Document:

EX 10.22 - KeyManagementBonusProgram

Exhibit 10.22
Post Holdings, Inc. Key Management Bonus Program 
Article I - Purpose
The purpose of the Key Management Bonus Program (the “Program”) is to focus Key Management Employees on critical business objectives of Post Holdings, Inc. (the “Company”) to encourage superior performance to exceed or achieve identified metrics that drive shareholder value.  The Bonus Awards metrics will be based on Net Sales, EBIT, Market Share and Individual Performance Factors. 
Article II – Definitions and Rules of Construction
2.1    “Base Salary” means as to any Program Year, 100% of the Participant’s annualized salary rate on the last day of the Program Year.  Such Base Salary shall be before both (a) deductions for taxes or benefits, and (b) deferrals of compensation pursuant to Company-sponsored plans.
2.2    “Beneficiary” means the person or persons designated by a Participant, or otherwise entitled to receive a Bonus Award that remains undistributed at Participant’s death.
2.3    “Board” means the Board of Directors of the Company.
2.4    “Bonus Award” means any cash bonus granted under the terms of the Program.  Bonus Awards may be expressed as a percentage of a Key Management Employee’s Base Salary or a specific dollar amount, as determined by the Chief Operating Officer (“COO”) for each Participant for any Program Year, or for multiple Program Years. 
2.5    “Bonus Target” means the percentage of Base Salary the Participant is eligible to receive in the form of a Bonus Award.
2.6    “Chief Operating Officer” means the Chief Operating Officer of Post Holdings, Inc.
2.7    “Code” means the Internal Revenue Code of 1986, as amended from time to time.
2.8    “Company” means Post Holdings, Inc., a Missouri Corporation, and any successor thereto.
2.9    “Corporate Employee” means a Key Management Employee who is classified by the Company as an employee primarily working in a corporate group within Post Holdings, Inc. (i.e., not within a specific Division).
2.10    “Delayed Transfer Employee” means those individuals designated as Delayed Transfer Employees by the Company pursuant to the Employee Matters Agreement entered into by the Company and Ralcorp Holdings, Inc.
2.11    “Division” means any operating division of Post Holdings, Inc. identified by the COO as eligible to participate in the Key Management Bonus Program. 
2.12    “Division Employee” means an individual who is classified by the Company as an employee primarily working in a Division.

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2.13    “Grade” means the numerical salary grade assigned to each Key Management Employee by the COO.
2.14    “Key Management Employee” means an individual who is designated by the Company as a Division Employee or Corporate Employee of the Company or its subsidiaries or affiliates whose Grade is at or higher than 17 or who is designated as eligible for participation at the discretion of the COO.
2.15    “Participant” means any Key Management Employee who satisfies the conditions for participation in the Program as set forth in Section 3.1.
2.16    “Performance Appraisal” means an annual evaluation of the individual performance of a Participant.
2.17    “Performance Criteria” means the level of performance assigned to each Participant. The Performance Criteria is then used to determine the applicable bonus factor. 
2.18    “Program Year” means the accounting year of the Program, which ends on September 30; provided that the first Program Year shall begin on February 3, 2012 and end on September 30, 2012.
2.19    Rules of Construction
(a)Governing law.  The construction and operation of this Program are governed by the laws of the State of Missouri.
(b)Headings.  The headings of Articles, Sections and Subsections are for reference only and are not to be utilized in construing the Program.
(c)Gender.  Unless clearly inappropriate, all pronouns of whatever gender refer indifferently to persons or objects of any gender.
(d)Singular and Plural.  Unless clearly inappropriate, singular items refer also to plural and vice versa.
(e)Severability.  If any provision of this Program is held illegal or invalid for any reason, the remaining provisions are to remain in full force and effect and to be construed and enforced in accordance with the purposes of the Program as if the illegal or invalid provision did not exist.
Article III - Eligibility
3.1    Eligibility.  All Key Management Employees of the Company, as defined herein and who are so designated by the Company, are eligible to receive a Bonus Award under this Program from the Company or a subsidiary of the Company subject to the performance criteria set forth in Article IV.  If a Key Management Employee is included in an alternative, business-specific bonus program, including but not limited to a sales incentive program or plant gainshare program, the Chief Operating Officer, in his discretion, may alter or eliminate that Key Management Employee’s participation in this Program.

