EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT, effective June 1, 2006, is between The Language Access
Network, Inc., a Nevada Corporation ("Employer" or the "Company"), and Xxxxxxx
X. Xxxxxxxxxx, ("Employee").
WITNESSETH:
WHEREAS,
Employer and Employee want to enter into an agreement providing for the
continued employment of Employee as Chief Executive Officer and Chief Operations
Officer;
NOW,
THEREFORE,
in
consideration of the promises and the covenants contained herein, Employer
and
Employee agree as follows:
I.
Employment of Employee and Term.
| a) |
Subject
to the terms and conditions hereof, Employer hereby employs Employee
as
Chief Executive Officer and Chief Operations Officer, to perform
the
services set forth in Section 1(b) below commencing with the date
hereof and ending upon the termination of this Agreement as set
forth
below. Employee hereby accepts such employment and agrees to serve
Employer as Chief Executive Officer and Chief Operations Officer
for such
period.
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| b) |
Employee
will perform the general duties of managing the Company, including
serving
as Chief Executive Officer and Chief Operations Officer and such
similar
positions with any subsidiary of the Company as shall, from time
to time,
be assigned by the Board.
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| c) |
Subject
to the provisions for termination as hereinafter provided, the temp
of
this Employment Agreement shall be deemed to begin on the date this
Employment
Agreement is executed, and shall continue for a term of three
(3) years from such date, and the employment term under this Agreement
extends automatically for an additional year on each anniversary
of the
Agreement,
threshold levels for bonus and options to be adjusted
annually.
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2.
Compensation
(a)
Employer shat pay to Employee as compensation for the services to be performed
ten thousand four hundred and seventeen dollars ($10,411.00) per month, payable
in one monthly installment on the first
(b)
Salary Increases will be provided to employee according to the following
schedule: For each increase in Gross Revenue of two million five hundred
thousand dollars ($2,500,000.00) Employee's salary will increase five thousand
dollars ($5000.00) payable at the next monthly installment at the rate of
one-twelfth of the total new rate. The rate increase described above will be
capped at a total salary of two hundred and twenty-five thousand dollars
($225,000.00) during the
first
three-year term of this Agreement. Additional increases to salary will be
determined between the Employer and Board within six months of achieving the
top
salary available under this compensation item. Period for measuring gross
revenue increases of ($2,500,000.00) will begin January I,
2007.
(c)
Annual
Bonus Payment. For the period that Employee is employed by Employer hereunder,
Employer shall pay or cause to be paid to Employee as incentive compensation
a
potential cash bonus payable within seventy-five (75) clays after each
year
ending December 31. Such potential cash bonus shall be determined in accordance
with the following description and shall not exceed a total amount of One
Hundred Eighty Seven Thousand Five
Hundred
Dollars ($187,500.00) per year. Notwithstanding anything contained herein,
no
such Bonus shall be earned or payable unless and until Employee has been
employed for the entire year in which the Bonus is to he calculated and
the
requirements below have been met Bonus calculation start: date January
1,
2007.
If
Employer's consolidated earnings before interest expense, taxes, depreciation
and amortization ("EBITDA"), based on independent audit results, equals or
exceeds the targeted EBITDA amount for the year, as stipulated below, then
a
bonus of 5% of the EBITDA amount shall be paid. If
less
than the ER11DA threshold but a minimum of 80% of the EBITDA amount is earned,
then the 3% potential bonus shall be multiplied by the actual percentage of
the
targeted EBITDA achieved. Also, the potential bonus amounts for Employee shall
not be considered when calculating the Company's annual BRITDA.
The
targeted EBITDA amount for purposes of this Agreement shall be: Year ending
December 31, 2007 $__________
| d) |
Benefits.
During the Term, the Employee (i)
shall
be entitled to participate in all employee benefit plans which
any senior
officer of the Company is
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entitled
to participate in (subject to, and on a basis consistent with, the
teams,
conditions and overall administration of such plans, programs and
arrangements) and shall not be entitled to a lesser want of rights
which
any other officer of the Company receives under any such employee
benefit
plans; (ii) shall receive and participate in all profit sharing,
incentive
compensation, 401K plans and pension benefits and retirement and
supplemental benefits (collectively, "Pension Benefits") which are
available to any other senior officer of the Company;
and (iii) shall receive health
insurance programs, medical and dental benefits, life insurance,
accidental death and dismemberment benefits plus such other benefits
which
are available to the senior officers of the Company (collectively,
"Welfare Benefits") which are generally available to other senior
officers
of the Company.
