Document:

ex10-7.htm

Exhibit 10.7

 

Referral Agreement

THIS REFERRAL AGREEMENT is made and entered into as of January 1, 2010, between Modavox, Inc., a Delaware corporation, with its principal place of business at 43 W. 24th Street, Suite 11B, New York, NY 10001 (“Company”), and C&H Capital, Inc., a Georgia corporation with its principal place of business at 2020 Stone Meadow Way, Cumming, GA 30041 (“Consultant”).

Recitals

	
  

	
1.

	
Company is engaged in the business of providing Internet-based communication and interaction services using the Company’s proprietary brand, technical platforms, and patented processes and methods;

	
  

	
2.

	
Consultant is engaged in the business of consulting and making capital investments in early stage technology companies and as a result Consultant has a network of high net worth individuals and investment fund managers who Consultant desires to introduce to the Company from time to time;

	
  

	
3.

	
In furtherance of its business objectives, Company desires to receive certain investor/capital referrals from Consultant; and

	
  

	
4.

	
Consultant agrees to provide investor/capital referrals to the Company under the terms and conditions set forth in this Agreement.

In consideration of the mutual promises set forth herein, it is agreed by and between Company and Consultant as follows:

I.  Nature of Work

A.           Accredited Investor Referrals.  Consultant, where commercially practical and consistent with good business practice, will identify to Company management certain “Accredited Investors,” as that term is defined in Regulation D promulgated under the Securities Act of 1933, as amended (each, an “Accredited Investor”), who may desire to make capital investments in the Company given the Accredited Investor’s background and investment profile.  In advance of introducing an Accredited Investor to the Company, Consultant will notify the Company in writing (which writing may be via email) of the identity of the Accredited Investor. In addition, Consultant will qualify that the Accredited Investor has expressed a reasonable interest in learning more about the Company or making a capital investment in the Company. If, based upon such information, the Company desires, in its sole discretion, to receive an introduction to the Accredited Investor from Consultant, then Company will “accept” or “register” the referral by authorizing Consultant, in writing (which writing may be via email), to facilitate the introduction of the Accredited Investor (each, a “Referred Accredited Investor”).

B.           Prohibited Activities.  Consultant is not a registered broker dealer and may not be compensated for any financings or securitization of capital.  Consultant will not act, either directly or indirectly, as a broker, dealer, agent or investment advisor under applicable federal or state securities laws.  In providing services under this Agreement, Consultant’s activities will be limited to introducing Accredited Investors to the Company, and Consultant will not use any general solicitation or general advertising within the meaning of applicable securities laws in connection with any offering of securities by the Company.  Consultant will introduce the Company to Accredited Investors only in states in which Consultant has been advised that offers and sales of securities can be legally made by the Company.  Consistent with the foregoing, Consultant has no authority to, and will not: (i) offer for sale or solicit offers to buy any securities of the Company to or from any person; (ii) provide any advisory or valuation services to any person regarding any securities offerings or the merits or risks of an investment in such securities; (iii) provide any information to any person, other than such information reasonably necessary to introduce such person to the Company, regarding the Company, its proposed business or any such securities or offerings; (iv) make any representations or warranties in connection with any such offerings; (v) otherwise effect any transactions with respect to, or induce or attempt to induce the purchase or sale of, any such securities; (vi) make or have made written postings or publications about the Company, on the Internet (chat rooms, message boards, etc.) or in any other published media, without express written approval from the Company as to the content of such publication; provided, however, that the foregoing does not prohibit Consultant from disseminating Company-issued press releases, filings or third party articles relevant to the Company’s business.

  

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II. Warranties

Consultant hereby represents and warrants to Company that: (i) it has the authority and capacity to execute and deliver this Agreement and perform its obligations hereunder; (ii) this Agreement constitutes a legal, valid and binding obligation of Consultant, enforceable against Consultant in accordance with its terms;  (iii) it has all necessary rights or approvals, for which it is responsible, for Consultant to be able to provide the Services to Company; (iv) in executing its duties under this Agreement, Consultant will comply with all laws, regulations and rules, whether pursuant to state, federal or administrative authorities, including, by way of example, laws related to Securities and all rules, guidance and regulations issued or promulgated by the Securities Exchange Commission (the “SEC”), and (iv) in executing its duties under this Agreement, Consultant will not divulge non-public material information about the Company (“Insider Information”), to the extent Consultant obtains such Insider Information, to any third party, whether directly or indirectly, and in all events Consultant agrees to comply with the Company’s Policy “Securities Trading By Company Personnel” attached hereto as Exhibit B.

III. Compensation

A.           Annual Consulting Fee.  As compensation for Consultant’s efforts in making introductions of Accredited Investors to the Company as defined under this Agreement, Company will pay Consultant an annual fee of one hundred and twenty five thousand dollars ($125,000) (the “Annual Referral Fee”), which Annual Referral Fee is payable by the Company as follows: (i) $50,000 payable within ten (10) business days after the date the Agreement is executed; and (ii) $25,000 payable quarterly thereafter following calendar quarters 2, 3 and 4, within ten (10) business days after the last day of each such calendar quarter.  Such fee is not contingent on the “success” of any particular Consultant referral and will be paid regardless of whether such Accredited Investor Referrals lead to investments in the Company.  The Company has agreed to the Annual Consulting Fee given the Company’s business judgment as to the perceived value of referrals from Consultant and assumptions made by the Company as to the likelihood of receiving investments from Accredited Investor Referrals during the Consulting Term.  In the event of a Change of Control of the Company, unpaid portions of the Annual Referral Fee will accelerate and Consultant will be paid within ten (10) business days following public announcement of the Change of Control.  For purposes of this Agreement, "Change Of Control" means a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is subject to the Exchange Act at such time.

B.           Expenses.  Consultant will be responsible for paying all expenses associated with Consultant’s services hereunder, including computer, telephone, travel and office expenses.

IV.  Confidentiality

As a condition to this Agreement, Consultant will execute a Confidentiality & Non-Solicitation Agreement with an effective date of December 1, 2009, which document is hereby incorporated into and made part of this Agreement as Exhibit A.

  

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V. Duration & Termination

A.           Term.  The duration of the Agreement, unless otherwise extended by the mutual written consent of both parties, shall be for the one-year period beginning January 1, 2010, and ending December 31, 2010 (the “Consulting Term”), unless the Agreement is terminated sooner in accordance with the following paragraph.

B.           Termination.  Either party may terminate this Agreement upon thirty (30) days advanced written notice to the other party.  Upon such termination, the Company’s only liability to Consultant will be its obligation to pay fees earned by Consultant prior to the date of termination.

