KEY EXECUTIVE EMPLOYMENT AGREEMENT
THIS KEY EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made this
22nd day of March, 2006 (the "Effective Date"), by and between DIRECT RESPONSE
FINANCIAL SERVICES, INC., a Delaware Corporation (the "Company"), and XXXXXX
XXXXXX (the "Executive").
WHEREAS, the parties are entering into this Agreement to set forth and
confirm their respective rights and obligations with respect to the Executive's
employment by the Company.
NOW THEREFORE, in consideration of the mutual covenant set forth below,
the parties agree as follows:
TERMS & CONDITIONS
1. EMPLOYMENT. Company hereby hires Executive as its Chief Financial Officer.
For the initial 90 day period following the Effective Date, Executive
shall have the title of Interim Chief Financial Officer.
2. DUTIES. POLICIES. Executive agrees to serve as the Chief Financial Officer
as defined in Exhibit "A," attached and incorporated herein by reference,
subject to the terms set forth in this Agreement and the provisions of the
Bylaws of the Company. Executive hereby accepts such employment on the
terms and conditions described herein, and further agrees that the general
employment practices and policies of Company shall govern the employment
relationship. Where the terms of this Agreement and the general policies
and procedures of the Company conflict, this Agreement shall control.
Executive shall obtain the prior written approval of the Company's Board
of Directors (which approval shall not be unreasonably withheld), before
Executive shall be entitled to serve as director on the governing boards
of other for-profit or not-for-profit entities and to retain any
compensation and benefits resulting from such service, so long as such
service does not unduly interfere with his duties and obligations under
this Agreement.
3. STANDARD OF PERFORMANCE. Executive shall at all times faithfully and
industriously and to the best of Executive's ability, experience, and
talents perform all of the duties that may be required of Executive and as
may be assigned to Executive from time to time by the Board of the Company
pursuant to the terms of this Agreement. Executive agrees to perform said
duties during the hours of 8:00am to 5:00pm PST. Any work performed on
weekends or holidays will be at the sole discretion of Executive.
4. TERM. The term of Executive's employment, pursuant to this Agreement, will
commence on the 1st day of March, 2006 (the "Commencement Date") and
continue until the 28th day of February, 2008 (the "End Date"), or upon
termination of this Agreement described in Section 12 below, whichever
shall occur first. This provision is for reference and convenience of the
parties to this Agreement and in no way diminishes the at-will nature of
this Agreement.
5. LOCATION. Executive's primary place of business shall be at the Company's
headquarters in Westlake Village, California.
6. TRAVEL. Executive understands and agrees that it may be necessary for him
from time to time to travel to other locations either in the domestic
United States or internationally. Executive shall be promptly reimbursed
by Company for approved travel expenses pursuant to Section 10, below.
7. RENEWAL. If this Agreement has not been previously terminated pursuant to
Section 12 below, then, without further action by either party, this
Agreement shall be renewed for a period of one year from the End Date, and
in each succeeding year for an additional one year renewal term or, in
each case until termination as described herein. Such term is for
convenience only and does not diminish the at-will nature of this
Agreement.
8. COMPENSATION. In consideration of all services rendered during the term of
this Agreement, Company shall pay Executive the amounts described in
Exhibit "A", which is attached and incorporated fully by reference herein.
Executive will receive no additional compensation for serving the Company
in any other capacity, unless by prior written approval of the Board of
Directors.
a. BENEFITS. Subject to Section 9 and upon satisfaction of applicable
eligibility requirements, Executive shall be entitled to participate
in all fringe benefits which Company may from time to time make
generally available to other Executives of the Company with
comparable responsibilities, subject to the provisions of those
programs, including but not limited to incentives, bonuses,
retirement, profit-sharing, life, medical, disability, and other
plans and programs (collectively "Benefits") as may be offered by
Company from time to time.
b. STOCK ENTITLEMENT. Executive shall be entitled to stock in Company
as described in Exhibit "A." Said entitlement is based upon
Executive's continued employment, subject to the provisions of
Sections 12 and 13 below, during the initial term of this Agreement.
