EMPLOYMENT AGREEMENT

 

THISEMPLOYMENT AGREEMENT is made and entered into this 2nd day of January, 2014, by and between NET TALK.com , Inc., aFlorida corporation (the "Company''),and Kenneth A. Hosfeld, residing at 5166 North Springs Way, Coral Springs FL 33076 (the "Executive"). 

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**WITNESSETH:**

**1. EMPLOYMENT**

 

TheCompany hereby employs the Executive, and the Executive hereby accepts such employment, upon the terms and subject to the conditionsset forth in this Agreement. (The "AmendmentEmployment Agreement")

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**2. TERM**

 

Subjectto the provisions for termination as hereinafter provided, the term of employment under this Agreement shall begin as ofJanuary 2nd 2014, and shall continue through January1st 2019, provided, however, (each such January 2nd being referred to as a "Renewal Date"),the term of this Agreement shall automatically be extendedfor an additional one year so that on each Renewal Date the then remaining unexpired term of this Agreement shall be fiveyears, unless either party gives the other written notice of termination at least ninety (90) days prior to any such RenewalDate,

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**3. COMPENSATION**

 

(a)Base Salary. The Company shall pay to the Executive as basic compensation for all services rendered by the Executive during theterm of this Agreement a basic annualized salary of $100,000 per year (starting January, 2015) the base salary will increase to$125,000), or such other sum in excess of that amount as the parties may agree on from time to time or as provided in the nextsentence (as in effect from time to time, the "Base Salary"), payable twice-monthly or in other more frequent installments,as determined by the Company. The Board of Directors shall have the authority to increase the Executive's BaseSalary in effect from time to time. In addition, the Board of Directors,in its discretion, may award a bonus or bonuses to the Executive in addition to the bonuses provided for in Section 3(b). 

 

(b) Bonuses. In addition to theBase Salary to be paid pursuant to Section 3(a), for each of the Company's five fiscal years ending December 31st 2018,to the extent earned, specified on Exhibit A to this agreement. For each fiscal year ending on or after December 31st 2014,the Company shall pay to the Executive as incentive compensation annual bonuses in accordance with comparable incentive bonusplan(s) adopted by the Board of Directors of the Company.

 

(c)Certain Plans and Initial Award. (i) It is anticipated that the Company will adopt certain incentive compensation plans, includinga long term incentive plan (the "LTIP"), providing for annual or other periodic awards to key employees, among otherthings, of restricted stock, and a stock option plan (the "ISO/NSO Plan"), providing for the annual or other periodicissuance of options to purchase the Company's common stock. The L TIPand ISO/NSO Plan are referred to collectively in this Agreement as the "Plans." The Executive will be given an opportunityto participate in the Plans, in accordance with and subject to the terms of the Plans as they may be adopted, amended and administeredfrom time to time. 

 

(I)In addition to the incentive compensation referred to in Section 3(c)(i),the Company hereby agrees to issue to the Executive under the LTIP, effective immediately following the completion of the Distribution,that number of shares of the Company's common stock (the "Initial Restricted Stock"), four percent (4%) of any new secondaryIPO of the shares of the Company's common stock. 

 

(2) Any and all risks offorfeiture shall lapse as to all of the Initial Restricted Stock and the Initial Options shall be fully vested and shall beexercisable as to all of the shares of common stock covered by the Initial Options upon (i) the death of the Executive ortermination of employment upon the "Permanent Disability" (as that term is defined in Section 7(b) (ii) of thisAgreement) of the Executive, (ii) the termination of employment of the Executive by the Company "Without GoodCause" (as that term is defined in Section S(b) (iii) of thisAgreement)or (iii) the exercise by the Executive of his rights toterminate his employment under Section S(d) (ii) following a "Change of Control" (as that term is defined inSection S(d) (i) of thisAgreement).

 

 

(d)·Reimbursement. The Company shall reimburse the Executive, in accordance with the Company's policies and practices for senior management,for all reasonable expenses incurred by the Executive in the performance of the Executive's duties under this Agreement, provided,however, that the Executive must furnish to the Company an itemized account, satisfactory to the Company, in substantiation ofsuch expenditures. 

