EMPLOYMENT AGREEMENT
Exhibit
No. 10.14
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of October 1, 2006 by
and between Shearson Financial Network, Inc., a Nevada corporation (the
“Company”) and Xxxxxxx Xxxxxxx (“Executive”).
WITNESSETH:
WHEREAS,
the Company and Executive desire to enter into this Agreement to assure the
Company of the continuing and exclusive service of Executive and to set forth
the terms and conditions of Executive’s employment with the
Company.
NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties agree as follows:
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1.
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Term: The
Company agrees to employ Executive and Executive hereby accepts
such
employment, in accordance with the terms of this Agreement, commencing
as
of the date hereof and ending on the third anniversary of the date
hereof
unless this Agreement is earlier terminated as provided
herein. Notwithstanding any other provision of this Agreement,
the Company shall have an obligation to make any payments to Executive
for
Base Salary and Bonuses, as defined below and as required by this
Agreement.
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2.
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Services
and Exclusivity of Services: So long as this Agreement shall
continue in effect, Executive shall devote Executive’s full business time,
energy and ability to the matters related thereto in order to perform
duties as assigned by the Board of directors of the Company (the
“Board”),
Executive shall use Executive’s best efforts and abilities to promote the
Company’s interests and shall perform the services contemplated by this
Agreement in accordance with policies established by and under
the
direction of the Board. Executive agrees to serve without
additional remuneration in such executive capacities for one or
more
direct or indirect Affiliates of the Company as the Board may from
time to
time request, subject to appropriate authorization by the Affiliate
or
Affiliates involved and any limitations under applicable
law. Executive agrees to faithfully and diligently promote the
business, affairs and interests of the Company and its
Affiliates.
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Without
the prior express written authorization of the Board, Executive shall not,
directly or indirectly, during the term of this Agreement engage in any activity
competitive with or adverse to the Company’s business, whether alone, as a
partner, officer, director, employee or significant investor of or in any
other
entity. (An investment of greater than 5% of the outstanding capital
or equity securities of an entity shall be deemed significant for these
purposes.)
Executive
represents to the Company that Executive has no other outstanding commitments
inconsistent with any of the terms of this Agreement or the services to be
rendered hereunder.
3
Duties and Responsibilities: In addition to his/her
duties as an employee as discussed herein, Executive shall serve as Chief
Financial Officer of the Company for the duration of this
Agreement. Executive’s duties as an Executive shall be overall
responsibility and authority, subject to authorities and limitations as
established by the “Board”, to implement and continue to develop the business
strategies of the Company. In the performance of Executive’s duties,
Executive shall report directly to and shall be subject to the direction
of the
Chief Executive Officer and/or the Board.
Executive
agrees to observe and comply with the rules and regulations of the Company
as
adopted by the Board respecting the performance of Executive’s duties and agrees
to carry out and perform orders, directions and policies of the Company and
its
Board as they may be, from time to time, stated either orally or in
writing. The Company agrees that the duties which may be assigned to
Executive shall be usual and customary duties of the position(s) to which
Executive may from time to time be appointed or elected and shall not be
inconsistent with the provisions of the charter documents of the Company
or
applicable law. Executive shall have such corporate power and
authority as shall reasonably be required to enable Executive to perform
the
duties required in any office that may be held, subject to the limitations
on
such powers imposed by the Chief Executive Officer or the Board.
4
Compensation:
Base
Compensation:
During
the term of this Agreement, the Company agrees to pay Executive a base salary
at
the rate of $196,800.00 per year from the date hereof to October 1
2009, subject to increases at the discretion of the
Compensation Committee of the Board, payable in accordance with the Company
practices in effect from time to time.
Bonuses:
Executive
shall be eligible for General Bonuses (as defined below) and Performance
Bonuses
(as defined below) as follows (collectively, “Bonuses”):
General
Bonuses: Executive shall be eligible for bonuses in accordance
with any bonus or other incentive compensation plans adopted by the Board
(“General Bonuses”).