VI. Status of Consultant

This Agreement calls for the performance of the services of the Consultant, as an independent contractor, and Consultant will not be considered an employee of the Company for any purpose, including, but not limited to, tax and insurance matters. Company is not responsible for the payment of employer-related taxes which may be imposed with respect to any employees or agents of Consultant including, but not limited to, FICA, unemployment taxes, state and federal income tax withholding payments.  The employees, subcontractors, methods, facilities and equipment used by Consultant shall be at all times under its exclusive direction and control. Company’s relationship to Consultant under the Agreement shall be that of an independent contractor, and nothing in the Agreement shall be construed to constitute Consultant, its subcontractors or any of their employees as an employee, agent, associate, joint venturer, or partner of Company. It is agreed that Consultant’s employees who are assigned to Company work under the Agreement, if any, shall at all times be and remain employees of Consultant.

VII. Services for Others

During the term of this Agreement, Consultant may not perform consulting or similar professional services for any other person or firm engaged in a business competitive to Company, without Company’s prior written approval.

VIII. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of New York.  All actions arising out of the Agreement shall be brought in New York, New York.

IX. Integration, Execution, and Headings

A.           Entire Agreement.  This Agreement, including the Mutual Non-Disclosure Agreement and Insider Trading Policy incorporated herein, contains the entire agreement among parties and supersedes all prior and contemporaneous oral and written agreements, understandings, and representations among the parties.  No amendments to this Agreement shall be binding unless executed in writing by all of the parties.

B.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be original, and all of such together shall constitute one and the same instrument.

C.           Invalidity.  If any provision, or portion thereof, of this Agreement is invalid under applicable statute or rule of law, it is only to that extent to be deemed omitted.

X. Arbitration; Attorney’s Fees

Any controversy or claim arising out of, or relating to, this Agreement, or the making, performance, or interpretation, of it, shall be settled by arbitration in New York, New York, or as otherwise mutually agreed upon by the parties, under the commercial arbitration rules of the American Arbitration Association then existing, and judgment on the arbitration award may be entered in any court having jurisdiction over the subject matter of the controversy.  If any legal action or any arbitration of other proceeding is brought for the enforcement of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorney’s fees and other costs incurred in that action or preceding, in addition to any other relief to which it or they may be entitled.

  

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XI. Assignment & Subcontracting

The Agreement shall not be assignable or otherwise transferable, in whole or in part, by Consultant. Consultant shall not be permitted to subcontract any Services or work without the prior written consent of Company.

XII. Company Policy and Procedures

Consultant and any agents of Consultant shall observe Company’s policies and procedures and shall perform their respective duties in a manner which does not interfere with Company’s business and operations.

IN WITNESS WEREOF, the parties to this Agreement have duly executed on the day and year as written above:

	
Modavox, Inc.

	
C&H Capital, Inc.

	
 

By:

	
 

By:                                                             

	
 

Print Name: Mark Severini

	
 

Print Name:                                                             

	
 

Title: CEO

	
 

Title:                                                              

	
 

Date: January 15, 2010

	
 

Date:                                                             

 

 

 

 

  

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Exhibit A

Mutual Non-Disclosure Agreement

 

Modavox, Inc., a Delaware Corporation including its division Augme MobileTM, having a principle place of business at 135 West 20th Street, 5th Floor, New York, NY 10011 (“Modavox”), and C&H Capital, Inc., a Georgia corporation, having a principle place of business at  2020 Stone Meadow Way, Cumming, GA 30041 (“Company”), hereby enter into this Mutual Non-Disclosure Agreement (“Agreement”), effective as of December 1, 2009 (“Effective Date”) and agree as follows:

 

	
1.

	
Modavox and Company, for their mutual benefit, desire to disclose to one another certain Confidential Information (defined in Paragraph 2 below) for the purpose of discussing services, products, or potential business relationships (the “Purpose”).

 

	
2.

	
Confidential Information consists of certain specifications, designs, plans, drawings, software, data, internal processes, prototypes, or other business and/or technical information, and all copies and derivatives containing such Confidential Information, which a party considers proprietary or confidential, including but not limited to information related to Modavox’s technical platforms, portal, intellectual property, processes and services (“Confidential Information”). Confidential Information may be in any form or medium, tangible or intangible, and may be communicated in writing, orally, or through vis­ual observation.

 

	
3.

	
The receiving party’s duty to protect the disclosing party’s Confidential Information expires five (5) years from the date on which the Confidential Information was disclosed to receiving party.  Either party may terminate this Agreement upon ten (10) days written notice to the other party; however, any termination of this Agreement shall not relieve the receiving party of its confidentiality and use obligations with respect to Confidential Information disclosed prior to the date of termination.

 

	
4.

	
Modavox and Company agree that:

 

	
  

	
a)

	
The receiving party shall use Confidential Information only for the Purpose, shall hold Confidential Information in confidence using the same degree of care as it normally exercises to protect its own proprietary Confidential Information, but not less than reasonable care, taking into account the nature of the Confidential Information, and shall grant access to Confidential Information only to its employees who have a need to know, shall cause its employees to comply with the provisions of this Agreement applicable to the receiving party, shall reproduce Confidential Information only to the extent essential to fulfilling the Purpose, and shall prevent disclosure of Confidential Information to third parties. The receiving party may, however, disclose the Confidential Information to its consultants and contractors with a need to know; provided that by doing so, the receiving party agrees to bind those consultants and contractors to terms at least as restrictive as those stated herein, advise them of their obligations, and the receiving party will be responsible for any violation of the terms of this Agreement by its employees, consultants and contractors and will indemnify the disclosing party for any breach of those obligations.

 

	
  

	
b)

	
Upon the disclosing party's request, the receiving party shall either return to the dis­closing party all Confidential Information or shall certify to the disclosing party that all media containing Confidential Information have been destroyed. Provided, however, that an archival copy of the Confidential Information may be retained in the files of the receiving party's counsel, solely for the purpose of proving the contents of the Confidential Information.

 

	
5.

	
The foregoing restrictions on each party's use or disclosure of Confidential Information shall not apply to Confidential Information that the receiving party can demonstrate:

 

	
  

	
a)

	
was independently developed by or for the receiving party without reference to the Confidential Information, or was received without restrictions; or

 

	
  

	
b)

	
has become generally available to the public without breach of confidentiality obliga­tions of the receiving party; or

 

	
  

	
c)

	
was in the receiving party's possession without restriction or was known by the receiving party without restriction at the time of disclosure; or

 

	
  

	
d)

	
is the subject of a subpoena or other legal or administrative demand for disclosure; provided, however, that the receiving party has given the disclosing party prompt notice of such demand for disclosure and the receiving party reasonably cooperates with the disclosing party's efforts to secure an appropriate protective order.

 

  

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6.