 

(e)Certain Benefits. The Executive shall be entitled to such fringe benefits including, but not limited to, medical and other insurancebenefits as may be provided from time to time by the Company to other senior officers of the Company. In addition, without restrictingthe foregoing, the Company shall provide the Executive at the Company's sole cost and expense with (i) a policy or policies ofterm life insurance (the "Basic Life Insurance") providing, among other things, basic death benefits of not less thanthree times the Base Salary in effect from time to time, (ii) directors and officers liability insurance with coverage, termsand limits suitable for an executive officer of a OTCBB, or any up listed Stock Exchange, comparable in financial size and wherewithalto that of the Company and (iii) a monthly allowance of $500 cash to reimburse the Executive for the use and maintenance of hisautomobile in furtherance of the business and affairs of the Company, provided that the Executive shall at all times insure theExecutive and the Company in such amounts as may be reasonably requested by the Company against claims for bodily injury, deathand property damages occurring as a result of its use. The Company shall use its reasonable best efforts to make available tothe Executive in providing and paying for the Basic Life Insurance the opportunity to purchase at the Executive's sole cost andexpense additional life insurance with a basic death benefit (the "Optional Life Insurance") equal to two times theExecutive's Base Salary in effect from time to time (affording the Executive the opportunity to have basic death benefit lifeinsurance coverage equal to four times such Base Salary). The Company will use its reasonable best efforts to affect the transferof the ownership to the Executive of the policy or policies for the Basic Life Insurance and the Optional Life Insurance, if any,upon the termination of the Executive's employment by the Company premiums would be the obligation of the Executive. The Companyshall, at the company's expense, providethe executive with a cellular telephone with an unlimited talk and text plan, and included data plan of:at least, 4 Gb/month. 

 

(f) Other Incentive and BenefitPlans. The Executive shall be eligible to participate, in accordance with the terms of such plans as they may be adopted, amendedand administered from time to time, in incentive bonus, benefit or similar plans, including without limitation, any stock option,bonus or other equity ownership plan, any short, mid or long term incentive plan and any other bonus, pension or profit sharingplans established by the company from time to time.

 

**4. DUTIES**

 

(a) General. The Executive is engagedas the Executive Vice President of the Company. In addition, at the request of the Board of Directors, the Executive shall servein the same positions in any wholly owned subsidiary of the Company, with additional compensation. The Executive's duties shallbe commensurate with those customarily associated with the Executive Vice President of a corporation comparable to the Company.

 

(b) Specific. In addition to thegeneral duties, responsibilities and authority as Executive Vice President, and without in any way intending to diminish the Executiveduties, responsibilities and authority, the Executive's duties, responsibilities and authority shall include but not be limitedto (i) participating in consultation with the rest of the Management Team in the development and implementation of the Company'sstrategic business plans.

 

(c) Indemnification. To the fullestextent permitted by law, the Company shall indemnify and hold harmless the Executive for all liabilities, costs, expenses anddamages arising out of or in connection with the Executive's service to the Company under this Agreement. In furtherance of thisindemnity, the Company shall enter into an indemnification agreement, in form and substance reasonably satisfactory to the Executiveand the Company. In addition, the indemnity providing officer or director, or service in a similar capacity, for any civic, communityor charitable organization, provided such service is undertaken at the request of or with the knowledge and acquiescence of theCompany. The foregoing indemnification shall be in addition to any rights or benefits the Executive may have under statute, theBylaws or Articles of Incorporation of the Company, under a policy of insurance, or otherwise.

 

 

**5. EXTENT OF SERVICES; VACATIONSAND DAYS OFF**

 

(a) Extent of Services. During theterm of the Executive's employment under this Agreement, except during customary vacation periods and periods of illness, theExecutive shall devote full-time energy and attention during regular business hours to the benefit and business of the Companyas may be reasonably necessary in performing the Executive's duties pursuant to this Agreement. Notwithstanding the foregoing,the Executive may (i) serve on corporate, trade association, civic, religious or charitable boards or committees, (ii) deliverlectures, carry out non related consultancy activity, fulfill speaking engagements or teach at educational institutions and (iii)manage personal investments, so long as such activities do not materially interfere with the performance of the Executive's dutiesand responsibilities and do not create a conflict of interest.

 

(b)Vacations. The Executive shall be entitled to vacations with pay and to such personal and sick leave with pay in accordance withthe policy of the Company as may be established from time to time by the Company and applied to other senior officers of the Company.In no event shall the Executive be entitled to not fewer than four weeks' annual vacation. Unused vacation days may be carriedover from one year to the next for a period ofupto three years. Any vacation days which remain unused on the third anniversary of the end of the fiscal year to which they originallyrelated shall expire and shall thereafter no longer be useable by the Executive. 

 

**6. FACILITIES**

 

TheCompany shall provide the Executive with a fully furnished office located in northern Dade or Broward county, Florida, and thefacilities of the Company shall begenerally available to the Executive in the performance of the Executive's duties pursuant to this Agreement, it being understoodand contemplated by the parties that all equipment, supplies and office personnel required in the performance of the Executive'sduties under this Agreement shall be supplied by and at the sole expense of the Company. 

