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EXHIBIT 10.5
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 30,
2007 (the
"Date of this Agreement"), is made by and between DigitalPost
Interactive, Inc.,
a Nevada corporation (the "Employer"), and Steven Dong (the
"Executive").
WHEREAS, the Employer wishes to employ the Executive on the terms
set
forth below.
WHEREAS, Executive wishes to accept such employment.
Accordingly, the parties hereto agree as follows:
1. Term. The Employer hereby employs the Executive, and the
Executive
hereby accepts such employment, for an initial term commencing as
of the Date of
this Agreement and ending on the second anniversary of such date,
unless sooner
terminated in accordance with the provisions of Section 4 or
Section 5; with
such employment to continue thereafter for successive one-year
periods in
accordance with the terms of this Agreement on each anniversary of
the Date of
this Agreement (subject to termination as aforesaid) unless either
party
notifies the other party in writing not less than thirty (30) days
before
expiration of the initial term and each annual renewal thereof (the
period
during which the Executive is employed hereunder being hereinafter
referred to
as the "Term") of an intent not to renew this Agreement. To the
extent Employer
does not obtain a minimum of $2,000,000 in financing with in the 90
days
following the Date of this Agreement ("Floor Amount") then, this
Agreement shall
terminate on such 90th day, and become null and void, except for:
(i) Section
3.3; (ii) Section 3.6; (iii) Section 3.7; and: (iv) Section 3.11
all of which
shall remain valid pursuant to the terms of this agreement and not
be subject to
the limitation of the Floor Amount. If financing of at least
$2,000,000 is
obtained within 90 days following the Date of this Agreement, then
this entire
Agreement shall remain valid and in full force.
2. Duties. During the Term, the Executive shall be employed by
the
Employer as its Chief Financial Officer ("CFO"), and as such, the
Executive
shall faithfully perform for the Employer the duties and have the
powers
customary for such position, including general financial oversight
of the
Employer's operations and preservation of the Company's assets.
During the Term,
the
Executive shall be required to report to the CEO of the Employer.
The Executive
shall devote substantially all of his business time and effort to
the
performance of his duties hereunder, and shall work primarily at
the Employer's
main business offices.
3. Compensation.
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3.1 Salary. The Employer shall pay the Executive during the Term
a
salary at the rate of One Hundred Seventy Five Thousand Dollars
($175,000) per
annum (the "Annual Salary"), in accordance with the customary
payroll practices
of the Employer applicable to senior executives, provided the
payments are no
less frequent than monthly (or, if there is no such policy,
payments shall be
semi-monthly). The Annual Salary shall be annually reviewed by the
Employer for
possible increases. The Annual Salary shall be subject to possible
further
increase from time to time in the discretion of the CEO or such
committee of the
Board as they shall designate for such purpose from time to time.
Any increased
Annual Salary shall thereupon be the "Annual Salary" for the
purposes hereof.
The Executive's Annual Salary shall not be decreased without his
prior written
consent at any time during the Term.
3.2 Incentive Compensation. During the Employment Term, the
Executive shall be eligible to receive, in addition to his Annual
Salary, an
annual bonus (the "Bonus") of up to 30% of the Annual Salary. The
amount of such
Bonus and any performance standards or goals required to be
attained in order to
receive such Bonus shall be set by the CEO or such committee of the
Board as
they shall designate for such purpose from time to time based on,
but not
limited to, any of the following criteria: (i)amount of capital
raised for the
Employer; (ii) positioning of the Employer for a secondary public
offering of
the Employer's common stock; (iii) valuation attained for the
Employer, as
measured by arm's length investment transactions or market
capitalization; (iv)
periodic revenues as measured by total transaction dollars; and (v)
entering
into key strategic relationships. The Bonus shall be declared on or
before the
thirtieth day following each quarterly period, and paid not later
than the last
business day of the quarter following the quarter for which the
Bonus is being
paid. Paid bonus as defined in this section 3.2 only is subject to
final
approval of the board of directors.