All stock granted to Executive pursuant to this Agreement shall be
"Rule 144" restricted common stock.
c. INCENTIVE BONUS COMPENSATION. Executive shall be entitled to
incentive bonus compensation as described in Exhibit "A" as well as
participate in any future Company incentive bonus compensation plan
as Company may adopt from time to time.
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d. STOCK INCENTIVE PLAN. Executive shall be entitled to incentive stock
as described in Exhibit "A." Said entitlement is based upon
Executive's continued employment with Company. Executive shall also
be entitled to participate in the Company's stock option plan at an
Executive level. All stock options shall be subject to the stock
option plan and stock option agreement approved by the Company board
of directors.
e. VACATION. Executive shall be entitled to vacation time, as defined
in Exhibit "A" attached hereto and incorporated by reference herein,
during each year of the term of the Agreement. Executive shall take
vacations in accordance with the Company's policies as they may
change from time to time. Further, Executive agrees that vacations
shall be taken at a time convenient for the Company as signified by
the approval of the Company officer to whom the Executive has direct
reporting responsibility.
9. DEDUCTIONS. Company shall, after Executive's initial 90 days of
employment, deduct and withhold from all compensation payable to Executive
all amounts required to be deducted or withheld pursuant to any present or
future federal, state, or local law, ordinance, regulation, order, writ,
judgment, or decree requiring such deduction or withholding.
10. EXPENSES. The Company shall promptly reimburse Executive, in accordance
with the Company's policies and procedures in effect from time to time,
for all expenses reasonably incurred by Executive in performance of
Executive's duties under this Agreement. Expenses exceeding $1,000 in any
calendar month must be pre-approved in writing by the Company's Chief
Executive Officer. Executive is responsible for proper substantiation and
reporting of actual and incurred expenses. Executive may consult with a
tax advisor to determine the deductibility or taxability of payments made
under this section.
11. INDEMNIFICATION. The Company shall indemnify, to the full extent and in
the manner permitted under the laws of the State of California and any
other applicable laws, any person made or threatened to be made a party to
an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that Executive is or was a director
or officer of the Company or served any other enterprise as a director of
officer at the request of the Company; such right of indemnification shall
be applicable to the executors, administrators and other similar legal
representatives of the Executive. The provisions of this section shall be
deemed to be a contract between the Company, and any repeal or
modification of this section shall not affect any rights or obligations
then existing with respect to any state of facts then existing or any
action, suit or proceeding brought based in whole or in part upon any such
state of facts. The foregoing rights of indemnification shall not be
deemed exclusive on any other rights to which the Executive or his legal
representative may be entitled apart from the provisions of this section.
The Company's indemnification obligations shall be binding on the Company
and its successors and assigns and shall inure to benefit of and, where
applicable, shall be binding on each party entitled to indemnification
herein.
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12. TERMINATION. This Agreement and Executive's employment by Company may be
terminated by either party prior to the end of the initial term (or any
renewal period) upon thirty (30) days' prior written notice to the other
party, with termination date effective upon the lapse of thirty (30) days
from the receipt of notice of intent to terminate (the "Effective
Termination Date"). Executive's employment may be terminated i) upon any
change of control as described in Subsection (a) below; ii) Executive's
death or disability as described in Subsection (b) below; iii) for any
reason other than for cause or non-performance at any time; or iv) for
cause, as defined in Subsection (c) below.
a. CHANGE OF CONTROL. The term "Change of Control" shall mean any sale,
merger or hostile takeover of Company which has the effect of
causing involuntary or constructive termination of the Executive
within one year after the event described above. Equity grants shall
completely vest upon the completion of Change of Control described
in this section. In the event of constructive termination any "Post
Termination Benefits" will be paid in accordance with Exhibit "A."
b. DISABILITY. The term "disability" means the determination under the
Company's Disability Plan, as issued from time to time, that the
Executive is eligible to receive a disability benefit.
c. CAUSE. The term "cause" in the event of termination of the Executive
employment means: i) the commission of any act of fraud,
embezzlement or dishonesty by the Executive that is materially and
demonstrably injurious to the Company; ii) any act or omission by
Executive which constitutes a default or breach of the terms in this
Agreement, including, but not limited to Sections 14, 15, 16, any
bylaws or other governing material of the Company; iii) any other
intentional misconduct by the Executive that has a material adverse
affect on the business or affairs of the Company or its affiliates;
and iv) any non-performance of employment duties by Executive.
