EMPLOYMENT AGREEMENT
This Employment Agreement dated as of March 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 Chief Administrative Officer; 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 March 1, 2000 (the
"Effective Date"), and will continue, unless sooner terminated, until March 1,
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 Chief Administrative Officer with such powers and duties in
that capacity as may be established from time to time by the Company in its
discretion. Executive will devote his entire time, attention and energies to the
Company's business. Executive, subject to approval by the Company's Board of
Directors, may in the future have other business investments and participate in
other business ventures which may, from time to time, require portions of his
time, but shall not interfere with his duties hereunder. However, nothing in
this Agreement shall prevent Executive from passively investing in business
activities so long as such investments require no active participation by
Executive.
3. COMPENSATION.
(a) BASE SALARY. The Company will pay Executive an annualized base
salary of $125,000 until June 30, 2000 and $150,000 until December 31, 2000 and
$200,000 for the remainder 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: During the term of this Agreement, the Executive shall
receive an annual bonus from the Company, based on performance goals determined
at the beginning of
Page 1 of 7 Pages
each fiscal year by the Executive and Board of Directors of
the Company, in its good faith discretion.
(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. Merchant shall grant to Executive stock options to
purchase an aggregate of 300,000 shares of common stock at prices to be
determined by the Board of Directors. The options shall vest in equal
installments on March 1, 2001, 2002 and 2003. The options will only vest
assuming that Executive remains employed by Company on the dates that the
options are to be deemed vested. There will be no "pro-rated" vesting of any
options for the period in which Executive ceases to be employed by Company.
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 $500 per month
commencing March 1, 2000 for the remaining term of his employment.
(f) EXPENSES. The Company shall pay or reimburse the Executive for all
reasonable expenses which are actually incurred or paid by him in the
performance of his service hereunder.
(g) INSURANCE. 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 Merchant
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
Page 2 of 7 Pages
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 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, or (ii) 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
Page 3 of 7 Pages
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 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
Page 4 of 7 Pages
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.
10. COVENANT NOT TO COMPETE. During the term of this Agreement, and for
two (2) years after its termination, Executive promises and agrees that she/he
will not enter into any employment or business relationship (whether as a
principal, agent, partner, employee, investor, owner, consultant, board member
or otherwise) with any company, business organization or individual whose
primary business that is engaged in the same or similar business as that
conducted by the Company or with any other business that competes with the
Company. 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 or the Company. 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 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
11 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. 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
Page 5 of 7 Pages
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 12 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.
13. AGREEMENT NOT TO HIRE COMPANY EXECUTIVES. If Executive leaves the
employ of the Company or terminates this Agreement, Executive promises and
agrees that, during the two (2) years following his departure from the Company,
Executive will not, without the express written permission of the Company,
actively recruit or solicit employees of the company. This Section 13 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.
14. INJUNCTIVE RELIEF. In recognition of the unique services to be
performed by Executive and the possibility that any violation by Executive of
Section 10, Section 11, Section 12 or Section 13 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.
15. 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, Section 11, Section 12 or Section
13 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.
16. 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 9,
Section 10, Section 11 or Section 12 of this Agreement directly from a court
under Section 14 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.
17. TERMINATION OF CERTAIN PROVISIONS. The provisions of paragraph 10
and 13 shall no longer apply if the Company shall file a petition for bankruptcy
or if an involuntary petition is filed against the Company that is not dismissed
within 60 days.
Page 6 of 7 Pages
18. ADEQUATE CONSIDERATION. Executive expressly agrees that the Company
has provided adequate, reasonable consideration for the obligations imposed upon
him in this Agreement.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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 March 1, 2000.
COMPANY EXECUTIVE
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ -------------------------------------
Page 7 of 7 Pages