3.3 Stock Options. The Executive was granted options (the
"Options")
to purchase Five Hundred Thousand (500,000) shares [pre-merger
basis] of the
common stock of the Employer pursuant to previous stock option
agreements with
Executive, dated March 15, 2006 (400,000 options) and November 13,
2006
(100,000) which, at the option of the Executive as of their date of
grant, may
be intended to qualify as "incentive stock options" within the
meaning of
Section 422 of the Internal Revenue Code of 1986, as amended. Such
options shall
have an exercise price per share as stated in the stock option
agreement, which
is equal to or exceeds the agreed fair market value of shares of
Employer's
stock as of the date of the stock option agreement. Such Options
shall vest
according to the stock option agreements. Pursuant to the stock
option
agreements, as a result of the merger on or about January 29, 2007,
50% (or
250,000) of the option to purchase 500,000 (in aggregate) shares
were fully
vested as of the date of this agreement. As such, further
accelerated vesting
discussed below will be calculated on the remaining 250,000
unvested option
shares. The vesting period shall be subject to possible
acceleration in the
discretion of the CEO or such committee of the Board as they shall
designate for
such purpose from time to time. Such options shall become fully
vested
immediately upon (i) a Change of Control, defined below, of the
Employer, or
(ii) a termination of the executive by Employer without Cause
(defined in
Section 5.1(a) below, or a termination due to resignation by
Executive for Good
Reason (defined in Section 5.2(a) below), if the same occurs within
120 days
prior to the execution and delivery of an acquisition, merger,
consolidation or
other agreement which results in a Change of Control. For purposes
of this
Agreement "Change of Control" shall be deemed to have occurred if,
as a result
of a tender offer, other acquisition, merger, consolidation or sale
or transfer
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of assets, any person(s) (as used in Sections 13(d) or 14(d) of the
Securities
Exchange Act of 1934 ("SEA")) becomes the beneficial owner (as
defined in Rule
13(d)-3 of the SEA) of a total of fifty percent (50%) or more of
either the
outstanding shares of Employer's stock or Employer's assets;
provided, however,
that a change of control shall not be deemed to have occurred if a
person who
beneficially owned 50% or more of the Employer's stock as of the
effective date
of this Agreement continued to do so during the term of this
Agreement. The
terms of this Section 3.3 shall be included in the applicable stock
option
agreement between Employer and Executive relating to the issuance
of the
Options.
3.4 Benefits. Except otherwise provided herein, the Executive
shall
be entitled to participate in any group life, medical or disability
insurance
plans, health programs, retirement plans, fringe benefit programs
and similar
benefits that may be available to other senior executives of the
Employer
generally, on the same terms as such other executives, to the
extent that the
Executive is eligible under the terms of such plans or programs as
they may be
in effect from time to time. Employer will provide coverage for the
Executive
under the Employer's health benefits plan and will pay 100% of the
cost of
spouse or dependent coverage. Coverage under the health benefits
plan will be in
effect commencing with the first month following ninety (90) days
of employment.
Executive shall receive credit for the 10 months of service as
consultant to
Employer.
3.5 Expenses. The Employer shall pay or reimburse the Executive
for
all ordinary and reasonable out-of-pocket expenses actually
incurred (and, in
the case of reimbursement, paid) by the Executive during the Term
in the
performance of the Executive's services under this Agreement,
provided that the
Executive submits proof of such expenses, with the properly
completed forms as
prescribed from time to time by the Employer, no later than 30 days
after the
end of the monthly period in which such expenses have been so
incurred. In
addition, the Employer will pay the Executive's reasonable basic
relocation
expenses, if any, which shall consist of airfare, moving company
expenses and
hotel stays during the transition period, such expenses to be
approved in
advance, in writing, by the Company.
3.6 Successful Merger Bonus. The Executive shall be paid thirty
thousand dollars ($30,000) as incentive to sign this Agreement,
hold the office
designated herein and successful completion of merger of The Family
Post, Inc.
and a subsidiary of the Company on or about January 30, 2007. The
obligations
under this Section 3.6 are not cancellable for any reason except
for the pro
rata terms of Section 3.11 herein.