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(a)New Participants.  If an individual is hired as a Key Management Employee and is not a Delayed Transfer Employee or becomes a Key Management Employee after the start of the Program Year and the individual’s date of hire or promotion is: 
(i)prior to July 1, he or she will be a Participant in this Program and may receive a Bonus Award for the Program Year on a prorated basis; or
(ii)after July 1, he or she will not be eligible to participate in the Program or receive a Bonus Award for that Program Year.  However, the Key Management Employee will be eligible to participate in the Program for the next Program Year beginning October 1. 
(b)Transferring Participants.  A Key Management Employee who transfers to a different Division during the Program Year and who remains a Key Management Employee will remain in the Program and will be eligible for a Bonus Award based upon the prorated number of months in each Division.  Notwithstanding the foregoing, if such a transferring Key Management Employee worked less than three months in a particular Division during the Program Year, any Bonus Award for such transferring Key Management Employee will be calculated based only on the performance of a Division, if any, in which the Key Management Employee worked nine months or more.  The individual performance of the Key Management Employee during the entire Program Year will be considered in evaluating any Bonus Award. This provision does not apply to Delayed Transfer Employees.
(c)Promoted Participants. An employee who is promoted to a Key Management Employee status during the Program Year will be a Participant in this Program and may receive a Bonus Award, as determined by the Chief Operating Officer in such Officer’s discretion, for the Program Year on a prorated basis.
(d)Delayed Transfer Employees.   An employee who is a Delayed Transfer Employee and who is designated as a Key Management Employee upon his or her transfer to the Company from Ralcorp Holdings, Inc. shall be eligible to receive a Bonus Award, as determined by the Chief Operating Officer in such Officer’s discretion, for the full Program Year in which he or she was hired.
3.2    Bonus Targets.  Prior to the Program Year, each Participant will receive a Bonus Target, expressed as a percentage of Base Salary based upon the Company’s business outlook and goals for the fiscal year.  Bonus Targets for specific positions will be influenced by competitive market practices, job grade, and level of contribution within the Company and the experience/performance of the Participant in his or her position. If a Participant’s Base Salary changes during the Program Year, any Bonus Award will be calculated based upon the prorated number of months the Participant was eligible to receive each Base Salary for that Program Year.
3.3.    Bonus Pool.  Prior to the Program Year, the Chief Operating Officer shall assign a total aggregate amount as a bonus pool either for the Company or for each Division, as applicable, based on the number of Participants in each Division and the Participants’ individual Bonus Targets.  

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Article IV – Award Criteria
4.1      Post EBIT Targets.  The Post EBIT component accounts for 60% of the overall Bonus Award determination.  The Bonus Target and the Performance Criteria will be established annually. 
4.2    Post Net Sales Targets.  The Post Net Sales component accounts for 20% of the overall Bonus Award determination.  The Net Sales components will be established annually. 
4.3    Post Market Share Targets.  The Post Market Share component accounts for 20% of the overall Bonus Award determination.  Share of market will be measured as an average over the 52 weeks since the start of the year based on the share of the market at the end of the fiscal year. 
4.4    Individual Performance Criteria.   The relevant Division Head and/or Department Manager shall evaluate the individual performance of its Participants according to pre-established criteria set forth in a Performance Appraisal, approved by the Chief Operating Officer, within 30 days following the close of the Program Year.  Participants must receive an overall rating of at least  “More Is Expected” or its equivalent in order to qualify for a Bonus Award.  Participants receiving a rating of a “Unacceptable” or its equivalent are not eligible to receive any portion of a Bonus Award.  The individual Performance Criteria for each Participant is used to determine the percentage of his or her portion of the Bonus Pool. 
In addition to the criteria set forth in the Performance Appraisal, the following factors may be considered in evaluating individual performance:  (a) level of contribution within the Company; (b) experience; and (c) performance of job duties.  Except as set forth in Article VI, an employee must be employed on the last day of the Program Year, as defined herein, in order to be eligible to receive a Bonus Award.
Notwithstanding the foregoing, the Company shall make the determination of whether the targets and performance criteria set forth in this Article IV have been met by any means it deems reasonable under the circumstances using its good faith judgment and general accounting principles.  In the event that any i) unusual and/or non-recurring items; and/or ii) acquisitions or divestitures occur that have a significant effect on EBIT, Market Share or Net Sales, the Company reserves the right to make appropriate adjustments to the calculations of these targets.   
Article V - Payment of Bonus Awards
5.1    Timing of Payment.  Payment of each Bonus Award shall be made by the December 31st following the end of the Program Year during which such Award was earned. 
5.2    Form of Payment.  Each Bonus Award shall be paid in cash (or its equivalent) in a single lump sum.
5.3    Deferral of Bonus.  A Participant may defer all or a portion of any Bonus Award under this Program subject to the Post Holdings, Inc. Deferred Compensation Plan for Key Employees in a manner that complies with the requirements of Section 409A of the Code and the terms of such plan.  The Bonus Award shall be deemed benefit earnings for purposes of the Company’s employee benefit plans.