	
Access to Confidential Information hereunder shall not preclude an individual who has seen such Confidential Information for the purposes of this Agreement from working on future projects for the receiv­ing party which relate to similar subject matters, provided that such individual does not make reference to the Confidential Information and does not copy the substance of the Confidential Information. Furthermore, nothing contained herein shall be construed as imposing any restriction on the receiving party's disclosure or use of any general learning, skills or know-how developed by the receiving party's personnel under this Agreement, if such disclosure and use would be regarded by a person of ordinary skill in the relevant area as not constituting a disclosure or use of the Confidential Information. As between the parties, all Confidential Information shall remain the property of the disclosing party. By disclosing Confidential Information or executing this Agreement, the disclosing party does not grant any license, explicitly or implicitly, under any trademark, patent, copyright, mask work protec­tion right, trade secret or any other intellectual property right. THE DISCLOSING PARTY DISCLAIMS ALL WARRANTIES REGARDING THE CONFIDENTIAL INFORMATION, INCLUDING ALL WARRANTIES WITH RESPECT TO INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS AND ALL WARRANTIES AS TO THE ACCURACY OR UTILITY OF SUCH CONFIDENTIAL INFORMATION. Execution of this Agreement and the disclosure of Confidential Information pursuant to this Agreement does not constitute or imply any commitment, promise, or inducement by either party to make any purchase or sale, or to enter into any additional agreement of any kind.

 

	
7.

	
The parties acknowledge that certain products, software and technical information provided pursuant to this Agreement may be subject to United States export laws and regulations and agree that any use or transfer of such items must be authorized by the appropriate United States government agency. Neither party shall directly or indirectly use, distribute, transfer or transmit any item of Confidential Information (even if incorporated into other products, software and technical information), except in compliance with United States export laws and regula­tions.

 

	
8.

	
Either party's failure to enforce any provision, right or remedy under this Agreement shall not constitute a waiver of such provision, right or remedy.

 

	
9.

	
This Agreement and performance thereunder shall be governed by the laws of the law of the State of New York, without regard to the conflict of law rules of such state, and excluding the United Nations Convention on the Sale of Goods.

 

	
10.

	
If a dispute arises with respect to this Agreement which cannot be resolved by negotiation, it shall be referred to a neutral arbitrator selected in accordance with the commercial arbi­tration rules of the American Arbitration Association (“AAA”). The arbitration shall be governed by the United States Arbitration Act and the rules of the AAA. The arbitrator shall not be empowered to limit, expand, or modify this Agreement, to award punitive or exemplary damages, or to award any financial damages other than damages caused by breach of this Agreement. The arbitrator may order limited discovery, but in determining whether to permit discovery shall balance the benefit of the requested discovery against the burden on the party against whom discovery is sought. Each party shall bear its own expenses and an equal share of all the costs and fees of arbitration. The contents and results of the arbitration shall be held in confidence by all participants. Nothing herein shall pre­clude either party from seeking interim equitable relief from a court of competent jurisdic­tion. A request by a party to a court for interim relief shall not affect either party's obliga­tion hereunder to arbitrate.

 

	
11.

	
This Agreement constitutes the entire agreement of the parties with respect to the parties' respective obligations in connection with Confidential Information disclosed hereunder and supersedes all prior oral and written agreements and discussions with respect thereto. Each party intends that a facsimile of its signature printed by a receiving fax machine be regarded as an original signature and agrees that this Agreement can be executed in counterparts. The par­ties can amend or modify this Agreement only by a writing duly executed by their respective authorized representatives. Neither party shall assign this Agreement without first securing the other party's written consent.

 

	
Modavox, Inc.

	
Company

	
 

By: [Missing Graphic Reference]

	
 

By:                                                             

	
 

Print Name: Mark Severini

	
 

Print Name:                                                             

	
 

Title: CEO

	
 

Title:                                                              

	
 

Date: January 15, 2010

	
 

Date:                                                             

 

  

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Exhibit B

SECURITIES TRADING BY COMPANY PERSONNEL

The Board of Directors of Modavox, Inc. has adopted the following Policy which applies to all personnel (including directors and officers) of our corporation and its subsidiaries (collectively called the “Company”) arising from our legal and ethical responsibilities as a public company.

1.           Prohibition Against Trading on Undisclosed Material Information.  If you are aware of material information relating to the Company which has not yet been made available to the public for at least two full trading days (often called “inside information”), you are prohibited from trading in our securities, directly or indirectly, and from disclosing such information to any other persons who may trade in our securities.  Any information, positive or negative, is “material” if it might be of significance to an investor in determining whether to purchase, sell or hold our securities.  Information may be significant for this purpose even if it would not alone determine the investor’s decision.  Examples include a potential business acquisition, internal information about revenues, earnings or other aspects of financial performance which departs in any way from what the market would expect based upon prior disclosures, important business developments, the acquisition or loss of a major customer or an important transaction.  We emphasize that this list is merely illustrative.

Once material information is announced, trading generally can occur after a lapse of two full trading days.  Therefore, if an announcement is made before the commencement of trading on a Monday, an employee generally may trade in the Company’s stock starting on the Wednesday of that week, because two full trading days would have elapsed by then (all of Monday and Tuesday).  If the announcement is made on Monday after trading begins, employees may not trade in the Company’s stock until Thursday.  However, as discussed below, all trades must be precleared in writing by the Company’s CEO.

The above prohibition against trading on inside information generally reflects the requirements of law as well as the Company’s Policy.  As more fully discussed below, in many cases a breach of this Policy also will constitute a serious legal violation.

2.           Restricted Periods.  No personnel may trade any securities of the Company during the periods that begin on the day following the end of a quarterly reporting period and end two full trading days after the financial results for the quarter, or for the full year with respect to the fourth quarter, have been announced publicly.  The announcement date of the quarterly results varies, but normally occurs toward the end of the month following the end of the fiscal quarter.  The announcement date of yearly results also varies, but normally occurs during May or June.

Note that the limitations in Section 1 above relating to material undisclosed information remain applicable in the period when trading is permitted by this Section 2.  The two sections apply independently.

3.           Pre-clearance of all Trades.  Information relating to the Company’s business is highly sensitive and does not arise at predictable times during quarterly reporting periods.  In addition, due to the relatively small number of Company personnel, sensitive information cannot effectively be isolated in all instances within the Company.  Accordingly, in order to prevent intentional and unintentional violations of applicable law and Company Policy, all trades in Company securities by any director, officer or employee of the Company must be approved in advance, in writing, by the President/Chief Executive Officer of the Company or, in his absence, the Chairman of the Board of the Company.  Trading by the President/Chief Executive Officer must be approved in advance, in writing, by the Chairman of the Board of the Company.  Requests for approval of a proposed trade should be directed to the President/Chief Executive Officer, who will promptly approve or deny the request.  In recognition of the fact that circumstances may arise from time to time that constitute material nonpublic information, but which cannot be widely disclosed within the Company, the President/Chief Executive Officer may, but shall not be obligated to, describe the reason for any denial of a trading request.

4.           Confidentiality.  Serious problems could be caused for the Company by  unauthorized disclosure of internal information about the Company (or confidential information about our customers or vendors), whether or not for the purpose of facilitating improper trading in our stock.  Company personnel should not discuss internal Company matters or developments with anyone outside of the Company, except as required in the performance of regular corporate duties.

This prohibition applies specifically (but not exclusively) to inquiries about the Company which may be made by the press, investment analysts, shareholders or others in the financial community.  It is important that all such communications on behalf of the Company be made only through an appropriately designated officer under carefully controlled circumstances.  Unless you are expressly authorized to the contrary, if you receive any inquiries of this nature, you should decline comment and refer the inquiry to the President/Chief Executive Officer or Chief Financial Officer.