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(i)
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Performance
Bonuses: With respect to each fiscal year in which the
actual revenues and net income of Shearson Financial Network Inc.
after
taxes (as determined by the Company’s public accountants) equal or exceed
the actual projected revenue and net income amounts set forth in
the
budget projections approved by the Board for such fiscal year,
the Company
shall pay the Executive a bonus (the “Performance Bonus”). The
Performance Bonus shall be in an amount equal to (a) 50% of the
Base
Salary on the last day of such fiscal year plus (b) the product
of the
Base Salary on the last day of such fiscal year, multiplied by
the
percentage by which the Company’s actual net income for such fiscal year
exceeded it projected net income for such fiscal year, if
any.
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(ii)
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Deferral
of Performance Bonuses: Notwithstanding anything else contained herein
to the contrary, Executive may elect in writing on forms provided
by the
Company to receive the entire Performance Bonus in the form of
restricted
stock if Executive makes such election prior to December 31 of
the fiscal
year to which the Performance Bonus
relates.
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(iii)
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Restricted
Stock: All shares of restricted stock awarded pursuant to
this Agreement will be granted subject to the terms and restrictions
on
the actual certificate as issued at time of signing this Agreement.
Executive shall be eligible under the plan as approved by the Board
of
Directors to receive Ten Million (10) shares. Such shares shall
vest over
a 3 year period and only upon satisfaction of Executives performance,
the
shares shall be exercisable in part for each month of employment
completed
or in whole after 3 years from initial date of July 1, 2006. Said
shares
shall be subject to adjustments such as stock splits and other
modifications such that the number of shares stated above shall
adjust
according to such forward or reverse splits in the Company’s
stock.
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Additional
Benefits: The Company agrees to provide the following “Additional
Benefits” to Executive:
Medical
plan coverage for Executive, his spouse and dependents, if any, at the expense
of the Company, with such coverage (or comparable coverage) to continue
following termination of employment (other than for “Cause” or without “Good
Reason” as each term is defined in this Agreement) until Executive and spouse
are eligible for Medicare; and
All
rights and benefits for which Executive is otherwise eligible under any pension
plan, profit-sharing plan, dental, disability, or insurance plan or policy
or
other plan or benefit that the Company or its Affiliates may provide for
Executive or (provided Executive is eligible to participate therein) for
employees of the Company generally, as from time to time in effect, during
the
term of this Agreement.
Stock
Options: Executive shall be eligible for stock option grants
under the Company’s stock option plans as administered by the Board or the
Compensation Committee of the Board. Affirmatively, Executive shall have
the
right to purchase Ten Million (10,000,000) shares of the $.01 par
value common stock at a purchase price of Five Cents ($.0.05) or the price
of
the initial Registration Statement to be filed with the Securities and Exchange
Commission Form SB-2. The purchase price shall be determined based on the
lower
of the two prices. The Company at its option and sole discretion shall establish
the exercise period in accordance with the Company stock option
plan.
Perquisites:
Executive shall be entitled to four weeks paid vacation and other perquisites
in
accordance with the plans, policies, programs and practices which are at
least
as favorable as those in effect with respect to other peer employees of the
Company.
5.
Termination: This Agreement and all obligations hereunder (except
the obligations contained in Sections 4, 7, 8, 9 and 10 (Additional Benefits,
Confidential Information, Non-Competition, No Solicitation of Customers and
Noninterference with Executives) which shall survive any termination hereunder)
shall terminate upon the earliest to occur of any of the following:
Expiration
of Term: The expiration of the term provided for in Section 1 or
the voluntary termination by Executive or retirement from the Company in
accordance with the normal retirement policies of the Company.
Death
or Disability of Executive: The death or disability of
Executive. For the purposes of this Agreement, disability shall mean
the absence of Executive performing Executive’s duties with the Company on a
full-time basis for a period of six months period, as a result of incapacity
due
to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to Executive or Executive’s legal representative (such agreement as
to acceptability not to be withheld unreasonably). If Executive shall
become disabled, Executive’s employment may be terminated by written notice from
the Company to Executive.