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5.4    Payment Upon Death.  If a Participant dies after December 31 of a Program Year but before payment of the Bonus Award related to that Program Year, the Participant’s designated beneficiary shall be entitled to a prorated share of the Bonus Award based on the time the Participant worked or otherwise provided services during the Program Year.  If a Participant dies after the end of the Program Year and before payment of the Bonus Award, the Participant’s designated beneficiary may receive the entire share of the Bonus Award.  Any such Bonus Award shall be paid in accordance with Section 5.1 above.
5.5    Designation of Beneficiary.  A Participant shall designate a Beneficiary on a form to be supplied by the Human Resources Department of the Company.  The Beneficiary designation may be changed by the Participant at any time, but any change shall not be effective until the Beneficiary designation form completed by the Participant is delivered to and received by Human Resources.  In the event that Human Resources receives more than one Beneficiary designation form from the Participant, the form bearing the most recent date shall be controlling.  If Human Resources does not have a valid Beneficiary designation of a Participant at the time of the Participant’s death, then the Participant’s beneficiary shall be the Participant’s estate.
5.6    Payment Upon Termination.  If a Participant’s employment terminates after December 31 of a Program Year due to retirement or disability, as determined by the Company in its sole discretion, the Participant shall be eligible to receive a prorated share of the Bonus Award based on the time the Participant worked or otherwise provided services during the Program Year.  If a Participant’s employment is terminated prior to December 31 of a Program Year for any reason, including due to retirement or disability, or after December 31 but prior to September 30 of a Program Year for reasons other than for death, retirement or disability, the Participant is not eligible to receive a Bonus Award unless provided for by a written agreement between the Company and the Participant and as approved by the Chief Operating Officer.  Any Bonus Award payable hereunder shall be paid in accordance with Section 5.1 above.
5.7    Participants on Leave.  If a Participant is absent from work due to a medical, workers’ compensation or family leave of absence during the Program Year in accordance with Company policy, he or she will be eligible to receive a Bonus Award based on the full Program Year if the Participant’s absence from work amounted to twelve weeks or less.  If the Participant’s absence exceeds twelve weeks, the Participant shall be eligible for a pro-rated Bonus Award calculated based on the actual time worked during the Program Year.  A Participant’s absence which is deemed qualified and approved under the Family and Medical Leave Act (“FMLA”) shall be credited toward the pro-rated Bonus Award up to a maximum of twelve weeks (26 weeks if military caregiver leave under FMLA).  Any such Bonus Award shall be paid in accordance with Section 5.1 above.
5.8    Withholding of Taxes.  The Company shall deduct from any payment, or otherwise collect from the Participant, any taxes required to be withheld by federal, state or local governments in connection with any Bonus Award.  
5.9    No Warranty of Tax Effect.  No opinion is expressed nor warranties made as to the effect for federal, state, or local tax purposes of any Bonus Award.

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Article VI - Program Administration
6.1    Powers of the Chief Operating Officer.  The Chief Operating Officer shall have exclusive authority and discretion to administer and interpret the Program and, in connection therewith, have the power to establish rules in connection with the administration of the Program and perform all other acts that such Officer believes reasonable and proper, including the power to delegate responsibility to others to assist it in administering the Program.
6.2    Conclusiveness of Action.  Any action on matters within the discretion of the Chief Operating Officer will be conclusive, final and binding upon all Participants and upon all persons claiming any rights under the Program, including Beneficiaries.
6.3    Expenses.  All expenses of the Chief Operating Officer with respect to the Program shall be paid by the Company.
Article VII - Non-Assignability
7.1    Non-Assignability.  Neither a Participant nor any Beneficiary of a Participant shall have any right to commute, sell, assign, pledge, transfer or otherwise convey the right to receive a Bonus Award until the Bonus Award is actually distributed to the Participant or his or her Beneficiary.  
Article VIII - Amendment or Termination of Program
8.1    Power to Amend or Terminate Program.  The Chief Operating Officer may amend, modify or terminate this Program at any time.
8.2    When Amendments Take Effect.  A resolution amending or terminating the Program becomes effective as of the date specified therein.  
8.3    Restriction on Retroactive Amendments.  No amendment may be made that retroactively deprives a Participant of any benefit accrued before the date of the amendment.
Article IX - Miscellaneous
9.1    Program Not a Contract of Employment.  The adoption and maintenance of the Program does not constitute a contract of employment between the Company and any Participant or to be a consideration for the employment of any person.  Nothing herein contained gives any Participant the right to be retained in the employ of the Company or derogates the right of the Company to discharge any Participant at any time , with or without notice, without regard to the effect of such discharge upon his or her rights as a Participant in the Program.
9.2    Program Not a Contract or Guarantee of Bonus Award.  While the Company intends to adhere to the policies and practices listed in this document, the statements and guidelines contained in this Program are not and should not be considered a contract of any kind, express or implied. 
9.3    No rights under Program Except as Set Forth Herein.  Nothing in this Program, express or implied, or shall be construed, to confer upon or give to any person, firm, association or corporation, other than the parties hereto and their successors in interest, any right, remedy, or claim under or by reason of this Program or any covenant, condition or stipulation hereof, and all covenants, conditions and stipulations in this Program, by or on behalf of any party, are for the sole and exclusive benefit of the parties hereto.

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9.4    Severability.  If any provision of this Program is determined to be invalid or illegal, the remaining provisions shall be effective and shall be interpreted as if the invalid or illegal provision did not exist, unless the illegal or invalid provision is of such materiality that its omission defeats the purpose o the parties in entering into this Program.
9.5    Unfunded Nature of Program.  The Program shall be unfunded, and the Company shall not be required to segregate any assets which may at any time be awarded under the Program.  
9.6    Successors.  All obligations of the Company under this Program, with respect to any Bonus Awards granted hereunder, shall be binding on any successors to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.
9.7    Choice of Law.  This Program shall be construed in accordance with and governed by the laws of the State of Missouri determined without regard to its choice of law provisions.  

IN WITNESS WHEREOF, Post Holdings, Inc. has executed this Program Document on this 7th of August 2012.
	
			
	 
	POST HOLDINGS, INC.

	 
	 
	 

	 
	By:
	/s/ Terence E. Block

	 
	Terence E. Block

	 
	President and Chief Operating Officer

7ex10-1.htm

Exhibit 10-1

 

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made between Epazz, Inc., an Illinois corporation (the “Company"), and Shaun Passley (“Executive”) (collectively sometimes referred to as the “Parties” and individually sometimes referred to as a “Party”). Unless otherwise indicated, all references to Sections are to Sections in this Agreement.  This Agreement is effective as of the “Effective Date” set forth below.