  

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5.           Information About Other Companies.  In the course of your employment, you may become aware of material non-public information about other public companies -- for example, other companies with which our Company has business dealings.  You are prohibited from trading in the securities of any other public company at a time when you are in possession of material non-public information about such company.

6.           Tipping.  Improper disclosure of non-public information to another person who trades in the stock (so-called “tipping”) is also a serious legal offense by the tipper and a violation of the terms of this Policy.  If you disclose information about our Company, or information about any other public company which you acquire in connection with your employment with our Company, you may be fully responsible legally for the trading of the person receiving the information from you (your “tippee”) and even persons who receive the information directly or indirectly from your tippee.  Accordingly, in addition to your general obligations to maintain confidentiality of information obtained through your employment and to refrain from trading while in possession of such information, you must take utmost care not to discuss confidential or non-public information with family members, friends or others who might abuse the information by trading in securities.

7.           Limitation of Certain Trading Activities.  We encourage interested employees to own our securities as a long-term investment at levels consistent with their individual financial circumstances and risk bearing abilities (since ownership of any security entails risk).  However, Company personnel may not trade in puts, calls or similar options on our stock or sell our stock “short.”  (You may, of course, exercise any stock options granted to you by the Company on the terms in your grant letter.)

8.           Consequence of Violation. The Company considers strict compliance with this Policy to be a matter of utmost importance.  We would consider any violation of this Policy by an employee as a threat to our reputation.  Violation of this Policy could cause extreme embarrassment and possible legal liability to you and the Company.  Knowing or willful violations of the letter or spirit of the Policy will be grounds for immediate dismissal from the Company.  Violation of the Policy might expose the violator to severe criminal penalties as well as civil liability to any person injured by the violation.  The monetary damages flowing from a violation could be three times the profit realized by the violator, as well as the attorney’s fees of the persons injured.

9.           Resolving Doubts.  If you have any doubt as to your responsibilities under this Policy, seek clarification and guidance before you act from the President/Chief Executive Officer or Chief Financial Officer.  Do not try to resolve uncertainties on your own.

10.           A Caution About Possible Inability to Sell.  Although the Company encourages employees to own our securities as a long-term investment (see Section 7), all personnel must recognize that trading in securities may be prohibited at a particular time because of the existence of material non-public information.  Anyone purchasing our securities must consider the inherent risk that a sale of the securities could be prohibited at a time he or she might desire to sell them.  The next opportunity to sell might not occur until after an extended period, during which the market price of the securities might decline.

  

-8-ex10-9.htm

Exhibit 10.9

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated as of May 19,  2009 (the “Agreement”) between Modavox, Inc., a Delaware corporation, or any successor thereto (“Company”), and Mark Severini (“Executive”).

WHEREAS, the Company desires to employ Executive as its Chief Executive Officer upon the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the Company and Executive hereby agree as follows:

Article I.

DEFINITIONS

The terms set forth below have the following meanings (such meanings to be applicable to both the singular and plural forms, except where otherwise expressly indicated):

	
  

	
1.1

	
“Accrued Annual Bonus” means the amount of any Annual Bonus earned but not yet paid with respect to the Year ended prior to the Date of Termination.

	
  

	
1.2

	
“Accrued Base Salary” means the amount of Executive’s Base Salary which is accrued but not yet paid as of the Date of Termination.

	
  

	
1.3

	
“Affiliate” means any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, the Company.  For the purposes of this definition, the term “control” when used with respect to any Person means the power to direct or cause the direction of management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

	
  

	
1.4

	
“Agreement” – see the recitals to this Agreement.

	
  

	
1.5

	
“Agreement Date” means the date that is specified in the recitals to this Agreement.

	
  

	
1.6

	
“Anniversary Date” means any annual anniversary of the Agreement Date.

	
  

	
1.7

	
“Annual Bonus” – see Section 4.2(a).

	
  

	
1.8

	
“Annualized Total Compensation” means, as of any date, the sum of Executive’s Base Salary as of such date and Target Annual Bonus applicable to the Year that includes such date.

	
  

	
1.9

	
“Base Salary” – see Section 4.1.

	
  

	
1.10

	
“Beneficiary” – see Section 9.3.

	
  

	
1.11

	
“Board” means the Board of Directors of the Company.

  

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1.12

	
“Cause” means any of the following:

	
  

	
(a)

	
Executive’s conviction of a felony or of a misdemeanor involving fraud, dishonesty or moral turpitude, or

	
  

	
(b)

	
Executive’s willful or intentional material breach of this Agreement, or grossly neglects his duties under this Agreement, that results, or in all probability is likely to result, in financial detriment that is material to the Company.

	
  

	
(c)

	
a repeated failure by Executive to follow the written directives of the Board or any written Company policy or guidelines expressly approved by the Board which results, or in all probability is likely to result, in financial detriment that is material to the Company; provided, however, that (a) if Executive initially refused to obey the written directives of the Board, Executive is furnished a written statement by the Board that it believes in good faith that the acts or non-acts being directed are in the best interests of the Company, and (b) Executive is provided the opportunity to discuss with the Board its reasons for not complying with the Board’s directives, and provided further that following the written directive of the Board would not cause Executive to commit any illegal act or engage in any illegal course of conduct.

For purposes of clause (b) of the preceding sentence, Cause shall not include any one or more of the following:

	
  

	
(i)

	
bad judgment,

	
  

	
(ii)

	
ordinary negligence,

	
  

	
(iii)

	
any act or omission that Executive believed in good faith to have been in or not opposed to the interest of the Company (without intent of Executive to gain therefrom, directly or indirectly, a profit to which he was not legally entitled), or

	
  

	
(iv)

	
any act or omission of which any member of the Board who is not a party to such act or omission has had actual knowledge for at least 12 months.

	
  

	
1.13

	
“Change of Control” means any of the following events:

	
  

	
(a)

	
 individuals who, as of the Agreement Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute a majority of the members of the Board; provided that any individual who becomes a director after the Agreement Date whose election or nomination for election by the Company’s shareholders was approved by a majority of the members of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with any action or threatened “election contest” relating to the election of the directors of the Company (as such terms are used in Rule 14a-11 under the Exchange Act), “tender offer” (as such term is used in Section 14(d) of the Exchange Act) or a proposed Merger (as defined below)) shall be deemed Incumbent Directors and to be members of the Incumbent Board; or

  

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(b)

	
approval by the stockholders of the Company of either of the following:

	
  

	
(i)

	
a merger, reorganization, consolidation or similar transaction (any of the foregoing, a “Merger”), as a result of which the Persons who were the respective beneficial owners of the outstanding Common Stock and Voting Securities of the Company immediately before such Merger are not expected to beneficially own, immediately after such Merger, directly or indirectly, more than 60% of, respectively, the common stock and the combined voting power of the Voting Securities of the corporation resulting from such Merger in substantially the same proportions as immediately before such Merger,

	
  

	
(ii)

	
a plan of liquidation of the Company or a plan or agreement for the sale or other disposition of all or substantially all of the assets of the Company.

