EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
March 11, 1999 by and between iChargeit, Inc., a Texas corporation (the
"Company"), and Xxxxx Xxxxx, an individual (the "Employee").
1. EMPLOYMENT. The Company hereby agrees to employ the Employee as the
Chief Executive Officer of the Company, and the Employee accepts such
employment, and agrees to perform faithfully and diligently all duties and
responsibilities required of such position or assigned by the Company from time
to time.
2. TERM. This Agreement and Employee's employment shall be for a term
of two years commencing on March 11, 1999 (the "Effective Date"), and expiring
on March 11, 2001, but may be terminated earlier at any time in accordance with
Section 4 of this Agreement. This Agreement shall be renewed automatically for
successive one year periods thereafter unless either party gives written notice
to the other party of non-renewal at least 60 days in advance of any successive
anniversary of the Effective Date.
3. COMPENSATION. In consideration for all services to be performed
under this Agreement, Employee shall receive the following compensation:
3.1 SALARY. Employee shall be paid base salary at the rate of
Seventy Thousand Dollars ($70,000) per year (the "Base Salary"). Employee's Base
Salary shall be reviewed annually and may be increased based upon and evaluation
by the Board of Directors of the Company (the "Board of Directors") of
Employee's performance and the Company's financial condition.
3.2 SALARY IN ARREARS. The Company shall pay Employee Thirty
Five Thousand Dollars ($35,000) as compensation for work performed prior to the
commencement of his employment with the Company.
3.3 BONUS. In addition to the Base Salary, Employee shall be
eligible for bonus compensation at each anniversary of the Effective Date. The
amount of any such bonus and the determination of whether any bonus is paid
shall be in the complete discretion of the Board of Directors.
3.4 VACATION. Employee shall accrue vacation at the rate of
13.32 hours per month of active employment so that at the end of each year of
employment he will have earned four weeks vacation.
3.5 EMPLOYEE BENEFIT PLAN. Employee shall be entitled to
participate in group medical and dental, and such other benefit plans as
Employer may offer from time to time for employees at comparable levels of
responsibility.
3.6 STOCK OPTION PROGRAM. Employee shall be granted options
under the Company's 1999 Stock Incentive Plan (the "Plan") to purchase nine
hundred thousand (900,000) shares of common stock of the Company, as set forth
in the Incentive Stock Option Agreement
attached hereto as EXHIBIT A, which options shall vest in equal quarterly
increments over a two year period.
3.7 GRANT OF COMMON STOCK. Employee shall be granted three
hundred fifteen thousand (315,000) shares of common stock of the Company as of
March 11, 1999. In connection with such grant, Employee shall execute a Stock
Issuance Agreement in substantially the form of EXHIBIT B attached hereto, which
shall contain, without limitation, legend requirements for the stock certificate
representing such shares, and provisions restricting transfer of the granted
shares and subjecting such shares to forfeiture to the Company upon termination
of employment, all as set forth in such agreement.
3.8 EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee for all reasonable and properly documented business expenses incurred
in connection with Employee's performance of his duties under this Agreement.
4. TERMINATION. This Agreement and Employee's employment are subject to
immediate termination at any time as follows:
4.1 DEATH OR DISABILITY. This Agreement shall terminate
immediately upon Employee's death or total disability, in which event the
Company's only obligation shall be to pay all compensation owing for services
rendered by Employee prior to the date of his death. For purposes of this
Agreement, the term "total disability" means an inability of Employee, due to a
physical or mental illness, injury or impairment, to perform a substantial
portion of his duties for a period of one hundred eighty (180) or more
consecutive days, as determined by a competent physician selected by the Board
of Directors and reasonably agreed to by the Employee, following such one
hundred eighty (180) day period.
4.2 TERMINATION BY THE COMPANY FOR CAUSE. Any of the following
acts or omissions shall constitute grounds for the Company to terminate the
Employee's employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Employee causing material harm to
the Company but only if Employee shall not have discontinued such misconduct
within 30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this Agreement.
(b) Any material act or omission by the Employee involving
gross negligence in the performance of the Employee's duties to, or material
deviation from any of the policies or directives of, the Company, other than a
deviation taken in good faith by the Employee for the benefit of the Company;
(c) Any illegal act by the Employee which materially and
adversely affects the business of the Company or any felony committed by
Employee, as evidenced by conviction thereof, provided that the Company may
suspend the Employee with pay while any allegation of such illegal or felonious
act is investigated.
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Termination by the Company for cause shall be accomplished by
written notice to the Employee and shall be preceded by a written notice
providing a reasonable opportunity for the Employee to correct his conduct.
4.3 TERMINATION FOR GOOD REASON. Employee's employment
pursuant to this Agreement may be terminated by the Employee for "good reason"
if the Employee voluntarily terminates his employment as a result of any of the
following:
(a) Without the Employee's prior written consent, a
reduction in his then current Base Salary;
(b) Without Employee's prior written consent, a
relocation of the Employee's place of employment outside of Orange County,
California;
(c) Resignation as a result of unlawful
discrimination, as evidenced by a final court order;
(d) A reduction in duties and responsibilities which
results in the Employee no longer having duties customary for the Chief
Executive Officer; or
(e) The Company materially breaches any provision of
this Agreement.
4.4 TERMINATION WITHOUT CAUSE. The Company may terminate this
Agreement, and the employment of the Employee under this Agreement, without
cause at any time upon at least thirty (30) days prior written notice to the
Employee.
4.5 PAYMENTS UPON REMOVAL OR TERMINATION. If during the term
of this Agreement, the Employee resigns for one of the reasons stated in Section
4.3, or the Company terminates the Employee's service, except as provided in
Sections 4.1 or 4.2 hereof, the Employee shall be entitled to the following
compensation: (i) the portion of his then current Base Salary which has accrued
through his date of termination, (ii) any payments for unused vacation and
reimbursement expenses, which are due, accrued or payable at the date of
Employee's termination, (iii) severance payment in an amount (the "Severance
Amount") equal to Employee's then-current Base Salary, payable for the remainder
of the Term; and (iv) all of Employee's options to purchase shares of the
Company's common stock and restricted stock shall accelerate and automatically
vest by one additional year, and such options shall otherwise be exercisable in
accordance with their terms.
All payments required to be made by the Company to
the Employee pursuant to this Section 4.5 shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies, including,
without limitation, the Severance Amount which shall be paid at such times and
in such amounts consistent with the Company's normal payroll procedures and
policies over the number of months immediately succeeding the date of
termination that is equal to the number of months of Base Salary payable as the
Severance Amount. If the Company terminates the Employee's employment pursuant
to Sections 4.1 or 4.2, or if the Employee voluntarily resigns (except as
provided in Section 4.3), then the Employee shall be entitled to only the
compensation set forth in items (i) and (ii) or the first paragraph of this
Section 4.5.
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4.6 RETURN OF COMPANY PROPERTY. Upon termination of employment
for any reason, Employee immediately shall return to the Company without
condition all files, records, keys, and other property of the Company.
5. CONFIDENTIALITY. Employee acknowledges and agrees that Employee will
be entrusted with trade secrets and proprietary information regarding products,
processes, technical data, formulas, know-how, methods, designs, work in
progress, business plans, videos, electronic mail, inventions, vendor lists and
information, contacts and information, prices, costs, personnel and payroll
information and records, mailing lists, financial and accounting records,
contracts, leases, research and development, computer software and data bases,
copyrights, trademarks, patents, marketing techniques, and future business
plans, as well as customer lists and information concerning the identity, needs,
and desires of actual and potential customers of the Company and its
subsidiaries, joint ventures, partners, and other affiliated persons and
entities ("Confidential Information"), all of which derive significant economic
value from not being generally known to others outside the Company.
5.1 NON-DISCLOSURE. During the entire term of Employee's
employment with the Company, and at all times thereafter, Employee shall not
disclose or exploit any Confidential Information except as necessary in the
performance of Employee's duties under this Agreement or with the Company's
express written consent.