 

W I T N E S S E T H:

WHEREAS, the Company desires to obtain the services of Executive, and Executive desires to be employed by the Company upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as of the date hereof as follows:

1. Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve the Company as its Chief Executive Officer, President and Chief Financial Officer or any other titles or lesser titles as the Company’s Board of Directors elects (the “Employment”) for a term of ten (10) years, beginning on the Effective Date (the “Term”).  The “Effective Date” of the Employment shall be September __, 2012.

2. Scope of Employment.  During the Employment, Executive will (i) devote his full-time (i.e, an average minimum of 40 hours per week), attention, and energies to the business of the Company and will diligently and to the best of his ability perform all duties incident to his employment hereunder; (ii) use his best efforts to promote the interests and goodwill of the Company; and (iii) perform such other duties commensurate with his office as his superiors at the Company may from time-to-time assign to him.  Executive must work in the Company’s principal office location for at least three day per week.

3. Compensation and Benefits During Employment. During the Employment, the Company shall provide compensation to Executive as follows.

(a) Base Salary - The Company shall pay Executive a minimum base salary, as may be adjusted from time to time, equal to $180,000 per year (the “Salary”), beginning on the Effective Date of this Agreement and ending at the end of the Term or upon the termination of this Agreement as provided below.  A total of $30,000 of the Salary shall be payable yearly on the anniversary date of the Effective Date in cash.  A total of $150,000 of the Salary shall be payable yearly, on each anniversary of the Effective Date in shares of the Company’s Class A Common Stock (“Shares”), at the rate of $0.006 per share (the “Share Price”)(i.e., 25,000,000 Shares per year or 250,000,000 Shares in aggregate)(the “Salary Shares”), which shall be issued to Executive upon the Parties entry into this Agreement and shall vest to Executive pursuant to the schedule above each year that Executive continues to be employed hereunder, subject in all cases to the Vesting Date (i.e., final vesting shall not occur until both the Vesting Date has occurred and the shares have vested pursuant to this Section 3(a)).

(b) Bonus.  The Company shall pay the Executive a bonus of $4,000,000 in Shares, equal to 666,666,667 Shares based on the Share Price (the “Bonus Shares”), upon the Parties entry into this Agreement, which Bonus Shares shall be considered earned and vested immediately on the Vesting Date.

 

 

 

 

  

  

  

(c) Acquisition Bonuses.  The Company shall pay the Executive a bonus of $150,000 in Shares (25,000,000 Shares based on the Share Price), for each of the following acquisitions previously completed by the Company: (a) the acquisition of DeskFlex; (b) the acquisition of PRM; (c) the acquisition of AutoHire; (d) the acquisition of Intellisys; and (e) the acquisition of K9 Bytes (a total of $750,000 or 125,000,000 Shares)(the “First Acquisition Shares”); and a bonus of $200,000 or 33,333,333 Shares (the “Second Acquisition Shares” and together with the First Acquisition Shares, the “Acquisition Shares”) in connection with the Company’s acquisition of MsHealth.  The Acquisition Shares shall be issued to Executive on the Effective Date and considered earned and vested on the Vesting Date.  Executive shall also be eligible to earn an additional $200,000 bonus (33,333,333 Shares) in the event the Company completes a future acquisition with a total value of at least $200,000 during the Term of the Agreement (a “Future Acquisition” and the “Future Acquisition Shares”), provided that the Future Acquisition Shares shall be issued to Executive on the Effective Date and considered earned and vested on the date that both the Vesting Date has occurred and the completion of such Future Acquisition has occurred

(d) Continuing Collateral Bonus.  The Company shall pay the Executive a bonus of $200,000 (33,333,333 Shares) in compensation to Executive for Executive providing his personal residence (the “Collateral”) as collateral for various business loans and promissory notes of the Company (the “Collateral Bonus Shares”) which Collateral Bonus Shares shall be considered earned and vested immediately upon the Effective Date.  The Company shall also pay the Executive a bonus of $200,000 (33,333,333 Shares) per year that Executive continues to provide the Collateral during the Term of this Agreement (up to an aggregate of $1,800,000 or 299,999,997 Shares)(the “Additional Collateral Bonus Shares”), which Additional Collateral Bonus Shares shall be issuable to Executive on the Effective Date and vest to Executive at the rate of 33,333,333 Shares on each anniversary of the Effective Date of this Agreement during the Term, subject in all cases to the Vesting Date (i.e., final vesting shall not occur until both the Vesting Date has occurred and the shares have vested pursuant to this Section 3(d)).

(e) Vesting and Forfeiture.  All Shares issuable to Executive pursuant to this Agreement shall be subject to forfeiture upon termination of Executive’s employment as provided below in Sections 11 and 12 of this Agreement prior to vesting (as provided above in Sections 3(a), 3(c) and 3(d)) and prior to the Vesting Date (“Vesting”).  The “Vesting Date” shall be the date that the Company reports revenues of at least $10 million in its audited financial statements for a fiscal year then ended as filed with the Securities and Exchange Commission.  In the event (a) that this Agreement is terminated; or (b) the Term of the Agreement expires, prior to the Vesting Date, all Shares issuable to Executive as provided above shall be forfeited by the Executive and returned to the Company for cancellation, subject in all cases to Section 12(b), below.