"Intentional misconduct" means any act or omission that is
detrimental to the business or the reputation of the Company as
perceived by the general public and similar industry participants.
"Non-performance" means the determination by a majority of the Board
of Directors, in their sole and absolute discretion, that the
Executive refuses or is not performing the duties or obligations as
defined by this Agreement. The Board shall provide the Executive
with written notice which specifically identifies the manner in
which the Board believes Executive is not performing the duties and
obligations as defined herein.
13. CONSEQUENCES OF TERMINATION. In the event of termination as described in
Section 12, Company shall be obligated to make payments and provide
benefits accrued to the Executive within fifteen (15) business days of the
Effective Termination Date.
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a. TERMINATION BY EMPLOYER.
i. FOR CAUSE. Upon effective termination for cause, Executive is
entitled to accrued salary, vested stock, and benefits. No
severance will be paid and Executive may be liable for any and
all legal fees, costs, judgments, fines, attorneys' fees and
costs, related to the litigation or dispute resolution, fines
or judgments incurred as a result of Executive's conduct as
described in Section 12(c).
ii. WITHOUT CAUSE. Where Company terminates Executive at its sole
discretion, Executive is entitled to accrued salary, vested
stock, and the Post Termination Benefits as the Company has
made available from time to time, specifically as identified
in Exhibit "A" herein.
b. TERMINATION BY EXECUTIVE.
i. VOLUNTARY. Where Executive voluntarily terminates Executive's
employment with Company, for any reason other than retirement,
disability, as defined in Section 12(b), or "cause" as defined
in Section 12(c) above, Executive is entitled to accrued
unpaid salary and any benefits required by law. Any Post
Termination Benefits are not available and not payable to
Executive should Executive terminate employment by reason
hereof.
ii. INVOLUNTARY. Where Executive's employment is terminated due to
retirement, death or disability, then the Executive or the
Executive's representative (including anyone representing
Executive's interests subsequent to the above-mentioned
events) is entitled to any accrued unpaid salary, vested stock
and Post Termination Benefits.
c. POST TERMINATION BENEFITS. Subject to the provisions relating to
Termination in Sections 12 and 13 above and subject to any specified
terms in Exhibit "A," Post Termination Benefits are limited to such
benefits described therein.
14. CONFIDENTIAL AND PROPRIETARY INFORMATION OBLIGATIONS. During the term of
employment under this Agreement, Executive will have access to and become
acquainted with Company's confidential and proprietary information
(collectively, "Proprietary Information"), including but not limited to
information or plans concerning Company's customer relationships; client
lists; personnel; sales, marketing, and financial operations and methods;
trade secrets; formulas; devices; secret inventions; processes; and other
compilations of information, records, and specifications, designated and
treated as confidential and propriety property of Company. Executive
acknowledges that such Proprietary Information constitutes or contains in
whole or part Company Trade Secret and is the sole property of Company.
Executive shall not utilize, employ, distribute, replicate or retain any
Proprietary Information for Executive's own benefit or the benefit of any
third party. Any Proprietary Information removed shall immediately be
returned to Company upon termination of employment.
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15. NONDISCLOSURE. Executive shall not disclose any of Company's Proprietary
Information directly or indirectly, or use it in any way, either during
the term of this Agreement or at any time thereafter, except as reasonably
necessary in the course of his employment for Company or as authorized in
writing by Company. All files, records, documents, computer-recorded or
electronic information, drawings, specifications, equipment, and similar
items relating to Company's business, whether prepared by Executive or
otherwise coming into his possession, shall remain Company's exclusive
property and shall not be removed from Company premises under any
circumstances whatsoever without Company's prior written consent, except
when (and only for the period) necessary to carry out Executive's duties
hereunder.