For
Cause or Without Good Reason: The Company may terminate
Executive’s employment and all of Executive’s rights to receive Base Salary and
Bonuses hereunder for Cause or upon the resignation of Executive without
Good
Reason. For purposes of this Agreement, the term “Cause” shall be
limited to the willful commission of a felony or other act of moral turpitude
which directly and demonstrably causes material, tangible harm to the Company,
and “Good Reason” shall be defined as (i) demotion of Executive from the
position of Chairman and President without the consent of Executive; (ii)
any
attempt to decrease Executive’s Base Salary or Bonuses; (iii) any breach of this
Agreement by the Company; or (iv) any requirement that Executive relocate
to an
office more than 30 miles further from Executive’s current home address than the
Company’s current office.
Notwithstanding
the foregoing, Executive shall not be terminated for Cause pursuant to this
Section 5(c) unless and until Executive has received notice of a proposed
termination for Cause and Executive has had an opportunity to be heard before
at
least a majority of the members of the Board. Executive shall be
deemed to have had such an opportunity if given written or telephonic notice
at
least 72 hours in advance of a meeting. The initial determination
that Cause or Good Reason exists shall be made by the Board. Any
dispute regarding such determination shall be resolved in accordance with
Section 20 of this Agreement.
Without
Cause or With Good Reason: Notwithstanding any other provision of
this Section 5, the Board shall have the right to terminate Executive’s
employment with the Company without Cause, and Executive shall have the right
to
resign with Good Reason, at any time. If the Company terminates
Executive without Cause or Executive terminates for Good Reason, then the
Company shall, within 10 days of such termination, make an immediate lump
sum
payment in the amount of (i) two times the applicable Base Salary, net of
applicable taxes, plus (ii) the present value of the Base Salary and Bonuses
(based on the assumption that the Company would achieve all performance targets
for a 100% bonus), and the Company shall provide the Additional Benefits
provided for under Section 4(c) for the remainder of the term, including
the
full vesting of Stock Options and any gross up of lump sum distributions
due to
tax effect. The present value of the aggregate unpaid Base Salary and
Bonuses shall be determined under the then applicable federal rates under
the
Internal Revenue Code. Further, if Executive is terminated without
Cause or resigns with Good Reason, all stock options held by Executive shall
become fully vested.
6.
Business Expenses: During the term of this Agreement,
the Company shall reimburse Executive promptly for business expenditures
made
and substantiated in accordance with policies, practices and procedures
established from time to time by the Company generally with respect to other
employees and incurred in the pursuit and furtherance of the Company’s business
and good will.
7.
Confidential Information: Executive acknowledges that the nature of
Executive’s engagement by the Company is such that Executive shall have access
to information of a confidential and/or trade secret nature which has great
value to the Company and which constitutes a substantial basis and foundation
upon which the business of the Company is based. Such information
includes financial, manufacturing and marketing data, techniques, processes,
formulas, developmental or experimental work, work in process, methods, trade
secrets (including, without limitation, customer lists and lists of customer
sources), or any other secret or confidential information relating to the
products, services, customers, sales or business affairs of the Company or
its
Affiliates (the “Confidential Information”). Executive shall keep all
such Confidential Information in confidence during the term of this Agreement
and at any time thereafter and shall not disclose any of such Confidential
Information to any other person, except to the extend such disclosure is
(i)
required by applicable law, (ii) lawfully obtainable from other sources,
or
(iii) authorized in writing by the Company. Upon termination of
Executive’s employment with the Company, Executive shall deliver to the Company
all documents, records, notebooks, work papers, and all similar material
containing any of the foregoing information, whether prepared by Executive,
the
Company or anyone else.
8.
Non-Competition: In order to protect the
Confidential Information, Executive agrees that during the term of Executive’s
employment, and for a period of one year thereafter if Executive employment
is
terminated by the Company with Cause or by Executive without Good Reason,
Executive shall not, directly or indirectly, whether as an owner, partner,
shareholder, agent, employee, creditor or otherwise, promote, participate
or
engage in any activity or other business competitive with the Company’s business
or the business of any present Affiliate of the Company in Orange or Los
Angeles
Counties if such activity or other business involves any use by Executive
of any
of the Confidential Information. The Company shall notify Executive
of any perceived violation of this Section 9, and Executive shall have 30
days
to cure such violation.
9.
