock Option Grant. Concurrently with the execution and delivery of this
Agreement by Employee, the Company hereby grants to Employee the option to
purchase 375,000 shares of the Company's common stock (collectively, the
"Options") at an exercise price of $.26 per share (the "Price Per Share").
Unless otherwise provided herein, the Options shall vest (i) one third on due
execution hereof'; (ii) one third on the first anniversary date hereof; and
(iii) one third on the second anniversary date hereof. To exercise the Options,
in whole or in part, Employee shall deliver written notice to the Company at
least ten (10) days prior to the exercise date together with a check made
payable to the Company in an amount equal to the aggregate Price Per Share for
the number of shares of common stock being purchased. The Company shall pay all
expenses, transfer (hut not income) taxes and other charges payable in
connection with the preparation, issuance and delivery of the shares underlying
the exercised Options. In case the Company shall at any time subdivide its
outstanding shares of common stock line a greater number of shares, or declare a
dividend or make any other distribution upon the stock of the Company payable in
common stock, the Price Per Share. in effect immediately prior to such
subdivision or stock dividend shall be proportionately reduced and the number of
shares subject to this Option shall be proportionately increased. If any capital
reorganization or reclassification of the capital stock of the Company. or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of common stock shall be entitled to receive stock,
securities, cash or other property with respect to or in exchange for common
stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the Employee, as holder of the Options, shall have the right to acquire
and receive upon exercise of the Options such shares of stock, securities, cash
or other property issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with respect to or in exchange
for such number of outstanding shares of the Company's common stock as would
have been received upon such exchange of common stock, at the Price Per Share
then in effect. The Company covenants and agrees that: (a) it will authorize,
reserve and set apart and have at all times a number of shares of authorized but
unissued common stock deliverable upon the exercise of the Options sufficient to
enable it at any time to fulfill all its obligations hereunder; and (b) it will
use its best efforts to register all shares of its common stock subject to the
options by means of a registration statement on Form S-8 or other registration
statement as soon as is reasonably practicable. Any Options not exercised by
Employee within one (1) year from the date of termination of Employee's
employment shall automatically expire.
5. Severance and Change of Control Provisions. Upon the occurrence of a
Triggering Event (as hereinafter defined), Employee shall be entitled to the
immediate receipt of' Severance Payments and Benefits (as hereinafter defined)
from the Company in accordance with the terms hereinafter set forth:
(a) Triggering Event. The occurrence of any of the following events shall
be defined as a "Triggering Event" for purposes hereof:
(1) The Company's termination of Employee's employment (other than for Cause (as
hereinafter defined)) at any time prior to the expiration of' the Term or within
two (2) years following a Change of Control (as hereinafter defined);
(2) The voluntary resignation of Employee for any reason whatsoever
within ninety (90) days following a Change of Control; or
(3) The voluntary resignation of Employee for "good reason," which, for purposes
hereof shall include, without limitation, (i) a demotion, (ii) a reduction in
salary, benefits, bonuses, incentives or perquisites, or (iii) the relocation of
the principal office of the Company or the relocation of Employee outside of'
Broward or Palm Beach Counties in Florida.
(4) The death or disability of' the Employee (as defined herein).
(b) Change of Control. For purposes of this Agreement, the term
"Change of Control" shall mean the occurrence of any of the following
events:
(1) Forty percent (40%) or more of the Company's voting stock shall be acquired
by any person (other than Employee), entity or affiliated group;
(2) An unapproved change to the majority control of the Company's Board;
(3) Any merger, consolidation or business combination pursuant to which the
Company is not the surviving corporation or forty percent (40%) or more of the
Company's voting stock shall be owned or controlled by any person (other than
Employee), entity or affiliated group;
(4) A liquidation or dissolution of the Company; or
(5) The sale of all or substantially all of the Company's assets.
