EMPLOYMENT AGREEMENT
This Employment Agreement dated as of June 1, 2000 (hereinafter
referred to as "Agreement") is entered into by and among ▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
Inc. (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ( "Executive").
WHEREAS, the Company employs Executive in the capacity of Vice
President and General Counsel; and
WHEREAS, the Company and Executive desire to set forth in this
Agreement all of the terms and conditions of said employment, and to establish a
mechanism to resolve disputes relating to said employment;
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained in this Agreement, the Company and Executive agree as follows:
1. TERM OF EMPLOYMENT. This Agreement is effective June 1, 2000 (the
"Effective Date"), and will continue, unless sooner terminated, until May 31,
2003 (the "Initial Term"). Thereafter, the term of this Agreement shall
automatically be extended for successive one (1) year periods ("Renewal Terms")
unless either the Company or Executive gives written notice to the other at
least ninety (90) days prior to the end of the Initial Term or Renewal Term, as
the case may be, of its or his intention not to renew the term of this
Agreement. The Initial Term and any Renewal Terms of this Agreement shall be
collectively referred to as the "Term."
2. DUTIES AND RESPONSIBILITIES. The Company hereby employs Executive
as Vice President and General Counsel with such powers and duties in that
capacity as may be established from time to time by the Company in its
discretion. Executive is required to devote a majority, but not his entire time,
attention and energies to the Company's business, and may provide legal and
other services to any company, business organization or individual whose primary
business is not the same or similar business as that conducted by the Company or
otherwise competes with the Company, provided that any such client is
pre-approved by the Company's Chief Executive Officer and shall not interfere
with his duties hereunder. Executive has provided details of his involvement and
ownership with Camelot Partners, Baby's Best Laboratories Inc. and Mobilitylink
Inc. and has the Company's permission to maintain his involvement in those
companies.
3. COMPENSATION.
(a) BASE SALARY. The Company will pay Executive an annualized base
salary of $150,000 for the first year of the Initial Term, less applicable
deductions, payable in installments according to the Company's normal payroll
practices ("Base Salary"). The Base Salary shall be reviewed at least annually
by the Company's Board of Directors, which may in its discretion increase the
Base Salary. Participation in deferred compensation, discretionary bonus,
retirement, stock option and other employee benefit plans and in fringe benefits
shall not reduce the Base Salary payable to Executive under this Section 3(a).
(b) BONUSES: The Executive shall be paid a signing bonus of $25,000
upon execution of this Agreement. During the term of this Agreement, the
Executive shall receive an annual bonus from the Company determined by the Chief
Executive Officer, in his good faith discretion.
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(c) VACATION. Executive shall be entitled to four (4) weeks of paid
vacation during each year of the Term, the time and duration thereof to be
determined by mutual agreement between Executive and the Company.
(d) STOCK OPTIONS. On the date of this Agreement, Merchant shall grant
to Executive stock options to purchase an aggregate of 1,000,000 shares of
common stock at an exercise price of $4.75 per share. The first 200,000 options
shall vest immediately. The remaining 800,000 shall vest in equal installments
on May 15, 2001 and 2002. The options will only vest assuming that Executive
remains employed by Company on the dates that the options are to be deemed
vested. Executive will have five (5) years to exercise all vested options.
(e) AUTOMOBILE. The Company shall reimburse Executive with car
expenses to include monthly lease and insurance payments not to exceed $750 per
month for the term of his employment.
(f) EXPENSES. The Company will furnish Executive with and pay for a
cell phone and laptop computer of his choice. The Company shall pay or reimburse
the Executive for all other reasonable expenses which are actually incurred or
paid by him in the performance of his service hereunder.
(g) INSURANCE. In addition, the Company will provide Executive with
$1,000,000 of term insurance for which Executive will appoint the beneficiary.
