|
<PAGE>
EXHIBIT 10.4
------------
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 Michael Sawtell (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 fifth anniversary of such date,
unless sooner
terminated in accordance with the provisions below, and in 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 within 90 days
of the Date
of this Agreement ("Floor Amount"), this agreement shall terminate
on such 90th
day, except for Section 3.3 which shall remain valid pursuant to
the terms of
this Agreement. If financing of at least $2,000,000 is obtained by
the Company
within the 90 days of the Date of this Agreement, then this
Agreement shall
remain valid and in full force.
2. Duties. During the Term, the Executive shall be employed by
the
Employer as its Chief Executive Officer ("CEO"), 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 Board of Directors
of the
Employer (the "BOD"). 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.
3.1 Salary. The Employer shall pay the Executive during the Term
a
salary at the rate of Two Hundred Ten Thousand Dollars ($210,000)
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
1
<PAGE>
possible increases. The Annual Salary shall be subject to possible
further
increase from time to time in the discretion of the BOD 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 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 BOD 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 or transfer of listing to a national exchange; (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 Three Million (3,000,000) shares [pre-merger basis] of
the common
stock of the Employer pursuant to a previous stock option agreement
with
Executive dated November 13, 2006, 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
agreement.
Pursuant to the stock option agreement dated November 13, 2006, as
a result of
the merger on or about January 29, 2007, 50% (or 1,500,000) of the
option to
purchase 3,000,000 shares were fully vested as of the date of this
agreement. As
such, further accelerated vesting discussed below will be
calculated on the
remaining 1,500,000 unvested option shares. The vesting period
shall be subject
to possible acceleration in the discretion of the BOD 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 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
2
<PAGE>
sale or transfer 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.
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 fifty
thousand ($50,000) 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.
3.7 Car Allowance. The Executive shall be paid nine hundred
($900)
per month as an automobile allowance which serves as additional
incentive to
sign this Agreement and hold the office designated herein. Payment
of the
monthly $900 car allowance shall begin the same month this
agreement is signed.
3.8 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.
3.9 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
<PAGE>
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 one
year 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;
(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;
4
<PAGE>
(iii) After notice from the BOD, and, if
requested by Executive, the opportunity to be heard by the BOD,
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
BOD, his
termination under this Section 5.2(a)(v) shall not be effective
until such
BOD 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 Resignation
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;
5
<PAGE>
(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
Executive 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 in one lump sum upon termination,
or (B)
three (3) times the Annual Salary payable in one lump sum upon
termination
6
<PAGE>
(iii) not applicable;
(iv) reimbursement for COBRA payments equal to employee's
regular monthly contributions toward the Executive's health
insurance
benefits for the twenty four (24) 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 twenty four (24) 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.
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 inventions, discoveries, improvements, ideas,
developments, designs,
products, formulas, software programs, processes, techniques,
technology,
know-how, negative know-how, data, research, technical data and
original works
of authorship (whether or not patentable or registrable under
patent, copyright
or similar statutes and including all rights to obtain, register,
perfect and
enforce those proprietary interests) that are related to or useful
in the
Employer's present or future business or result from use of
property owned,
leased, or contracted for by the Employer and which the Executive
develops,
makes, conceives or reduces to practice during the Executive's
employment by the
Employer, either solely or jointly with others (collectively,
the
"Developments"). All such Developments shall be the sole property
of the
Employer, and the Executive hereby assigns to the Employer, without
further
compensation, all of the Executive's right, title and interest in
and to such
Developments and any and all related patents, patent applications,
copyrights,
copyright applications, trademarks, service marks and trade names
in the United
States and elsewhere.
7
<PAGE>
(b) The Executive shall disclose promptly to an officer or to
attorneys of the Employer in writing any inventions, discoveries,
improvements,
ideas, developments, designs, products, formulas, software
programs, processes,
techniques, technology, know-how, negative know-how, data,
research, technical
data and original works of authorship, whether or not patentable or
registrable
under patent, copyright or similar statutes, the Executive may
conceive, make,
develop or work on, in whole or in part, solely or jointly with
others during
the Executive's employment, for the purpose of permitting the
Employer to
determine whether they constitute Developments. The Employer shall
receive such
disclosures in confidence.
(c) The Executive will keep and maintain adequate and current
written records of all Developments (in the form of notes,
sketches, drawings
and as may be specified by the Employer), which records shall be
available to
and remain the sole property of the Employer at all times.
(d) The Executive will assist the Employer in obtaining and
enforcing patent, copyright, trademark, ser
|