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(e) Stock
Options. Employee will be eligible for stock options to be granted under the
Incentive Stock Option Plan of the Company. Employee will be granted a minimum
of fifteen thousand stock options for each year
of
employment separate and exclusive of
any
stock option grants based upon performance as noted in
the
Incentive Stock Option Plan of the Company.
(f) Insurance:
During the Term and thereafter while the Employee could have any liability,
the
Employee shall be named as an insured party in
any
liability insurance policy (including any director and officer liability policy)
which shall be maintained by the Company for its directors and/or senior
officers.
(g) Indemnification;
Employer shall indemnity the Employee to the fullest extent permitted by the
laws of the State of Nevada in effect on the date hereof or as such laws may
from time to time be amended.
3. Confidentiality.
Employee
acknowledges that all information possessed by him relating to those activities
of the Company that are of a secret or confidential nature is the property
of
Employer, and Employee shall not, during the period he is
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employed
by Employer and for one year thereafter, use any such information for the
benefit of any one other than Employer and for one year thereafter, use any
such
information for the benefit of any one other than Employer, or any corporation
directly or indirectly controlled by it, or disclose any such information to
others except in the course of the business of Employer, or any corporation
directly or indirectly controlled by it. Such restricted confidential
information includes, but is not limited to, all of Employer's: (a) client
and
client prospect lists and information; (b) service or product pricing policies;
(c) hotline operationg structures, designs and client routing; (d) service or
product agreements; (e) manuals or other information relating to the business
operation or operating
systems
designs; (f) website designs, plans or
systems; (g) software or database designs; and (h) any written materials
describing any of the above or that are marked confidential. Upon termination
of
employment for any reason, Employee will immediately return any and all material
containing confidential information to Employer.
4. Non-compete
and Hiring Restrictions.
| (a) |
Upon
termination of this Agreement for any reason, Employee shall not
for a
period of one year compete with Employer within any area of Employer's
business operation by directly
or indirectly
managing, consulting with, being an owner or any forth of partner
with any
entity that provides
phone or internet services the same as or similar to those
services
provided by Employer. Employee will also not solicit the business
of, or
contact for the purposes of soliciting the business or investment
of;
any of Employer's Employees, vendors, investors, customers or clients.
Employer's customers or diems shall include potential customers or
clients, in development or already solicited by Employer through
the date
of Employee's termination.
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| (b) |
Upon
termination of this Agreement and
for a period of one year thereafter, without regal to the reason
for
termination, Employee shall
not directly or indirectly, individually, or as a Employee, consultant
or
partner ofany entity, solicit the employment, contractual services,
or
employ or contract in any manor, with any individual, client or vendor
who
has been employed or
has contracted in anyway by or with Employer
at
any time during the term of this
Agreement
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It
is
understood and agreed that a violation of any provision of this Section 4 or
of
any provision of Section 3 above will cause Employer serious and irreparable
harm that would entitle Employer to obtain injunctive relief against Employee
to
prevent any such violation, stop its reoccurrence or minimize its harmful
effects. Employee hereby specifically agrees, that should Employee violate
any
of the provisions contained in this Section 4 or Section 3 above, Employer,
in
addition to any other remedies available at law or equity, shall be entitled
to
seek and obtain injunctive relief from a court of law preventing any such
violation.
5. Assignment
of Inventions. Any
and
all inventions and improvements Employee may conceive or make, during the
continuation of this Agreement, relating, or in any way,
pertaining
to or connected with any
of the
matters that
have
been, are may become the subject of Employer's business
investigations, or in which Employer has been, is, or may become
interested for its business operations, shall be the sole and exclusive property
of Employer. Employee
will,
whenever requested by Employer, execute any and all applications, assignments
and other instruments that
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Employer
shall deem necessary
in
order to apply for and obtain letters of patent for U.S. or foreign countries
and assign and convey to Employer the sole and exclusive right, title and
interest for the inventions or improvements created by Employee. All expenses
in
connection with such documentation shall be borne by Employer. The Employee's
obligations to execute the papers referred to in this paragraph shall continue
beyond the termination of
this
Agreement with respect to any and
all
inventions or improvements conceived or made by him during the term of this
Agreement, and the obligations shall be binding on his assigns, executors,
administrators or other legal representatives.