(c) Severance of Payments and Benefits. For purposes of this Agreement,
the term "Severance Payments and Benefits" shall mean:
(1) Employee shall receive a lump sum payment equal to the higher of two (2)
multiplied by the sum of Employee's highest annual Base Salary plus the highest
bonus, incentive and other compensation payments received by Employee in respect
of any year within the three (3) year period preceding the Triggering Event or
the annualized sum of Employee's Base Salary plus the maximum amount of bonuses
and incentives which Employee could have been entitled during the year in which
the Triggering Event occurred;
(2) All stock options, restricted stock, warrants, other stock appreciation
rights and other similar securities shall become immediately and fully vested
and all conditions applicable to all contingently issued options. wan-ants,
stock appreciation rights and other similar securities shall be deemed waived by
the Company;
(3) All benefits applicable to Employee and his family members as described in
Sections 5(a) and (b) of the Agreement shall continue for a period of two (2)
years following the Triggering Event or through the expiration of the Term (as
if the Triggering Event had not occurred), whichever is later;
(4) The aggregate Severance Payments and Benefits under this Section 5, to the
extent any such payment or benefit is deemed to be a "parachute payment" under
Section 280G(b)(2) of the Internal Revenue Code, as amended (the "Code"), shall
be limited to 2.99 times Employee's base amount, as defined under Section
280G(b)(3) of the Code.
(5) The Company shall pay as and when due any and all attorneys' foes and costs
that Employee may incur iii connection with the enforcement of his rights under
this Agreement or any dispute or settlement in connection herewith;
(6) Severance Payments and Benefits will not be subject to mitigation in
any respect;
(7) The non-competition and non-solicitation periods described in Section 12 of
this Agreement shall he reduced from one (1) year to three (3) months (other
than by virtue of the expiration of the Term of this Agreement); and
(8) Provided Employee shall have been an employee of the Company for a period of
twelve (12) months from Effective Date, all indebtedness due under any
promissory note executed by Employee in connection with the Common Stock grant
set forth in Section 4(e) hereof shall be automatically forgiven. Further,
provided Employee shall have been an employee of the Company for a period of
twelve (12) months from the Effective Date, all Guaranteed Bonuses and
Supplemental Bonuses that would otherwise hr due and payable to Employee on each
anniversary date hereof shall become immediately due and payable in full to
Employee.
(d) Stock Options, Warrants and Stock Appreciation Rights. Notwithstanding the
foregoing, all stock options, warrants, stock appreciation rights and other
similar securities shall immediately vest upon the occurrence of a Change of
Control and at such time all conditions applicable to contingently issued
options, wan-ants, stock appreciation rights and other securities shall be
deemed waived by the Company.
6. Termination. Employee's employment hereunder shall terminate as a
result of any of the following events:
(a) Employee's death;
(b) Employee shall he unable to perform his duties hereunder by reason of
illness, accident or other physical or mental disability for a continuous period
of at least nine months or an aggregate of twelve months during any continuous
eighteen month period ("Disability");
(c) Voluntary termination by Employee; or
(d) For Cause, where "Cause" shall mean: (i) final non-appealable adjudication
of Employee of a felony; or (ii) the unanimous determination of the entire Board
(other than Employee) that Employee has engaged in material intentional
misconduct or the gross neglect, of his duties, which has a continuing material
adverse effect on the business of the Company.
Any termination pursuant to subparagraph (h), (c) or (d) of
this Section shall be communicated by a written notice ("Notice of'
Termination"), such notice to set forth with specificity the grounds for
termination if the result of "Cause". Employee's employment, under this
Agreement shall he deemed to have terminated as follows: (i) if Employee's
employment is terminated pursuant to subparagraph (a) above, on the date of his
death; (ii) if Employee's employment is terminated pursuant to subparagraph (b)
or (d) above, on the date on which Notice of Termination is given; and (iii) ii
Employee's employment is terminated pursuant to subparagraph (e) above, thirty
(30) days after the date on which a Notice of Termination is given. The date on
which termination is deemed to have occurred pursuant to this paragraph is
hereinafter referred to as the "Date of Termination".
7. Payments on Termination. In the event that Employee's employment is
terminated pursuant to Section 6 above, the Company shall pay to Employee his
full Base Salary through the Date of Termination together with all incentive
compensation, benefits and other compensation, if any, due and owing as of that
date, plus any Severance and Benefit Payments to which Employee may he entitled
hereunder.