3.7 Other Incentive Compensation. Just prior to this agreement,
Executive held the role of consulting CFO of Employer pursuant to
an agreement
between Irvine CPA Group, PC ("ICPA") on one hand and Employer on
the other,
dated March 15, 2006. Executive is owner of ICPA. Employer agrees
to allow
Executive flexibility to wind down ICPA business and transition
from ICPA to
Employer such that Executive may need to attend meetings during
normal business
hours outside of Employers office for business of ICPA during the
first ninety
days of this agreement. To the extent Executive does not work a 160
hours per
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month during the transition period, Executives pay shall be
pro-rated based upon
the monthly salary rate times the ratio of the actual monthly time
worked
divided by the standard 160 hour month. For example, if Executive
works only 120
hours during one monthly period, then, Executives pay shall be the
normal
monthly rate of $14,583.33 times the ratio of 75% (120 hours / 160
hours) which
equals $10,937.50. Furthermore, as incentive for Executive to
transition from
ICPA to Employer, Employer agrees to pay additional following
amounts as
additional incentive compensation:
- Employer shall pay Executive Twenty Thousand dollars ($20,000)
due on March
31, 2007.
- Employer shall pay Executive Twenty Thousand dollars ($20,000)
due on May 15,
2007.
- Employer shall pay Executive Fifteen Thousand dollars ($15,000)
due on August
15, 2007.
- Employer shall pay Executive Fifteen Thousand dollars ($15,000)
due on
November 15, 2007.
The obligations under this Section 3.7 are not cancelable due to
termination of
this Agreement for any reason except for the pro-rata terms under
section 311.
3.8 Executive is a currently licensed Certified Public
Accountant
(CPA) in good standing with the California State Board of
Accountancy and
American Institute of CPAs. Employer shall also indirectly benefit
from
Executive having such CPA designation, as such, Employer agrees to
reimburse
Executive for all costs of keeping current Executives CPA license.
Such
reimbursed costs shall not exceed $2,500 and be used for licensing
fees,
professional memberships and continuing professional education
(CPE) courses or
seminars, which Employer shall allow Executive to attend such CPE
courses or
seminars from time to time during the term of this Agreement.
3.9 Paid Time Off. Executive is eligible for paid vacations,
personal holidays, and sick leave. The Employee handbook describes
Employers
current policies regarding these benefits. As a member of Employers
executive
management team, Executive will be eligible to accrue up to four
(4) weeks
annual paid vacation in addition to those paid holidays recognized
in Employers
policies.
3.10 Unpaid Time Off. As additional benefit to Executive, in
addition to the paid time off in Section 3.10, Employer shall allow
Executive up
to two (2) additional weeks of unpaid vacation annually. It is
Executives sole
discretion to take or not take unpaid time off. Scheduling of such
unpaid time
off shall be approved by the CEO.
3.11 To the extent there is not any financing obtained in 2007,
the
above additional compensation defined in Section 3.6, and Section
3.7, the sum
of which is equal to an aggregate of $100,000 additional
compensation
("Financing Compensation") is cancelable by Employer except for the
following
condition: to the extent financing obtained is less than
$4,000,000, the
Financing Compensation of $100,000 shall be reduced by a number
that is equal to
$100,000 multiplied by the "Lessor Financing Ratio" which is the
amount raised
in the financing divided by $4,000,000 . For example, if only
$3,000,000 is
raised, then the Lesser Financing Ratio is 75%
($3,000,000/$4,000,000),
therefore the $100,000 Financing Compensation will be reduced to
$75,000 (75%
multiplied by $100,000). To the extent financing is obtained in an
amount
greater than $4,000,000, then all compensation due under Section
3.6, is due and
payable to Executive . Any payment of the Financing Compensation to
Executive
shall be immediately paid in a single full amount upon closing of
any financing.