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**7. ILLNESS OR INCAPACITY, TERMINATIONON DEATH, ETC.**

 

(a) Death. If the Executive diesduring the term of the Executive's employment, the Company shall pay to the estate of the Executive within 30 days after the dateof death such Base Salary and any cash bonus compensation earned and unearned during the full duration of this contract, and pursuantto the provisions of any incentive compensation plan then in effect but not yet paid, as would otherwise have been payable tothe Executive up to the end of the month in which the Executive's death occurs. After receiving the full payments provided inthis Section 7(a), the Executive and the Executive's estate shall have no further rights under this Agreement (other than thoserights already accrued).

 

(b)Disability. (i) During any period of disability, illness or incapacity during the term of this Agreement which renders the Executiveat least temporarily unable to perform the services required under this Agreement, the.Executive shall receive the Base Salary payable under Section 3(a) of this Agreement plus any cash bonus compensation earned pursuantto the provisions of any incentive compensation plan then in effect but not yet paid, less any cash benefits received by him underany disability insurance carried by or provided by the Company. Upon the Executive's "Permanent Disability" (as definedbelow), which Permanent Disability continues during the payment periods specified herein, the Company shall pay to the Executivefor the period of time specified below an amount (the "Disability Payment") equal to the (i) sum of (A) the Base Salarypaid in the same monthly or other period installments as in effect at the time of the Executive's Permanent Disability plus (B)an amount equal to the target level of the annual cash bonus payable to the Executive under the Company's Management IncentiveCompensation Plan as described on Exhibit A or any similar bonus or incentive plans or programs then in effect (the "MICPTarget Amount") in respect of the fiscal year during which the Executive's Permanent Disability occurred, which MICP TargetAmount shall be paid in pro rata equal monthly installments over the period of time specified below (ii) reduced by the amountof any monthly payments under any policy of disability income insurance paid for by the Company which payments are received duringthe time when any Disability Payment is being made to the Executive following the Executive's Permanent Disability. For so longas the Executive's Permanent Disability continues, the Disability Payment shall be paid by the Company to the Executive in equivalentinstallments at the same time or times as would have been the case for payment of Base Salary over the unexpired term of thisAgreement If the Executive had not become permanently disabledand had remained employed by the Company hereunder, but in no case shall such period exceed 72 months. The Executive may be entitledto receive payments under any disability income insurance which may be carried by or provided by the Company from time to time.Upon "Permanent Disability" (as that term is defined in Section 7(b) (ii) below) of the Executive, except as providedin this Section 7(b) all rights of the Executive under this Agreement (other than rights already accrued) shall terminate. 

 

 

(ii) The term "Permanent Disability"as used in this Agreement shall mean, in the event a disability insurance policy is maintained by the Company covering the Executiveat such time and is in full force and effect, the definition of permanent disability set forth in such policy. In the event nodisability insurance policy is maintained at such time and in full force and effect, "Permanent Disability" shall meanthe inability of the Executive, as determined by the Board of Directors of the Company, by reason of physical or mental disabilityto perform the duties required of him under this Agreement for a period of one hundred and eighty (180) days in any one-year period.Successive periods of disability, illness or incapacity will be considered separate periods unless the later period of disability,illness or incapacity is due to the same or related cause and commences less than six months from the ending of the previous periodof disability. Upon such determination, the Board of Directors may terminate the Executive's employment under this Agreement uponten (10) days' prior written notice. If any determination of the Board of Directors with respect to permanent disability is disputedby the Executive, the parties hereto agree to abide by the decision of a panel of three physicians. The Executive and Companyshall each appoint one member, and the third member of the panel shall be appointed by the other two members. The Executive agreesto make him available for and submit to examinations by such physicians as may be directed by the Company. Failure to submit toany such examination shall constitute a breach of a material part of this Agreement.

 

**8. OTHER TERMINATIONS**

 

(a) By the Executive. (i) The Executivemay terminate the Executive's employment hereunder upon giving at least ninety (90) days' prior written notice. In addition, theExecutive shall have the right to terminate the Executive's employment hereunder on the conditions and at the times provided forin Section 8(d) of this Agreement.

 

(ii) If the Executive gives noticepursuant to Section 8(a) (i) above, the Company shall have the right (but not the obligation) to relieve the Executive, in wholeor in part, of the Executive's duties under this Agreement, or direct the Executive to no longer perform such duties, or directthat the Executive should no longer report to work, or any combination of the foregoing. In any such event, the Executive shallbe entitled to receive only the Base Salary not yet paid, as would otherwise have been payable to the Executive up to the endof the month specified as the month of termination in the termination notice. In the event the Executive gives notice pursuantto Section 8(a)(i) above but specifies a termination date in excess of ninety (90) days from the date of such notice, the Companyshall have the right (but not the obligation) to accelerate the termination date to any date prior to the date specified in thenotice that is in excess of ninety (90) days from the date of the notice, and the Company shall have the right (but not the obligation)to relieve the Executive, in whole or in part, of the Executive's duties under this Agreement, or direct the Executive to no longerperform such duties, or direct that the Executive should no longer report to work, or any combination of the foregoing; provided,however, that in any such event the Executive shall be entitled to receive the Base Salary, as would otherwise have been payableto the Executive up to the end of the month of the termination date properly selected by the Company. Upon receiving the paymentsprovided for under this Section 8(a), all rights of the Executive under this Agreement (other than rights already accrued) shallterminate.