All
inventions and discoveries relating to the business of Employer and all
knowledge and information that Employee may acquire during his engagement shall
be held by Employee, in trust, for the benefit of Employer.
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6.
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Reimbursement
of Expenses.
During the period that Employee is employed hereunder, Employer shall
reimburse Employee for all travel and
other out-of-pocket expenses reasonably incurred by Employee in
the
performance of his duties hereunder. In order to be entitled to
reimbursement, Employee will provide a written record and receipts
of
all
expenses for reimbursement. Any expense to be reimbursed hereunder
that is
greater than $1,500.00 must have been approved in writing in advance
by
the President, CEO, CEO or Employee's immediate
supervisor.
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7.
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Obligation
to Perform Duties.
The obligations of Employer hereunder, including
its obligation as to the payment of Employee's compensation provided
for
herein, shall be contingent upon the non-negligent performance by
Employee
of his obligations hereunder, including, but not limited to, Employee's
obligations of confidentiality.
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8. Termination
of Agreement
This
Agreement:
(a) shall
be
terminated immediately upon the death, bankruptcy or incapacity
of
Employee.
(b) may
be
terminated immediately by Employer for cause which shall
include
any of the following reasons:
(1) if
Employee
shall engage in any material misconduct or neglect of
duties
or otherwise act, or fail to act, in away that materially and adversely
affects the
business or affairs of
Employer;
or
5
(2) if
Employee
shall: (i) be charged or convicted of a felony, or (i)
in
Employer's good faith assessment, appear to have committed an act of dishonesty,
fraud or embezzlement against Employer.
(c) may
be
terminated immediately by Employer at any time if
Employee
shall become ill
or be
injured or otherwise incapacitated and such illness, injury, or incapacity
shall
be of such nature as to prevent him from
performing
the duties to be performed by him hereunder and shall continue for a period
of
six months.
| (d) |
may
be terminated immediately by Employer without cause and without written
notice, subject to the payments being made to Employee on the effective
termination date as described in Section 9
below.
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(e) May
be
terminated by Employee upon four weeks advance written notice.
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9.
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Payments
After Termination.
In
the event Employee's employment hereunder terminates pursuant to
Section
8(a), 8(c), 8(d) or 8(e), Employee (or his heirs, executors, or
administrators in the event of termination by reason of death of
Employee)
shall be entitled to receive:
(a) the
prorated compensation
payable to Employee under Section 2, plus
(b) any
un-reimbursed expenses. In the event Employee's employment hereunder
terminates pursuant to Section 8(b), Employee shall he entitled to
receive
only any tut-reimbursed expenses not already paid to Employee. In
the
event Employee's employment hereunder is terminated pursuant to Section
8(d) only, Employer shall pay Employee within thirty (30) days of
termination an additional payment of one hundred thousand dollars
($100,000.00) or the average of the total compensation to Employee
for the
last six months prior to termination, which ever is larger, ("Severance
Payment"). In the event that Employee violates the restrictions set
forth
in Sections 3, 4, or 5, however, Employee, in addition to any other
damages available at law, shall be required to reimburse Employer
for this
Severance Payment, or, in the event not
yet paid, shall no longer be entitled to this Severance
Payment.
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10. Change
of Control.
