Employment Agreement - Lifelink Online.com Inc. and Jerry Farrar
EMPLOYMENT AGREEMENT
This Agreement is entered into, to be effective as of December 15, 2000,
by and between Lifelink Online.com, Inc., a Delaware corporation ("Employer"),
and Jerry Farrar, an individual residing at 3340 Palos Verdes Drive East, Rancho
Palos Verdes, California 90275 ("Executive").
RECITALS
WHEREAS, Employer recognizes that Executive will be a key member of
management and important to the long term development and prospects of Employer;
and
WHEREAS, Employer desires to employ Executive and Executive desires to be
employed by Employer pursuant to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the forgoing and the terms and
conditions set forth herein, Employer and Executive hereby agree as follows:
I. Employment and Duties
Employer hereby employs Executive, and Executive hereby accepts such
employment, upon the terms and conditions set forth in this Agreement.
Executive shall render such managerial, supervisory, developmental, marketing,
or other services as Employer may specify from time to time, subject at all
times to the direction and control of the Board of Directors of Employer.
Executive shall serve as and with the title of President and Chief Executive
Officer of Employer. Furthermore, Executive will be nominated to serve as a
member of the Board of Directors of Employer.
II. Term
The term of Executive's employment under this Agreement shall commence on
the date that funding of Employer's initial private placement offering is
completed and shall continue for a period of three (3) years from such date.
Prior thereto, Executive shall serve as acting President and Chief Executive
Officer of Employer for which Executive shall be compensated on a pro rata basis
based solely on the annual salary as set forth in Section 3.1 below.
Notwithstanding anything to the contrary set forth herein, however, at any time
during the term hereof either party may elect to reduce said term or terminate
this Agreement upon not less than sixty (60) days prior written notice to the
other.
III. Compensation
3.1 Salary. Executive will receive an initial base salary equal to One
Hundred Fifty Thousand Dollars ($150,000) per annum which salary shall be
reviewed annually; provided, however, that in no event shall Executive's salary
increase by less than five percent (5%) per annum during the term hereof. Such
base salary shall be paid in accordance with the normal payroll practices of
Employer.
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3.2 Signing Bonus. Executive will receive a signing bonus in the amount of
Fifty Thousand Dollars ($50,000), such bonus to be paid within thirty (30) days
following receipt by Employer of the first One Million Dollars ($1,000,000) of
capital from any source.
3.3 Incentive Bonus. Executive shall be eligible to receive an annual
incentive bonus in an amount not to exceed one hundred percent (100%) of
Executive's applicable base salary for each fiscal year of Employer. The
criteria for awarding such bonus for any given fiscal year of Employer shall be
mutually agreed to by Executive and Employer prior to the commencement of such
fiscal year. If Executive shall fail to achieve one hundred percent (100%) of
his bonus criteria for any given year, Executive will be entitled to receive a
portion of his incentive bonus for such year in accordance with the following
table:
Percent of Criteria Achieved Percent of Bonus to be Awarded
---------------------------- ------------------------------
75% 0
80% 20%
85% 40%
90% 60%
95% 80%
100% 100%
In the event that this Agreement terminates prior to the end of a given fiscal
year, Executive shall be entitled to (1) fifty percent (50%) of any such bonus
if Executive has been employed for not less than six (6) months during such
fiscal year and (2) seventy-five percent (75%) of any such bonus if Executive
has been employed for not less than nine (9) months during such fiscal year. All
bonuses described in this section shall be paid, if due, fifteen (15) days after
the filing of Employer's Annual Report on Form 10-K with the Securities and
Exchange Commission.
3.4 Stock Options. Executive shall be entitled to participate in
Employer's Incentive Stock Option Plan in accordance with the terms and
conditions set forth in Exhibit A attached hereto and incorporated herein.
Employer agrees that it will recommend to the Compensation Committee of the
Board of Directors that Executive be allowed to exercise any and all options
granted hereunder through the use of one or more promissory notes containing
such terms and conditions as the Compensation Committee shall deem reasonable
and appropriate.