 

(b)Termination for "Good Cause". (i) Except as otherwise provided in this Agreement, the Company may terminate the employmentof the Executive hereunder only for "good cause," which shall mean (a) the willful, substantial, continued and unjustifiedrefusal of the Executive substantially to perform his duties with the willful intention of harming the company (other than anyfailure due to physical or mental incapacity) or (b) continued willful misconduct materially and demonstrably injurious to theCompany, financially or otherwise, in each case, as determined in the reasonable discretion of the Board of Directors, but withrespect to each of the foregoing bases for termination specified in the preceding clause, only if (1) the Executive has been providedwith written notice of any assertion that there is a basis for termination for good cause which notice shall specify in reasonabledetail specific facts regarding any such assertion and the Executive has been given a reasonable period of time within which toremedy or cure the problem or complaint, (2) such notice is provided to the Executive a reasonable .timebefore the Board of Directors meets to consider any possible termination for cause, (3) at or prior to the meeting of the Boardof Directors to consider the matters described in the written notice, an opportunity is provided to the Executive and his counselto be heard by the Board of Directors with respect to the matters described in the written notice, before it acts with respectto such matter, (4) any resolution or other action by the Board of Directors with respect to any deliberation regarding or decisionto terminate the Executive for good cause is duly adopted by a unanimous vote of the entire Board of Directors of the Companyat a meeting of the Board duly called and held and (5) the Executive is promptly provided with a copy of the resolution or othercorporate action taken with respect to such termination. No act or failure to act by the Executive shall be considered willfulunless done or omitted to be done by him not in good faith and without reasonable belief that his action or omission was in thebest interests of the Company. 

 

(ii) If the employment of the Executiveis terminated for good cause under Section 8(b) (i) of this Agreement, the Company shall pay to the Executive any Base Salaryearned prior to the effect yet paid and any cash bonus compensation earned pursuant to the provisions of any incentive compensationplan then in effect but not paid to the Executive prior to the effective date of such termination. Under such circumstances, suchpayments shall be in full and complete discharge of any and all liabilities or obligations of the Company to the Executive hereunder,and the Executive shall be entitled to no further benefits under this Agreement (other than rights already accrued).

 

 

(iii) Terminationof the employment of the Executive other than as expressly specified above in Section 8(b) (i) for good cause shall be deemedto be a termination of employment "Without Good Cause."

 

(c)Termination without Good Cause. (i) Notwithstanding any other provision of this Agreement, the Company shall have the right toterminate the Executive's employment Without Good Cause pursuant to the provisions of this Section 8(c). If the Company shallterminate the employment of the Executive Without Good Cause effective on a date earlier than the termination date provided forin Section 2 (with the effective date of termination as so identified by the Company being referred to herein as the "AcceleratedTermination Date"), the Executive, until the end of the term of this Agreement then in effect as provided for in Section2, but in no case shall such period exceed 60 months, or until the date which is 24 months after the Accelerated Termination Date,whichever is greater, shall continue to receive (1) the Base Salary, paid in the same monthly or other periodic installments asin effect prior to the Accelerated Termination Date (2) an equal monthly pro rata portion of an amount of cash equal to the MICPTarget Amount (as that term is defined in Section 7(b)(i)) in respect of the year during which the Executive's employment terminates,multiplied times the number of years (or fractions thereof) remaining in the then unexpired term of this Agreement or multipliedrata portion of an amount of cash equal to the cash value of any bonus paid or to be paid to the Executive in the form of performanceshares or restricted stock under the LTIP as described on Exhibit A or any similar bonus or incentive plans or programs then ineffect (valued, if applicable under the terms of such plans or programs, at the greater of the closing price on the OTCBB StockExchange, or other such market on which the Company's stock trades if itis not listed on the New York Stock Exchange/ or other exchanges, on the first trading day of the plan or program cycle or theAccelerated Termination Date, or if the Accelerated Termination Date is not a trading day, on the first trading day thereafter)in respect of the then-current three year cycle of such plans or programs or such other cycle as is then in effect, calculatedas If the then-current cycle were completed and the target levelsattained {the "LTIP Target Amount"), which cash paymentshall be in lieu and in full satisfaction any rights under the LTIP in respect of such stock or shares as described in ExhibitA or any similar bonus or incentive plans or programs in effect at the time of such payment (all of which stock or shares shallbe cancelled upon such payment and receipt); provided however, If the Accelerated Termination Date is prior to December 31, 2015,the amount of cash payable to the Executive under the LTIP shall be a minimum of $500,000, and (4) any other cash or other bonuscompensation earned prior to the date of such termination pursuant to the terms of all incentive compensation plans then in effectother than the Company's Management Incentive Compensation Plan as described on Exhibit A or any similar bonus or incentive plansor programs then in effect; provided that, notwithstanding such termination of employment, the Executive's covenants set forthin Section 10 and Section 11 are intended to and shall remain in full force and effect and provided further that in the eventof such termination, the Company shall have the right (but not the obligation) to relieve the Executive, in whole or in part,of the Executive's duties under this Agreement, or direct the Executive to no longer perform such duties, or direct that the Executiveno longer be required to report to work, or any combination of the foregoing. 