 

Notwithstanding the foregoing, there shall not be a Change in Control if, in advance of such event, Executive agrees in writing that such event shall not constitute a Change in Control.

	
  

	
1.14

	
“Code” means the Internal Revenue Code of 1986, as amended from time to time.

	
  

	
1.15

	
“Committee” means the Compensation Committee of the Board.

	
  

	
1.16

	
“Common Stock” means the common stock, $.0001 par value, of the Company.

	
  

	
1.17

	
“Company” – see the recitals to this Agreement.

	
  

	
1.18

	
“Date of Termination” means the effective date of a Termination of Employment for any reason, including death or Disability, whether by either of the Company or by Executive.

	
  

	
1.19

	
“Disability” means a mental or physical condition which, in the opinion of the Board, renders Executive unable or incompetent to carry out the material job responsibilities which such Executive held or the material duties to which Executive was assigned at the time the disability was incurred, which has existed for at least three (3) months and which in the opinion of a physician mutually agreed upon by the Company and Executive (provided that neither party shall unreasonably withhold his agreement) is expected to be permanent or to last for an indefinite duration or a duration in excess of a total of six (6) months.

	
  

	
1.20

	
“Employment Period” – see Section 3.1.

	
  

	
1.21

	
“Exchange Act” means the Securities Exchange Act of 1934.

	
  

	
1.22

	
“Executive” – see the recitals to this Agreement.

	
  

	
1.23

	
“Fair Market Value” means, as of any date, (a) the average of the high and low prices of the Common Stock on such date reported on the national securities exchange on which the Company is listed (or, if no sale of the Common Stock was reported for such date, on the next preceding date on which such a sale of security was reported), (b) if the Common Stock is not listed on any national securities exchange, the average of the high bid and low asked quotations for the Common Stock on such date un the over-the-counter market (or, if no quotation of the Common Stock was reported for such date, on the next preceding date on which such a quotation of such security was reported), or (c) if there is no public market for the Common Stock, the fair market value for the Common Stock determined by the Committee in the good faith exercise of its discretion.

  

-3-

  

	
  

	
1.24

	
“Good Reason” means the occurrence of any one or more of the following events unless Executive specifically agrees in writing that such event shall not be Good Reason:

(a)           any material breach of this Agreement by the Company, including:

	
  

	
(i)

	
the failure of the Company to comply with the provisions of Articles II, III, IV, V, or VI of this Agreement;

	
  

	
(ii)

	
any material adverse change in the status, responsibilities or prerequisites of Executive;

	
  

	
(iii)

	
any failure to nominate or elect Executive as Chief Executive Officer or as a member of the Board;

	
  

	
(iv)

	
causing or requiring Executive to report to anyone other than the Board; or

	
  

	
(v)

	
assignment of duties materially inconsistent with his position and duties described in this Agreement,

	
  

	
(b)

	
the failure of the Company to assign this Agreement to a successor to the Company or failure of a successor to the Company to explicitly assume and agree to be bound by this Agreement, or an Agreement with materially identical terms, but, for example, with stock options in a successor rather than the Company,

	
  

	
(c)

	
requiring Executive to be principally based at any office or location more than ten miles from the current offices of the Company in New York, NY.

	
  

	
(d)

	
the delivery of Executive of a Notice of Consideration pursuant to Section 7.1(d) if, within a period of 90 days thereafter, the Board fails for any reason to terminate Executive for Cause in compliance with all of the substantive and procedural requirements of Section 7.1, or

	
  

	
(e)

	
a Termination of Employment by Executive for any reason or no reason during the 30-day period commencing 12 months after a Change of Control.

  

-4-

  

	
  

	
1.25

	
“Including” means including without limitation.

	
  

	
1.26

	
“Initial Option” – see Section 5.1.

	
  

	
1.27

	
“Notice of Consideration” – see Section 7.1(b).

	
  

	
1.28

	
“Option” means an option to purchase shares of Common Stock.

	
  

	
1.29

	
“Option Term” – see Section 5.2(d).

	
  

	
1.30

	
“Permitted Transferee” means the spouse of Executive, a lineal descendent of Executive or a spouse of a lineal descendant of Executive or a trust, limited partnership or other entity principally benefiting all or a portion of such individuals.

	
  

	
1.31

	
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, body or department.

	
  

	
1.32

	
“Prorata Annual Bonus” means (a) the product of the amount of Bonus to which the Board determines Executive would have been entitled if he had been employed by the Company on the last day of the Year that includes the Termination Date, and if Executive had achieved his Target Annual Goals for such Year, multiplied by (b) a fraction of which the numerator is the number of days which would have elapsed in such Year through the Date of Termination and the denominator is 365.

	
  

	
1.33

	
“Severance Payment” means the payment of a multiple of Executive’s Annualized Total Compensation pursuant to Section 7.3 or Section 7.4, as applicable.

	
  

	
1.34

	
“Subsequent Options” – see Section 5.1(a).

	
  

	
1.35

	
“Subsidiary” means, with respect to any Person, (a) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned by such Person, and (b) any partnership in which such Person has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) or more than 50%.

	
  

	
1.36

	
“Taxes” means the incremental United States federal, state and local income, excise and other taxes payable by Executive with respect to any applicable item of income.

	
  

	
1.37

	
“Termination for Good Reason” means a Termination of Employment by Executive for a Good Reason, whether during or after the Employment Period.

  

-5-

  

	
  

	
1.38

	
“Termination of Employment” means a termination by the Company or by Executive of Executive’s employment by the Company.

	
  

	
1.39

	
“Termination without Cause” means a Termination of Employment by the Company for any reason other than Cause or Executive’s death or Disability, whether during or after the Employment Period, including Termination of Employment at the end of the Employment Period after the Company’s giving a Notice of Non-Renewal.

	
  

	
1.40

	
“Witholding Taxes” means any United States federal, state, local or foreign withholding taxes and other deductions required to be paid in accordance with applicable law by reason of compensation received pursuant to this Agreement.

	
  

	
1.41

	
“Year” means a calendar year period ending December 31.

Article II.

DUTIES

2.1           Duties.  The Company shall employ Executive during the Employment Period as its Chief Executive Officer.   During the Employment Period, Executive shall perform the duties properly assigned to him hereunder and shall use his reasonable best efforts to promote the interests of the Company.

2.2           Other Activities.  Executive may serve on non-competitive corporate, civic or charitable boards or committees, teach at educational institutions or engage in other non-competitive business interests and manage personal investments; provided that such activities do not individually or in the aggregate significantly interfere with the performance of his duties under this Agreement.

Article III.

EMPLOYMENT PERIOD

3.1           Employment Period.   Subject to the termination provisions hereinafter provided, the term of Executive’s employment under this Agreement shall begin on the Agreement Date and shall remain in effect until terminated by either Executive or the Company as described herein (the “Employment Period”).  The employment of Executive by the Company shall not be terminated other than in accordance with Article VII.