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4. Termination upon Death or Disability. If the Executive dies
during the
Term, the Term shall terminate as of the date of death, and the
obligations of
the Employer to or with respect to the Executive shall terminate in
their
entirety upon such date except as otherwise provided under this
Section 4. If
the Executive becomes disabled for purposes of the long-term
disability plan of
the Employer for which the Executive is eligible, or, in the event
that there is
no such plan, if the Executive by virtue of ill health or other
disability is
unable to perform substantially and continuously the duties
assigned to him for
more than 180 consecutive or non-consecutive days out of any
consecutive
12-month period, then the Employer shall have the right, to the
extent permitted
by law, to terminate the employment of the Executive upon notice in
writing to
the Executive. Upon termination of employment due to death or
disability, (i)
the Executive (or the Executive's estate or beneficiaries in the
case of the
death of the Executive) shall be entitled to receive any Annual
Salary and other
benefits earned and accrued under this Agreement prior to the date
of
termination (and reimbursement under this Agreement for expenses
incurred prior
to the date of termination), including, but not limited to a
pro-rata Bonus for
the year of termination (which in no event shall be less than a
similar pro-rata
portion of the Executive's bonus for the preceding year) to be paid
at such time
as Bonuses are ordinarily paid; (ii) in the case of termination due
to
disability, the Executive shall be entitled to receive his Annual
Salary for the
lesser of six (6) months following such termination, or the period
until long
term disability insurance benefits commence under disability
coverage furnished
by the Employer to the Executive; and (iii) the Executive (or, in
the case of
his death, his estate and beneficiaries) shall have no further
rights to any
other compensation or benefits hereunder on or after the
termination of
employment, or any other rights hereunder, except as otherwise
provided in the
plans and policies of the Employer.
5. Certain Terminations of Employment.
5.1 Termination for Cause; Termination of Employment by the
Executive without Good Reason.
(a) For purposes of this Agreement, "Cause" shall mean the
Executive's:
(i) conviction of (or pleading nolo contendere to) a felony
involving the crime of theft or a related or similar act of
unlawful
taking, or a felony involving the federal or California securities
or
pension laws, or any felony , which results in material economic
harm to
the Employer;
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(ii) engagement in the performance of his duties hereunder or
otherwise to the material and demonstrable detriment of the
Employer, in
willful misconduct, willful or gross neglect, fraud,
misappropriation or
embezzlement;
(iii) After notice from the Board of Directors, and, if
requested by Executive, the opportunity to be heard by the Board
of
Directors, the failure to adhere to the lawful and reasonable
directions
of the Board that are consistent with the terms of this Agreement,
or the
failure to devote substantially all of the business time and effort
to the
Employer (except for any activities expressly authorized by the
Employer);
(iv) material breach of any of the provisions of Section 6,
other than inadvertent breaches; or
(v) breach in any material respect of the terms and provisions
of this Agreement and failure to cure such breach within thirty
(30) days
following written notice from the Employer specifying such
breach;
provided however, if Executive delivers written notice to Employer
during
the 30 day cure period requesting to be heard at a meeting of the
Board of
Directors, his termination under this Section 5.2(a)(v) shall not
be
effective until such Board of Directors meeting at which Executive
had an
opportunity to be heard.
provided that Cause shall not exist except on written notice given
to the
Executive at any time not more than 60 days following the
occurrence of any of
the events described above (or, if later, the Employer's knowledge
thereof),
which events in any case must have occurred after the effective
date of this
Agreement.
(b) The Employer may terminate the Executive's employment
hereunder
for Cause, and the Executive may terminate his employment for any
or no reason
on at least 30 days' and not more than 60 days' written notice
given to the
Employer. If the Employer terminates the Executive for Cause, or
the Executive
terminates his employment and the termination by the Executive is
not covered by
Section 4 or 5.2, (i) the Executive shall receive Annual Salary and
other
benefits earned and accrued under this Agreement prior to the
termination of
employment (and reimbursement under this Agreement for expenses
incurred prior
to the termination of employment); and (ii) the Executive shall
have no further
rights to any other compensation or benefits hereunder on or after
the
termination of employment, or any other rights hereunder, except as
otherwise
provided in the plans and policies of the Employer.