 

(ii) The parties agree that, becausethere can be no exact measure of the damage that would occur to the Executive as a result of a termination by the Company of theExecutive's employment Without Good Cause, the payments and benefits paid and provided pursuant to this Section 8(c) shall bedeemed to constitute liquidated damages and not a penalty for the Company's termination of the Executive's employment WithoutGood Cause.

 

 

                   (d)Change of Control. (i) For purposes of this Agreement, a "Change in Control":

 

(1) a change in control of the Companyof a nature that is required, pursuant to the Securities Exchange Act of 1934 (the "1934 Act"), to be reported in responseto Item 1(a) of a Current Report on Form 8-K or Item 6(e) 14A under the 1934 Act (in each case under this Agreement, referencesto provisions of the 1934 Act and the rules and regulations promulgated there under being understood to refer to such law, rulesand regulations as the same are in effect on November 1, 1996); or

 

(2) the acquisition of "BeneficialOwnership" (as defined in Rule 13d-3under the 1934 Act) of the Company's securities comprising 35% or more of the combinedvoting power of the Company's outstanding securities by any "person" (as that term is used in Sections 13(d) and 14(d)(2) of the 1934 Act and the rules and regulations promulgated there under, but not including any trustee or fiduciary acting inthat capacity for an employee benefit plan sponsored by the Company) and such person's "affiliates" and "associates"(as those terms are defined under the 1934 Act), but excluding any ownership by the Executive and his affiliates and associates;or

 

(3) the failure of the"Incumbent Directors" (as defined below) to constitute at least a majority of all directors of the Company (forthese purposes, "Incumbent Directors" means individuals who were the directors of the Company on January2nd, 2014 and, after his or her election, any individual becoming a director subsequent to January 2nd,2014, whose election, or nomination for election by the Company's stockholders, is approved by a vote of 

 

atleast two-thirds of the directors then comprising the Incumbent Directors, except that no individual shall be considered anIncumbent Director who is not recommended by management and whose initial assumption of office as a director is in connectionwith an actual or threatened "election contest" relating to the "election of Directors"of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the 1934 Act); or 

 

(4) the closing of a sale of allor substantially all of the assets of the Company;

 

(5) the Company's adoption of aplan of dissolution or liquidation; or

 

                  (6)the closing of a merger or consolidation involving the Company in which the Company is not the surviving corporation or if, immediatelyfollowing such merger or consolidation, less than seventy-five percent (75%) of the surviving corporation's outstanding votingstock is held or is anticipated to be held by persons who are stockholders of the Company immediately prior to such merger orconsolidation.

 

                                             (ii)If a Change in Control of the Company occurs, the Executive shall have the right, exercisable for a period of one year thereafterby delivering a written statement to that effect to the Company, to immediately terminate this Agreement and upon such a determinationthe Executive shall have the right to receive and the Company shall be obligated to pay to Executive in cash a lump sum paymentin an amount equal to the sum of(l)the "Control Cash Payment" as that term is defined in Section 8(d)(iii) of this Agreement; (2) three times the annualBase Salary then in effect, (3) three times the MICP Target Amount(as that term is defined in Section 7(b)(i)) in the year in which employment terminates, (4) the cash value of the LTIP TargetAmount (as that term is defined in Section 8(c)), which cash payment shall be in lieu and in full satisfaction of any rights underthe L TIP in respect of such stock or shares as described in ExhibitA or any similar bonus or incentive plans or programs in effect at the time of such payment (all of which stock or shares shallbe cancelled upon such payment and receipt), and (5) the additional payments necessary to discharge certain tax liabilities (the"Gross Up") as that term is defined in Section 13 of this Agreement (the sum of the foregoing amounts other than theGross Up being referred to as the "Change in Control Payment"). If the Executive fails to exercise his rights underthis Section 8(d) within one year following a Change in Control, such rights shall expire and be of no further force or effect.

