Document:

Form of Shareholder's Agreement by and among Registrant and certain of its common stockholders

SHAREHOLDERS AGREEMENT

This Shareholders Agreement (this "Agreement") is dated as of __________ "by and among MoveMoney.com, Inc., a Texas corporation (the "Company"), and the shareholders of the Company identified on the signature pages hereto, together with any transferees of their shares of Company common stock, par value $0.001 per share ("Common Stock"), and any other holders of Common Stock that agree to be bound by the terms hereof (the "Shareholders").

WHEREAS, the Shareholders own shares of the Company's Common Stock and desire to place certain restrictions on the transfer and voting of the Common Stock and to enter into certain other agreements with respect to the management of the Company;

NOW, THEREFORE, the parties hereto agree as follows:

1. Definitions. In addition to the definitions that appear elsewhere in the Agreement, the following terms have the meanings specified:

"Affiliate" of a Shareholder means a corporation, partnership or other entity whose equity securities and voting rights are owned 100% (directly or indirectly) by such Shareholder, such Shareholder's spouse or immediate family or a trust entirely for the benefit of one of the foregoing entities or individuals.

"Fair Market Value" means fair market value, as determined by agreement between all parties to a purchase and sale transaction for which determination of Fair Market Value is required (an "Appraisal Transaction"); provided that if the parties to an Appraisal Transaction cannot agree on the fair market value after 15 days, then such fair market value will be determined by an independent appraiser, accountant or investment bank knowledgeable in the Company's field of business (the "Appraiser") acceptable to all such parties. If the parties cannot agree on an Appraiser, then all Persons buying in the Appraisal Transaction (acting as a group) will select one independent appraiser, accountant or investment bank and all Persons selling in the Appraisal Transaction (acting as a group) will select one independent appraiser, accountant or investment bank, and the two appraisers, accountants or investment banks will select the Appraiser. The Appraiser's appraisal of the fair market value will be conclusive and binding on all parties to the Appraisal Transaction. The costs of the Appraiser will be borne fifty percent by all of the buyers in the Appraisal Transaction and fifty percent by all of the sellers in the Appraisal Transaction, in each case based on their pro rata participation in the Appraisal Transaction. Decisions by a group of Shareholders that are parties to an Appraisal Transaction may be made by the holders of a majority of the Pro Rata Shares represented by such group of Shareholders.

"Interested Party" means each Person who, as a result of an Involuntary Transfer, has an interest in Common Stock previously owned by a Shareholder, including (as applicable) the affected Shareholder's estate, personal representative, spouse or successor.

"Involuntary Transfer" means any transfer of Common Stock owned by a Shareholder that results from (a) the attachment, sequestration, garnishment or other similar  involuntary transfer resulting from a bankruptcy or similar proceeding affecting such Shareholder; (b) the death or involuntary dissolution of such Shareholder; or (c) a Marital Relationship Transfer.

"Marital Relationship Transfer" means the divorce of a Shareholder or the death of a Shareholder's spouse under circumstances in which such Shareholder does not succeed to the spouse's interest (if any) in any Common Stock.

"Person" means any individual, corporation, partnership, limited liability company, trust or other entity.

"Pro Rata Share" means, with respect to a Shareholder, the percentage of all outstanding Common Stock of the Company owned by such Shareholder. If a group of Shareholders is entitled to purchase or sell Common Stock based on their respective Pro Rata Shares, then, if some Shareholders in the group choose not to purchase or sell the full amount to which they are entitled, the remaining Shareholders in the group may, in the case of a purchase, purchase shares of Common Stock in proportion to the respective Pro Rata Shares of the Shareholders who choose to purchase, and may, in the case of a sale, sell shares in proportion to the respective Pro Rata Shares of the Shareholders who choose to sell.

"Voluntary Transfer" means any sale, pledge or other transfer of Common Stock by a Shareholder, except (a) a transfer to such Shareholder's spouse or immediate family or a trust entirely for the benefit of such Shareholder or his spouse or immediate family, but only if and for so long as such Shareholder retains all voting rights with respect to such Common Stock; (b) a transfer to an Affiliate of such Shareholder, but only if and for so long as such Shareholder retains all voting rights with respect to such Common Stock and such transferee continues to be an Affiliate of such Shareholder; and (c) an Involuntary Transfer. If a transfer is effected pursuant to clause (a) of the preceding sentence, and the Shareholder loses its voting rights, or if a transfer is effected pursuant to clause (b) of the preceding sentence, and the Shareholder loses its voting rights or the transferee ceases to be an Affiliate of such Shareholder, then an Involuntary Transfer will be deemed to have occurred.

2. Voluntary Transfers. If any Shareholder or group of Shareholders (the "Selling Shareholder") intends to effect a Voluntary Transfer of Common Stock, the Selling Shareholder must first comply with the following provisions:

(a) Notice of Sale. The Selling Shareholder will deliver a written notice (the "Notice of Sale") to the Company describing the proposed Voluntary Transfer. The Notice of Sale will include (i) a statement of the Selling Shareholder's bona fide intention to sell or transfer Common Stock; (ii) the name and address of the proposed transferee (the "Buyer"); (iii) the number of shares of Common Stock to be sold or transferred (the "Offered Shares"); (iv) the per share purchase price, which must be in cash; and (v) the other terms and conditions of the proposed sale. 

(b) Company's Option. The Notice of Sale will constitute an irrevocable offer by the Selling Shareholder to sell to the Company all or any portion of the Offered Shares on the same per share terms and conditions stated in the Notice of Sale. The Company may elect to accept such offer in whole or in part only by delivering to the Selling Shareholder written notice of its irrevocable election to accept such offer within 30 business days after delivery of the Notice of Sale. If the Company does not elect to purchase all of the Offered Shares within such option period, then the Selling Shareholder will be free to sell or transfer all of the remaining Offered Shares to the Buyer on the same terms set forth in the Notice of Sale, within 60 days after the expiration of the Company's option period. If the sale to the Buyer is not so consummated, the terms of this Section 2 will again be applicable to any Voluntary Transfer of Common Stock by such Selling Shareholder. Notwithstanding the foregoing, any Selling Shareholder or designee thereof that is a member of the Company's Board of Directors will abstain from voting on the proposed purchase of the Offered Shares by the Company.

(c) Closing. If the Company elects to purchase Offered Shares pursuant to Section 2(b), the closing of the purchase and sale will occur on the 60th day following expiration of the Company's option pursuant to Section 2(b) (or such earlier date as may be agreed among the purchasing and selling parties). At such closing, the purchasers will deliver (by wire transfer or cashier's check, or as otherwise specified in the Notice of Sale) the consideration payable to the order of the Selling Shareholder, against delivery by the Selling Shareholder of certificates evidencing the Offered Shares being so purchased, free and clear of all liens, claims and encumbrances (other than this Agreement) and endorsed in good form for transfer.

3. Involuntary Transfers. Upon any Involuntary Transfer of Common Stock affecting a Shareholder (the "Former Shareholder"), each Interested Party will comply with the following provisions:

(a) Notice of Involuntary Transfer. The Interested Party will deliver a written notice (the "Notice of Involuntary Transfer") to the Company and, in the case of a Marital Relationship Transfer, to the Former Shareholder no later than 30 days after such Involuntary Transfer. The Notice of Involuntary Transfer will include (i) a description of the circumstances resulting in the Involuntary Transfer; (ii) the name and address of each Interested Party; and (iii) the number of shares of Common Stock subject to such Involuntary Transfer.

(b) Former Shareholder's Option. In the case of a Marital Relationship Transfer, the Notice of Involuntary Transfer will constitute an irrevocable offer by the Interested Party to sell to the Former Shareholder, at Fair Market Value, all or any portion of the Common Stock that was subject to the Marital Relationship Transfer. The Former Shareholder may elect to accept such offer in whole or in part only by delivering to the Interested Party and the Company written notice of its irrevocable election to accept such offer within 30 business days after delivery of the Notice of Involuntary Transfer. If the Former Shareholder does not accept such offer within such 30 business day period with respect to all of the Common Stock subject to the Marital Relationship Transfer, then the Company will have the option, pursuant to Section 3(c) to purchase any remaining Common Stock.

(c) Company's Option. The Notice of Involuntary Transfer will constitute an irrevocable offer by the Interested Party to sell to the Company, at Fair Market Value, all or any portion of the Common Stock subject to the Involuntary Transfer that is not purchased by the Former Shareholder pursuant to Section 3(b). The Company may elect to accept such offer in whole or in part only by delivering to the Interested Party written notice of its irrevocable election to accept such offer within 60 days after delivery of the Notice of Involuntary Transfer (or, if applicable, after the expiration of any options under Section 3(b)). Notwithstanding the foregoing, any Former Shareholder or Interested Party or designee thereof that is a member of the Company's Board of Directors will abstain from voting on the proposed purchase of such Common Stock by the Company.

(d) Closing. If the Former Shareholder or the Company elects to purchase Common Stock pursuant to this Section 3, the closing of the purchase and sale will occur on the 120th day following delivery of the Notice of Involuntary Transfer (or such earlier date as may be agreed among the purchasing and selling parties). At such closing, the purchasers will deliver by wire transfer or cashier's check the consideration payable to the order of the Interested Party, against delivery by the Interested Party of certificates evidencing the Common Stock being so purchased, free and clear of all liens, claims and encumbrances (other than this Agreement) and endorsed in good form for transfer.

4. Market Stand-Off Agreement. Each Shareholder hereby agrees, for a period of 180 days following the effective date of the first registration statement of the Company covering Common Stock (or other securities) to be sold on behalf of the Company in an underwritten public offering (or for such other period as may be agreed to by the managing underwriter or underwriters of such offering and the Company), not to sell or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any Common Stock beneficially held by such Shareholder at any time during such period except Common Stock included in such registration; provided, however, that all officers and directors of the Company who hold securities of the Company and all other Persons who beneficially hold at least five percent of the outstanding Common Stock enter into similar agreements. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Common Stock of each Shareholder (and the shares or securities of every other Person subject to the foregoing restriction) until the end of such period.

5. Addendum Agreement. No sale, pledge or other transfer of Common Stock by a Shareholder, whether voluntary or involuntary, will be valid or effective (a) unless effected in compliance with the terms of this Agreement and (b) until the transferee executes an addendum agreement substantially in the form of Exhibit A hereto (an "Addendum Agreement"), agreeing to be bound by the terms and conditions of this Agreement applicable to a Shareholder. The Company will not issue or sell any Common Stock unless the purchaser executes an Addendum Agreement.

6. Transfer Restriction Legends. Each Shareholder hereby agrees with the Company that each certificate representing Common Stock will bear substantially the following legend:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, VOTING AGREEMENTS AND OTHER PROVISIONS SET FORTH IN A SHAREHOLDERS AGREEMENT AMONG MOVEMONEY.COM, INC. (THE "COMPANY") AND ITS SHAREHOLDERS, A COPY OF WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE."

In addition, the Common Stock may not be sold, pledged or otherwise transferred in the absence of an effective registration statement pertaining thereto under the Securities Act of 1933, as amended, and all applicable regulations promulgated thereunder (the "Federal Act"), and under any applicable state securities laws and all applicable regulations promulgated thereunder (the "State Acts"), or an exemption from the registration requirements of the Federal Act and all applicable State Acts. Each certificate representing Common Stock will also bear substantially the following legend until such restriction is no longer required by law:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR DOCUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER."

7.        Miscellaneous

(a) Termination of Agreement. This Agreement will terminate upon the closing of an underwritten public offering of the Company's Common Stock. This Agreement also may be terminated or otherwise amended by written agreement among the Company and Shareholders having a combined Pro Rata Share of at least 66 2/3%.

(b) Notices. All notices and other communications hereunder must be in writing and will be deemed to have been duly given when delivered personally or sent by overnight delivery service or facsimile transmission or five days after being mailed by certified mail (return receipt requested) (i) to the Company at its principal executive offices or (ii) to a Shareholder at his address in the records of the Company.

(c) Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any applicable law, then provision will be deemed to be modified to the extent necessary to render it legal, valid and enforceable, and if no such modification will render it legal, valid and enforceable, then this Agreement will be construed as if not containing the provision held to be illegal, invalid or unenforceable, and the rights and obligations of the parties will be construed and enforced accordingly.

(d) CHOICE OF LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF TEXAS.

 (e) Counterparts. This Agreement may be executed in any number of counterparts, and all such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument.

(f) Complete Agreement. This Agreement embodies the complete agreement and understanding among the parties with respect to the subject matter hereof and supersedes and preempts any prior written, or prior or contemporaneous oral, understandings, agreements or representations by or among any of the parties that may have related to the subject matter hereof in any way.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

MOVEMONEY.COM, INC.

By:      __________________ Name: Balamani S. Vishwanath Title:   President

 

 

SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT

The undersigned hereby executes this counterpart signature page of the Shareholders Agreement, dated as of _____________, among MoveMoney.com, Inc., a Texas corporation (the "Company"), and certain Shareholders of the Company. If the undersigned is a married individual, the undersigned's spouse has executed a Spousal Consent in the form attached.

Individual:

(signature) Corporation or Trust:

(name of entity)

By:

Name:

Title:

Partnership:

(name of partnership)

(name of general partner)

By:     __________ Name:;__________

Title:

SPOUSAL CONSENT

I acknowledge that I have read the foregoing Shareholders Agreement, dated as of ____________, among MoveMoney.com, Inc., a Texas corporation (the "Company"), and certain Shareholders of the Company, that I know its contents, that I consent thereto and that I agree to be bound by its terms. I am aware that by its terms, among other things, my spouse agrees to sell certain of his/her shares of the capital stock of the Company, including my community property or other interest therein (if any), upon his/her death and upon certain other events and that transfer of such shares is otherwise restricted. I hereby consent to such sale and to such restrictions, approve of the provisions of the Shareholders Agreement, and agree that if I pre-decease my spouse, the successors of my community property or other interest (if any) in such shares will hold such shares subject to the provisions of the Shareholders Agreement. I am also aware of, and hereby consent to, the rights granted to my spouse and the other parties to the Shareholders Agreement to purchase any shares of the Company's capital stock that I may acquire by virtue of an Involuntary Transfer (as defined in the Shareholders Agreement), including without limitation any shares that may be awarded or distributed to me in any dissolution, divorce, legal separation or other similar proceeding.

Dated:

Name of Spouse:

 

 

Exhibit A  

 

ADDENDUM TO SHAREHOLDERS AGREEMENT

 

Reference is made to the Shareholders Agreement, dated as of _______________, among MoveMoney.com, Inc., a Texas corporation (the "Company"), and Shareholders of the Company identified therein (the "Agreement"). Capitalized terms used herein have the meanings assigned to such terms in the Agreement.

The undersigned hereby agrees to become a party to the Agreement and to be bound by and to observe and perform all obligations of a "Shareholder" thereunder with respect to all Company capital stock now owned or hereafter acquired by the undersigned. If the undersigned is a natural person who is married, the spouse of the undersigned has also executed this Addendum in the space provided below.

This Addendum will be attached to and become part of the Agreement and will be binding upon and inure to the benefit of the Company and each other Shareholder.

 

SHAREHOLDER:

Name:

 

Date:

I acknowledge that I have read the foregoing Addendum and the Shareholders Agreement of the Company, that I know its contents, that I consent thereto and that I agree to be bound by its terms. I am aware that by its terms, among other things, my spouse agrees to sell certain of his/her shares of the capital stock of the Company, including my community property or other interest therein (if any), upon his/her death and upon certain other events and that transfer of such shares is otherwise restricted. I hereby consent to such sale and to such restrictions, approve of the provisions of the Shareholders Agreement, and agree that if I pre-decease my spouse, the successors of my community property or other interest (if any) in such shares will hold such shares subject to the provisions of the Shareholders Agreement. I am also aware of, and hereby consent to, the rights granted to my spouse and the other parties to the Shareholders Agreement to purchase any shares of the Company's capital stock that I may acquire by virtue of an Involuntary Transfer (as defined in the Shareholders Agreement), including without limitation any shares that may be awarded or distributed to me in any dissolution, divorce, legal separation or other similar proceeding.

 

Name of Spouse:

SCHEDULE OF STOCKHOLDERS (AUGUST 31, 1999 – JUNE 1, 2000)

	Michael and Connie Eshelman Family Limited Partnership

	Richard Doyle

	Gary Larsen

	Veronica Gonzales

	Maria Larsen

	Vivienne B. Moran 

	Carl Galant

	Amir Borazjani

	Burns Family Partnership

	Sherry Hartgrove

	Robert Adrian

	Harold Adrian

	Carolyn Adrian

	Ronald V. Mylius

	Robert J. Mahoney Jr.

	Craig J. Wall

	Christian McColgan

	David Womack

	Robert Cave

	Bala Vishwanath

	Ravikanth Ganesan

	Sanjay Lall

	Seges
  Consultants, Inc.Employment Ageement dated as of August 23, 2004 by and between Registrant and Mark Eshelman

EMPLOYMENT AGREEMENT

This Agreement (the “Agreement”) is entered into as of March 1, 2002 (the “Commencement Date”) by and between Mark Eshelman
  (the “Executive”) and Smarte Solutions, Inc. (the “Company”).

1.

Duties and Scope of Employment.

(a)

Position.  For the term of his employment under this Agreement (the “Employment”), the Company agrees to employ the Executive in the position of Executive Vice President or in such other position as the Company subsequently may assign to the Executive.  The Executive shall report to the President.

(b)

Obligations to the Company.  During his Employment, without the prior written approval from the Company, the Executive shall not render services in any capacity to any other person or entity and shall not act as a sole proprietor or partner of any other person or entity or as a shareholder owning more than five percent of the stock of any other corporation.  The Executive shall comply with the Company’s policies and rules, as they may be in effect from time to time during his Employment.

(c)

No Conflicting Obligations.  The Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement.  The Executive represents and warrants that he will not use or disclose, in connection with his Employment, any trade secrets or other proprietary information or intellectual property in which the Executive or any other person has any right, title or interest.  

 

2.

Cash and Incentive Compensation.

(a)

Salary and Bonus.  During the period commencing on the Commencement Date and continuing through and until the Total Funding Date (as defined below), the Company shall pay the Executive as compensation for his services an initial base salary at a gross annual rate of not less than $90,000.00.  The “Total Funding Date” shall refer to the date the Company secures and closes equity or debt financing totaling $3,000,000.00 or more (inclusive of monies raised in the Initial Funding) or at the time investors holding Bridge Notes convert their Notes to equity.  In the event that the Total Funding Date occurs, the Company shall increase the Executive’s initial base salary to a gross annual rate of not less than $125,000.00 for a period of 2 years, and $120,000.00 subsequently thereafter.  Subject to the approval of the Board, the Company shall also provide the Executive an incentive cash bonus plan.  In the event that the Total Funding Date does not occur, the Company shall continue to pay the Executive a salary at the gross annual rate of $90,000.00, subject to any increases determined at the sole discretion of the Company’s Board of Directors.  The annual compensation specified in this Subsection (a), together with any modifications in such compensation that the Company may grant from time to time, is referred to in this Agreement as “Base Salary”. Such Base Salary shall be payable in accordance with the Company’s standard payroll procedures.  In addition to a Base Salary, Executive will be eligible to be considered for a financing bonus upon the Initial Funding Date (the “Financing Bonus”).  The Financing Bonus will be earned only if Executive is employed by the Company at the time of payment.  The Financing Bonus will be Fifteen Thousand Dollars  $15,000.00), payable no more than ten (10) days after the Total Funding Date.

(b)

Stock Options.  In addition to Stocks and Options the Executive received from the Company prior to this agreement, subject to the approval of the Board, the Company shall grant the Executive an additional incentive stock option covering 150,000 shares of the Company’s Common Stock.  Such option shall be granted as soon as reasonably practicable after the date of this Agreement.  The exercise price of such option shall be equal to the fair market value of such stock on the Commencement Date.  The term of such option shall be 10 years, subject to earlier expiration in the event of the termination of the Executive’s Employment.  Such option shall be immediately exercisable, but the purchased shares shall be subject to repurchase by the Company (“Right of Repurchase”) at the exercise price in the event that the Executive’s Employment terminates before he vests in the shares.  The Right of Repurchase shall lapse in equal monthly installments over the next three years of continuous service.  If, during the term of this Agreement, the Company terminates the Executive’s Employment for any reason other than Cause, then the Right of Repurchase shall lapse with respect to all remaining option shares.  The grant of such option shall be subject to the other terms and conditions set forth in the Smarte Solutions 2002 Stock Plan and in the Company's standard form of Stock Option Agreement.

(i)

In addition to the lapse of the Right of Repurchase as set forth above, the Right of Repurchase shall lapse as follows:

a)

In the event that the Company is subject to a Change in Control (as defined in the Smarte Solutions 2001 Stock Plan) before the Executive’s Employment ends, the Right of Repurchase shall lapse on the date of the Change in Control; 

b)

In the event that the Executive is terminated without Cause or is subject to a Constructive Termination, the Right of Repurchase shall lapse; and

c)

In the event of the Executive’s death or Permanent Disability before the Executive’s Employment ends, the Right of Repurchase shall lapse on the date of such death or Permanent Disability.

d)

For all purposes under this Agreement, “Constructive Termination” shall mean Executive’s voluntary resignation following (i) a change in his position with the Company that materially reduces his level of authority or responsibility, or (ii) receipt of notice that his principal workplace will be relocated more than 50 miles.

 

3.

Vacation and Employee Benefits.  During his Employment, the Executive shall be eligible for fifteen (15) paid vacation days in accordance with the Company’s vacation policy, as it may be amended from time to time.  During his Employment, the Executive shall be eligible to participate in the employee benefit plans maintained by the Company, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan.

 

4.

Board Seat.  The Company shall cause Executive to be appointed as a director (a "Director") to the Company’s Board of Directors (the "Board").  

 

5.

Business Expenses.  During his Employment, the Executive shall be authorized to incur necessary and reasonable travel, entertainment, cell phone and other business expenses in connection with his duties hereunder.  The Company shall reimburse the Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company’s generally applicable policies.

 

6.

Term of Employment.

(a)

Termination of Employment.  The Company may terminate the Executive’s Employment at any time and for any reason (or no reason), and with or without Cause, by giving the Executive 14 days’ advance notice in writing.  The Executive may terminate his Employment by giving the Company 14 days’ advance notice in writing.  The Executive’s Employment shall terminate automatically in the event of his death.  The termination of the Executive’s Employment shall not limit or otherwise affect his obligations under Section 8.

(b)

Employment at Will.  The Executive’s Employment shall be “at will,” meaning that either the Executive or the Company shall be entitled to terminate the Employment at any time and for any reason, with or without Cause.  Any contrary representations that may have been made to the Executive shall be superseded by this Agreement.  This Agreement shall constitute the full and complete agreement between the Executive and the Company on the “at-will” nature of the Executive’s Employment, which may only be changed in an express written agreement signed by the Executive and a duly authorized officer of the Company.

(c)

Rights Upon Termination.  Except as expressly provided in Section 7, upon the termination of the Executive’s Employment, the Executive shall only be entitled to the compensation and benefits earned and the reimbursements described in this Agreement for the period preceding the effective date of the termination.

7.

Termination Benefits.

(a)

General Release.  Any other provision of this Agreement notwithstanding, Subsections (b) and (c) below shall not apply unless the Executive has returned all Company property.

(b)

Severance Pay.  If, during the term of this Agreement, the Company terminates the Executive’s Employment for any reason other than Cause, then the Company shall pay the Executive severance pay at a rate equal to an average of the Executive’s prior three months Base and bonus/commission calculated salary in effect at the time of termination of his Employment for a period of Four (4) months following the termination of his Employment (the “Continuation Period”).  Such severance pay shall be paid in accordance with the Company’s standard payroll procedures.

(c)

Health Insurance.  If Subsection (b) above applies, and if the Company has a health insurance plan in place for employees, and if the Executive elects to continue and pays his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his Employment, then the Company shall reimburse the Executive’s monthly premium under COBRA until the earliest of (i) the close of the Continuation Period, (ii) the expiration of the Executive’s continuation coverage under COBRA or (iii) the date when the Executive receives substantially equivalent health insurance coverage in connection with new employment or self-employment.

(d)

Definition of “Cause.”  For all purposes under this Agreement, “Cause” shall mean:

(i)

Any material breach of this Agreement, the Proprietary Information and Inventions Agreement between the Executive and the Company, or any other written agreement between the Executive and the Company, if such breach causes material harm to the Company;

(ii)

Any material failure to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Executive’s Employment, if such failure causes material harm to the Company;

(iii)

Commission, conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State;

(iv)

the Employee, in carrying out his duties hereunder, has been guilty of gross neglect or willful misconduct and, after receiving written notice to such effect, has failed to correct such neglect or misconduct within 15 days thereof; or

(e)

Definition of “Permanent Disability.”  For all purposes under this Agreement, “Permanent Disability” shall mean Executive’s inability to perform the essential functions of his position with or without reasonable accommodation for a period of 120 consecutive days because of Executive’s physical or mental impairment.

 

8.

Non-Solicitation and Non-Disclosure.

(a)

Non-Solicitation.  During the period commencing on the date of this Agreement and continuing until the first anniversary of the date when the Executive’s Employment terminated for any reason, the Executive shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on the Executive’s own behalf or on behalf of any other person or entity) either (i) any employee of the Company or any of the Company’s affiliates or (ii) the business of any customer of the Company or any of the Company’s affiliates on whom the Executive called or with whom the Executive became acquainted during his Employment if such solicitation would cause material harm to the Company. 

Non-Disclosure.  The Executive has entered into a Proprietary Information and Inventions Agreement with the Company, which is incorporated herein by this reference.

 

9.

Successors.

(a)

Company’s Successors.  This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which become bound by this Agreement.

(b)

Executive’s Successors.  This Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

10.

Arbitration.

(a)

Scope of Arbitration Requirement.  The parties hereby waive their rights to a trial before a judge or jury and agree to arbitrate before a neutral arbitrator any and all claims or disputes arising out of this Agreement and any and all claims arising from or relating to the Executive’s Employment, including (but not limited to) claims against any current or former employee, director or agent of the Company, claims of wrongful termination, retaliation, discrimination, harassment, breach of contract, breach of the covenant of good faith and fair dealing, defamation, invasion of privacy, fraud, misrepresentation, constructive discharge or failure to provide a leave of absence, claims regarding commissions, stock options or bonuses, infliction of emotional distress or unfair business practices.

(b)

Procedure.  The arbitrator’s decision shall be written and shall include the findings of fact and law that support the decision.  The arbitrator’s decision shall be final and binding on both parties, except to the extent applicable law allows for judicial review of arbitration awards.  The arbitrator may award any remedies that would otherwise be available to the parties if they were to bring the dispute in court.  The arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association; provided, however that the arbitrator shall allow the discovery that the arbitrator deems necessary for the parties to vindicate their respective claims or defenses.  The arbitration shall take place in Travis County, Texas or, at the Executive’s option, the county in which the Executive primarily worked with the Company at the time when the arbitrable dispute or claim first arose.

(c)

Costs.  The parties shall share the costs of arbitration equally, except that the Company shall bear the cost of the arbitrator’s fee and any other type of expense or cost that the Executive would not be required to bear if he were to bring the dispute or claim in court.  Both the Company and the Executive shall be responsible for their own attorneys’ fees, and the arbitrator may not award attorneys’ fees unless a statute or contract at issue specifically authorizes such an award.

(d)

Applicability.  This arbitration provision does not apply to the following: (a)  workers’ compensation or unemployment insurance claims or (b) claims concerning the validity, infringement or enforceability of any trade secret, patent right, copyright or any other trade secret or intellectual property held or sought by either the Executive or the Company (whether or not arising under the Proprietary Information and Inventions Agreement between the Executive and the Company).

 

11.

Miscellaneous Provisions.

(a)

Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of the Executive, mailed notices shall be addressed to him at the home address that he most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(b)

Modifications and Waivers.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c)

Whole Agreement.  No other agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof.  This Agreement and the Proprietary Information and Inventions Agreement contain the entire understanding of the parties with respect to the subject matter hereof.

(d)

Withholding Taxes.  All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law.

(e)

Choice of Law and Severability.  This Agreement shall be interpreted in accordance with the laws of the State of Texas (except its provisions governing the choice of law).  If any provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any applicable jurisdiction by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the minimum extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially altering the intention of the parties, then such provision shall be stricken and the remainder of this Agreement shall continue in full force and effect.  If any provision of this Agreement is rendered illegal by any present or future statute, law, ordinance or regulation (collectively, the “Law”) then that provision shall be curtailed or limited only to the minimum extent necessary to bring the provision into compliance with the Law.  All the other terms and provisions of this Agreement shall continue in full force and effect without impairment or limitation.

(f)

No Assignment.  This Agreement and all rights and obligations of the Executive hereunder are personal to the Executive and may not be transferred or assigned by the Executive at any time.  The Company may assign its rights under this Agreement to any entity that assumes the Company’s obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company’s assets to such entity.

(g)

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

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

/s/ MARK ESHELMAN

Smarte Solutions, Inc.

By  /s/ MICHAEL SHAPIRO

Michael Shapiro,

Titl:  President

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