5.2 SOLICITATION. During the term of this Agreement and for
one year thereafter, Employee shall not (i) induce or solicit any employee,
agent, consultant, or independent contractor of the Company to quit his/her
employment or other business relationship with the Company or to work for any
person or entity other than the Company; or (ii) call on, solicit, or take away,
or attempt to call on, solicit or take away, any past or present customer of the
Company with respect to the same or similar business services now or in the
future provided by the Company.
5.3 VIOLATION OF CONFIDENTIALITY. Employee acknowledges and
agrees that any violation of this Section 5 would cause immediate irreparable
damage to the Company, and that it would be extremely difficult or impossible to
determine the amount of damage caused to the Company. Employee therefore
consents to the issuance of a temporary restraining order, preliminary and
permanent injunction, and other appropriate relief to restrain any actual or
threatened violation of this Section, without limiting any other remedies the
Company may have.
5.4 OTHER AGREEMENTS. Employee represents that he is not
subject to any confidentiality, non-competition, or other agreement with any
other party that would conflict with this Agreement or prevent Employee from
performing all of his assigned duties as an employee of the Company.
6. CONFLICT OF INTERESTS. During the term of this Agreement, Employee
shall devote Employee's full working time, ability, and attention to the
business of the Company, and shall not accept other employment or engage in any
other outside business activity which interferes with the performance of
Employee's duties and responsibilities under this Agreement or which involves
actual or potential competition with the business of the Company, except with
the express written consent of the Board of Directors.
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7. ARBITRATION. Any dispute whatsoever relating to or arising out of
this Agreement or its construction, validity or enforcement shall be submitted
to final and binding arbitration in Orange County, California, by and pursuant
to the Employment Dispute Resolution Rules of the American Arbitration
Association. The arbitrator shall be entitled to award any relief which might be
available at law or in equity, including that of a provisional, permanent or
injunctive nature.
8. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Employee, assign its rights and
obligations under this Agreement to an Affiliate or to any corporation, firm or
other business entity (i) with or into which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets.
7. SUCCESSORS. This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Employee's devisee, legatee, or other
designee or, if there be no such designee, to the Employee's estate.
9. NOTICES. All notices required by this Agreement
may be delivered by first class mail at the following addresses:
To the Company: iChargeit, Inc.
000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
To Employee: Xxxxx Xxxxx
0000 Xxxxxxxx Xxxxxx, #000
Xxxxxxxxxx Xxxxx, XX 00000
10. AMENDMENT. This Agreement may be modified only by written agreement
signed by the party against whom any amendment is to be enforced.
11. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of California.
12. PARTIAL INVALIDITY. In the event any provision of this Agreement is
void or unenforceable, the remaining provisions shall continue in full force and
effect.
13. COMPLETE AGREEMENT. This Agreement, including the Incentive Stock
Option Agreement and Stock Issuance Agreement attached as EXHIBIT A and EXHIBIT
B, respectively, contains the entire agreement between the parties, and
supersedes any and all prior and contemporaneous oral and written agreements,
including Employee's previous employment contracts, which shall have no further
force and effect.
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14. WITHHOLDING TAXES. The Company may withhold from any salary and
benefits payable under this Agreement all federal, state, city or other taxes or
amounts as shall be required to be withheld pursuant to any law or governmental
regulation or ruling.
15. NO WAIVER. No term or condition of this Agreement shall be deemed
to have been waived nor shall there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
16. SEVERABILITY. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
17. COUNTERPART EXECUTION. This Agreement may be executed by facsimile
and in counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute but one and the same instrument.
18. ATTORNEYS FEES. Should any legal action or arbitration be required
to resolve any dispute over the meaning or enforceability of this Agreement or
to enforce the terms of this Agreement, the prevailing party shall be entitled
to recover its or his reasonable attorneys fees and costs incurred in such
action, in addition to any other relief to which that party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
"COMPANY"
iCHARGEIT, INC.,
a Texas corporation
By: /s/ Xxxxx Xxxxx
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Its: President
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"EMPLOYEE"
/s/ Xxxxx Xxxxx
---------------------------------
Xxxxx Xxxxx
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
EXHIBIT B
STOCK ISSUANCE AGREEMENT