 

 

                                             (ill)The "Control Cash Payment"shall be (A) $750,000 if any Event that constitutes a Change of Controloccurs. 

 

(e) Intentions Regarding CertainStock and Benefit Plans. Except as otherwise provided herein, upon any termination of the Executive's employment Without GoodCause or upon the exercise by the Executive of his rights to terminate his employment following a Change of Control, it is theintention of the parties that any and all vesting or performance requirements or conditions affecting any outstanding restrictedstock, performance stock, stock option, stock appreciation right, bonus, award, right, grant or any other incentive compensationunder any of the Plans, under this Agreement, or otherwise received, shall be deemed to be fully satisfied and any risk of forfeiturewith respect thereto shall be deemed to have lapsed.

 

(t)Certain Rights Mutually Exclusive. The provisions of Section 8(c) andSection 8(d) are mutually exclusive, provided, however, that if within one yearfollowing commencement of an 8(c) payout there shall be a Change in Control as defined in Section 8(d) (i), then the Executiveshall be entitled to the amount payable to the Executive under Section 8(d) (ii) and Section 8(d) (iii) reduced by the amountthat the Executive has received under Section 8(c) up to the date of the change in control. The triggering of the lump sum paymentrequirement of Section 8(d) shall cause the provisions of Section 8(c) to become inoperative. 

 

**9. DISCLOSURE**

 

The Executiveagrees that during the term of the Executive's employment by the Company, the Executive will disclose and disclose only to theCompany all ideas, methods, plans, developments or improvements known by him which relate directly or indirectly to the businessof the Company, whether acquired by the Executive before or during the Executive's employment by the Company. Nothing in thisSection 9 shall be construed as requiring any such communication where the idea, plan, method or development is lawfully protectedfrom disclosure as a trade secret of a third party and of this Section 9 shall not be violated by ordinary and customary communicationswith reporters, bankers and securities analysts and other members of the investment community.

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**10. CONFIDENTIALITY**

 

TheExecutive agrees to keep in strict secrecy and confidence any and all information the Executive assimilates or to which the Executivehas access during the Executive's employment by the Company and which has not been publicly disclosed and is not a matter of commonknowledge in the fields of work ofthe Company. The Executive agrees that both during and after the term of the Executive's employment by the Company, the Executivewill not, without the prior written consent of the Company, disclose any such confidential information to any third person, partnership,joint venture, company, corporation or other organization. The foregoing covenants shall not be breached to the extent that anysuch confidential information becomes a matter of general knowledge other than through a breach by the Executive of the Executive'sobligations under this Section 10. 

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**11. NONCOMPETITION AND NONSOLICITATION**

 

(a) General. The Executive herebyacknowledges that, during and solely as a result of the Executive's employment by the Company, the Executive has received andshall continue to receive: (1) special training and education with respect to the operations of the Company's real estate developmentand management businesses and its leasing, lending and financing activities, and other related matters, and (2) access to confidentialinformation and business and professional contacts. In consideration of the special and unique opportunities afforded to the Executiveby the Company as a result of the Executive's employment, as outlined in the previous sentence, the Executive hereby agrees tothe restrictive covenants in this Section 11.

 

(b) Noncompetition. During the termof the Executive's employment, whether pursuant to this Agreement, any automatic or other renewal hereof or otherwise, and, exceptas may be otherwise herein provided, for a period of two (2) years after the termination of the Executive's employment with theCompany ,regardless of the reason for such termination, the Executive shall not, directly or indirectly, enter into, engage in,be employed by or consult with any business which competes with the Company's real estate lending, leasing, development or managementbusinesses in Florida. The Executive shall not engage in such prohibited activities, either as an individual, partner, officer,director, stockholder, employee, advisor, independent contractor, joint venture, consultant, agent, or representative or salesmanfor any person, firm, partnership, corporation or other entity so competing with the Company. The restrictions of this Section11 shall not be violated by (i) the ownership of no more than 2% of the outstanding securities of any company whose stock is tradedon a national securities exchange or is quoted in the Automated Quotation System of the National Association of Securities Dealers(NASDAQ), or (ii) other outside business investments that do not in any manner conflict with the services to be rendered by theExecutive for the Company and that do not diminish or detract from the Executive's ability to render the Executive's requiredattention to the business of the Company.