3.5 Medical Insurance. Employer shall obtain and maintain in full force
and effect a comprehensive major medical, hospitalization group plan (or the
equivalent) with dental coverage for the benefit of Executive and his
dependents. In the event of termination pursuant to Article V or in the event
Employer and Executive mutually agree, medical and dental benefits will be
available under the federal Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA) at Executive's option and expense.
3.6 Group Term Life Insurance. Executive shall receive a group term life
insurance policy in the face amount equal to one hundred percent (100%) of
Executive's base salary up to One Hundred Fifty Thousand Dollars ($150,000).
3.7 Automobile. It is contemplated that to perform the services required
by this Agreement, Executive shall obtain and remain fully responsible for the
maintenance and repair of an automobile for which Employer shall provide
Executive with an expense allowance in an amount equal to Twelve Thousand
Dollars ($12,000) per annum.
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3.8 Travel Expenses. Executive will be reimbursed for all reasonable and
necessary expenses incurred while traveling on authorized business for Employer,
in accordance with the terms of Employer's travel policy.
3.9 Other Compensation. In addition to the compensation heretofore set
forth, or as may be hereinafter provided, Employer shall provide Executive
during his employment any and all benefits commensurate with his position, which
Employer, in its sole and absolute discretion, may make available to its
executive personnel (or employees in general, if any one is not available solely
for executive personnel) under any general pension plan, or other employee
benefit plan which may be in effect at any time or from time to time during the
Employment Period.
IV. Extent of Service
Executive shall devote such of his time, attention, energies and skill to
the business of Employer as shall be reasonably necessary to perform such
responsibilities and duties as may be assigned to him from time to time by the
Board of Directors of Employer. Executive shall be required to travel to such
locations as may be directed by Employer in the course of Executive's duties
hereunder. Throughout the term of this Agreement, Executive's office shall be
located in the County of Los Angeles, California.
V. Termination
Notwithstanding any contrary provisions herein contained, the employment
of Executive pursuant to this Agreement may be terminated before the expiration
of the term as specified in the following provisions of this Article V, but such
termination shall not affect the obligations of Executive as set forth in
Article VII hereof.
5.1 Death. Executive's employment hereunder shall be terminated
immediately in the event of his death.
5.2 By Employer. Employer shall have the right to terminate immediately
Executive's employment under this Agreement for cause. Cause includes, but is
not limited to, the following:
(a) Misappropriating any funds or property of Employer;
(b) Attempting to obtain personal profit from any transaction in
which Employer has an interest;
(c) The material failure, material neglect or material refusal to
perform the duties assigned to Executive under or pursuant to
this Agreement or to abide by the other covenants, terms and
conditions of this Agreement; or
(d) Activities by Executive of a public nature that (i) fail to
conform to community standards of generally accepted personal
or business conduct, or (ii) may reasonably be expected to
reflect badly upon the public image of Employer or its
business; provided, however, that such activities shall be
limited to those that can be substantiated by admissible
documentary evidence (i.e. arrest report, felony indictment,
etc.).
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5.3 By Employer or Executive: Employer or Executive may terminate this
Agreement at any time upon not less than sixty (60) days prior written notice to
the other party.
5.4 Effect of Termination. In the case of termination, the salary and
other compensation set forth in Article III, unless otherwise specified, shall
immediately terminate and cease to accrue. If termination under this Article
occurs under Section 5.1, Employer shall pay to Executive or to his respective
heirs (i) all amounts due under this Agreement which are then accrued but unpaid
including, but not limited to, salary, automobile allowance, outstanding
expenses, vested stock options, and any other compensation which is due to
Executive, and (ii) an amount equal to six (6) months of Executive's current
base salary, all such payments to be made within fifteen (15) days after the
date of termination. If the Employer terminates this Agreement under Section
5.3, Employer shall pay to Executive (i) base salary, (ii) incentive bonus (if
any), (iii) medical and dental benefits, (iv) group life insurance premiums and
(v) auto allowance (collectively, "Severance") for a period of six (6) months
commencing on the termination date. All Severance payments will be made in
accordance with the normal payroll practices of Employer. In no event, however,
will Executive be entitled to any stock options unless they have fully vested
prior to termination.