16. NON-COMPETITION. Executive agrees that, during the term of this Agreement,
Executive shall not knowingly, without Company's prior written consent
(which consent will not be unreasonably withheld), directly or indirectly,
be employed by, be connected with, or otherwise have an interest in,
including, but not limited to an Executive, consultant, officer, director,
partner, stockholder, joint-venturer, with any person or entity owning,
managing, controlling, operating or otherwise participating or assisting
in businesses that directly or indirectly compete with the business of
Company in any location; provided, however, that the foregoing shall not
prevent Executive from being a stockholder of less than one percent (1%)
of the issued and outstanding securities of any class of a corporation
listed on a national securities exchange or designated as national market
system securities on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc. The breach or violation of this
section will be immediate grounds for termination, forfeiture of any and
all post termination benefits and all stock options.
17. INJUNCTIVE RELIEF. The parties agree that damages would be an inadequate
remedy for Company in the event of a breach or threatened breach of
Sections 14, 15 or 16 of this Agreement by Executive, and in the event of
any such breach or threatened breach, Company may, either with or without
pursuing any potential damage remedies, obtain and enforce an injunction
prohibiting Executive from violating this Agreement and requiring
Executive to comply with its terms.
18. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants to
Company that he: (a) is not now under any contractual or quasi-contractual
obligation that is inconsistent or in conflict with this Agreement or that
would prevent, limit or impair Executive's performance of his obligations
under this Agreement; (b) that he has been advised that he may seek the
advice and representation of independent counsel prior to entering into
this Agreement; and (c) fully understands its terms and provisions.
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19. DISPUTE RESOLUTION AND BINDING ARBITRATION. Executive and Company agree
that, if a dispute arises concerning or relating to Executive's employment
with Company, the dispute shall be submitted to binding arbitration under
the rules of the American Arbitration Association (AAA) then in effect.
The arbitration shall take place in Los Angeles, California, and both
Executive and Company agree to submit to the jurisdiction of the
arbitrator selected in accordance with AAA rules and procedures. Except as
set forth in Section 17, Executive and Company agree that this arbitration
procedure will be the exclusive means of redress for any disputes relating
to or arising from Executive's employment with Company, including disputes
over rights provided by federal, state or local statutes, regulations,
ordinances, and common law, including all laws that prohibit
discrimination based on any protected classification. The parties
expressly waive the right to a jury trial, and agree that the arbitrator's
award shall be final and binding on both parties, and non-appealable. The
arbitrator shall have discretion to award monetary and other damages, or
to award no damages, and to fashion any other relief the arbitrator deems
appropriate. The arbitrator shall have discretion to award the prevailing
party reasonable costs and attorney fees incurred in bringing or defending
an action under this Section.
20. ATTORNEYS' FEES. If any legal proceeding is necessary to enforce or
interpret the terms of this Agreement, or to recover damages for breach of
this Agreement, the prevailing party shall be entitled to reasonable
attorney fees, as well as costs and disbursements, in addition to any
other relief to which the prevailing party may be entitled.
21. NOTICES. Any notices provided hereunder must be in writing and shall be
deemed effective on the earlier of personal delivery (including personal
delivery by facsimile) or the third day after mailing first class mail to
the recipient at the address indicated below:
Direct Response Financial Services, Inc. XXXXXX XXXXXX
x/x Xxxxxxx X. Xxxx, Xxx. 0000 Xxxxx Avenue
00000 X. Xxxxxx Xxxx, Xxx. 000 Xxx Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx, XX 00000
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
22. SEVERABILITY. If any term, provision, or part of this Agreement is found
by a court to be invalid, illegal, or incapable of being enforced by any
rule of law or public policy, all other terms, provisions, and parts of
this Agreement shall nevertheless remain in full force and effect as long
as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. On such
determination that any term, provision, or part of this Agreement is
invalid, illegal or incapable of being enforced, this Agreement shall be
deemed to be modified so as to effect the parties' original intent as
closely as possible to the end that the transactions contemplated by this
Agreement and the terms and provisions of this Agreement are fulfilled to
the greatest extent possible.
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23. ENTIRE AGREEMENT. This document constitutes the final, complete, and
exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter of the Agreement and supersedes and
preempts any prior or contemporaneous understandings, agreements, or
representations by or between the parties, written or oral. Without
limiting the generality of the foregoing, except as provided in this
Agreement, all understandings and agreements, written or oral, relating to
Executive's employment by Company, or the payment of any compensation or
the provision of any benefit in connection therewith or otherwise, are
hereby terminated and shall be of no future force and effect.