  

 

(c) No solicitation. During theExecutive's employment with the Company and, except as may be otherwise herein provided, for a period of two (2) years followingthe termination of the Executive's employment with the Company, regardless of the reason for such termination, the Executive agreesthe Executive will refrain from and will not, directly or indirectly, as an individual, partner, officer, director, stockholder,employee, advisor, independent contractor, joint venture, consultant, agent, representative, salesman or otherwise solicit anyof the employees of the Company to terminate their employment.

 

(d) Term Extended or Suspended.The period of time during which the Executive is prohibited from engaging in certain business practices pursuant to Sections 11(b)or (c) shall be extended by any length of time during which the Executive is in breach of such covenants.

 

(e)Essential Element. It is understood by and between the parties hereto that the foregoing restrictive covenants set forth in Sectionsll(a) through (c) are essential elementsof this Agreement, and that, but for the agreement of the Executive to comply with such covenants, the Company would not haveagreed to enter into this Agreement. Such covenants by the Executive shall be construed as agreements independent of any otherprovision in this Agreement. The existence of any claim or cause of action of the Executive against the Company, whether predicatedon this Agreement, or otherwise, shall not constitute a defense to the enforcement by the Company of such covenants.

 

(t)Severability. It is agreed by the Company and Executive that if any portion of the covenants set forth in this Section 11 areheld to be invalid, unreasonable, arbitrary or against public policy, then such portion of such covenants shall be considereddivisible both as to time and geographical area. The Company and Executive agree that, if any court of competent jurisdictiondetermines the specified time period or the specified geographical area applicable to this Section 11 to be invalid, unreasonable,arbitrary or against public policy, a lesser time period or geographical area which is determined to be reasonable, non-arbitraryand not against public policy may be enforced against the Executive. The Company and the Executive agree that the foregoing covenantsare appropriate and reasonable when considered in light of thenature and extent of the business conducted by the Company. 

 

**12. SPECIFIC PERFORMANCE**

 

The Executiveagrees that damages at law will be an insufficient remedy to the Company If the Executive violates the terms of Sections 9, 10or 11 of this Agreement and that the Company would suffer irreparable damage as a result of such violation. Accordingly, it isagreed that the Company shall be entitled, upon application to a court of competent jurisdiction, to obtain injunctive reliefto enforce the provisions of such Sections, which injunctive relief shall be in addition to any other rights or remedies availableto the Company. The Executive agrees to pay to the Company all reasonable costs and expenses incurred by the Company relatingto the enforcement of the terms of Sections 9, 10 or 11 of this Agreement, including reasonable fees and reasonable disbursementsof counsel selected by the Company (during investigation and before and at trial and in appellate proceedings).

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**13. PAYMENT OF EXCISE TAXES**

 

(a) Payment of Excise Taxes. Ifthe Executive is to receive any (1) Change of Control Payment under Section 8(d), (2) any benefit or payment under Section 7 asa result of or following the death or Permanent Disability of the Executive, (3) any benefit or payment under Section 8(c) asa result of or following any termination of employment hereunder Without Good Cause, (4) any benefit or payment under the Plansas a result of a Change of Control, following the death or Permanent Disability of the Executive or following the terminationof employment hereunder Without Good Cause (such sections being referred to as the "Covered Sections" and the benefitsand payments to be received there under being referred to as the "Covered Payments"), the Executive shall be entitledto receive the amount described below to the extent applicable: If any Covered Payment(s) under any of the Covered Sections orby the Company under another plan or agreement (collectively, the "Payments") are subject to the excise tax imposedby Section 4999 of the Internal Revenue Code of 1986 (as amended from time to time, the "Code"), or any successor orsimilar provision of the Code (the "Excise Tax"), the Company shall pay the Executive an additional amount (the "GrossUp") such that the net amount retained by the Executive after deduction of any Excise Tax on the Payments and the federalincome tax on any amounts paid under this Section 13 shall be equal to the Payments.

 

(b)Certain Adjustment Payments. For purposes of determining the Gross Up, the Executive shall be deemed to pay the federal incometax at the highest marginal rate oftaxation (currently 39.5%) in the calendar year in which the payment to which the Gross Up applies is to be made. The determinationof whether such Excise Tax is payable and the amount thereof shall be made upon the opinion of tax counsel selected by the Companyand reasonably acceptable to the Executive. The Gross Up, if any, that is due as a result of such determination shall be paidto the Executive in cash in a lump sum within thirty (30) days of such computation. If such opinion is not finally accepted bythe Internal Revenue Service upon audit or otherwise, then appropriate adjustments shall be computed (without interest but withGross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined; any additional amountdue the Executive as a result of such adjustment shall be paid to the Executive by his or her Company in cash in a lump sum withinthirty (30)days of such computation, or any amount due the Executive's Company as a result of such adjustment shall be paid tothe Company by the Executive in cash in a lump sum within thirty (30) days of such computation. 

