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EMPLOYMENT AGREEMENT
Employment Agreement made as of September 24,2001 by and between
VoiceFlash Network, Inc., a Florida corporation (the "Company"), and Xxxxxx
Xxxxxxx ("Employee").
WITNESSETH:
WHEREAS, Employee wishes to be employed by the Company with the duties
and 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, and
Employee hereby agrees to serve the Company, upon the terms
and 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 date hereof and shall
automatically be extended for an additional two year period on the third year
anniversary date of this Agreement unless the Company, by a majority vote of its
Board of Directors (the "Board"), has provided Employee with notice of
non-renewal one hundred and eighty (180) days prior to such third year
anniversary date (the "Term").
3. Duties. Employee shall, subject to overall direction consistent with the
legal authority of the Board of the Company (the "Board"), serve as, and have
all power and authority inherent in the offices of Chief Executive Officer and
President and shall be responsible for those areas in the conduct of the
business reasonably assigned to him by the Board of Directors. 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 be 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 base salary of (i)
$125,000 per annum for the first year of this Agreement; (ii) $150,000 per annum
for the second year of this Agreement; and (iii) $175,000 for the third year of
this Agreement ("Base Salary"). The Base Salary and Employee's other
compensation will be reviewed by the Board at least annually and may be
increased (but not decreased) from time to time as the Board may determine. The
Base Salary for any renewal term shall be based on the mutual agreement of the
parties, but in any event shall reflect an increase of not less than 10%.
(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 be established, including, without limitation, all life,
group insurance and medical care plans and~ all disability, retirement and other
employee benefit plans of the Company. Should the employee not want to
participate in the Company's health plan, with Board approval, the Company will
reimburse the employee for the expense incurred in participating in another
plan. 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 be entitled to four (4) weeks paid vacation
per annum. In addition, the Company shall provide Employee with an automobile
for his use during the term of this Agreement. The Company shall pay all
expenses incurred by Employee in the operation of said automobile. 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
Board of Directors.
(d) Discretionary Bonuses. Employee shall be entitled to receive annual and/or
interim cash bonuses and/or other bonuses when and in such amounts as may be
determined by the Board in its sole and reasonable discretion based upon
Employee's performance, the Company's performance and/or other factors;
provided, that, the Board shall meet at least annually to review Employee's
bonus entitlements; and provided further, that Employee shall receive a
guaranteed annual bonus sufficient to enable Employee to satisfy his Federal
income and Medicare tax obligations on (i) the forgiveness of any promissory
notes which may now or hereafter be executed by Employee in favor of the
Company, and (ii) this guaranteed bonus. By way of example, if notes totaling
$1,000,000 are forgiven, the Company will pay a guaranteed bonus to Employee of
$682,086. Such amount will be withheld by Company to satisfy (x) the tax
obligations ($276,586) on the guaranteed bonus and (y) the tax obligations
($405,500) on the forgiveness, assuming an overall income and Medicare tax of
40.55%.
(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 sell to Employee 1,000,000 of its shares of common stock upon
such terms and conditions set forth therein.
(f) Restricted Stock Grant. The Company and Employee shall enter into the
Restricted Stock Purchase Agreement attached hereto as Exhibit B pursuant to
which the Company shall issue and sell to Employee 450,000 of its shares of
common stock containing certain restrictions and upon such terms and conditions
set forth therein. Unless otherwise provided herein, such shares of common stock
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.
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) Twenty percent (20%) 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 twenty percent (20%) 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 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 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, warrants,
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 Paragraph 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' fees and costs
that Employee may incur in 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; and
(7) The non-competition and non-solicitation periods described in Section 12 of
this Agreement shall be reduced from one (1) year to three (3) months (other
than by virtue of the expiration of the Term of this Agreement).
(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, warrants, 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 be 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 (b), (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 be 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) if Employee's
employment is terminated pursuant to subparagraph (c) 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 be 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 deliver
such documents as may be 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
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 be imposed by the Company for the
protection of Confidential Information, and will inform the Company of any
defects in, or improvements that could be 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 of Confidential Information.
(e) Upon termination of employment, Employee will deliver to the Company any and
all records and 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. Employed 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 and 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 11
and 12 hereof are of the essence in this Agreement, that each of such covenants
is reasonable and 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 be precluded from gainful
engagement in a satisfactory fashion by the enforcement of these provisions.
13. Availability of Injunctive Relief. Employee acknowledges and agrees that any
breach by him of the provisions of Sections 11 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 its 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 Xxxxxxx
c/o VoiceFlash Networks, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000 (facsimile)
with a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxx
000 X. Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000 (facsimile)
If to the Company: 0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 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 be 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 be in writing.
18. Binding Effect. The Company's rights and obligations under this Agreement
shall not be 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, its successors and
assigns.
19. Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
20. Governing Law Venue. this Agreement is to be performed in the State of
Florida, and the validity, construction and enforcement of; and the remedies
under, this Agreement shall be governed in accordance with the laws of the State
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 Palm Beach 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 by the
parties.
22. Invalidity. The invalidity or unenforceability of any 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 be entitled to request the trier of fact in any dispute,
litigation or arbitration between them, to 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 Xxxxxxx
SS#
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