Non-Solicitation of Customers: Executive agrees that for a period
of one year after the termination of employment with the Company, Executive
will
not, on behalf of any other individual, association or entity, call on any
of
the customers of the Company or any Affiliate of the Company for the purpose
of
soliciting or inducing any of such customers to acquire (or providing to
any of
such customers) any product or service provided by the Company or any Affiliate
of the Company, nor will Executive in any way, directly or indirectly, as
agent
or otherwise, in any other manner solicit, influence or encourage such customers
to take away or to divert or direct their business to Executive or any other
person or entity by or with which Executive is employed, associated, affiliated
or otherwise related if such business is competitive with the
Company.
10.
Noninterference with Executives: In order to protect the
Confidential Information, Executive agrees that during the term hereof and
for a
period of one year thereafter, Executive will not, directly or indirectly,
induce or entice any employee of the Company or its Affiliates to leave such
employment or cause anyone else to leave such employment.
11.
Indemnity: To the fullest extend permitted by applicable
law and the bylaws of the Company, as from time to time in effect, the Company
shall indemnify Executive and hold Executive harmless for any acts or decisions
made in good faith while performing services for the Company, and the Company
shall use its best efforts to obtain coverage for Executive (provided the
same
may be obtained at reasonable cost) under any liability insurance policy
or
policies now in force or hereafter obtained during the term of this Agreement
that cover other officers of the Company having comparable or lesser status
and
responsibility. The Company will pay and, subject to any legal
limitations, advance all expenses, including reasonable attorneys’ fees and
costs of court approved settlements, actually and necessarily incurred by
Executive in connection with the defense of any action, suit or proceeding
and
in connection with any appeal thereon, which has been brought against Executive
by reason of Executive’s service as an officer or agent of the Company or of any
Affiliate of the Company.
12.
Severability: If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided,
if
possible, to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Agreement shall
be deemed valid and enforceable to the extent possible.
13
Succession: This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns and any such
successor or assignee shall be deemed substituted for the Company under the
terms of this Agreement for all purposes. As used herein, “successor”
and “assignee” shall include any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly
or
indirectly acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise. The obligations and
duties of Executive hereunder are personal and otherwise not
assignable. Executive’s obligations and representations under this
Agreement will survive the termination of Executive’s employment, regardless of
the manner of such termination.
14.
Notices: Any notice or other communication provided for in this
Agreement shall be in writing and sent if to the Company to its office
at:
0000
X.
Xxxxxxxx Xxxx, Xxxxx # 0
Xxx
Xxxxx, Xxxxxx 00000
(000)
000-0000
or
at
such other address as the Company may from time to time in writing designate,
and if to Executive at such address as Executive may from time to time in
writing designate. Each such notice or other communication shall be effective
(i) if given by telecommunication, when transmitted to the applicable number
so
specified in (or pursuant to) this Section 16 and a verification of receipt
is
received, (ii) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (iii) if given by any other means, when actually delivered at such
address.
15.
Entire Agreement: This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
any prior agreements, undertakings, commitments and practices relating to
Executive'’ employment by the Company.
16.
Amendments: No amendment or modification of the terms of
this Agreement shall be valid unless made in writing and duly executed by
both
parties.
17.
Waiver: No failure on the part of any party to exercise
or delay in exercising any right hereunder shall be deemed a waiver thereof
or
of any other right, nor shall any single or partial exercise preclude any
further or other exercise of such right or any other right.
18.
Governing Law: This Agreement, and the legal relations
between the parties, shall be governed by and construed in accordance with
the
laws of the State of Nevada without regard to conflicts of law doctrines,
and
any court action arising out of this Agreement shall be brought in any court
of
competent jurisdiction within the State of Nevada.
19.
Arbitration: Executive may, if he desires, submit any
claim for payment under this Agreement or any dispute regarding the
interpretation of this Agreement to arbitration. This right to select
arbitration shall be solely that of Executive, and Executive may decide whether
or not to arbitrate in his discretion. The “right to select
arbitration” does not impose on Executive a requirement to submit a dispute for
arbitration. Executive may, in lieu of arbitration, bring an action
in appropriate civil court. Executive retains the right to select
arbitration, even if a civil action (including, without limitation, an action
for declamatory relief) if brought by the Company prior to the commencement
of
arbitration. If arbitration is selected by Executive after a civil
action concerning Executive’s dispute has been brought by a person other than
Executive, the Company and Executive shall take such actions as are necessary
or
appropriate, including dismissal of the civil action, so that the arbitration
can be timely heard. Once arbitration is commenced, it may not be
discontinued without the unanimous consent of all parties to the
arbitration.
Any
Claim
for arbitration may be submitted as follows: If Executive disagrees
with an interpretation of this Agreement by the Company, or disagrees with
the
calculation of his benefits under this Agreement, such claim may be filed
in
writing with an arbitrator of Executive’s choice who is selected by the method
described in the next four sentences. The first step of the selection
shall consist of Executive submitting in writing a list of five potential
arbitrators to the Company. Each of the five arbitrators must be
either (1) a member of the National Academy of Arbitrators located in the
state
of Executive’s principal residence or (2) a retired California Superior Court or
Appellate Court judge. Within one week after receipt of the list, the
Company shall select one of the five arbitrators as the arbitrator of the
dispute in question. If the Company fails to select an arbitrator in
a timely manner, Executive then shall designate one of the five arbitrators
as
the arbitrator of the dispute in question.
The
arbitration hearing shall be held within seven days (or as soon thereafter
as
possible) after the selection of the arbitrator. No continuance of
said hearing shall be allowed without the mutual consent of Executive and
the
Company. Absence from or non-participation at the hearing by any
party shall not prevent the issuance of an award. Hearing procedures
that will expedite the hearing may be ordered at the arbitrator’s discretion,
and the arbitrator may close the hearing in his sole discretion when he decides
he has heard sufficient evidence to justify issuance of an award.
The
arbitrator’s award shall be rendered as expeditiously as possible and in no
event later than one week after the close of the hearing. In the
event the arbitrator finds that Executive is entitled to the benefits he
claimed, the arbitrator shall order the Company to pay such benefits, in
the
amounts and at such time as the arbitrator determines. The award of
the arbitrator shall be final and binding on the parties. The Company
shall thereupon pay Executive immediately the amount that the arbitrator
orders
to be paid in the manner described in the award. The award may be
enforced in any appropriate court as soon as possible after its
rendition. If any action is brought to confirm the award, no appeal
shall be taken by any party from any decision rendered in such
action.
If
the
arbitrator determines either that Executive is entitled to the claimed benefits
or that the claim by Executive was made in good faith, the arbitrator shall
direct the Company to pay to Executive, and the Company agrees to pay to
Executive in accordance with such order, an amount equal to Executive’s expenses
in pursuing the claim, including attorneys’ fees.
20.
Withholding: All compensation payable hereunder,
including salary and other benefits, shall be subject to applicable taxes,
withholding and other required, normal or elected employee
deductions.
21.
Counterparts: This Agreement and any amendment hereto
may be executed in one or more counterparts. All of such counterparts
shall constitute one and the same agreement and shall become effective when
a
copy signed by each party has been delivered to the other party.
22.
Headings: Section and other headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way
the meaning or interpretation of this Agreement.
23.
Representation By Counsel; Interpretation: The Company
and Executive each acknowledges that each party to this Agreement has been
represented by counsel in connection with this Agreement and the matters
contemplated by this Agreement. Accordingly, any rule of law,
including but not limited to Section 1654 of the California civil Code, or
any
legal decision that would require interpretation of any claimed ambiguities
in
this Agreement against the party that drafted it has no application and is
expressly waived. The provision of this Agreement shall be
interpreted in a reasonable manner to effect the intent of the
parties.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
first
above written.
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THE
COMPANY
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Shearson
Financial Network, Inc.
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/s/ Xxxxxxx
X. Xxxxxx
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By: Xxxxxxx
X. Xxxxxx
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Its: CEO
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EXECUTIVE
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Xxxxxxx
Xxxxxxx
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/s/ Xxxxxxx
Xxxxxxx
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Xxxxxxx
Xxxxxxx
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November
20, 2006
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