Article IV.

COMPENSATION

4.1           Salary.  The Company shall pay Executive in accordance with its normal payroll practices (but not less frequently than monthly) an annual salary at a rate of $150,000 per year (“Base Salary”).  During the Employment Period, the Base Salary shall be reviewed at least annually by the Committee after consultation with Executive and may from time to time be increased as determined by the Committee.  Effective as of the date of any such increase, the Base Salary as so increased shall be considered the new Base Salary for all purposes of this Agreement and may not thereafter be reduced.  Any increase in Base Salary shall not limit or reduce any other obligation of the Company to Executive under this Agreement unless otherwise expressly agreed by the parties.

  

-6-

  

	
  

	
4.2.

	
Annual Bonus.

(a)           At the discretion of the Board, Executive shall be eligible for an annual cash bonus ranging from zero to 33% of his Base Salary (“Annual Bonus”) in accordance with the terms hereof for each Year which begins during the Employment Period.

(b)           In determining whether Executive is to receive an Annual Bonus, the Board shall consider whether Company has a positive operating cash flow in the applicable Year and whether Executive has achieved his target performance goals (the “Target Annual Goals”), initially drafted by Executive and edited and approved by the Committee after consulting with Executive on an annual basis.  Such performance goals shall be provided by Executive within a reasonable time to allow of finalization by the Committee within 90 days after the first day of the applicable Year.

(c)           The Company shall pay the entire Annual Bonus that is payable with respect to a Year in a lump-sum cash payment as soon as practicable after the Committee can determine whether and the degree to which Maximum Annual Goals or Target Annual Goals have been achieved following the close of such Year.  Any such Annual Bonus shall in any event be paid within 30 days after the end of the Year.

Article V.

STOCK GRANTS

5.1           Option Grants.  As an inducement to Executive to enter into this Agreement, the Company shall grant to Executive an Option to purchase 500,000 shares of Common Stock (the “Initial Option”).  Although the Company and Executive intend the Initial Option to be in lieu of normal annual or other option grants through the end of the Year 2010, the Committee may at any time in its discretion consider Executive for possible future annual or other grants of Options (such Options collectively, the “Subsequent Options”) and, commencing in the Year 2011, shall at least once during each Year consider Executive for a grant of a Subsequent Option.

	
  

	
5.2

	
Terms & Conditions of Options.

(a)           The Initial Option and each Subsequent Option shall be subject to the terms and conditions specified in paragraphs (b) or (c) of this Section, respectively, and shall also be subject to the terms and conditions specified in paragraph (d) of this Section.

	
  

	
(b)

	
The Initial Option:

	
  

	
(i)

	
shall have an exercise price equal to 100% of the Fair Market Value of the Common Stock on the date on which the Stock Option grant is approved by the Board or the Committee.

	
  

	
(ii)

	
shall become vested/exercisable at a rate of 1/36th per month for a vesting period of thirty six (36) months for as long as Executive remains employed by the Company; provided, however, that the Initial Option shall immediately become 100% vested/exerciseable upon a Termination of Employment by reason of  the death or Disability, a Termination Without Cause, a Termination for Good Reason, or a Change of Control.

  

-7-

  

	
  

	
(c)

	
Each Subsequent Option shall in all other respects be on terms and conditions that are no less favorable to Executive than the terms and conditions applicable to Options granted at or about the same time to other senior executives of the Company.

	
  

	
(d)

	
The Initial Option and each Subsequent Option:

	
  

	
(i)

	
shall have a term (the “Option Term”) of at least ten (10) years;

	
  

	
(ii)

	
may be exercised after the Date of Termination to the extent such Option was exercisable on such date (after giving effect to any acceleration of exercisability by reason of Termination of Employment):

(A)  in the event of Termination of Employment by reason of death or Disability, a Termination for Good Reason, or a Termination without Cause, at any time or from time before the expiration of the applicable Option Term, or

(B)  in the event of any other Termination of Employment, at any time or from time to time during the five-year period commencing on the Date of Termination, but not after the expiration of the applicable Option Term;

(iii)          shall not be transferable by Executive during his lifetime except to a Permitted Transferee; and

	
  

	
(iv)

	
shall be cancelled in the event of a merger or consolidation pursuant to the terms of which cash is to be paid for each share of Common Stock then outstanding, such cancellation to be effective immediately before the consummation of such merger or consolidation, subject to the immediate payment by the Company of a cash amount to Executive equal to the Option Spread (as defined below).  The “Option Spread” applicable to an Option shall equal the product of the number of shares of Common Stock subject to such Option multiplied by the positive difference, if any, between the cash amount to be paid for each share of Common Stock in such merger or consolidation and the exercise price of such Option

 

	
  

	
(e)

	
In the event of a Merger (as defined in 1.13(b)(i), pursuant to which Company shares are exchanged for or converted into other securities or property, the Board shall appropriately adjust each outstanding vested Option (including exercise price, as appropriate) such that, upon exercise thereof, each Option will entitle the holder to receive the securities and/or property that such holder would have received had the Option been exercised immediately prior to upon payment of the applicable exercise price of such option.

5.3           Manner of Exercise of Options.  Any Option or any part thereof shall be exercised by Executive, his Permitted Transferee or, if after his death, a Beneficiary by a written notice to the Company stating the number of shares of Common Stock with respect to which the Option is being exercised and the form of payment of the exercise price of the Option and any related Withholding Taxes.  Such payment may be made in any one or more of the following forms:

 

  

-8-

  

	
  

	
(a)

	
cash, or

	
  

	
(b)

	
previously-owned shares of Common Stock (which, if acquired from the Company or an Affiliate, shall have been held by Executive for at least six (6) months) valued at their Fair Market Value on the date of exercise.

The Company shall deliver the purchased shares of Common Stock promptly after its receipt of notice of exercise and payment.

5.4           Adjustment of Options.  If any dividend is declared on the Common Stock which is payable in Common Stock, the number of shares of Common Stock to which any Option is subject shall be multiplied by (and the exercise price of such Option shall be divided by) the sum of the number 1.0 plus the number of shares of Common Stock (including any fraction thereof) payable as a dividend on each share of Common Stock.  In the event of any change in the number or kind of outstanding shares of Common Stock by reason of any recapitalization, reorganization, merger, consolidation, stock split or any similar change affecting the Common Stock (other than a dividend payable in Common Stock), the Company shall make an appropriate adjustment in the number of shares of Common Stock and exercise price applicable to each Option so that, after such adjustment, the Option shall represent a right to receive, upon payment of the same aggregate exercise price as in effect immediately before such adjustment, the same consideration (or of such consideration is not available, other consideration of the same value) that Executive would have been entitled to receive before such recapitalization, reorganization, merger, consolidation, stock split or other change affecting the Common Stock.

Article VI.