 

**14. MISCELLANEOUS**

 

(a) Waiver of Breach. The waiverby either party to this Agreement of a breach of any of the provisions of this Agreement by the other party shall not be construedas a waiver of any subsequent breach by such other party.

 

(b) Compliance with Other Agreements.The Executive represents and warrants that the execution of this Agreement by him and the Executive's performance of the Executive'sobligations hereunder will not conflict with, result in the breach of any provision of or the termination of or constitute a defaultunder any Agreement to which the Executive is a party or by which the Executive is or may be bound.

 

(c) Binding Effect; Assignment.The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successorsand assigns of the Company. This Agreement is a personal employment contract and the rights, obligations and interests of theExecutive hereunder may not be sold, assigned, transferred, pledged or hypothecated.

 

(d) Entire Agreement. This Agreementcontains the entire agreement and supersedes all prior agreements and understandings, oral or written, with respect to the subjectmatter hereof. This Agreement may be changed only by an agreement in writing signed by the party against whom any waiver, change,amendment, modification or discharge is sought.

 

(e) Headings. The headings and indentationscontained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

(f) No Duty to Mitigate. The Executiveshall be under no duty to mitigate any loss of income as result of the termination of his employment hereunder and any paymentsdue the Executive upon termination of employment shall not be reduced in respect of any other employment compensation receivedby the Executive following such termination.

 

(g)Florida Law. This Agreement shall be construed pursuant to and governed by the substantive laws of the State of Florida (exceptthat any provision of Florida law shall not apply Ifthe law of a state or jurisdiction other than Florida would otherwise apply). 

 

(h) Venue; Process. The partiesto this Agreement agree that jurisdiction and venue in any action brought pursuant to this Agreement to enforce its terms or otherwisewith respect to the relationships between the parties shall properly lie in and only in the Circuit Court of the State of Floridain and for Dade County (the "Circuit Court") and the parties agree that jurisdiction shall not properly lie in any otherjurisdiction provided, however, if jurisdiction does not properly lie with the Circuit Court, the parties agree that jurisdictionand venue shall properly lie in and only in the United States District Court for the District of Florida, Dade Division. The partieshereby waive any objections which they may now or hereafter have based on venue and/or forum non conveniens and irrevocably submitto the jurisdiction of any such court in any legal suit, action or proceeding arising out of or relating to this Agreement. Theparties further agree that the mailing by certified or registered mail, return receipt requested, of any process required by anysuch court shall constitute valid and lawful service of process against them, without the necessity for service by any other meansprovided by statute or rule of court.

 

 

(i) Severability. Any provisionof this Agreement which is determined by a court of competent jurisdiction to be prohibited, unenforceable or not authorized inany jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorizationwithout invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision inany other jurisdiction. In any such case, such determination shall not affect any other provision of this Agreement, and the remainingprovisions of this Agreement shall remain in full force and effect. If any provision or term of this Agreement is susceptibleto two or more constructions or interpretations, one or more of which would render the provision or term void or unenforceable,the parties agree that a construction or interpretation which renders the term or provision valid shall be favored.

 

(j) Deduction for Tax Purposes.The Company's obligations to make payments under this Agreement are independent of whether any or all of such payments are deductibleexpenses of the Company for federal income tax purposes.

 

(k)Enforcement. If, within 10 days after demand to comply with the obligations of one of the parties to this Agreement served inwriting on the other, compliance or reasonable assurance of compliance is not forthcoming, and the party demanding complianceengages the services of an attorney to enforce rights under this Agreement, the prevailing party in any action shall be entitledto recover all reasonable costs and expenses of enforcement (including reasonable attorneys' fees and reasonable expenses duringinvestigation, before and at trial and in appellate proceedings). In addition, each of the parties agrees to indemnify the otherin respect of any and all claims, losses, costs, liabilities and expenses, including reasonable fees and reasonable disbursementsof counsel (during investigation prior to initiation of litigation and at trial and in appellate proceedings if litigation ensues),directly or indirectly resulting from or arising out of a breach by the other party of their respective obligations hereunder.The parties' costs of enforcing this Agreement shall include prejudgment interest. Out of-pocketexpenses in connection with the enforcement of this Agreement, all such amounts shall accrue interest at 10% per annum (or suchlower rate as may be required to avoid any limit imposed by applicable law) commencing 30 days after any such expenses are incurred.

 

(I)Notices. All notices which are required or may be given under this Agreement shall be in writing and shall be deemed to have beenduly given when received if personally delivered; when transmitted if transmitted by telecopy or similar electronic transmissionmethod; one working day after it is sent, if sent by recognized expedited delivery service; and three days after it is sent, ifmailed, first class mail, certified mail, return receipt requested, with postageprepaid. In each case notice shall be sent to: