Document:

EX-10.5

 

Exhibit 10.5

AMENDED AND RE-STATED EMPLOYMENT AGREEMENT

BY AND BETWEEN

HARTVILLE GROUP, INC.

AND

CHRISTOPHER R. SACHS

EFFECTIVE: March 29, 2007

 

 

EMPLOYMENT AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PAGES	 
	 
	 	 	 	 	 	 	 	 
	1.	 	EMPLOYMENT	 	 	1	 
	 
	 	1.1	 	General Duties and Title	 	 	1	 
	2.	 	TERM	 	 	2	 
	3.	 	REMUNERATION	 	 	2	 
	4.	 	WITHHOLDING	 	 	3	 
	5.	 	INSURANCE AND OTHER BENEFIT PLANS	 	 	3	 
	6.	 	VACATIONS, ILLNESS AND HOLIDAYS	 	 	3	 
	7.	 	BUSINESS EXPENSES	 	 	4	 
	8.	 	INDEMNIFICATION	 	 	4	 
	9.	 	TERMINATION OF EMPLOYMENT	 	 	5	 
	 
	 	9.1	 	Termination by the Company for Cause	 	 	5	 
	 
	 	9.2	 	Definition of Cause	 	 	5	 
	 
	 	9.3	 	Determination of For Cause Termination	 	 	5	 
	 
	 	9.4	 	Termination by the Company Without Cause	 	 	6	 
	 
	 	9.5	 	Voluntary Termination by the Executive	 	 	6	 
	 
	 	9:6	 	Disability Termination	 	 	7	 
	 
	 	9.7	 	Termination Due to Executive’s Death	 	 	7	 
	10.	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY; OWNERSHIP OF PROCEEDS OF EMPLOYMENT	 	 	7	 
	 
	 	10.1	 	Solicitation of Employees; Customers; Agents or Representatives etc	 	 	7	 
	 
	 	10.2	 	Confidential Records	 	 	8	 
	 
	 	10.3	 	Ownership of Proceeds of Employment	 	 	9	 
	 
	 	10.4	 	Survival	 	 	9	 
	 
	 	10.5	 	Enforceability; Remedies	 	 	9	 
	MISCELLANEOUS PROVISIONS	 	 	9	 
	 
	 	11.1	 	Severability	 	 	9	 
	 
	 	11.2	 	Execution in Counterparts	 	 	9	 
	 
	 	11.3	 	Notices	 	 	10	 
	 
	 	11.4	 	Entire Agreement and Subsequent Amendments	 	 	10	 
	 
	 	11.5	 	Applicable Law	 	 	10	 
	 
	 	11.6	 	Headings	 	 	11	 
	 
	 	11.7	 	Binding Effect; Successors and Assigns,	 	 	11	 
	 
	 	11.8	 	Waiver	 	 	11	 
	 
	 	11.9	 	Warranty and Capacity to Contract	 	 	11	 
	 
	 	11.10	 	Arbitration	 	 	11	 
	 
	 	11.11	 	Remedies	 	 	12	 
	 
	 	11.12	 	Survival	 	 	12	 
	 
	 	11.13	 	Costs of Preparation and Negotiation of Agreement	 	 	12	 

 

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) originally entered into September 19, 2005
(the “Effective Date”) and amended and re-stated, effective March 29, 2007 by and among
HARTVILLE GROUP, INC. (the “Company”) a Nevada corporation, and CHRISTOPHER R. SACHS an
individual currently residing at 3287 Lander Road, Pepper Pike, OH 44124 (“Executive”).

WITNESSETH THAT,

WHEREAS, the Company desires to employ Executive in accordance with the terms of this
Agreement and Executive desires to be so employed by the Company; and

WHEREAS, the parties desire to set forth the employment understanding and terms and conditions
of employment in a written agreement; and Executive wishes to accept such employment upon the
terms and subject to the conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual promises contained herein, the parties hereto
hereby agree as follows:

	1.	 	EMPLOYMENT
	 
	1.1	 	General Duties and Title
	 
	 	 	On the Effective Date, the Company hereby employs Executive with the title/s designated
in Exhibit A (the “Position Description”) attached hereto and forming a part of this
Agreement.
	 
	 	 	Executive’s primary responsibilities and duties are as described in Exhibit A. The
primary responsibilities and duties of the Executive may be altered or amended by either
(i) the mutual agreement of the Company and the Executive; or (ii) the establishment of
new or modified duties, as determined by the Chief Executive Officer (CEO) after
consultation with the Board of Directors of the Company (the “Board”). Any
modifications or alterations to the duties assigned to the Executive will be consistent
with the customary duties of a Chief Financial Officer and the education, background and
experience of the Executive. Executive shall faithfully and substantially perform for
the Company all such duties. Executive shall report to and take direction primarily
from the CEO. Executive agrees to act in the capacity of a member or officer of such
boards as he may be appointed without remuneration other than the remuneration to which
Executive is otherwise entitled under this Agreement.
	 
	 	 	Services rendered by Executive shall be rendered in accordance with recognized insurance
and financial industry standards and recognized codes of conduct or ethics. Executive
shall further promote and enhance the business purposes of the Company’ by entertainment
and other means, including participation in professional organizations and activities,
attendance at insurance, financial, or industry conventions and seminars, and membership
in insurance or financial industry societies.

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	2.	 	TERM
	 
	 	 	The employment of Executive hereunder shall commence on the Effective Date and shall,
unless this Agreement is sooner terminated as provided in Section 9 hereof, continue for
one year and thereafter for additional one (1) year terms, provided however, that if
written notice of termination of this Agreement is given by party hereto to the other
party hereto at least ninety (90) days prior to an Anniversary Date, then this Agreement
shall terminate no later than the Anniversary Date next following the date of such
notice.
	 
	3.	 	REMUNERATION
	 
	 	 	The Company (and/or an affiliate acting on behalf of the Company) will pay, or provide,
to Executive as compensation for services to be rendered under Section 1 hereof, the
following amounts:

	 	(a)	 	Monthly Base Salary
	 
	 	 	 	A base salary (“Base Salary”) at the monthly equivalent rate of One Hundred and
Fifty Thousand Dollars ($150,000) per annum.
	 
	 	(b)	 	Stock Option Rights
	 
	 	 	 	Options under a nonstatutory stock option plan to be adopted by the Company in
2006 to purchase up to 350,000 shares of the common stock of the Company on the
terms and conditions set forth in a Stock Option Agreement to be adopted by the
parties.
	 
	 	 	 	With regard to the above referenced Stock Option Agreement and any previous or
subsequent Stock Option Agreements executed by the Company and the Executive, in
the event that a “Change of Control”, as defined herein, occurs, notwithstanding
the vesting schedule contained in any such Stock Option Agreement all options
shall immediately vest upon a ‘Change of Control’ of the Company.
	 
	 	 	 	The period of time within which any Options granted under any Stock Option
Agreement may be exercised in the event of termination after a ‘Change in
Control,’ shall be extended by not less than twelve (12) months after the
Termination Date, but in any event, no later than the expiration date of all
Options.
	 
	 	 	 	For the purposes of this Agreement, “Change of Control” means:

	 	(i)	 	if any “person”, as defined in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (“Act”) (other than a current 10%
beneficial owner (as defined in Rule 13d-3 under the Act) of the Company’s
Securities) becomes the beneficial owner, directly or indirectly, of more
than fifty percent (50%) of the combined voting power of the then issued
and outstanding securities of the Company; or
	 
	 	(ii)	 	the sale, transfer, or other disposition of all or
substantially all of the

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	 	 	 	assets of the Company, whether by sale of assets, merger, or otherwise.

	 	(c)	 	Travel Expenses
	 
	 	 	 	The Company shall provide the Executive with a car allowance of $500.00 per month.
	 
	 	(d)	 	Discretionary Cash Bonus
	 
	 	 	 	A cash bonus payable to the Executive at such times and in such amounts as the
Company may, in its sole discretion, determine.

	4.	 	WITHHOLDING
	 
	 	 	Executive agrees that the Company shall withhold from any and all payments required to
be made to Executive pursuant to this Agreement all actual or potential Federal, State,
local and/or other taxes the Company determines are required or potentially will be
required, to be withheld in accordance with applicable statutes and/or regulations from
time to time in effect.
	 
	5.	 	INSURANCE AND OTHER BENEFIT PLANS
	 
	 	 	Executive shall be entitled, during the period of employment with the Company, to
participate in (i) the life insurance and disability insurance plans available to
executives of the Company, including such accidental death or other benefits as may be
provided under such plans, and (ii) the health and dental and vision plans available to
officers (and their immediate families) of the Company, and (iii) such other employee
benefit plans, including all employee welfare benefit plans and employee pension benefit
plans, that currently are or will be made generally available to executives and salaried
employees of the Company. Participation by or inclusion of the Executive in any benefit
plan maintained by the Company shall be provided only to the extent that the Executive
is eligible under the terms and conditions of the applicable plan and, if required
pursuant to the plan, the employee meets any insurance underwriting or other conditions
validly required by the provider or carrier of the plan or the contracts, policies, or
other terms of eligibility or participation issued in connection with the plan.
	 
	6.	 	VACATIONS, ILLNESS AND HOLIDAYS
	 
	 	 	Without any loss or reduction of remuneration, Executive shall be entitled to be absent
from Executive’s duties with the Company by reason of vacation for four (4) weeks for
each year or illness for (4) four weeks for each year during the term of this Agreement.
In addition, the Executive shall be entitled to such national and religious holidays as
generally approved by the Company. The Executive shall not be entitled to carry forward
any unused sickness, vacation or holiday time accrued during a year to successive years
of this Agreement until used.

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	7.	 	BUSINESS EXPENSES
	 
	 	 	The Company recognizes that, in connection with Executive’s performance of his duties,
functions and responsibilities hereunder, Executive will incur certain reasonable and
necessary expenses. The Company agrees to pay or promptly reimburse Executive for all
such reasonable business expenses, which are incurred in connection with the Company’s
business, upon the presentation of statements setting forth the nature and amount of
such expenses in reasonable detail, in accordance with the Company’s generally
applicable guidelines and procedures from time to time.
	 
	8.	 	INDEMNIFICATION
	 
	 	 	The Company shall indemnify, defend and hold harmless Executive, and shall cause each
applicable entity controlled by the Company (defined for purposes of this Section 8 as a
“Subsidiary”) to indemnify, defend and hold harmless Executive for general directors
and/or officers liability in the normal course of Executive’s services on Company
business or Subsidiary business, to the fullest extent allowed by Nevada law and the
bylaws of the Company.
	 
	 	 	To secure its indemnification obligations the Company has and shall maintain in full
force and effect through the term of this Agreement directors and officers insurance
coverage as determined by the Company, but in no event in an amount less than $2
million. The use of the Company’s insurance coverage or policy to secure its or any
Subsidiary’s indemnification obligation shall not, however, limit the obligation of the
Company or any Subsidiary to indemnify the Executive for claims or expenses either below
the annual or periodic deductible limit in the policy or in excess of the policy limits
or for items or events not covered by the policy.
	 
	 	 	The Company shall be obligated, and shall cause each applicable Subsidiary, to pay the
claims or expenses of the Executive required under this Section 8, including defense
cost, directly to the third party to whom payment is due and owing, without the
necessity of the Executive making such payment and seeking reimbursement from the
Company or the Subsidiary.
	 
	 	 	To the extent that the Executive is successful on the merits or otherwise in defense of
any action, suit, or proceeding, or in defense of any claim, issue or matter brought
against the Executive, the Executive shall be indemnified by the Company, and the
Company shall cause each applicable Subsidiary to indemnify the Company, against all
expenses, including defense and legal fees, incurred by the Executive.
	 
	 	 	The provisions of this Section 8 shall survive the termination or expiration of
Executive’s employment under this Agreement irrespective of the reason for such
termination, provided that nothing herein shall be construed to provide Executive with
any greater coverage or coverage for any period longer than Executive would have been
entitled to receive under the terms of such insurance policy referred to herein (other
than deductible and policy dollar limits).

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	9.	 	TERMINATION OF EMPLOYMENT
	 
	9.1	 	Termination by the Company for Cause
	 
	 	 	In the event that Executive is removed from office by the Company for cause (as
hereinafter defined), the employment of Executive under this Agreement shall terminate
and Executive shall be entitled to receive all remuneration and benefits accrued
hereunder to the date of such termination except for unvested Options under the Option
Plan and insurance which would by its terms lapse.
	 
	 	 	No other or further payment of benefits under this Agreement will be due upon
Termination for Cause, except as required by law, or under the Company’s insurance and
other employee benefit plans and the procedures referred to in Sections 5 and 7.
	 
	9.2	 	Definition of Cause
	 
	 	 	For purposes of this Agreement, the term “cause” shall mean (i) any willful material
neglect by Executive, or material failure by Executive to substantially perform the
duties and responsibilities of the Executive’s office or offices (other than any such
failures resulting from Executive’s incapacity due to illness or injury), or (ii) any
malfeasance or gross misconduct by Executive in connection with the performance of any
of the duties or responsibilities or otherwise which would, in the view of a reasonable
person, be materially prejudicial to the interests of the Company or any of its
affiliates if Executive were retained in the respective office or offices, including
without limitation, conviction of a felony, or (iii) actual indictment for, or formal
admission to a felony or crime of moral turpitude, dishonesty, breach of trust or
unethical business conduct or any crime involving the Company, or (iv) repeated material
failure to adhere to the policies and directions of the CEO or the Board of Directors,
or failure of the Executive to devote sufficient time and efforts to the business of the
Company and the duties and responsibilities hereunder so as to result in material
impairment of the Executive’s performance hereunder, and with respect to 9.2(i) or
9.2(ii) or 9.2(iv) herein, there has been a failure to cure such breach or a failure to
modify Executive’s conduct within 30 days of receiving written notice of such breach
specifying the factual reasons supporting the proposed dismissal for cause.
	 
	9.3	 	Determination of For Cause Termination
	 
	 	 	A determination of a for cause termination shall be made by the Company as follows:

	 	(a)	 	The CEO shall first make a preliminary determination that the Executive
should be reviewed for discharge for cause. The Company will not be required to
provide any preliminary notice to the Executive of its intention to investigate the
possible discharge of the Executive for cause.
	 
	 	(b)	 	After investigating the circumstances surrounding the possible for cause
termination of the Executive, the Company, through the CEO, may immediately relieve
or suspend the Executive from the Executive’s position by providing notice to the
Executive. Upon notice of the suspension, the Executive shall immediately vacate
the premises and remove all personal property from the premises of the Company.
The Company shall have the absolute right to review

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	 	 	 	 	any and all material in the possession of the Executive on the Company premises to
determine those items, which are proprietary to the Company. After sorting the
appropriate items, all personal items shall be delivered to the Executive at the
location designation reasonably selected by the Executive.
	 
	 	 	(c)	 	After concluding its investigation, the Company, through the CEO, shall
make a determination whether the Executive should be discharged for cause. The
determination for discharge for cause shall be timely communicated in writing to
the Executive.
	 
	 	 	(d)	 	Until terminated, notwithstanding that any of the foregoing procedures are
taking place, or have taken place, the Executive shall be entitled to and shall
continue to accrue all remuneration and benefits provided for under this Agreement.
	 
	9.4	 	Termination by the Company Without Cause
	 
	 	 	The Company expressly reserves the right to terminate the employment, or materially
reduce the responsibilities, of Executive at any time for no reason or for any reason.
	 
	 	 	In the event that Executive’s employment is so terminated or altered under this Section,
Executive shall be entitled to receive:
	 
	 	 	Six (6) monthly payments of the current monthly Base Salary, paid pursuant to the
Company’s normal payroll practices
	 
	 	 	In addition to the above payments if permitted under the appropriate plan documentation
and if allowed by law, all health, dental and life insurance coverage provided to
Executive under the employee benefit plans will be extended for such period as the
Company is obligated to make monthly Base Salary payments to Executive in terms of this
Section, unless Executive becomes covered by other employer plans. If coverage
extensions are not permitted by law or under the plans, the Company shall pay to the
Executive periodic bonuses equal to the insurance premium cost which would have been
required as if the Executive were covered under the plan.
	 
	 	 	Any unvested employer contributions attributable to Executive under any pension plan,
shall be accelerated and deemed vested as of the date of termination of employment
without cause. If the acceleration of vesting is not permitted by law or under the
terms of the plan, the Company shall, in lieu of accelerated vesting, pay a bonus to the
Executive in the amount of the account forfeiture under the plan.

	9.5	 	Voluntary Termination by the Executive
	 
	 	 	Executive shall be entitled, with not less than ninety (90) days written notice, to
voluntarily terminate employment with the Company. If Executive elects such
termination, Executive shall be entitled to receive the Executive’s monthly Base Salary
defined under Section 3 and benefits defined under Section 5 until the end of such
notice period. Executive shall also be entitled to exercise any vested rights under
Sections 5 and 6.

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	 	 	Even though the Executive is required to give not less than ninety (90) days advance
written notice, the Company shall have the option to require that the Executive
discontinue service on behalf of the Company at any time upon receipt of advance written
notice of the Executive’s election to terminate; provided, however, that in such event
the Company shall be required to continue the Base Salary and benefit payments through
the ninety (90) day notice period.
	 
	9.6	 	Disability Termination
	 
	 	 	The Executive’s employment shall terminate if the Executive becomes so disabled as to be
unable to substantially perform the services of the character contemplated by this
Agreement, and such disability continues for a period of ninety (90) consecutive days.
The Executive’s employment shall terminate at the conclusion of the 90-consecutive day
disability. In such event, the Executive shall be entitled to receive the Executive’s
monthly Base Salary defined under Section 3 and benefits defined under Section 5 until
the end of the 90-consecutive day disability period. Executive shall also be entitled
to exercise any vested rights under Sections 5 and 6.
	 
	 	 	For purposes of this Agreement the term “disability” or “disabled” shall mean a physical
or mental condition resulting from a bodily injury or disease or mental disorder which
renders the Executive incapable of engaging in substantial gainful activity of the
character contemplated by this Agreement and which can be expected to be of a long and
continued duration. The disability of the Executive shall be determined by the Board
based upon competent medical authority. The determination of a disability may be made
by the Board independent of such determination being made under any other disability
insurance plan sponsored or funded by the Company.
	 
	9.7	 	Termination Due to Executive’s Death
	 
	 	 	This Agreement shall terminate if the Executive shall die, in which event the
Executive’s estate or personal representative shall not be entitled to continue to
receive Base Salary payments permitted under Section 3 or other benefits permitted under
this Agreement, other than the monthly Base Salary for the period until death and those
benefit continuation requirements imposed as a matter of law, With respect to other
benefit entitlement under the bonus plan or other similar plans, the Executive’s estate
shall only be permitted to such rights or benefits as otherwise provided in those plan
documents.
	 
	10.	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY; OWNERSHIP OF
PROCEEDS OF EMPLOYMENT,
	 
	10.1	 	Solicitation of Employees; Customers; Agents or Representatives etc.
	 
	 	 	Executive agrees that, during the term of employment hereunder, and for a period of one
(1) year after the Company no longer employs Executive, Executive shall not, directly or
indirectly:

	 	   (a)	 	solicit, entice, persuade or induce any individual who is then or has been
within the preceding six-month period, an employee of the Company or any of its
subsidiaries or affiliates, to terminate his or her employment with the Company or
any company controlled by or under common control with the Company (defined

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	 	 	 	for purposes of this Section 10 as an “Affiliate”), or to become employed by or
enter into contractual relations with any other individual or entity, and the
Executive shall not approach any such employee for any such purpose or authorize
or knowingly approve the taking of any such actions by any other individual or
entity; or,
	 
	 	   (b)	 	except in accordance with Executive’s duties hereunder, solicit, entice,
persuade or induce any individual or entity which is then, or has within the
preceding twelve month period been, a customer, distributor or supplier, or policy
owner, agent or representative of the Company or any of its Affiliates to terminate
or materially reduce his, her or its contractual or other relationship with the
Company or any of its subsidiaries or affiliates, and the Executive shall not
approach any such customer, distributor, supplier, policy owner, agent or
representative for such purpose or authorize or knowingly approve the taking of any
such actions by any other individual or entity.
	 
	 	   (c)	 	For purposes of this Agreement, where the Executive has been Terminated
without Cause under Section 9.4, such restrictive period of one (1) year shall
commence at the time provided under 9.4 for the Executive’s receipt of the final
monthly payment under Section 9.4.

	10.2	 	Confidential Records
	 
	 	 	In the course of employment, Executive will have access to confidential information,
records, data, specifications, and other knowledge owned by the Company or its
subsidiaries or affiliates. Executive agrees that at no time during or after the term of
employment shall the Executive remove or cause to be removed from the premises of the
Company or its subsidiaries or affiliates, any record, file, memorandum, document,
equipment or like item relating to the business of the Company or its subsidiaries or
affiliates, except in furtherance of Executive’s duties hereunder, and immediately
following the termination of Executive’s employment hereunder or at any other time at
the request of the CEO or the Board of Directors, all such records, files, memoranda,
documents, equipment and like items then in Executive’s possession will promptly be
returned to the Company. Executive further agrees that, during and after the term of
employment, Executive shall not without the written consent of the Company or a person
authorized thereby, disclose to any person, other than an employee of the Company its
subsidiaries or affiliates or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of duties as an executive of
the Company, any confidential information obtained by Executive while in the employ of
the Company with respect to any business methods, plans, policies, products and/or
personnel of the Company or its subsidiaries or affiliates, the disclosure, including
speaking with the press, of which would, in the view of a reasonable person, be
injurious or damaging to the business of the Company or its subsidiaries, or affiliates,
provided, however, that confidential information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
Executive), or any information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to that conducted by the
Company.

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	10.3	 	Ownership of Proceeds of Employment
	 
	 	 	Executive acknowledges that the Company shall be the sole owner of all the fruits and
proceeds of the Executive’s services hereunder, including without limitation all ideas,
concepts, formats, suggestions, developments, arrangements, designs, packages, programs,
promotions and other properties relating to the businesses of the Company, which
Executive may create in connection with and during the term of employment hereunder,
free and clear of any claims by the Executive of any kind or character whatsoever (other
than Executive’s right to compensation and benefits hereunder).
	 
	10.4	 	Survival
	 
	 	 	The provisions of this Section 10 shall survive any termination or expiration of
Executive’s employment under this Agreement, irrespective of the reason therefore.
	 
	10.5	 	Enforceability; Remedies
	 
	 	 	The parties hereto agree that a breach by Executive of any of the provisions of Section
10 hereof will cause the Company great and irreparable injury and damage. By reason of
this, Executive acknowledges that, in the event of a breach by Executive of any of the
provisions of Section 10 hereof, the Company shall be entitled, in addition and as a
supplement to any other rights or remedies it may have at law, to the remedies of
injunction, specific performance and other equitable relief. This section 10 shall
riot, however, be construed as a waiver of any of the rights which the Company may have
for damages or otherwise.
	 
	11.	 	MISCELLANEOUS PROVISIONS
	 
	11.1	 	Severability
	 
	 	 	Executive acknowledges and agrees that (i) Executive has had an opportunity to seek
advice of counsel in connection with this agreement and (ii) the Restrictive Covenants
contained in Section 10.1 hereof are reasonable in temporal and geographic scope and in
all other respects. If in any jurisdiction any term or provision hereof is determined
to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, (b) any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction, and the
remaining provisions hereof shall be given full force and effect without regard to the
invalid portions. The Employer and the Executive intend to and hereby confer
jurisdiction to endorse the Restrictive Covenants upon the Courts of any jurisdiction
within the geographical scope of the covenants.
	 
	11.2	 	Execution in Counterparts
	 
	 	 	This Agreement may be executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement (and all signatures
need not appear on any one counterpart),and this Agreement shall become effective when
one or more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto.

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	11.3	 	Notices
	 
	 	 	Any notice or other communication in connection with this Agreement shall be deemed to
be delivered if in writing (or in the form of a fax) addressed as provided below and if
either (a) actually delivered at said address, or (b) in the case of a letter, three
business days shall have elapsed after the same shall have been deposited in the US
mail, postage prepaid and registered or certified, and (c) in the case of fax, one
business day shall have elapsed after dispatch.
	 
	 	 	If to the Company, to it at the following address:

Hartville Group, Inc.

3840 Greentree Avenue SW

Canton, Ohio

FAX: (330) 484-8081

Attention: C.E.O.

          with a copy to:

Jack Bjerke

Baker & Hostetler

Capitol Square, Suite 2100

Columbus, Ohio 43215-4260

          or at such other address as the Company shall have specified by written notice actually
received by the addresser.

          If to Executive, to Executive at the address provided in the preamble or to
csachs@sbcglobal.net

          or at such other address as Executive shall have specified by written notice actually
received by the addresser.

	11.4	 	Entire Agreement and Subsequent Amendments
	 
	 	 	This Agreement constitutes the entire agreement between the Company and Executive
relating to Executive’s employment and supersedes all prior agreements and
understandings of the parties hereto, whether oral or written with respect to the
subject matter herein.
	 
	 	 	This Agreement may be amended or altered only by the written agreement of the Company
and Executive.
	 
	11.5	 	Applicable Law
	 
	 	 	This Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio without regard to principles of conflict of law.

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	11.6	 	Headings
	 
	 	 	The descriptive headings of the several sections of this Agreement are inserted for the
sole purpose of convenience of reference, and do not constitute part of this Agreement
or in any way limit or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
	 
	11.7	 	Binding Effect; Successors and Assigns
	 
	 	 	This Agreement shall be binding upon and shall inure to the benefit of:
	 
	 	 	(a)	 	the Company and its successors and assigns; and
	 
	 	 	(b)	 	Executive and to the benefit of Executive’s heirs, executors,
administrators and legal representatives. Executive’s duties and obligations
hereunder are personal and shall not be assignable or delegable in any manner
whatsoever.

	 	 	The Company may assign the obligations under this Agreement (subject to a right of
recourse by Executive to the Company in the event of any default under the obligations
to Executive hereunder), to an affiliate or to any intermediate parent of the Company.

	 
	11.8	 	Waiver
	 
	 	 	The failure of either of the parties hereto at any time, to enforce any of the
provisions of this agreement shall not be deemed or construed to be a waiver of any such
provision, nor to in any way affect the validity of this agreement or any provision
hereof or the right of either of the parties hereto, to thereafter enforce each and
every provision of this Agreement. No waiver of any breach of any of the provisions of
this Agreement shall be effective unless set forth in a written instrument executed by
the party against whom or which enforcement of such waiver is sought, and no waiver of
any such breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
	 
	11.9	 	Warranty and Capacity to Contract
	 
	 	 	The Company and Executive hereby represent and warrant to the other that:
	 
	 	 	(a)	 	they have full power and authority to execute this Agreement, and to
perform their respective obligations hereunder;
	 
	 	 	(b)	 	such execution, delivery and performance will not (and with the giving of
notice or lapse of time or both would riot) result in any breach of any agreements
or other obligations to which Executive or the Company is otherwise bound; and
	 
	 	 	(c)	 	this Agreement is a valid binding obligation on Executive and the Company.
	 
	11.10	 	Arbitration
	 
	 	 	Except to the extent necessary for Executive or the Company to enforce rights under
Section 11.9 above, or for the Company to enforce its rights under Section 10 above, or
for the Executive to enforce his rights under Section 8, above, any case or controversy
arising among the parties hereto under this Agreement, or the subject matter hereof,
shall be settled by binding arbitration in Canton, Ohio under the then prevailing rules
of the American Arbitration Association. The decision of the arbitrators

11

 

	 	 	shall be final and binding and the party against whom the award is rendered (“the
non-prevailing party”) shall be specifically instructed in any such award to pay all
reasonable attorney’s fees, disbursements of the prevailing party’s legal counsel,
arbitration costs, expenses and filing fees incurred by the prevailing party in the
arbitration proceeding. The American Arbitration Association shall appoint three (3)
arbitrators to preside at the said arbitration proceeding and the arbitrators will
determine in their decision and award, which is the prevailing party, which is the
non-prevailing party, the amount of the fees and expenses of the prevailing party and
the amount of the arbitration expenses. The arbitrators will render their award, upon
the concurrence of at least two (2) of their number, no later than thirty (30) days
after the conclusion of the arbitration proceedings. Judgment may be entered on the
award of the arbitrators and may be enforced in any court of competent jurisdiction.
	 
	11.11	 	Remedies
	 
	 	 	All remedies hereunder are cumulative, are in addition to any other remedies provided by
law and may be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed to be an election of such remedy exclusively or to preclude the
exercise of any other remedy. No failure or delay in exercising any right or remedy
shall operate as a waiver thereof or modify the terms of this Agreement.
	 
	11.12	 	Survival
	 
	 	 	Anything contained in this Agreement to the contrary notwithstanding, the provisions of
Section 8; and Section 9; and Section 10; and Section 11.1; and the other provisions of
this Section 11 (to the extent necessary to effectuate the survival of Section 11) shall
survive termination of this Agreement and any termination of Executive’s contract
hereunder.
	 
	11.13	 	Costs of Preparation and Negotiation of Agreement
	 
	 	 	The Company shall be fully responsible for payment of its own costs and expenses
incurred in the preparation and negotiation of this Agreement and all documents related
thereto.

12

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of
the date first written above.

BY
CHRISTOPHER R. SACHS /s/ Christopher R. Sachs (“Executive”)

Executed at Canton, OH on March 29, 2007

/s/ Dennis C. Rushovich                   

Dennis C. Rushovich, CEO

BY HARTVILLE GROUP, INC.

Executed at Canton, OH on March 29, 2007

13

 

Exhibit A — Position Description

	 	 	 
	Titles:

	 	Chief Financial Officer of Hartville Group, Inc
	 
	 	 
	Reporting
Lines:

	 	Chief Executive Officer of Hartville Group, Inc

Responsibilities and Duties with regard to Companies Managed by Executive

As provided in Bylaws of Hartville Group Inc.

14EX-10.6

 

Exhibit 10.6

AMENDED AND RE-STATED EMPLOYMENT AGREEMENT

BY AND BETWEEN

HARTVILLE GROUP, INC.

AND

CHRISTOPHER EDGAR

EFFECTIVE: March 29, 2007

 

 

EMPLOYMENT AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PAGES	 
	 
	 	 	 	 	 	 	 	 
	1.	 	EMPLOYMENT	 	 	1	 
	 
	 	1.1	 	General Duties and Title	 	 	1	 
	2.	 	TERM	 	 	2	 
	3.	 	REMUNERATION	 	 	2	 
	4.	 	WITHHOLDING	 	 	3	 
	5.	 	INSURANCE AND OTHER BENEFIT PLANS	 	 	3	 
	6.	 	VACATIONS, ILLNESS AND HOLIDAYS	 	 	3	 
	7.	 	BUSINESS EXPENSES	 	 	4	 
	8.	 	INDEMNIFICATION	 	 	4	 
	9.	 	TERMINATION OF EMPLOYMENT	 	 	5	 
	 
	 	9.1	 	Termination by the Company for Cause	 	 	5	 
	 
	 	9.2	 	Definition of Cause	 	 	5	 
	 
	 	9.3	 	Determination of For Cause Termination	 	 	6	 
	 
	 	9.4	 	Termination by the Company Without Cause and for Good Reason	 	 	6	 
	 
	 	9.5	 	Voluntary Termination by the Executive	 	 	7	 
	 
	 	9.6	 	Disability Termination	 	 	7	 
	 
	 	9.7	 	Termination Due to Executive’s Death	 	 	7	 
	10.	 	RESTRICTIVE CONVENANTS; CONFIDENTIALITY; OWNERSHIP OF PROCEEDS OF EMPLOYMENT	 	 	8	 
	 
	 	10.1	 	Solicitation of Employees;  Customers;  Agents or Representatives etc	 	 	8	 
	 
	 	10.2	 	Confidential Records	 	 	8	 
	 
	 	10.3	 	Ownership of Proceeds of Employment	 	 	9	 
	 
	 	10.4	 	Survival	 	 	9	 
	 
	 	10.5	 	Enforceability; Remedies	 	 	9	 
	11.	 	MISCELLANEOUS PROVISIONS	 	 	9	 
	 
	 	11.1	 	Severability	 	 	9	 
	 
	 	11.2	 	Execution in Counterparts	 	 	10	 
	 
	 	11.3	 	Notices	 	 	10	 
	 
	 	11.4	 	Entire Agreement and Subsequent Amendments	 	 	11	 
	 
	 	11.5	 	Applicable Law	 	 	11	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PAGES	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.6	 	Headings	 	 	11	 
	 
	 	11.7	 	Binding Effect;  Successors and Assigns	 	 	11	 
	 
	 	11.8	 	Waiver	 	 	11	 
	 
	 	11.9	 	Warranty and Capacity to Contract	 	 	11	 
	 
	 	11.10	 	Arbitration	 	 	12	 
	 
	 	11.11	 	Remedies	 	 	12	 
	 
	 	11.12	 	Survival	 	 	12	 
	 
	 	11.13	 	Deferred Compensation	 	 	13	 

ii

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) originally entered into January 20, 2006 (the
“Effective Date”) and amended and re-stated, effective March 29, 2007 by and between HARTVILLE
GROUP, INC. (the “Company”) a Nevada corporation, and CHRISTOPHER EDGAR (“Executive”).

WITNESSETH THAT

WHEREAS, the Company desires to employ Executive in accordance with the terms of this Agreement and
Executive desires to be so employed by the Company; and

WHEREAS, the parties desire to set forth the employment understanding and terms and conditions of
employment in a written agreement; and Executive wishes to accept such employment upon the terms
and subject to the conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual promises contained herein, the parties hereto hereby
agree as follows:

	1.	 	EMPLOYMENT

	1.1	 	General Duties and Title
	 
	 	 	
On the Effective Date, the Company hereby employs Executive with the title/s designated in
Exhibit A (the “Position Description”) attached hereto and forming a part of this
Agreement.
 
	 
	 	 	Executive’s primary responsibilities and duties are as described in Exhibit A. The primary
responsibilities and duties of the Executive may be altered or amended by either (i) the
mutual agreement of the Company and the Executive; or (ii) the establishment of new or
modified duties, as determined by the Chief Executive Officer (the “CEO”) after
consultation with the Board of Directors of the Company (the “Board”). Any modifications
or alterations to the duties assigned to the Executive will be consistent with the
customary duties of a Chief Marketing Officer and the education, background and experience
of the Executive. Executive shall faithfully and substantially perform for the Company all
such duties. Executive shall report to and take direction primarily from the CEO. With
consent, the Executive agrees to act in the capacity of a board member or officer of such
subsidiaries as he may be appointed without remuneration other than the remuneration to
which Executive is otherwise entitled under this Agreement.

	 
	 	 	Services rendered by Executive shall be rendered in accordance with recognized insurance
and financial industry standards and recognized codes of conduct or ethics. Executive
shall further promote and enhance the business purposes of the Company by entertainment and
other means, including participation in professional organizations and activities,
attendance at insurance, financial, or industry conventions and seminars, and membership in
insurance or financial industry societies. Any expenses associated with the foregoing
shall be paid directly, or reimbursed to the Executive, by the Company.

1

 

	2.	 	TERM

The employment of Executive hereunder shall commence on the Effective Date (the date
coinciding with each one (1) year anniversary of the Effective Date shall be referred to as
an “Anniversary Date”) and shall, unless this Agreement is sooner terminated as provided in
Section 9 hereof, continue for two (2) years from the Effective Date (the “Initial Term”)
and thereafter for additional one (1) year terms, provided however, that if written notice
of termination of this Agreement is given by either party to the other party at least
ninety (90) days prior to an Anniversary Date (the first of which shall be the last day of
the Initial Term), then this Agreement shall terminate no later than the Anniversary Date
next following the date of such notice.

	3.	 	REMUNERATION

The Company will pay, or provide, to Executive as compensation for services to be rendered
under Section 1 hereof, the following amounts:

	 	(a)	 	Grant of Restricted Stock

On the Effective Date, the Company shall grant to Executive 2,000,000 shares of its
Restricted Common Stock pursuant to a Restricted Stock Agreement, a copy of which is
attached as Exhibit B and incorporated herein and on January 2, 2007, the Company
will grant to Executive an additional 1,000,000 shares of the Company’s Restricted
Common Stock pursuant to a restricted stock agreement with terms and conditions
substantially similar to the agreement attached as Exhibit B and shall provide that
250,000 shares shall vest on each of March 31, June 30, September 30 and December 31,
2007.

	 	(b)	 	Non-Statutory Stock Option Plan

On the Effective Date, the Company shall grant to Executive options to purchase
500,000 shares of the Company’s Common Stock under the Company’s 2003 Non-Qualified
Stock Option Plan and the grant shall be as set forth on Exhibit C attached hereto
and incorporated herein. In addition, on January 2, 2007, the Company shall grant an
additional 500,000 options to purchase shares of the Company’s Common Stock. The
grant of such options shall be as set forth in the Company’s 2003 Non-Qualified Stock
Option Plan and the grant shall be as set forth in an agreement substantially similar
to Exhibit C and shall provide that 125,000 shares shall vest on each of March 31,
June 30, September 30 and December 31, 2007.

Notwithstanding the foregoing, in the event that a proposed “Change of Control” (as
defined herein) occurs prior to January 2, 2007, the grant of restricted stock and
options that are scheduled to be made on January 2, 2007 shall instead by made prior
to the execution of an agreement which would result in a Change of Control, if the
transactions contemplated by such agreement were consummated.

The period of time within which any Options granted under any Stock Option
Agreement may be exercised in the event of termination after a ‘Change in

2

 

Control,’ shall be extended by not less than twelve (12) months after the
Termination Date, but in any event, no later than the expiration date of all
Options.

For the purposes of this Agreement, “Change of Control” means (i) any “person” (as
defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“Act”)
(other than a current 10% beneficial owner (as defined in Rule 13d-3 under the Act)
of the Company’s securities) becomes the beneficial owner, directly or indirectly, of
more than fifty percent (50%) of the combined voting power of the then issued
and outstanding securities of the Company or (ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company, whether by sale
of assets, merger or otherwise.

	 	(c)	 	Bonus Plans

In addition, if approved by the Board of Directors the Executive may be eligible to
participate in any bonus plan of the Company upon the same terms and conditions as
other senior executives of the Company.

	4.	 	WITHHOLDING

Executive agrees that the Company shall withhold from any and all payments required to be
made to Executive pursuant to this Agreement all actual or potential Federal, State, local
and/or other taxes the Company determines are required or potentially will be required, to
be withheld in accordance with applicable statutes and/or regulations from time to time in
effect.

	5.	 	INSURANCE AND OTHER BENEFIT PLANS

Executive shall be entitled, during the period of employment with the Company, to
participate in (i) the life insurance and disability insurance plans available to
executives of the Company, including such accidental death or other benefits as may be
provided under such plans, and (ii) the health and dental and vision plans available to
officers (and their immediate families) of the Company, and (iii) such other employee
benefit plans, including all employee welfare benefit plans and employee pension benefit
plans, that currently are or will be made generally available to executives and salaried
employees of the Company. Participation by or inclusion of the Executive in any benefit
plan maintained by the Company shall be provided only to the extent that the Executive is
eligible under the terms and conditions of the applicable plan and, if required pursuant to
the plan, the employee meets any insurance underwriting or other conditions validly
required by the provider or carrier of the plan or the contracts, policies, or other terms
of eligibility or participation issued in connection with the plan.

	6.	 	VACATIONS, ILLNESS AND HOLIDAYS

Without any loss or reduction of remuneration, Executive shall be entitled to be absent
from Executive’s duties with the Company by reason of vacation or illness for four (4)
weeks for each twelve (12) month period during the term of this Agreement. In addition,
the Executive shall be entitled to such national and religious holidays as

3

 

generally approved by the Company. The Executive shall not be entitled to carry forward any unused sickness, vacation or holiday time accrued during a
year to successive years of this Agreement.

	7.	 	BUSINESS EXPENSES

The Company recognizes that, in connection with Executive’s performance of his duties,
functions and responsibilities hereunder, Executive will incur certain reasonable and
necessary business expenses, including, but not limited to, travel to and from New York and
Ohio and lodging costs in Ohio. The Company agrees to pay or promptly reimburse Executive,
but not less frequently than monthly, for all such reasonable business expenses, which are
incurred in connection with the Company’s business, upon the presentation of statements
setting forth the nature and amount of such expenses in reasonable detail, in accordance
with the Company’s generally applicable guidelines and procedures from time to time;
provided, that, with respect to the travel and lodging costs described in this Section 7,
the Company shall pay such expenses directly.

In addition, the Company shall reimburse the Executive for 100% of his legal fees (up to a
maximum of $6000) associated with the preparation and negotiation of this Agreement and the
agreements set forth in Exhibits B and C immediately upon presentation of the billing
statements for such legal fees.

	8.	 	INDEMNIFICATION

The Company shall indemnify, defend and hold harmless Executive, and shall cause each
applicable entity controlled by the Company (defined for purposes of this Section 8 as a
“Subsidiary”) to indemnify, defend and hold harmless Executive for general directors and/or
officers liability in the normal course of Executive’s services on Company business or
Subsidiary business, to the fullest extent allowed by Nevada law and the bylaws of the
Company. To the extent that a Subsidiary does not fully indemnify the Executive, the
Company shall be responsible for such indemnification.

To secure its indemnification obligations the Company has and shall maintain in full force
and effect through the term of this Agreement directors and officers insurance coverage as
determined by the Company, but in no event in an amount less than $2 million. The use of
the Company’s insurance coverage or policy to secure its or any Subsidiary’s
indemnification obligation shall not, however, limit the obligation of the Company or any
Subsidiary to indemnify the Executive for claims or expenses either below the annual or
periodic deductible limit in the policy or in excess of the policy limits or for items or
events not covered by the policy.

To the extent provided in the Company’s bylaws, the Company shall be obligated, and shall
cause each applicable Subsidiary, to pay the claims or expenses of the Executive required
under this Section 8, including defense cost, directly to the third party to whom payment
is due and owing, without the necessity of the Executive making such payment and seeking
reimbursement from the Company or the Subsidiary.

4

 

	 	 	To the extent that the Executive is successful on the merits or otherwise in defense of any
action, suit, or proceeding, or in defence of any claim, issue or matter brought against
the Executive, the Executive shall be indemnified by the Company, and the Company shall
cause each applicable Subsidiary to indemnify the Company, against all expenses, including
defense and legal fees, incurred by the Executive.

	 
	 	 	The provisions of this Section 8 shall survive the termination or expiration of Executive’s
employment under this Agreement irrespective of the reason for such termination, provided
that nothing herein shall be construed to provide Executive with any greater coverage or
coverage for any period longer than Executive would have been entitled to receive under the
terms of such insurance policy referred to herein (other than deductible and policy dollar
limits).

	 
	9.	 	TERMINATION OF EMPLOYMENT
	 
	9.1	 	Termination by the Company for Cause
	 
	 	 	In the event that Executive is removed from office by the Company for Cause (as hereinafter
defined), the employment of Executive under this Agreement shall terminate and Executive
shall be entitled to receive all remuneration and benefits accrued hereunder to the date of
such termination except for unvested Restricted Stock and Options granted hereunder and
insurance which would by its terms lapse.

	 
	 	 	No other or further payment of benefits under this Agreement will be due upon termination
for Cause, except as required by law, or under the Company’s insurance and other employee
benefit plans and the procedures referred to in Sections 5 and 7.

	9.2	 	Definition of Cause
	 
	 	 	For purposes of this Agreement, the term “Cause” shall mean (i) any wilful material neglect
by Executive, or material failure by Executive to substantially perform the duties and
responsibilities of the Executive’s office or offices (other than any such failures
resulting from Executive’s incapacity due to illness or injury), or (ii) any gross
malfeasance or gross misconduct by Executive in connection with the performance of any of
the duties or responsibilities or otherwise which would, in the view of a reasonable
person, be materially prejudicial to the interests of the Company or any of its affiliates
if Executive were retained in the respective office or offices, including without
limitation, conviction of a felony, or (iii) formal admission to a felony or crime of moral
turpitude, dishonesty, breach of trust or unethical business conduct or any crime involving
the Company, or (iv) repeated material failure to adhere to the policies and lawful and
ethical directions of the CEO or the Board of Directors, or failure of the Executive to
devote sufficient time and efforts to the business of the Company and the duties and
responsibilities hereunder so as to result in material impairment of the Executive’s
performance hereunder, and with respect to 9.2.(i) or 9.2.(ii) or 9.2.(iv) herein, there
has been a failure to cure such breach or a failure to modify Executive’s conduct within 30
days of receiving written notice of such breach specifying the factual reasons supporting
the proposed dismissal for Cause. If the reason for Cause specified by the Company is cured by the
Executive, such reason shall no longer apply for a Cause termination.

5

 

	9.3	 	Determination of For Cause Termination
	 
	 	 	A determination of a for Cause termination shall be made by the Company as follows:
	 
	 	 	(a)	 	The CEO shall first make a preliminary determination that the Executive
should be reviewed for discharge for Cause. The Company will not be required to
provide any preliminary notice to the Executive of its intention to investigate the
possible discharge of the Executive for Cause.
	 
	 	 	(b)	 	After investigating the circumstances surrounding the possible for Cause
termination of the Executive, the Company, through the CEO, may immediately relieve or
suspend the Executive from the Executive’s position by providing notice to the
Executive. Upon notice of the suspension, the Executive shall immediately vacate the
premises and remove all personal property from the premises of the Company. The
Company shall have the absolute right to review any and all material in the possession
of the Executive on the Company premises to determine those items, which are
proprietary to the Company. After sorting the appropriate items, all personal items
shall be delivered to the Executive at the location designation reasonably selected by
the Executive.
	 
	 	 	(c)	 	After concluding its investigation, the Company, through the CEO, shall make
a determination whether the Executive should be discharged for Cause. The
determination for discharge for Cause shall be timely communicated in writing to the
Executive in accordance with Section 9.2.
	 
	 	 	(d)	 	Until terminated, notwithstanding that any of the foregoing procedures are
taking place, or have taken place, the Executive shall be entitled to and shall
continue to accrue all remuneration and benefits provided for under this Agreement,
including, but not limited to, vesting of Restricted Stock and Options.

	9.4	 	Termination by the Company Without Cause and for Good Reason
	 
	 	 	The Company expressly reserves the right to terminate the employment of the Executive
without Cause (upon at least sixty (60) days prior written notice to the Executive) and the
Executive may terminate his employment for “Good Reason (as defined below) upon thirty (30)
days prior written notice. For the purposes of this Agreement, “Good Reason” means,
without the Executive’s prior written consent (i) a material reduction or diminution of the
Executive’s duties, title or reporting relationship as set forth in this Agreement, (ii)
any breach of this Agreement by the Company, (iii) the Company requiring the Executive’s
principal office to be based at any location other than Canton, Ohio or New York City in
the borough of Manhattan, (iv) any failure by the Company to cause any successor to the
Company to expressly assume all of the Company’s obligations under this Agreement or (v) as
set forth in the following paragraph with respect to the subsequent grant of Restricted
Stock and Options.

	 
	 	 	In the event that the Executive’s employment is terminated without Cause or with Good
Reason, the Executive shall be entitled to receive immediate vesting of all

6

 

	 	 	Restricted Stock and Options which vested prior to such termination or which would vest within six (6)
months of such termination. In addition, in the event that the Company’s Common Shares are
not made available by July 31, 2006 to allow for the subsequent grant of Restricted Stock
and Options, or the subsequent grant of Restricted Stock or Options is not made for any
reason on the Anniversary Date, Executive shall be entitled to terminate this Agreement
with Good Reason. Upon such termination for Good Reason, or if the Executive is terminated
prior to the grant on the Anniversary Date or any other reason (except for Cause) after
July 1, 2006; (a) with respect to the initial grant of Restricted Stock, all such
Restricted Stock shall be immediately vested and all applicable restrictions shall lapse
and all Stock Options previously granted shall be fully and immediately vested and
exercisable.
	 
	9.5	 	Voluntary Termination by the Executive
	 
	 	 	Executive shall be entitled, with not less than sixty (60) days written notice, to
voluntarily terminate employment with the Company. If Executive elects such termination,
Executive shall also be entitled to ownership or exercise any vested Restricted Stock or
Options.

	 
	 	 	Even though the Executive is required to give not less than sixty (60) days advance written
notice, the Company shall have the option to require that the Executive discontinue service
on behalf of the Company at any time upon receipt of advance written notice of the
Executive’s election to terminate; provided, however, that in such event the Company shall
continue the vesting of all Restricted Stock and Options during such period.

	9.6	 	Disability Termination
	 
	 	 	The Executive’s employment shall terminate if the Executive becomes so disabled as to be
unable to substantially perform the services of the character contemplated by this
Agreement, and such disability continues for a period of ninety (90) consecutive days. The
Executive’s employment shall terminate at the conclusion of the 90-consecutive day
disability. In such event, the Executive shall be entitled to receive immediate vesting of
all Restricted Stock and Options which vested prior to such termination or which would vest
within six (6) months of such termination.
	 
	 	 	
For purposes of this Agreement the term “disability” or “disabled” shall mean a physical or
mental condition resulting from a bodily injury or disease or mental disorder which renders
the Executive incapable of engaging in substantial gainful activity of the character
contemplated by this Agreement and which can be expected to be of a long and continued
duration with or without reasonable accommodation. The disability of the Executive shall
be determined by the Board based upon competent medical authority. The determination of a
disability may be made by the Board independent of such determination being made under any
other disability insurance plan sponsored or funded by the Company.

	9.7	 	Termination Due to Executive’s Death
	 
	 	 	This Agreement shall terminate if the Executive shall die. Upon termination, the
Executive’s legal representatives shall be entitled to receive immediate vesting of all

7

 

Restricted Stock and Options which vested prior to such termination or which would vest
within six (6) months of such termination. With respect to benefit entitlement under the
Company’s plans or programs, the Executive’s legal representatives shall only be permitted
to such rights or benefits as otherwise provided in those plans or programs.

	10.	 	RESTRICTIVE CONVENANTS; CONFIDENTIALITY; OWNERSHIP OF PROCEEDS OF EMPLOYMENT
	 
	10.1	 	Solicitation of Employees; Customers; Agents or Representatives etc.
	 
	 	 	Executive agrees that, during the term of employment hereunder, and for a period of one (1)
year after the Company no longer employs Executive, Executive shall not, directly or
indirectly:

	 
	 	 	(a)	 	solicit, entice, persuade or induce any individual who is then or has been
within the preceding six-month period, an employee of the Company or any of its
subsidiaries or affiliates, to terminate his or her employment with the Company or any
company controlled by or under common control with the Company (defined for purposes
of this Section 10 as an “Affiliate”), or to become employed by or enter into
contractual relations with any other individual or entity, and the Executive shall not
approach any such employee for any such purpose or authorize or knowingly approve the
taking of any such actions by any other individual or entity; or,
	 
	 	 	(b)	 	except in accordance with Executive’s duties hereunder, solicit, entice,
persuade or induce any individual or entity which is then, or has within the preceding
twelve month period been, a customer, distributor or supplier, or policy owner, agent
or representative of the Company or any of its Affiliates to terminate or materially
reduce his, her or its contractual or other relationship with the Company or any of
its subsidiaries or affiliates, and the Executive shall not approach any such
customer, distributor, supplier, policy owner, agent or representative for such
purpose or authorize or knowingly approve the taking of any such actions by any other
individual or entity.

	10.2	 	Confidential Records
	 
	 	 	In the course of employment, Executive will have access to confidential information,
records, data, specifications, and other knowledge owned by the Company or its subsidiaries
or affiliates. Executive agrees that at no time during or after the term of employment
shall the Executive remove or cause to be removed from the premises of the Company or its
subsidiaries or affiliates, any record, file, memorandum, document, equipment or like item
relating to the business of the Company or its subsidiaries or affiliates except in
furtherance of Executive’s duties hereunder, and immediately following the termination of
Executive’s employment hereunder or at any other time at the request of the CEO or the
Board of Directors, all such records, files, memoranda, documents, equipment and like items
then in Executive’s possession will promptly be returned to the Company. Executive further agrees
that, during and after the term of employment, Executive shall not without the written
consent of the Company or a person authorized thereby, disclose to any person, other than
an employee of the Company its subsidiaries or affiliates or a person to

8

 

	 	 	whom disclosure is reasonably necessary or appropriate in connection with the performance by Executive of
duties as an executive of the Company, any confidential information obtained by Executive
while in the employ of the Company with respect to any business methods, plans, policies,
products and/or personnel of the Company or its subsidiaries or affiliates, the disclosure,
including speaking with the press, of which would, in the view of a reasonable person, be
injurious or damaging to the business of the Company or its subsidiaries, or affiliates,
provided, however, that confidential information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by Executive),
any information of a type not otherwise considered confidential by persons engaged in the
same business or a business similar to that conducted by the Company or any information
required to be disclosed under applicable law or an order of court or a governmental agency
with jurisdiction.

	 
	10.3	 	Ownership of Proceeds of Employment
	 
	 	 	Executive acknowledges that the Company shall be the sole owner of all the fruits and
proceeds of the Executive’s services hereunder, including without limitation all ideas,
concepts, formats, suggestions, developments, arrangements, designs, packages, programs,
promotions and other properties relating to the businesses of the Company, which Executive
may create in connection with and during the term of employment hereunder, free and clear
of any claims by the Executive of any kind or character whatsoever (other than Executive’s
right to compensation and benefits hereunder).

	10.4	 	Survival
	 
	 	 	The provisions of this Section 10 shall survive any termination or expiration of
Executive’s employment under this Agreement, irrespective of the reason therefore.

	10.5	 	Enforceability; Remedies
	 
	 	 	The parties hereto agree that a breach by Executive of any of the provisions of Section 10
hereof will cause the Company great and irreparable injury and damage. By reason of this,
Executive acknowledges that, in the event of a breach by Executive of any of the provisions
of Section 10 hereof, the Company shall be entitled, in addition and as a supplement to any
other rights or remedies it may have at law, to the remedies of injunction, specific
performance and other equitable relief. This Section 10 shall not, however, be construed
as a waiver of any of the rights which the Company may have for damages or otherwise.

	11.	 	MISCELLANEOUS PROVISIONS
	 
	11.1	 	Severability
	 
	 	 	Executive acknowledges and agrees that (i) Executive has had an opportunity to seek advice
of counsel in connection with this Agreement and (ii) the Restrictive Covenants contained in Section 10.1 hereof are reasonable in temporal and geographic scope
and in all other respects. If in any jurisdiction any term or provision hereof is
determined to be invalid or unenforceable, (a) the remaining terms and provisions hereof
shall be unimpaired, (b) any such invalidity or

9

 

	 	 	unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and the
remaining provisions hereof shall be given full force and effect without regard to the
invalid portions. The Company and the Executive intend to and hereby confer jurisdiction
to endorse the restrictive covenants upon the courts of any jurisdiction within the
geographical scope of the covenants.

	 
	11.2	 	Execution in Counterparts
	 
	 	 	This Agreement may be executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement (and all signatures need
not appear on any one counterpart), and this Agreement shall become effective when one or
more counterparts has been signed by each of the parties hereto and delivered to each of
the other parties hereto.

	11.3	 	Notices
	 
	 	 	Any notice or other communication in connection with this Agreement shall be deemed to be
delivered if in writing (or in the form of a fax to the Company) addressed as provided
below and if either (a) actually delivered at said address, or (b) in the case of a letter,
three business days shall have elapsed after the same shall have been deposited in the US
mail, postage prepaid and registered or certified, and (c) in the case of fax, one business
day shall have elapsed after dispatch.

If to the Company, to it at the following address:

Hartville Group, Inc.

3840 Greentree Avenue SW

Canton, Ohio

FAX 330-484-8081

Attention: C.E.O.

with a copy to:

Jack A. Bjerke

Baker & Hostetler, LLC

65 E. State Street, Suite 2100

Columbus, Ohio 43215-4260

or at such other address as the Company shall have specified by written notice actually
received by the addresser.

If to Executive, to Executive at his home address as set forth in the records of the
Company.

or at such other address as Executive shall have specified by written notice actually
received by the addresser.

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	11.4	 	Entire Agreement and Subsequent Amendments
	 
	 	 	This Agreement constitutes the entire agreement between the Company and Executive relating
to Executive’s employment and supersedes all prior agreements and understandings of the
parties hereto, whether oral or written with respect to the subject matter herein.

	 
	 	 	This Agreement may be amended or altered only by the written agreement of the Company and
Executive.

	11.5	 	Applicable Law
	 
	 	 	This Agreement shall be governed by and construed in accordance with the laws of the State
of Ohio without regard to principles of conflict of law.

	11.6	 	Headings
	 
	 	 	The descriptive headings of the several sections of this Agreement are inserted for the
sole purpose of convenience of reference, and do not constitute part of this Agreement or
in any way limit or affect the meaning or interpretation of any of the terms or provisions
of this Agreement.

	11.7	 	Binding Effect; Successors and Assigns
	 
	 	 	This Agreement shall be binding upon and shall inure to the benefit of:
	 
	 	 	(a)	 	the Company and its successors and assigns; and
	 
	 	 	(b)	 	Executive and to the benefit of Executive’s heirs, executors, administrators
and legal representatives. Executive’s duties and obligations hereunder are personal
and shall not be assignable or delegable in any manner whatsoever.
	 
	 	 	(c)	 	Other than the Restricted Stock or the Stock Options, the Company may assign
the obligations under this Agreement (subject to a right of recourse by Executive to
the Company in the event of any default hereunder) to an affiliate or to any
intermediate parent of the Company.

	11.8	 	Waiver
	 
	 	 	The failure of either of the parties hereto at any time, to enforce any of the provisions
of this Agreement shall not be deemed or construed to be a waiver of any such provision,
nor to in any way affect the validity of this Agreement or any provision hereof or the
right of either of the parties hereto, to thereafter enforce each and every provision of
this Agreement. No waiver of any breach of any of the provisions of this Agreement shall
be effective unless set forth in a written instrument executed by the party against whom or
which enforcement of such waiver is sought, and no waiver of any such breach shall be
construed or deemed to be a waiver of any other or subsequent breach.

	11.9	 	Warranty and Capacity to Contract
	 
	 	 	The Company and Executive hereby represent and warrant to the other that:

11

 

	 	 	(a)	 	they have full power and authority to execute this Agreement, and to perform
their respective obligations hereunder;
	 
	 	 	(b)	 	such execution, delivery and performance will not (and with the giving of
notice or lapse of time or both would not) result in any breach of any agreements or
other obligations to which Executive or the Company is otherwise bound; and
	 
	 	 	(c)	 	this Agreement is a valid binding obligation on Executive and the Company.
	 
	11.10	 	Arbitration
	 
	 	 	Except to the extent necessary for Executive or the Company to enforce rights under Section
11.9 above, or for the Company to enforce its rights under Section 10 above, or for the
Executive to enforce his rights under Section 8, above, any case or controversy arising
among the parties hereto under this Agreement, or the subject matter hereof, shall be
settled by binding arbitration in Canton, Ohio under the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association. The decision of the
arbitrators shall be final and binding and the party against whom the award is rendered
(“the non-prevailing party”) shall be specifically instructed in any such award to pay all
reasonable attorney’s fees, disbursements of the prevailing party’s legal counsel,
arbitration costs, expenses and filing fees incurred by the prevailing party in the
arbitration proceeding. The American Arbitration Association shall appoint three (3)
arbitrators to preside at the said arbitration proceeding and the arbitrators will
determine in their decision and award, which is the prevailing party, which is the
non-prevailing party, the amount of the fees and expenses of the prevailing party and the
amount of the arbitration expenses. The arbitrators will render their award, upon the
concurrence of at least two (2) of their number, no later than thirty (30) days after the
conclusion of the arbitration proceedings. Judgment may be entered on the award of the
arbitrators and may be enforced in any court of competent jurisdiction.

	 
	11.11	 	Remedies
	 
	 	 	All remedies hereunder are cumulative, are in addition to any other remedies provided by
law and may be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed to be an election of such remedy exclusively or to preclude the
exercise of any other remedy. No failure or delay in exercising any right or remedy shall
operate as a waiver thereof or modify the terms of this Agreement.

	 
	11.12	 	Survival
	 
	 	 	Anything contained in this Agreement to the contrary notwithstanding, the provisions of
Section 8; and Section 9; and Section 10; and Section 11.1; and the other provisions of
this Section 11 (to the extent necessary to effectuate the survival of Section 11) shall survive termination of this Agreement and any termination of
Executive’s contract hereunder.

	 
	 	 	The Company shall be fully responsible for payment of its own costs and expenses incurred
in the preparation and negotiation of this Agreement and all documents related thereto.

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	11.13	 	Deferred Compensation
	 
	 	 	This Agreement and all compensation derived herefrom are not intended to constitute
compensation deferred under a nonqualified deferred compensation plan as contemplated under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). Consistent
with the preceding sentence, the Executive and the Company shall agree on any changes to
this Agreement to prevent the application of Section 409A of the Code, provided however
that the changes do not incur additional equity to be issued or cash compensation to be
paid.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the
date first written above.

	 	 	 	 	 
	EXECUTIVE

 	 	 
	/s/ Christopher Edgar
 	 	 
	Christopher Edgar 	 	 
	 	 	 
	Executed at Canton, Ohio 	 	 
	 
	BY HARTVILLE GROUP, INC.

 	 	 
	/s/ Dennis C. Rushovich
 	 	 
	Dennis C. Rushovich, Chief Executive Officer 	 	 
	 	 	 
	Executed at Canton, Ohio 	 	 

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Exhibit A — Position Description

	 	 	 	 	 
	Titles:

	 	Chief Marketing Officer of Hartville Group, Inc.
	 	     

	 	 	 
	Reporting
Lines:

	 	Chief Executive Officer of Hartville Group, Inc.	 	 

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