24. COUNTERPARTS. This Agreement may be executed on separate copies, any one
of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same agreement.
25. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and Company, and their
respective successors and assigns, except that Executive may not assign
any of his rights or duties under this Agreement without Company's prior
written consent.
26. AMENDMENTS. No amendments or other modifications to this Agreement may be
made except by a writing signed by both parties. Except for Executive's
estate or legal representative and affiliates of Company, nothing in this
Agreement, express or implied, is intended to confer on any third person
any rights or remedies under or because of this Agreement.
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27. CHOICE OF LAW. Executive and Company agree that this Agreement shall be
interpreted in accordance with and governed by the laws of the State of
California.
IN WITNESS WHEREOF, the parties now execute this Agreement, to be
effective on the date first stated in this Agreement.
ACKNOWLEDGED AND ACCEPTED:
XXXXXX XXXXXX
By: /s/ Xxxxxx Xxxxxx
-------------------------
ACCEPTED AND AGREED:
DIRECT RESPONSE FINANCIAL SERVICES, INC.
By: /s/ T. Xxxxxxxx Xxxxxxxx
------------------------
T. Xxxxxxxx Xxxxxxxx
Chief Executive Officer
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EXHIBIT A
1. JOB DESCRIPTION - Executive shall serve in an executive capacity and shall
perform such duties as are consistent with his position as Chief Financial
Officer and as may be reasonably required by Company's Board of Directors (the
"Board"). Such duties shall include, without limitation, the duties and
responsibilities typically carried out by a Chief Financial Officer of a
corporation, specifically including: Management of Company financial operations
including coordination with Company accountants, investor development and market
development re stock investment by institutional investors, leading and
coordinating Company's efforts to develop and implement strategic and operating
plans for Company; executing day-to-day financial management of Company;
supporting the development and growth of Company, .
2. COMPENSATION - $5,000.00 per month for first twelve (12) months following the
Effective Date. During the twelfth month following the Effective Date, Company
and Executive agree to meet to renegotiate in good faith compensation for the
remainder of the Term. Further, during the Term of employment, Executive shall
be granted 500,000 Rule 144 shares of Company common stock, vesting monthly over
twenty-four (24) months. Stock shall be issued to Executive on a quarterly basis
following each quarter of vesting.
3. BONUS COMPENSATION - Executive shall have the opportunity to receive bonus
compensation dependent upon Company performance as follows:
For each calendar month that the Company's Direct2Own division books
gross sales in the amount of $500,000, Executive shall receive bonus
compensation totaling One Thousand Dollars ($1,000) for that month.
For each calendar month that the Company's Direct2Own division books
gross sales in the amount of $750,000, Executive shall receive an additional
Five Hundred Dollars ($500.00) for that month.
For each calendar month that the Company's Direct2Own division books
gross sales in the amount of $1,000,000, Executive shall receive an additional
Five Hundred Dollars ($500.00) for that month.
For example, should Company's Direct2Own division book gross sales in
the amount of $1,000,000 for calendar month August, 2006, Executive shall
receive bonus compensation for that month in the amount of Two Thousand Dollars
($2,000).
4. INCENTIVE STOCK GRANTS- Should the price of the Company's stock reach Ten
Cents ($0.10) per share, Executive shall be granted 250,000 shares of Company
stock. Should the price of the Company's stock reach Twenty Cents ($0.20) per
share, Executive shall be granted an additional 250,000 shares of Company stock.
Such stock shall be in the form of either S-8 free trading shares or stock
options, at Executive's election.
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5. VACATION - No vacation shall be granted to Executive during the first twelve
(12) months of the Agreement. During the twelfth month following the Effective
Date, Company and Executive agree to meet to renegotiate in good faith vacation
days for the remainder of the Term.
6. POST TERMINATION BENEFITS - Executive will receive no post-termination
benefits during the first twelve (12) months of the Agreement. During the
twelfth month following the Effective Date, Company and Executive agree to meet
to renegotiate in good faith post-termination benefits for the remainder of the
Term.
ACKNOWLEDGED: Executive: /s/ Xxxxxx Xxxxxx Company: T. Xxxxxxxx Xxxxxxxx
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