(f) Expenses - So long as this Agreement is in effect, the Company shall reimburse Executive for all reasonable, out-of-pocket business expenses incurred in the performance of his duties hereunder consistent with the Company’s policies and procedures, in effect from time to time, with respect to travel, entertainment and other business expenses customarily reimbursed to employees of the Company in connection with the performance of their duties on behalf of the Company.

(g)  PTO - Executive will be entitled to two (2) weeks annually of paid time off (“PTO”) during the Term, not including holidays. Unused PTO days shall not roll-over into any extension of the Term. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.

(h) Benefits - Executive shall be entitled to participate in all Company employee benefit plans and programs (excluding severance plans, if any) as Company generally maintains from time to time during the Term for the benefit of its senior employees, in each case, subject to the eligibility requirements, enrollment criteria and other terms and provisions of such plans or programs. Company may amend, modify or rescind any employee benefit plan or program and change employee contribution amounts to benefit costs without notice in its discretion.

 

 

  

  

  

4. Confidential Information.

(a) Executive acknowledges that the law provides the Company with protection for its trade secrets and confidential information.  Executive will not disclose, directly or indirectly, any of the Company’s confidential business information or confidential technical information to anyone without authorization from the Company’s management.  Executive will not use any of the Company’s confidential business information or confidential technical information in any way, either during or after the Employment with the Company, except as required in the course of the Employment.

(b) Executive will strictly adhere to any obligations that may be owed to former employers insofar as Executive’s use or disclosure of his confidential information is concerned.

(c)  Information will not be deemed part of the confidential information restricted by this Section 4 if Executive can show that: (i) the information was in Executive’s possession or within Executive’s knowledge before the Company disclosed it to Executive (provided that any information provided to the Executive by entities which the Company is considered successor entities to (collectively the “Company Parties”) shall be considered confidential information for the purposes of this Agreement); (ii) the information was or became generally known to those who could take economic advantage of it through no action of Executive;  (iii) Executive obtained the information from a party having the right to disclose it to Executive without violation of any obligation to the Company or any Company Party, or (iv) Executive is required to disclose the information pursuant to legal process (e.g., a subpoena), provided that Executive notifies the Company immediately upon receiving or becoming aware of the legal process in question. No combination of information will be deemed to be within any of the four exceptions in the previous sentence, however, whether or not the component parts of the combination are within one or more exceptions, unless the combination itself and its economic value and principles of operation are themselves within such an exception or exceptions.

(d) All originals and all copies of any drawings, blueprints, manuals, reports, computer programs or data, notebooks, notes, photographs, and all other recorded, written, or printed matter relating to research, manufacturing operations, or business of the Company or the Company Parties made or received by Executive during the Employment are the property of the Company.  Upon termination of the Employment, Executive will immediately deliver to the Company all property of the Company or the Company Parties which may still be in Executive’s possession.  Executive will not remove or assist in removing such property from the Company’s premises under any circumstances, either during the Employment or after termination thereof, except as authorized by the Company’s management.

(e) For a period of one (1) year after the date of termination of the Employment, Executive will not, either directly or indirectly, hire or employ or offer or participate in offering employment to any person who at the time of such termination or at any time during such one year period following the time of such termination was an Executive of the Company or the Company Parties without the prior written consent of the Company.

5.  Ownership of Intellectual Property.

(a) The Company will be the sole owner of any and all of Executive’s Inventions that are related to the Company’s business with respect to software, as defined in more detail below.

 

 

 

  

  

  

(b) For purposes of this Agreement, “Inventions” means all inventions, discoveries, and improvements (including, without limitation, any information relating to manufacturing techniques, processes, formulas, developments or experimental work, work in progress, or business trade secrets), along with any and all other work product relating thereto.

(c) An Invention is “related to the Company’s business” (“Company-Related Invention”) if it is made, conceived, or reduced to practice by Executive (in whole or in part, either alone or jointly with others, whether or not during regular working hours), whether or not potentially patentable or copyrightable in the U.S. or elsewhere, and it either: (i) involves equipment, supplies, facilities, or trade secret information of the Company; (ii) involves the time for which Executive was or is to be compensated by the Company; (iii) relates to the business of the Company or to its actual or demonstrably anticipated research and development; or (iv) results, in whole or in part, from work performed by Executive for the Company.

(d) Executive will promptly disclose to the Company, or its nominee(s), without additional compensation, all Company-Related Inventions.

(e) Executive will assist the Company, at the Company’s expense, in protecting any intellectual property rights that may be available anywhere in the world for such Company-Related Inventions, including signing U.S. or foreign patent applications, oaths or declarations relating to such patent applications, and similar documents.

(f) To the extent that any Company-Related Invention is eligible under applicable law to be deemed a “work made for hire,” or otherwise to be owned automatically by the Company, it will be deemed as such, without additional compensation to Executive.   In some jurisdictions, Executive may have a right, title, or interest (“Right,” including without limitation all right, title, and interest arising under patent law, copyright law, trade-secret law, or otherwise, anywhere in the world, including the right to sue for present or past infringement) in certain Company-Related Inventions that cannot be automatically owned by the Company.  In that case, if applicable law permits Executive to assign Executive’s Right(s) in future Company-Related Inventions at this time, then Executive hereby assigns any and all such Right(s) to the Company, without additional compensation to Executive; if not, then Executive agrees to assign any and all such Right(s) in any such future Company-Related Inventions to the Company or its nominee(s) upon request, without additional compensation to Executive.