8. Board of Directors. The Company shall cause Employee to be nominated as a
member of' the Board of Directors of the Company and each of its subsidiaries at
all times during the Term, Employee shall agree to faithfully serve the Company
as a member of all such Boards upon election.
9. Life insurance. If requested by the Company, Employee shall submit to such
physical examinations and otherwise take such actions and execute and delver
such documents as may he reasonably necessary to enable the Company to obtain
life insurance on the life of Employee for the benefit of the Company.
10. Representations and Warranties. Employee represents and warrants
to the Company that he is under no contractual or other restriction or
obligation that would prevent the performance of his duties hereunder or
interfere with the rights of the Company hereunder.
11. Disclosure and Protection of Confidential Information.
(a) For purposes of this Agreement, "Confidential Information" means knowledge,
information and material which is proprietary to the Company, of which Employee
may obtain knowledge or access through or as a result of his employment by the
Company (including information conceived, originated, discovered or developed in
whole or in part by Employee). Confidential information includes, but is not
limited to (i) technical knowledge, information, and material such as trade
secrets, processes, formulas, data, know-how, improvements, inventions, computer
programs, drawings, patents, and experimental and development work techniques,
and (ii) marketing and other information, such as supplier lists, customer
lists, marketing and business plans, business or technical needs of customers,
consultants, licensees or suppliers and their methods of doing business,
arrangements with customers, consultants, licensees or suppliers, manuals and
personnel records or data. Confidential Information also includes any
information described above which the Company obtains from another party and
which the Company treats as proprietary or designates as confidential, whether
or not owned or developed by the Company. Notwithstanding the foregoing, any
information which is or becomes available to the general public otherwise than
by breach of this Section 11 shall not constitute Confidential Information for
purposes of this Agreement.
(b) During the term of' this Agreement and thereafter, Employee agrees, to hold
in confidence all Confidential Information and not to use such information for
f-Employee's own benefit or to reveal, report, publish, disclose or transfer,
directly or indirectly, any Confidential Information to any person or entity, or
to utilize any Confidential Information for any purpose, except in the course of
Employee's work for the Company.
(c) Employee will abide by any and all security rules and regulations, whether
formal or informal, that may from time to time he imposed by the Company for the
protection or Confidential Information, and will inform the Company of any
defects in, or improvements that could he made to, such rules and regulations.
(d) Employee will notify the Company in writing immediately upon receipt of any
subpoena, notice to produce, or other compulsory order or process of' any court
of law or government agency if such document requires or may require disclosure
or other transfer at' Confidential Information.
(e) Upon termination of employment, Employee will deliver to the Company any and
all records arid tangible property that contain Confidential Information that
are in his possession or under his control.
12. Covenant Not to Compete.
(a) In consideration for the Company entering into this Agreement, Employee
covenants and agrees that during the Term and for a one (1) year period
thereafter, Employee will not, without the express prior written consent of' the
Company, directly or indirectly, compete with the business of the Company
anywhere within the United States of America. Employee will undertake no
activities that may lead Employee to compete with or to acquire rival,
conflicting or antagonistic interests to those of the Company with respect to
the business of the Company, whether alone, as a partner, or as an officer,
director, employee, independent contractor, consultant or shareholder holding 1%
or more of the outstanding voting stock of any other corporation, or as a
trustee, fiduciary or other representative of any other person or entity.
(b) During the Term arid for a period of one (1) year after termination of
employment, Employee will not, directly or indirectly, solicit or induce any
other employee of the company or any parent or affiliate to leave his or her
employment, or solicit or induce any consultant or independent contractor to
sever that person's relationship with the Company.
(c) If any court shall determine that the duration or geographical limit of any
covenant contained in this Section 12 is unenforceable, it is the intention of
the parties that Covenant shall not thereby be terminated but shall be deemed
amended to the extent required to render it valid and enforceable, such
amendment to apply only in the jurisdiction of the court that has made such
adjudication.
(d) Employee acknowledges and agrees that the covenants contained in Sections II
and 12 hereof are of the essence in this Agreement, that each of such covenants
is reasonable arid necessary to protect and preserve the interests, properties,
and business of the Company, and that irreparable loss and damage will be
suffered by the Company should Employee breach any of such covenants. Employee
further represents and acknowledges that he shall not he precluded from gainful
engagement in a satisfactory fashion by the enforcement of these pro visions.