VI. Inventions
6.1 Definitions. As used herein "Inventions" shall mean all discoveries,
inventions, improvements, and ideas relating to any process, formula, program or
software, machine, device, manufacture, composition of matter, plan or design,
whether patentable or not, and specifically includes, but is not limited to, all
designs and developments, of whatsoever nature, relating to computer hardware,
software or programs.
6.2 Rights to Inventions. Executive shall, during the period of his
employment with Employer, make prompt and full disclosure of all Inventions
which Executive makes or conceives, individually, jointly, or with any other
employee of Employer or any affiliate of Employer, during the period of
Executive's employment by Employer. All such inventions shall become Employer's
exclusive property.
Notwithstanding the foregoing, Executive shall retain all his rights in,
and shall not be required to assign to Employer, any invention (hereinafter an
"Excluded Invention"): (a) which was developed entirely on Executive's own time,
and (b) which does not relate directly to or have any application to the
business of Employer or any affiliate of Employer or to their actual or
demonstrably anticipated research or development, or which does not result from
any work performed by Executive for Employer. This paragraph constitutes written
notification to Executive of the inventions that Executive is not required to
assign to Employer. Executive shall advise employer of any invention made or
conceived by Executive that Executive believes he is entitled to pursuant to
this paragraph.
6.3 Records. Executive will keep and maintain complete written records of
all Inventions made or conceived by Executive, and of all work on investigations
done or carried out by Executive for Employer at all stages thereof, which
records shall be the property of Employer, except for records of the Excluded
Inventions. Upon termination of his employment with Employer, Executive agrees
to deliver promptly to Employer any unpublished memoranda, notes, records,
reports, sketches, plans, programs, software, or other documents held by him
concerning any Inventions or potential Inventions to which Employer would be
entitled pursuant to the provisions hereof, including any information, knowledge
or data relating thereto, or pertaining to Employer's business or contemplated
business, whether confidential or not.
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6.4 Assignments. During Executive's employment hereunder and after the
termination thereof, Executive shall execute, acknowledge, and deliver to
Employer all such papers, including applications for or assignments of patents
or copyrights or applications for the same, as may be necessary to enable
Employer, its nominees, successors or assigns, at its or their expense, to
publish, protect by litigation or otherwise, obtain titled and/or copyrights or
patents to the Inventions which are the property of Employer pursuant to this
Agreement, in any and all countries.
VII. Confidentiality and Non-Compete
7.1 Non-Competition Covenant. Executive agrees that, during the period of
Executive's employment by Employer or any affiliate of Employer in any capacity,
he will not, directly or indirectly, own, manage, operate, control, consult with
or for, be employed by or an agent for, participate in or be connected in any
manner with the ownership, management, operation or control of any business that
is competitive with the business of Employer or any affiliate of Employer.
Further, Executive acknowledges that, as the President of Employer, his services
are unique and extraordinary, and that the restrictions herein are reasonable
for Employer's protection of its legitimate business interests.
If any court or arbitrator having jurisdiction determines that the
foregoing non-compete covenant is invalid due to its duration, coverage or
extent, the covenant shall be modified to reduce its duration, coverage or
extent as necessary to make such covenant valid, and the covenant as modified
then shall be enforced.
7.2 Confidentiality and Trade Secrets. During and after the terms of his
employment by Employer, Executive shall not communicate, divulge, or use any
secret, confidential information, trade secret or confidential customer list of
Employer or any affiliate of Employer, to or on behalf of any person or entity,
except as consented to in writing by Employer. This obligation shall apply with
respect to any such item until such item ceases (other than through the action
of Executive) to be secret or confidential.
7.3 Remedies. In the event of any actual breach by either of the parties
of the provisions of this Article VII, then each shall be entitled to all the
remedies available by law or in equity, including without limitation the right
to obtain damages for said breach and non-adherence and the right to enjoin the
other, or any other person or entity in or threatening breach or non-adherence,
from continuing, and to remedy, the activities which constitute said breach. The
parties acknowledge and agree that any remedies at law may be inadequate in the
event of any breach of the provisions of this Article VII and, therefore, they
agree and acknowledge that each shall be entitled to all equitable remedies that
are appropriate in the event of such breach.