 

 

6.  Non-competition/Non-Solicitation.  As a condition to, and in consideration of, the Company’s entering into this Agreement, and giving Executive access to certain confidential and proprietary information, which Executive recognizes is valuable to the Company and, therefore, its protection and maintenance constitutes a legitimate interest to be protected by the provisions of this Section 6 as applied to Executive and other employees similarly situated to Executive, and for ten dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which Executive hereby acknowledges, Executive acknowledges and hereby agrees as follows:

(a) that Executive is and will be engaged in the business of the Company;

(b) that during the period of Executive’s Employment under this Agreement, Executive will become familiar with the Company’s trade secrets and with other proprietary and confidential information concerning the Company;

(c) that the obligations of this Agreement are directly related to the Employment and are necessary to protect the Company’s legitimate business interests; and that the Company’s need for the covenants set forth in this Agreement is based on the following:  (i) the substantial time, money and effort expended and to be expended by the Company in developing technical designs, technology, processes, materials, equipment, marketing plans and similar confidential information; (ii) the fact that Executive will be personally entrusted with the Company’s confidential and proprietary information; (iii) the fact that, after having access to the Company’s technology and other confidential information, Executive could become a competitor of the Company; and (iv) the highly competitive nature of the Company’s industry, including the premium that competitors of the Company place on acquiring proprietary and competitive information; and

 

 

  

  

  

(d) that for a period commencing on the Effective Date and ending twelve (12) months following termination as provided in Section 11, Executive will not, directly or indirectly, serve as an employee, agent, consultant, stockholder, director, co-partner or in any other individual or representative capacity, own, operate, manage, control, engage in, invest in or participate in any manner in, act as consultant or advisor to, render services for (alone or in association with any person, firm, corporation or entity), or otherwise assist any person or entity that directly or indirectly engages or proposes to engage in (i) the same, or a substantially similar, type of business as that in which the Company engages; or (ii) the business of distribution or sale of (A) products and services distributed, sold or license by the Company at the time of termination; or (B) products and services proposed at the time of termination to be distributed, sold or licensed by the Company, anywhere in the United States  (collectively, the “Territory”); provided, however

(e) that nothing contained herein shall be construed to prevent Executive from investing in the stock or securities of any competing corporation listed on any recognized national securities exchange or traded in the over the counter market in the United States, but only if (i) such investment is of a totally passive nature and does not involve Executive devoting time to the management or operations of such corporation and Executive is not otherwise involved in the business of such corporation; and if (ii) Executive and his associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as amended, as in effect on the Effective Date), collectively, do not own, directly or indirectly, more than an aggregate of two percent (2%) of the outstanding stock or securities of such corporation.

(f) The Parties acknowledge that the foregoing restrictions, as well as the duration and the territorial scope thereof as set above, are under all of the circumstances reasonable and necessary for the protection of the Company and its business.

(g) The Parties agree that the restrictions set forth in Section 6(a) through (f) above shall not be applicable if this Agreement is terminated by Executive for good reason or by the Company without cause.

(h)  Executive agrees that at no time after his employment with the Company will he engage in competition with the Company while making any use of the Company’s confidential information (as described in Section 4)(the “Confidential/Trade Secret Information”), or otherwise exploit or make use of the Confidential/Trade Secret Information. Executive agrees that during the twelve month period following the date his employment with the Company is terminated, he will not directly or indirectly accept or solicit, in any capacity, the business of any customer of the Company with whom Executive worked or otherwise had access to the Confidential/Trade Secret Information pertaining to the Company’s business with such customer during the last year of Executive’s employment with the Company, or solicit, directly or indirectly, or encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or otherwise interfere with such business relationships.

(i) Executive agrees that during the twelve month period following the termination date of Executive’s employment with the Company, he shall not, directly or indirectly, solicit or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit, directly or indirectly, any of the Company’s employees for employment. The Parties agree that the restrictions set forth in this Section 6(i) shall not be applicable if this Agreement is terminated by Executive for good reason or by the Company without cause.

 

 

 

  

  

  

(j) During his employment with the Company, Executive shall not: (a) interfere with the Company’s business relationship with its customers or suppliers, (b) solicit, directly or indirectly, or otherwise encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or (c) solicit, directly or indirectly, or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit any of the Company’s employees for employment.

(k) For the purposes of this Section 6, the term “Company” shall be deemed to include the Company Parties.

7. Legal Fees and Expenses.  In the event of a lawsuit, arbitration, or other dispute-resolution proceeding between the Company and Executive arising out of or relating to this Agreement, the prevailing party, in the proceeding as a whole and/or in any interim or ancillary proceedings (e.g., opposed motions, including without limitation motions for preliminary or temporary injunctive relief) will be entitled to recover its reasonable attorneys’ fees and expenses unless the court or other forum determines that such a recovery would not serve the interests of justice.

8.  Successors.

(a) This Agreement shall inure to the benefit of and be binding upon (i) the Company and its successors and assigns; (ii) Executive and Executive’s heirs and legal representatives, except that Executive’s duties and responsibilities under this Agreement are of a personal nature and will not be assignable or delegable in whole or in part; and (iii) the Executive Parties as provided in Section 10.