"Change
of Control" means
(a)
any
"person" (as
such
term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act
of
1934, as amended (the "Exchange Act")), other than a trustee or other fiduciary
holding securities of the Company under an employee benefit plan of the Company,
becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or
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(b)
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more
of(A) the outstanding shares of common stock of the Company or (B)
the
combined voting power of the Company's then-outstanding
securities;
the
Company is party to a merger or consolidation, or series of related
transactions, which results in the voting securities of the Company
outstanding immediately prior thereto failing to continue to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving or another entity) at least fifty (50%)
percent of the combined voting power of the voting securities of
the
Company or such surviving or other entity outstanding immediately
after
such merger or consolidation;
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| (c) |
the
sale or disposition of all of substantially all of the Company's
assets
(or consummation of any transaction; or series of related transactions,
having similar effect;
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| (d) |
there
occurs a change in the composition of the Board of Directors of the
Company within a two-year period, as a result of which fewer than
a
majority of the directors are Incumbent
Directors;
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| (e) | the dissolution or liquidation of the Company; or |
| (f) | any transaction or series of related transactions that has the substantial effect of any one or more of the foregoing. |
| (g) | If the Executive's employment with the Company shall be terminated for any reason other than as specified in Section 8.(b),(I) or (2), the Executive shall be entitle to the following: |
(i)
the
Employer shall pay the Executive all Accrued Compensation and a Pro Rata
Bonus:
(ii)
the
Employer shall pay the Executive as severance pay and in lieu of
any
further compensation for periods subsequent to the Termination
Date, in
a single payment an amount of cash equal to two and a half(2 1/2) times the
sum
of (A) the base amount and (B) the Bonus Amount.
(iii)
for
twenty-four (24) months following the Termination Date ( the "Continuation
Period"), the Employer shall at its expense continue on behalf of the Executive
and his dependents and beneficiaries the medical, dental, life, disability
and
hospitalization benefits provided (A) to the Executive at any time thereafter
(and if different benefits were paid during such period, such of those benefits
as are elected by the Executive) or (BO to other similarly situated executives
who continue in the employ of the Company during the Continuation Period. The
coverage and benefits (including deductibles and costs) provided in this Section
10 (g) (m) during the Continuation Period shall
be
no less favorable of such coverages and benefits during any of
the
periods referred to in clause 1 (c) above. The Employer's obligation hereunder
with respect to the foregoing benefits shall be
7
compromised
to the extent that the Executive obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the Employer may reduce
the
coverage of any benefits it is required to provide the Executive hereunder
as
long as the aggregate coverages and benefits of the combined benefits plans
is
no less favorable to the Executive than the coverage and benefits required
to be
provided hereunder. This subsection (iii) shall not be interpreted so as to
limit any benefits to which the Executive, his dependents or beneficiaries
may
be otherwise entitled under any of the Company's employee benefit plans,
programs, or practices following the Executive's termination of employment,
including without limitation, retiree medical and lift
insurance benefits;
(iv) all
theretofore unvested share options, restricted options, restricted share and
other awards issued to the Executive pursuant to the Company's Share Option
and
Share Award Plan, and all unvested benefits under any split dollar life
insurance policies insuring the Executive's life, shall immediately become
100%
vested; and
(v)
a payment from the Employer equal to the unvested amount contained in the
Executive’s accounts in the Company’s 401(k) plan (or any other qualified plan
of the Company or an affiliate) which he or she will forfeit as a result of
his
termination.
| 11. |
Severability. If
any one or more of the
covenants provide in this Agreement should be determined by a court
or
competent jurisdiction to be contrary to law, such covenant or agreement
shall be deemed and construed
to be severable from the remaining covenants and agreement
herein contained and shall in no way affect
the validity of the remaining provisions of this
Agreement.
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| 12. |
Notices.
Any notice or communication provided for herein and contemplated
hereby
shall be sufficiently given if
given in writing and delivered by certified mail, return receipt
requested, and addressed to Employer
at:_____________________________________________
and to Employee at: 00000
Xxxxxxx
Xxxxx Xxxxxx, XX
00000, or,
in either
ease, to a new address specified by notice given to the other party as
provided in this Section II.
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| 13. |
Binding
Agreement.This
Agreement shall be governed by and construed in accordance with the
laws
of the State of Nevada, without giving effect to its conflicts of
laws
provisions. Any action brought pursuant to this agreement shall be
filed
in a court of proper jurisdiction in the County of Xxxxx, State of
Nevada.
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By:
/s/
Xxxxxx X. Xxxxx
Printed
Name: Xxxxxx
X. Xxxxx Date:
6/1/06
Title:
President
Employee:
/s/
Xxxxxxx X. Xxxxxxxxxx Date:
6/1/06
Printed
Name: Xxxxxxx
X. Xxxxxxxxxx