VIII. Miscellaneous.
8.1 Entire Agreement. This Agreement contains the entire agreement among
the parties, superseding in all respects any and all prior oral or written
agreements or understandings pertaining to the subject matter hereof and
transactions contemplated hereby, and shall be amended or modified only by
written instrument signed by all of the parties hereto.
8.2 Waiver. No waiver by any party of any condition, or of the breach of
any term, covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed to
be or construed as a farther and continuing waiver of any such condition or
breach of any other term, covenant, representation, or warranty of this
Agreement, or the agreements or documents executed in connection herewith.
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8.3 Right of Offset. If at any time Employer is obligated to make payments
to Executive under this Agreement whether as compensation, reimbursement of
expenses or otherwise, Employer shall have the right to offset against said
obligation any amount which Executive is obligated to pay to Employer or any
corporation controlling, controlled by or under common control with the Employer
at the time of offset. In the event that the amount which Employer seeks to
offset is in dispute or otherwise unliquidated, Employer may nevertheless
exercise its right of offset, but if it is ultimately determined that Employer
was not entitled to such offset, Employer shall, in addition to the amount not
properly offset, pay Executive interest on such amount from the date of offset
to the date of payment at 6% per annum. In the event that it is necessary for
Executive to take any action, whether at law or in equity, to recover amounts
which employer inappropriately withheld under this provision, then the
prevailing party shall be entitled to reasonable attorney's fees, costs and
other necessary disbursements in addition to any other relief to which it may be
entitled.
8.4 Binding Effect; Assignment. This Agreement shall be binding upon, and
shall inure to the benefit of and be enforceable by, the parties hereto and
their respective heirs, successors, and assigns, but this Agreement shall not be
assignable by Executive. Employer may assign this Agreement in connection with a
merger, consolidation, assignment, sale or other disposition of all or
substantially all of its business or assets.
8.5 General. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same instrument. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. This Agreement shall be governed, enforced and
construed under the laws of the State of Connecticut.
8.6 Representation and Indemnity. Executive represents and warrants to
Employer that he has the full right and power to enter into this Agreement and
that he is not bound by any restriction or impediment thereto. Executive
represents and warrants that he is not subject to any covenant not to compete or
any other restriction with any former employer or other entity which would
inhibit or restrict Executive's ability to perform any tasks requested by
Employer. Executive hereby indemnifies Employer against any claims, losses,
damages or expenses that Employer may incur or suffer in connection with any
contrary claims by any party as a result of Executive's negligent or wrongful
actions or negligent or wrongful failure to act, including but not limited to
any unauthorized release of trade secrets or violation of any undisclosed
covenant not to compete.
8.7 Survivability. Notwithstanding anything herein to the contrary,
Sections 6.4, 7.1, 7.2, 7.3, 8.3 and 8.6 above shall survive the termination of
this Agreement and shall be deemed fully enforceable thereafter.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement to be
effective as of the date first set forth above.
LIFELINK ONLINE.COM, INC. EXECUTIVE
By: /s/ Joel S. San Antonio /s/ Jerry R. Farrar
----------------------- --------------------------
Title: Director Jerry Farrar
--------------------
Date: 1/18/01 Date:
--------------------- --------------------
<PAGE> 8
EXHIBIT A
STOCK OPTIONS
Executive shall be granted options to purchase up to Three Hundred
Thirty-Three Thousand Dollars ($333,000) worth of shares of Employer's common
stock under Employer's Incentive Stock Option Plan at an exercise price
equivalent to the midpoint between the "bid" and "ask" price of the common stock
on the date these options are approved by the Board of Directors of Employer.
The options granted hereunder shall vest on a daily basis throughout the term of
this Agreement at the daily rate of (i) .000913 multiplied by (ii) the total
number of options granted to Executive hereunder. Notwithstanding the forgoing,
it is understood and agreed by Executive and Employer that, for any year in
which Employer did not meet its financial objectives, the options that otherwise
would have been eligible for vesting during such year (assumed to be 365 days
for purposes hereof) shall be reduced in accordance with the following table:
Percent of Objectives Met Percent of Options Eligible for Vesting
-------------------------
75% 0
80% 20%
85% 40%
90% 60%
95% 80%
All options will be subject to approval by the Board of Directors of Employer
and subject to the other terms and conditions applicable to options granted
under the Plan.