5.2 Termination by the Employer without Cause; or by the
Executive
for Good Reason.
(a) For purposes of this Agreement, "Good Reason" shall mean,
unless
otherwise consented to in writing by the Executive;
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(i) a reduction in Annual Salary or in benefits of the
Executive, or the failure of the Employer timely to make any Annual
Salary
payment due to the Executive, provided that such deferral or
failure to pay
continues unremedied for more than thirty (30) days;
(ii) any action by the Employer that results in a material
diminution in the Executive's position, authority, duties or
responsibilities; provided that the appointment to the office of
Chief
Financial Officer of another person approved by the Executive shall
be
deemed not to be a material diminution in the Executive's
position,
authority, duties or responsibilities;
(iii) a material breach of any provision of this Agreement by
the Employer or;
(iv) a failure of the Employer to have a successor entity
specifically assume this Agreement.
Notwithstanding the foregoing, (i) Good Reason shall not be deemed
to exist
unless notice of termination on account thereof (specifying a
termination date
no later than 30 days from the date of such notice) is given no
later than 60
days after the time at which the event or condition purportedly
giving rise to
Good Reason first occurs or arises (or when the Executive first
becomes aware of
such circumstances); and (ii) if there exists (without regard to
this clause
(ii)) an event or condition that constitutes Good Reason, the
Employer shall
have 30 days from the date notice of such a termination is given to
cure such
event or condition and, if the Employer does so fully cure such
event or
condition, such event or condition shall not constitute Good Reason
hereunder.
(b) The Employer may terminate the Executive's employment at
any
time for any reason or no reason and the Executive may terminate
the Executive's
employment with the Employer for Good Reason. A notice of
non-renewal shall
constitute a termination of employment by the Employer without
Cause.
(c) If the Employer terminates the Executive's employment and
the
termination is not covered by Section 4 or 5.1, or the Executive
terminates his
employment for Good Reason, the Executive shall receive:
(i) Annual Salary and other benefits earned and accrued under
this Agreement prior to the termination of employment (and
reimbursement
under this Agreement for expenses incurred prior to the termination
of
employment);
(ii) the greater of (A) the Annual Salary for the unexpired
Term of this Agreement, payable over such term or (B) one (1) times
the
Annual Salary payable in accordance with standard payroll practices
of the
Company;
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(iii) not applicabe;
(iv) reimbursement for COBRA payments equal to employee's
regular monthly contributions toward the Executive's health
insurance
benefits for the twelve (12) month period following the termination
date
if the Executive elects COBRA benefits, and;
(v) the right to exercise any or all vested stock options for
a period of twelve (12) months after the effective date of
termination of
Executive's employment; provided however, (A) in the event the
termination
occurs within 120 days of the execution of a Change of Control
agreement
as provided in Section 3.3 above, vesting of all options shall
be
accelerated as provided in Section 3.3 above, and (B) in the event
the
termination occurs at a time not within such 120 day period, for
purposes
of this provision, all unvested options that would have vested had
this
Agreement remained in force through the end of the initial Term,
shall be
fully vested immediately prior to the termination under this
Section
5.2(c); The provisions of this subparagraph (v) shall be included
in any
stock option agreement between the Employer and the Executive.
(vi) all incentive pay amounts as outlined in Section 3.6
through Section 3.10 above without any limitations or any
conditions,
except for the limitations provided for in Section 2 and Section
3.11
above.
In order to be eligible to receive the benefits specified under
sections
5.2(c)(ii) - (iv), the Executive must execute a general release of
claims in a
form acceptable to the Employer, which shall not apply to the
Employer's
obligations described above in this Section 5.2(c).
6. Invention, Non-Disclosure and Non-Competition.
6.1 Inventions and Patents.
(a) The Executive will promptly and fully disclose to the
Employer
any and all
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