(b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, Acquisition or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, the “Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

9.  Arbitration.

(a) Except as set forth in paragraph (b) of this Section 9 or to the extent prohibited by applicable law, any dispute, controversy or claim arising out of or relating to this Agreement will be submitted to binding arbitration before a single arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect on the date of the demand for arbitration.  The arbitration shall take place before a single arbitrator, who will be a lawyer.  Unless otherwise agreed by the parties, the arbitration shall take place in Chicago, Illinois.  The arbitrator is hereby directed to take all reasonable measures not inconsistent with the interests of justice to expedite, and minimize the cost of, the arbitration proceedings.

(b) To protect inventions, trade secrets, or other confidential information of Section 4, and/or to enforce the non-competition provisions of Section 6, the Company may seek temporary, preliminary, and/or permanent injunctive relief in a court of competent jurisdiction, in each case, without waiving its right to arbitration.

 

 

 

  

  

  

(c) At the request of either party, the arbitrator may take any interim measures he/she deems necessary with respect to the subject matter of the dispute, including measures for the preservation of confidentiality set forth in this Agreement.

(d) Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.

10.  Indemnification.

(a)  The Company agrees to indemnify and hold harmless Executive, his nominees and/or assigns (a reference in this Section 10 to Executive also includes a reference to Executive’s nominees and/or assigns) against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements (incurred in any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise), including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation that is in any way related to the Executive’s employment with the Company (whether or not in connection with any action in which the Executive is a party). Such indemnification does not apply to acts performed by Executive, which are criminal in nature or a violation of law. The Company also agrees that Executive shall not have any liability (whether direct or indirect, in contract or tort, or otherwise) to the Company, for, or in connection with, the engagement of the Executive under the Agreement, except to the extent that any such liability resulted primarily and directly from Executive’s gross negligence and willful misconduct.

(b)  These indemnification provisions shall be in addition to any liability which the Company may otherwise have to Executive or the persons indemnified below in this sentence and shall extend to the following: the Executive, his affiliated entities, partners, employees, legal counsel, agents, and controlling persons (within the meaning of the federal securities laws), and the officers, directors, employees, legal counsel, agents, and controlling persons of any of them (collectively, the “Executive Parties”).

(c)  If any action, suit, proceeding or investigation is commenced, as to which any of the Executive parties propose indemnification under the Agreement, they shall notify the Company with reasonable promptness; provided however, that any failure to so notify the Company shall not relieve the Company from its obligations hereunder. The Executive Parties shall have the right to retain counsel of their own choice (which shall be reasonably acceptable by the Company) to represent them, and the Company shall pay fees, expenses and disbursements of such counsel; and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against the Executive Parties made with the Company’s written consent, which consent shall not be unreasonably withheld. The Company shall not, without the prior written consent of the party seeking indemnification, which shall not be unreasonably withheld, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent includes, as an unconditional term thereof, the giving by the claimant to the party seeking indemnification of an unconditional release from all liability in respect of such claim.

(d)  The indemnification provided by this Section 10 shall not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company's organizational documents, any law, agreement or vote of shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of Executive, both as to action in his Employment and as to action in any other capacity.

 

 

  

  

  

(f) Neither termination nor completion of the Employment shall effect these indemnification provisions which shall then remain operative and in full force and effect.

11.  Termination.

This Agreement and the employment relationship created hereby will terminate (i) upon the disability or death of Executive under Section 11(a) or 11(b); (ii) with cause under Section 11(c); (iii) for good reason under Section 11(d); (iv) without good reason under Section 11(e); or (v) without cause under Section 11(f).

	
  

	
(a)

	
Disability.  The Company shall have the right to terminate the employment of Executive under this Agreement for disability in the event Executive suffers an injury, illness, or incapacity of such character as to substantially disable him from performing his duties without reasonable accommodation by Executive hereunder for a period of more than thirty (30) consecutive days upon Company giving at least thirty (30) days written notice of termination.

	
  

	
(b)

	
Death. This Agreement will terminate immediately on the Death of the Executive.

	
  

	
(c)

	
With Cause.  The Company may terminate this Agreement immediately, and without providing any prior written notice to Executive, at any time because of, (i) the indictment of Executive of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty or theft or fraud; (ii) Executive’s negligence or insubordination in the performance of his duties hereunder, after having been given written notice with reasonable detail and an opportunity to cure within 15 days, unless the Company has experienced a material loss due to such negligence or insubordination, in which case Executive shall be terminated immediately without any opportunity to cure; (iii) Executive’s lack of performance of his duties hereunder, after having been given written notice with reasonable detail and an opportunity to cure within 15 days, unless the Company has experienced a material loss due to Executive’s lack of performance, in which case Executive shall be terminated immediately without any opportunity to cure; or (iv) Executive’s breach of any material provision of this Agreement (each “With Cause”).

	
  

	
(d)

	
Good Reason.  The Executive may terminate his employment for “Good Reason” by giving Company ten (10) days written notice if:

 

	
  

	
(i)

	
he is assigned, without his express written consent, any duties materially inconsistent with his positions, duties, responsibilities, or status with the Company as of the date hereof, or a change in his reporting responsibilities or titles as in effect as of the date hereof;

(ii)           his compensation is materially reduced;

	
  

	
(iii)

	
the Company does not pay any material amount of compensation due hereunder and then fails either to pay such amount within the ten (10) day notice period required for termination hereunder or to contest in good faith such notice.  Further, if such contest is not resolved within thirty (30) days, the Company shall submit such dispute to arbitration under Section 8; or

 

 

 

 

 

  

  

  

	
  

	
(iv)

	
the requirement that Executive relocate to another location of the Company outside a thirty (30) mile radius from the location of Executive’s office as of the date hereof.