(h) PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
BENEFITS. Executive shall be entitled to participate in all plans of the Company
relating to stock options, stock purchases, pension, thrift, profit sharing,
life insurance, hospitalization and medical coverage, disability, travel or
accident insurance, education or other retirement or employee benefits that
Merchant has adopted or may adopt for the benefit of its senior executives. In
addition, Executive shall be entitled to participate in any other fringe
benefits, such as club dues, legal and tax planning expenses (up to $5,000 per
year) and fees of professional organization and associations, which are now or
may become applicable to the Company's senior executives, and any other benefits
which are commensurate with the duties and responsibilities to be performed by
Executive under this Agreement. Executive shall, during the term of his
employment hereunder, continue to be provided with benefits at a level which
shall in no event be less in any material respect than the benefits available to
the Executive immediately prior to the date of this Agreement. Notwithstanding
the foregoing, the Company may terminate or reduce benefits under any benefit
plans and programs to the extent such reductions apply uniform to all senior
executives entitled to participate therein, and Executive's benefits shall be
reduced or terminated accordingly.
4. INABILITY TO PERFORM JOB DUTIES. In the event of Executive's
death, this Agreement and the Executive's salary and compensation shall
automatically end. If in the reasonable judgment of the Board of Directors,
based on independent medical advice, Executive becomes unable to perform his
employment duties during the term of this Agreement as a result of mental or
physical incapacity, illness or disability, his compensation under this
Agreement shall automatically end until such time as Executive becomes able to
resume his job duties for the Company. In the event that Executive becomes
unable to perform his employment duties for a cumulative period of greater than
twelve (12) weeks within any span of twelve (12) months, this Agreement and
Executive's employment will be automatically terminated. In either event,
Executive will be immediately entitled to all accrued and unpaid payments and
benefits under Section 3 and the Company shall continue to provide the
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Executive with those medical, life and disability insurance benefits, if any,
which are provided to the Executive on the last day of his employment by the
Company for a period of one year following the last day of employment with the
Company.
5. TERMINATION BY COMPANY FOR CAUSE. The Company may terminate this
Agreement, and Executive's employment "for cause" at any time. As used herein,
"for cause" shall mean any one of the following:
o The conviction of or a plea of guilty or nolo contendere by
Executive to a felony;
o Willful fraud or deceit of material fact by Executive in connection
with the performance of his duties hereunder;
o Commission of a serious and willful violation of any of the
Company's personnel policies, including but not limited to
violations of the Company's policies against any form of harassment,
which violation cannot be cured, or is not cured within fifteen (15)
days following (a) receipt by Executive of a written notice
specifying the factors or events constituting such failure or
refusal and (b) a reasonable opportunity to cure such violation; or
o Failure of or refusal on the part of Executive to substantially
perform all of his duties hereunder as reasonably requested by the
Company, which failure or refusal shall not be cured within fifteen
(15) days following (a) receipt by Executive of a written notice
specifying the factors or events constituting such failure or
refusal, and (b) a reasonable opportunity for Executive to correct
such deficiencies.
In the event the Company terminates Executive's employment for Cause,
Executive shall not be entitled to severance, but will immediately be entitled
to all accrued and unpaid payments and benefits under Section 3.
6. TERMINATION OF AGREEMENT BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE
FOR GOOD REASON. The Company may terminate this Agreement and Executive's
employment without Cause at any time upon thirty (30) days prior written notice
to Executive. The Executive may terminate this Agreement and Executive's
employment with Good Reason at any time upon thirty (30) days prior written
notice to the Company. "Good Reason" shall mean any of the following if the same
shall occur without Executive's express prior written consent: (i) the failure
by the Company to obtain the assumption by operation of law or otherwise of this
Agreement by any entity which is the surviving entity in any merger or other
form of reorganization involving the Company or by any entity which acquires all
or substantially all of the Company's assets, (ii) a material change by the
Company in Executive's functions, duties and responsibilities such that he no
longer effectively acts as Chief Operating Officer of the Company or (iii) any
other material breach of this Agreement by the Company, which breach shall not
be cured within fifteen (15) days after written notice thereof to the Company.
If the Company terminates Executive's Employment without Cause or Executive
terminates his employment with the Company for Good Reason, the Company will pay
to Executive a severance payment of an amount equal to 2.99 times his
then-current Base Salary. In addition, all unvested stock options owned by the
Executive shall become fully vested and exercisable at the date Executive's
employment terminates, and Executive shall have the right to exercise all
vested, unexercised stock options outstanding at the termination date (including
the accelerated options) in accordance with the
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terms of the plans and agreements pursuant to which such options were issued.
Executive shall also immediately be entitled to all accrued and unpaid payments
and benefits under Section 3.
7. TERMINATION OF AGREEMENT BY EXECUTIVE. Executive may terminate
this Agreement and his employment with the Company without Good Reason upon
thirty (30) days prior written notice to the Company. Executive may be required
to perform his job duties and will be paid his regular salary up to the date of
the termination. At the option of the Company, the Company may require Executive
to terminate employment upon receiving said thirty (30) days' notice from
Executive of the termination of this Agreement. In such event, the Company will
pay to Executive an amount equal to thirty (30) calendar days of his base
salary. Executive will not be entitled to receive any other compensation or
severance allowance under this Agreement.
8. CHANGE OF CONTROL. (a) For the purposes of this Agreement, a
"Change of Control" shall be deemed to have taken place if: (i) any person,
including a "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (but excluding Executive and members of his family),
becomes the owner or beneficial owner of Company securities, after the date of
this Agreement, having 50% or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the election of
directors of the Company (other than as a result of an issuance of securities
initiated by the Company, or open market purchases approved by the Board, as
long as the majority of the Board approving the purchases is the majority at the
time the purchases are made), or (ii) the persons who were directors of the
Company before such transactions shall cease to constitute a majority of the
Board, or any successor to the Company, as the direct or indirect result of or
in connection with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions.
(b) During the remaining term hereof after the Change of Control
Date, the Company (or subsidiary) will (i) continue to pay Executive at not less
than the Base Salary on the Change of Control Date, (ii) pay Executive bonuses
in amounts not less in amount than those paid during the 12 month period
preceding the Change of Control Date, and (iii) continue employee benefit
programs as to Executive at levels in effect on the Change of Control Date (but
subject to such reductions as may be required to maintain such plans in
compliance with applicable federal law regulating employee benefit programs).
(c) If during the remaining term hereof after the Change of
Control Date (i) Executive's employment is terminated by the Company (or
subsidiary), or (ii) there shall have occurred a material reduction in
Executive's compensation or employment related benefits, or a material change in
Executive's status, working conditions, management responsibilities or titles,
and Executive voluntarily terminates his relationship with the Company within 60
days of any such occurrence, or the last in a series of occurrences, then
Executive shall be entitled to receive, a lump sum payment equal to the
remainder of Executive's Base Salary, but no less than 18 months of salary. Such
amount will be paid to Executive within 15 business days after his termination
of affiliation with the Company.
9. COOPERATION. Upon the termination of this Agreement for any
reason, Executive agrees to cooperate with the Company in effecting a smooth
transition of the management of the Company with respect to the duties and
responsibilities which Executive performed for the Company. Further, after
termination of this Agreement, Executive will furnish such information and
proper assistance to the Company as it may reasonably require in connection with
any prior business arrangements in which Executive was involved, and any
litigation to which the Company is or may become party.
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10. AGREEMENT NOT TO USE OR DISCLOSE TRADE SECRETS. During the term of
this Agreement and a period of five (5) years thereafter, Executive promises and
agrees that he/she will not disclose or utilize any trade secrets acquired
during the course of service with the Company and/or its related business
entities. As used herein, "trade secret" refers to the whole or any portion or
phase of any formula, pattern, device, combination of devices, or compilation of
information which is for use, or is used, in the operation of the Company's
business and which provides the Company an advantage, or an opportunity to
obtain an advantage, over those who do not know or use it. "Trade secret" also
includes any scientific, technical, or commercial information, including any
design, list of suppliers, list of customers, as well as pricing information or
methodology, contractual arrangements with vendors or suppliers, business
development plans or activities, or Company financial information. This Section
10 is effective regardless of the reason for the termination of the Agreement
and regardless of whether the Agreement is terminated by the Executive, the
Company or by its own terms. This restrictive covenant may be assigned to and
enforced by any of the Company's assignees or successors.
11. AGREEMENT NOT TO USE OR DISCLOSE CONFIDENTIAL OR PROPRIETARY
INFORMATION. During the term of this Agreement and a period of two (2) years
thereafter, Executive promises and agrees that he/she will not disclose or
utilize any confidential or proprietary information acquired during the course
of service with the Company and/or its related business entities, Executive
shall not divulge, communicate, use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any confidential
or proprietary information pertaining to the business of the Company. Any
confidential or proprietary information or data now or hereafter acquired by
Executive with respect to the business of the Company (which shall include, but
not be limited to, information concerning the Company's financial condition,
prospects, technology, customers, suppliers, methods of doing business and
promotion of the Company's products and services) shall be deemed a valuable,
special and unique asset of the Company that is received by Executive in
confidence and as a fiduciary. For purposes of this Agreement "confidential and
proprietary information" means information disclosed to Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by Executive) prior to or after
the date hereof and not generally known or in the public domain, about the
Company or its business. This Section 10 is effective regardless of the reason
for the termination of the Agreement and regardless of whether the Agreement is
terminated by the Executive, the Company or by its own terms. This restrictive
covenant may be assigned to and enforced by any of the Company's assignees or
successors.
12. INJUNCTIVE RELIEF. In recognition of the unique services to be
performed by Executive and the possibility that any violation by Executive of
Section 10 or Section 11 of this Agreement may cause irreparable or
indeterminate damage or injury to Company, Executive expressly stipulates and
agrees that the Company shall be entitled, upon ten (10) days written notice to
Executive, to obtain an injunction from any court of competent jurisdiction
restraining any violation or threatened violation of this Agreement. Such right
to an injunction shall be in addition to, and not in limitation of, any other
rights or remedies the Company may have for damages.
13. JUDICIAL MODIFICATION OF AGREEMENT. The Company and Executive
specifically agree that a court of competent jurisdiction (or an arbitrator, as
appropriate) may modify or amend Section 10 or Section 11 of this Agreement if
absolutely necessary to conform with relevant law or binding judicial decisions
in effect at the time the Company seeks to enforce any or all of said
provisions.
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14. RESOLUTION OF DISPUTES BY ARBITRATION. Any claim or controversy
that arises out of or relates to Executive's employment, this Agreement, or the
breach of this Agreement, will be resolved by arbitration in Palm Beach County
in accordance with the rules of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator may be entered in any court possessing
jurisdiction over arbitration awards. This Section shall not limit or restrict
the Company's right to obtain injunctive relief for violations of Section 10 or
Section 11 of this Agreement directly from a court under Section 13 of this
Agreement. Each party shall be required to bear its own costs and attorney's
fees incurred in any arbitration arising out of Executive's employment, this
Agreement, or the breach of this Agreement.
15. ADEQUATE CONSIDERATION. Executive expressly agrees that the
Company has provided adequate, reasonable consideration for the obligations
imposed upon him in this Agreement.
16. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties, and supersedes any prior agreements or understanding
between the Company and Executive. This Agreement may be amended only in
writing, signed by both parties.
17. LIMITED EFFECT OF WAIVER BY COMPANY. If the Company waives a
breach of any provision of this Agreement by Executive, that waiver will not
operate or be construed as a waiver of later breaches by Executive.
18. SEVERABILITY. If any provision of this Agreement is held invalid
for any reason, such invalidity shall not affect the enforceability of the
remainder of this Agreement.
19. ASSUMPTION OF AGREEMENT BY COMPANY'S SUCCESSORS AND ASSIGNS. At
the Company's sole option, the Company's rights and obligations under this
Agreement will inure to the benefit and be binding upon the Company's successors
and assigns. Executive may not assign his rights and obligations under this
Agreement.
20. APPLICABLE LAW. Executive and the Company agree that this
Agreement shall be subject to, and enforceable under, the laws of the State of
Florida.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on May 31, 2000.
COMPANY EXECUTIVE
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Witness Witness
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