OTHER BENEFITS

6.1           Incentive, Savings & Retirement Plans.  In addition to Base Salary and an Annual Bonus, Executive shall be entitled to participate during the Employment Period in all incentive, savings, and retirement plans, practices, policies and programs that are from time to time applicable to other senior executives of the Company.

6.2           Welfare Benefits.  During the Employment Period, Executive and/or his family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare plans, practices, policies and programs provided by the Company (including medical, prescription, dental, disability, salary continuance, employee life, group life, dependent life, accidental death and travel accident insurance plans and programs) applicable to other senior executives of the Company.

6.3           Fringe Benefits; Car Allowance.  During the Employment Period, Executive shall be entitled to all fringe benefits that are from time to time available to other senior executives of the Company.  Executive shall also be entitled to an allowance of five hundred dollars ($500) per month to be used for the payment of car services and parking expenses.

6.4           Vacation.  During the Employment Period, Executive shall be entitled to paid vacation in accordance with the plans, practices, policies, and programs applicable to other senior executives of the Company, but in no event shall such vacation time be less than three (3) weeks per calendar year.

  

-9-

  

6.5           Expenses.  During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable employment-related expenses incurred by Executive upon the receipt by the Company of accounting in accordance with practices, policies and procedures applicable to other senior executives of the Company.

6.6           Insurance. The Company will at all times during the Employment Period maintain D&O and Fiduciary insurance policies which policies cover the acts and omissions of Executive in furtherance of his duties hereunder.

6.7           Indemnification; Legacy Matters.  In addition to any other protections afforded to Executive under the Company’s By-Laws, Articles of Incorporation, corporate charters or governing documents, and applicable law, the Company agrees to fully indemnify and hold harmless Executive for all liabilities, losses or expenses incurred by Executive, including attorney’s fees (“Losses”), to the extent such Losses relate to any act or omission of the Company, including any act or omission of any employee, agent or representative of the Company, regarding any action, transaction, matter or omission that occurred (or should have occurred) prior to the Agreement Date, including all legacy legal matters, or to the extent such Losses arise due to acts or omissions with respect to which Executive was not informed or involved.

Article VII.

TERMINATION BENEFITS

	
  

	
7.1

	
Termination for Cause or Other than for Good Reason, or Death or Disability

(a)           If the Company terminates Executive’s employment for Cause or Executive terminates his employment other than for Good Reason, death or Disability, the Company shall pay to Executive immediately after the Date of Termination an amount equal to the sum of Executive’s Accrued Base Salary and Accrued Annual Bonus, and Executive shall not be entitled to receive any Severance Payment.

(b)           The Company may not terminate the Executive’s employment for Cause unless:

	
  

	
(i)

	
no fewer than 60 days prior to the Date of Termination, the Company provides Executive with written notice (the “Notice of Consideration”) of its intent to consider termination of Executive’s employment for Cause, including a detailed description of the specific reasons which form the basis for such consideration;

	
  

	
(ii)

	
for a period of not less than 30 days after the date Notice of Consideration is provided, Executive shall have the opportunity to appear before the Board, with or without legal representation, at Executive’s election, to present arguments and evidence on his own behalf; and

	
  

	
(iii)

	
following the presentation to the Board as provided in (ii) above or Executive’s failure to appear before the Board at a date and time specified in the Notice of Consideration (which date shall not be less than 30 days after the date the Notice of Consideration is provided), Executive may be terminated for Cause only if (x) the Board, by the affirmative vote of all of its members (excluding Executive if he is a member of the Board, and any other member of the Board reasonably believed by the Board to be involved in the events leading the Board to terminate the Executive for Cause), determines that the actions or inactions of Executive specified in the Notice of Termination occurred, that such actions or inactions constitute Cause, and that Executive’s employment accordingly should be terminated for Cause; and (y) the Board provides Executive with a written determination (a “Notice of Termination for Cause”) setting forth in specific detail the basis of such Termination of Employment, which Notice of Termination for Cause shall be consistent with the reasons set forth in the Notice of Consideration.

  

-10-

  

Unless the Company establishes both (i) its full compliance with the substantive and procedural requirements of this Section 7.1 prior to a Termination of Employment for Cause, and (ii) that Executive’s action or inaction specified in the Notice of Termination for Cause did occur and constituted Cause, any Termination of Employment shall be deemed a Termination Without Cause for all purposes of this Agreement.

(c)           After providing a Notice of Consideration pursuant to the provisions of Section 7.1(b), the Board may, by the affirmative vote of all of its members (excluding for this purpose Executive if he is a member of the Board, and any other member of the Board reasonably believed by the Board to be involved in the events issuing the Notice of Consideration), suspend Executive with pay until a final determination pursuant to such Section 7.1(b) has been made.

7.2           Termination for Death or Disability.  If Executive’s employment terminates during the Employment Period due to his death or Disability, the Company shall pay to Executive or his Beneficiaries, as the case may be, immediately after the Date of Termination an amount which is equal to the sum of Executive’s Accrued Base Salary, Accrued Annual Bonus and Prorata Bonus.

7.3           Termination Without Cause or for Good Reason.  In the event of a Termination Without Cause or a Termination for Good Reason (whether during or after the Employment Period), Executive shall receive the following:

(a)           immediately after the Date of Termination, a lump-sum amount in immediately available funds equal to the sum of Executive’s Accrued Base Salary, Accrued Annual Bonus and Prorata Annual Bonus;

(b)           immediately after the Date of Termination, a lump-sum amount in immediately available funds equal to (x) the product of two (2) multiplied by (y) Executive’s Annualized Total Compensation;

(c)           immediately after the Date of Termination, a lump-sum amount in immediately available funds equal to the total amount for up to twelve (12) months (if any) of Executive’s unvested benefits under any plan or program sponsored by the Company which is forfeited on account of Executive’s employment being terminated, except unvested Subsequent Options.

7.4           Termination After a Change of Control.  If a Termination Without Cause or a Termination for Good Reason occurs within two years after a Change of Control, then Executive shall receive the payments required by Section 7.3.

  

-11-

  

7.5           Other Termination Benefits.  In addition to any amounts or benefits payable upon a Termination of Employment hereunder, Executive shall, except as otherwise specifically provided herein, be entitled to any payments or benefits provided hereunder or under the terms of any plan, policy or program of the Company or as otherwise required by applicable law.

Article VIII.

RESTRICTIVE COVENANTS

	
  

	
8.1

	
Non-solicitation of Employees; Confidentiality; Non-Competition.

(a)           Executive covenants and agrees that, at no time during the Employment Period nor during the one-year period immediately following a Termination of Employment by the Company for Cause or by Executive for other than Good Reason, will Executive:

(i)  directly or indirectly employ or seek to employ any person employed at that time by the Company or any of its Subsidiaries or otherwise encourage or entice any such person to leave such employment;

(ii)  become employed by, enter into a consulting arrangement with, or otherwise agree to perform personal services for a Competitor (as defined in Section 8.1(b));

(iii)  acquire an ownership interest in a Competitor; or

(iv)  solicit vendors of the Company on behalf of or for the benefit of a Competitor.