	
  

	
(e)

	
Without Good Reason.  The Executive can terminate this Agreement at any time for any reason provided that he gives the Company thirty (30) days prior written notice of such intent to terminate.

	
  

	
(f)

	
Without Cause.  The Company can terminate this Agreement at any time without cause.

12.  Obligations of Company Upon Termination.

(a) In the event of the termination of Executive’s employment pursuant to Section 11 (a) or (b), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination plus eight (8) additional weeks of compensation at his then current salary, provided that the Executive executes and delivers to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s Employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit); and Executive does not breach any of his covenants and agreements which continue following the date of termination of this Agreement.  Any Shares not Vested by Executive as of the termination date shall be forfeited and returned to the Company for cancellation.

(b) In the event of the termination of Executive’s employment pursuant to Section 11 (d) or (f), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination plus eight (8) additional weeks of compensation at his then current salary, provided that the Executive executes and delivers to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s Employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit); and Executive does not breach any of his covenants and agreements which continue following the date of termination of this Agreement.  Any Shares not Vested by Executive as of the termination date shall immediately vest to Executive.

(c) In the event of the termination of Executive’s employment pursuant to Section 11(c) or 11(e), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination.  Any Shares not Vested by Executive as of the termination date shall be forfeited and returned to the Company for cancellation.

(d) Upon termination of Executive’s Employment hereunder, or on demand by the Company during the Term of this Agreement, Executive will immediately deliver to the Company, and will not keep in his possession, recreate or deliver to anyone else, any and all Company property, as well as all devices and equipment belonging to the Company (including computers, handheld electronic devices, telephone equipment, and other electronic devices), Company credit cards, records, data, notes, notebooks, reports, files, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, photographs, charts, all documents and property, and reproductions of any of the aforementioned items that were developed by Executive pursuant to his employment with the Company, obtained by Executive in connection with his Employment with the Company, or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to this Agreement.

 

 

 

 

 

  

  

  

13.  Other Provisions.

(a) All notices and statements with respect to this Agreement must be in writing.  Notices to the Company shall be delivered to the President of the Company.  Notices to Executive may be delivered to Executive in person or sent to Executive’s then-current mailing address as indicated in the Company’s records.

(b) This Agreement sets forth the entire agreement of the parties concerning the subjects covered herein; there are no promises, understandings, representations, or warranties of any kind concerning those subjects except as expressly set forth in this Agreement.

(c) Any modification of this Agreement must be in writing and signed by all parties; any attempt to modify this Agreement, orally or in writing, not executed by all parties will be void.

(d) If any provision of this Agreement, or its application to anyone or under any circumstances, is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability will not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and will not invalidate or render unenforceable such provision or application in any other jurisdiction.

(e) This Agreement will be governed and interpreted under the laws of the United States of America and the laws of the State of Illinois.

(f) No failure on the part of any party to enforce any provisions of this Agreement will act as a waiver of the right to enforce that provision.

(g) Section headings are for convenience only and shall not define or limit the provisions of this Agreement.

(h) This Agreement may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.  A copy of this Agreement signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original.  A photocopy of this Agreement shall be effective as an original for all purposes.

(i) Non-Disparagement. Executive will not at any time (during or after Executive’s employment with Company) disparage the reputation of Company, its affiliates and their respective customers and merchants and its or their respective officers, managers, directors, agents or employees.

(j) Cooperation. Executive agrees to cooperate both during and after Executive's employment with the Company, at the Company's sole cost and expense, with the investigation by the Company involving the Company or any employee or agent of the Company.

(k) No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

 

 

  

  

  

(l) Limitation as to Amounts Payable. In the event that any payment, coverage or benefit provided under this Agreement would, in the opinion of counsel for the Company, not be deemed to be deductible in whole or in part in the calculation of the Federal income tax of Company, or any other person making such payment or providing such coverage or benefit, by reason of Section 280G of Internal Revenue Code of 1986, as amended (the “Code”), the aggregate payments, coverages or benefits provided under this Agreement shall be reduced to the "safe harbor" level under Section 280G so that the entire amount which is paid to Executive shall be deductible notwithstanding the provisions of Section 280G of the Code.

 

(m) Executive Withholdings and Deductions. All payments to Executive hereunder shall be subject to such withholding and other Executive deductions as may be required by law.

(n) Legal Counsel. Executive acknowledges and warrants that (A) he has been advised that Executive's interests may be different from the Company's interests, (B) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice and (C) he knowingly and voluntarily entered into this Agreement. The Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement.

 

 

 

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This Agreement contains provisions requiring binding arbitration of disputes.  By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it. Executed on the Effective Date.

	
EPAZZ, INC.:

	
EXECUTIVE:

	
By: /s/ Shaun Passley

	
/s/ Shaun Passley

	
Its: Sole Director and President

	
Shaun Passley

Printed Name: Shaun Passley

	
Date: 09/14/2012

	
Date: 09/14/2012

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