13. Availability of Injunctive Relief. Employee acknowledges and agrees that any
breach by him of the provisions of Sections ii or 12 hereof will cause the
Company irreparable injury and damage for which it cannot be adequately
compensated in damages. Employee therefore expressly agrees that the Company
shall be entitled to seek injunctive and/or other equitable relief on a
temporary or permanent basis to prevent any anticipatory or continuing breach of
this Agreement or any part hereof and is secured as an enforcement. Nothing
herein shall be construed as a waiver by the Company of any right it may have or
hereafter acquired to monetary damages by reason of any injury to it, property,
business or reputation or otherwise arising out of any wrongful act or omission
of it.
14. Survival. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment, irrespective of any investigation made
by or on behalf of any party.
15. Modification. This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
16. Notices. Any notice required or permitted hereunder shall be deemed validly
given if delivered by hand, verified overnight delivery, or by first class,
certified mail to the following addresses (or to such other address as the
addressee shall notify in writing to the other party):
If to Employee: Xxxxxx X. Xxxxx
0000 X.X. 000 Xxxxxxx
Xxxxx Xxxxx Xxxxx, XX 00000
(000) 000-0000 (facsimile)
with a copy to: Xxxxxx X. Xxxxx, Esquire
c/o Boies, Xxxxxxxx & Flexner LLP
Bank of America Tower, Suite 2800
000 X.X. Xxxxxx Xxxxxx
Xxxxx, XX 00000
(000) 000-0000 (facsimile)
If to the Company: 0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx. XX 00000
Attention: President
(000) 000-0000 (Facsimile)
17. Waiver. Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a. party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not he considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. All waivers must he iii writing.
18. Binding Effect. The Company's rights and obligations under this Agreement
shall not he transferable by assignment or otherwise, and any attempt to do any
of the foregoing shall be void. The provisions of this Agreement shall be
binding upon the Employee and his heirs and Personal representatives, and shall
be binding upon, and inure to the benefit of the Company, and its successors and
assigns.
19. Headings. The headings in this Agreement are solely for convenience
of reference and shall he given no effect in the construction or interpretation
of this Agreement.
20. Governing Law; Venue. This Agreement is to he performed in the State of
Florida and lie validity, construction and enforcement o1 and the remedies
under, this Agreement shall be governed in accordance with the laws of the Slate
of Florida, without giving effect to any choice of laws principles. In the event
of any litigation arising out of or relating to this Agreement, exclusive venue
shall be in Broward County, Florida.
21. Entire Agreement. This writing constitutes the binding and entire
agreement of the parties superseding and extinguishing all prior agreements
or understandings regarding the subject matter hereof and may not be
modified without the written agreement, which shall remain in full force and
effect.
22. Invalidity. The invalidity or unenforceability of ally term of this
Agreement shall not invalidate, make unenforceable or otherwise affect any
other term of this Agreement, which shall remain in full force and effect.
23. Attorneys' Fees. In the event any dispute or litigation arises hereunder
between any of the parties hereto, the prevailing party shall be entitled to all
reasonable costs and expenses incurred by it in connection therewith (including,
without limitation, all reasonable attorneys', fees and costs incurred before
and at any trial or other proceeding and at all tribunal levels), as well as all
other relief granted in any suit or other proceeding. As used herein, a party
shall be deemed "prevailing" when it recovers (i) as to a damage claim, an
aggregate of more than fifty percent (50%) of the damages which it seeks among
its various asserted claims exclusive of interest, attorney's fees, costs
incurred and exemplary damages and (ii) as to an equity claim, substantial
injunctive or other equitable relief upon its asserted claim. Either of the
parties herein shall he entitled to request the trier of fact in any dispute,
litigation or arbitration between them, In determine which of the parties is
"prevailing."
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first hereinabove written.
EMPLOYER:
By:
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Name:
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Title:
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EMPLOYEE:
Xxxxxx X. Xxxxx
SS#:
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