(b)           Executive covenants and agrees that, at no time during the Employment Period nor during the two-year period immediately following a Termination of Employment by the Company for Cause or by Executive for other than Good Reason, will Executive, directly or indirectly, solicit the Company’s Customers for the purpose of selling such customer services then offered or available through Company.  For the purposes of this Agreement.

(c)           For purposes of this Section: “Competitor” means any Person which sells goods or services which are directly competitive with those sold by a business that (i) is being conducted by the Company or any Subsidiary at the time in question and (ii) was being conducted at the Date of Termination and, for the Company’s most recently-completed fiscal year, contributed more than 10% of the Company’s consolidated revenues.  Notwithstanding anything to the contrary in this Section, goods or services shall not be deemed to be competitive with those of the Company (A) solely as a result of Executive being employed by or otherwise associated with a business of which a unit in competition with the Company or a Subsidiary but as to which unit Executive does not have direct or indirect responsibilities for the products or services involved. “Company’s Customers” shall mean all persons, firms, corporations, partnerships, limited liability companies and other legal entitles and all governmental bodies or agencies (including municipalities) for which Company is providing services as of the date of termination of Executive’s employment with Company.

 

  

-12-

  

(d)           Executive covenants and agrees that at no time during the Employment Period not at any time following any Termination of Employment will Executive communicate, furnish, divulge or disclose in any manner to any Person, or use, any Confidential Information (as defined in Section 8.1(d)) without the prior express written consent of the Company.  After a Termination of Employment, Executive shall not, without the prior written consent of the Company, or as may otherwise be required by law or legal process, communicate or divulge such Confidential Information to anyone other than the Company and its designees.

(e)           For purposes of this Section, “Confidential Information” shall mean financial information about the Company, contract terms with vendors and suppliers, customer and supplier lists and data, research and development, purchasing, accounting, marketing and selling practices, trade secrets and such other competitively-sensitive information to which Executive has access as a result of his positions with the Company, except that Confidential Information shall not include any information which was or becomes generally available to the public other than as a result of a wrongful disclosure by Executive, as a result of disclosure by Executive during the Employment Period which he reasonably and in good faith believes is required by the performance of his duties under this Agreement.

(f)           This Article does not prohibit executive from disclosing information compelled to be disclosed by applicable law or administrative regulation; provided that Executive, to the extent not prohibited from doing so by applicable law or administrative regulation, shall give the Company written notice of the information to be so disclosed pursuant to his subsection as far in advance of its disclosure as practicable.

8.2           Injunction.  Executive acknowledges that monetary damages will not be an adequate remedy for the Company in the event of a breach of this Article VIII, and that is would be impossible for the Company to measure damages in the event of such a breach.  Therefore, Executive agrees that, in addition to other rights that the Company may have, the Company is entitled to an injunction preventing Executive from any breach of this Article VIII.

Article IX.

MISCELLANEOUS

9.1.           Full Settlement.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others.  In no event shall Executive be obligated to seek other employment or take any other action to mitigate the amounts payable to Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned as a result of Executive’s employment by another employer.

	
  

	
9.2.

	
Legal Fees; Late Payments.

  

-13-

  

     (a)           If any contest or dispute shall arise between the Company and the Executive regarding any provision of this Agreement, the losing party shall reimburse the prevailing party for all legal fees and expenses reasonably incurred in connection with such contest or dispute, but only if the prevailing party prevails to a substantial extent with respect to its claims brought and pursued in connection with such contest or dispute.  Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute (whether or not appealed) to the extent the losing party receives reasonable written evidence of such fees and expenses.

(b)           If the Company fails to pay any cash amount owed under this Agreement when due, the Company shall pay interest on such amount at a rate equal to one percent (1%) per month (12 % per annum).

9.3.           Beneficiary.  If Executive dies prior to receiving all of the amounts payable to him in accordance with the terms of this Agreement, such amounts shall be paid to one or more beneficiaries (each, a “Beneficiary”) designated by Executive in writing to the Company during his lifetime, or if no such Beneficiary is designated, to Executive’s estate.  Such payments shall be made in a lump sum to the extent so payable and, to the extent not payable in a lump sum, in accordance with the terms of this Agreement.  Executive, without the consent of any prior Beneficiary, may change his designation of a Beneficiary or Beneficiaries at any time or from time to time by submitting to the Company a new designation in writing.

9.4.           Assignment; Successors.  The Company may not assign its rights and obligations under this Agreement without the prior written consent of Executive except to a successor of the Company’s business which expressly assumes the Company’s obligations hereunder in writing.  This Agreement shall be binding upon and inure to the benefit of Executive, his estate and Beneficiaries, the Company and the successors and permitted assigns of the Company.

9.5.           Nonalienation.  Benefits payable under this Agreement shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, prior to actually being received by Executive or a Beneficiary, as applicable, and any such attempt to dispose of any right to benefits payable hereunder shall be void.

9.6.           Severability.  If one or more parts of this Agreement are declared by any court or government authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any part of this Agreement not declared to be unlawful or invalid.  Any part so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such part to the fullest extent possible while remaining lawful and valid.

9.7.           Captions.  The names of the Articles and Sections of this Agreement are for convenience of reference only and do not constitute a part hereof.

9.8.           Amendment; Waiver.  This Agreement shall not be amended or modified except by written instrument executed by the Company and Executive.  A waiver of any term, covenant, or condition contained in this Agreement shall not be deemed a waiver of any other term, covenant or condition, and any waiver of any default in any such term, covenant or condition shall not be deemed a waiver of any later default thereof.

9.9.           Notices.  All notices hereunder shall be in writing and delivered by hand, by nationally-recognized delivery service that guarantees overnight delivery, or by first-class, registered or certified mail, return receipt requested, postage pre-paid, addressed as follows:

  

-14-

  

If to the Company, to:

Modavox, Inc.

Attention: Chief Executive Officer

43 West 24th Street

11th Floor

New York, NY 10011

If to Executive, to:

Mark Severini

200 West 86th Street

Apartment 1K

New York, NY 10024

9.10.           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

9.11.           Entire Agreement.  This Agreement forms the entire agreement between the parties hereto with respect to the subject matter contained in this Agreement and, except as otherwise provided herein, shall supercede all prior agreements, promises and representations regarding employment, compensation, severance or other payments contingent upon termination of employment, whether in writing or otherwise.

9.12.           Applicable Law.  The Agreement shall be interpreted and construed in accordance with the laws of the State of New York, without regard to its choice of law principles.

9.13.           Survival of Executive’s Rights.  All of Executive’s rights hereunder, including his rights to compensation and benefits, and his obligations under Section 9.1 hereof, and all of Company’s rights under Article VIII shall survive the termination of Executive’s employment and/or the termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement in the date first above written.

	
EXECUTIVE:

	
MODAVOX, INC.:

	  	  
	
__________________________

	
BY: ____________________________

	
Mark Severini

	  
	  	  
	  	
Its: _____________________________

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