EMPLOYMENT AGREEMENT
This
Employment
Agreement (the “Agreement”) is made as of the
28
th day
of June, 2007, by and between, Customer Acquisition Network, Inc.,
a company organized under the laws of the State of Delaware (the
“Company”), and Bruce
Kreindel (the
“Executive”).
In
consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and
Executive, intending to be legally bound, hereby agree as
follows:
1.
Employment and Duties .
The Company hereby agrees to employ Executive as the Chief
Financial Officer of the Company (the “CFO”), and
Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth. During the Employment Period (as
defined below), Executive shall serve as CFO and shall report to
the Board of Directors of the Company (the “Board”).
Executive shall have those powers and duties customarily associated
with the position of CFO of entities comparable to the Company and
such other powers and duties as may be prescribed by the Board.
Executive shall devote all of his working time, attention and
energies to the performance of his duties for the
Company.
2.
Term .
Executive’s employment by the Company shall commence no later
than two weeks after the Initial Funding (as defined below) and
after both parties execute this Agreement (the “Commencement
Date”) and shall continue unless and until such employment is
terminated in accordance with Section 5 below (the
“Employment Period”).
3.
Initial Capitalization and Funding .
Executive and the Company agree that the Company will receive
initial funding in the amount of $250,000 (the “Initial
Funding”) prior to commencement of the Employment Period and
initial capitalization in the amount of $2,000,000 within thirty
(30) business days following the Commencement Date (the
“Initial Capitalization”). The Initial Funding for
purposes of this paragraph is a payment of $250,000 deposited in
the Company’s bank account to partially fund the salary of
Executive and that of Michael Mathews and Devon Cohen. In the event
that the Initial Capitalization is not fully funded within the
requisite thirty (30) business day period, Executive shall have the
right to terminate this Agreement, after which this Agreement shall
be null and void, including Section 7.
4.
Compensation, Benefits and Equity Awards .
(a)
Base Salary .
During the first year of the Employment Period, Executive shall
receive a base salary of $250,000; during year two of the
Employment Period, Executive shall receive a base salary of
$265,000; and during year three of the Employment Period, Executive
shall receive a base salary of $280,000. Should Executive remain
employed by the Company after three years, his base salary will be
subject to good faith negotiations with the Board.
Executive’s base salary shall be paid in accordance with the
Company’s regular payroll practices, including all usual and
customary federal, state, and local tax withholdings.
(b)
Bonus .
In addition to a base salary, Executive shall be eligible to
receive an annual bonus (pro-rated for partial calendar years
during the Employment Period) upon the achievement of
pre-established performance goals tied to Company revenues and
earnings, as to be determined by the Board after consultation with
Executive (the “Bonus”). Depending upon achievement of
the performance goals established by the Board, Executive’s
Bonus for each calendar year during the Employment Period shall be
50% of Executive’s base salary earned during such year. The
Bonus is to be paid 50% in cash and 50% in Company stock; provided,
however, that in the event the Company is not public at the time
the Bonus is paid, the Bonus will be paid fully in cash. Any such
Bonus earned during a calendar year shall be paid at such time as
the Company customarily pays annual bonuses.
(c)
Expenses .
The Company shall reimburse Executive for all reasonable business
expenses upon the presentation of itemized statements of such
expenses in accordance with Company policies and procedures as may
be in effect from time to time.
(d)
Vacation .
During the Employment Period, Executive shall be entitled to at
least three (3) weeks of paid vacation per calendar year to be used
and accrued in accordance with the Company’s policies as may
be in effect from time to time. In addition to vacation, Executive
shall be entitled to the number of sick days, personal days and
national holidays per year as to which other Executives of the
Company may be entitled.
(e)
Other Benefit Plans .
During the Employment Period, Executive shall be entitled to
participate in such employee benefit plans and insurance programs
offered by the Company, or which may be in effect from time to
time, in accordance with any eligibility requirements for
participation therein. Such benefits will include medical, dental
and vision coverage similar to premium plans offered by United
HealthCare or Blue Cross Blue Shield. The Company agrees to pay 75%
of Executive’s premium payments for such
coverage.
(f)
Equity Awards .
(i)
Stock Options .
Immediately following consummation of the Company’s
contemplated reverse merger transaction with a to-be-identified
public company (such transaction referred to herein as the
“Reverse Merger”; and the entity which results from the
Reverse Merger referred to herein as the “Merged
Entity”), the Merged Entity shall grant Executive options to
purchase an aggregate of at least 1.14% of the Merged
Entity’s outstanding common stock (“Options”),
pursuant to an Equity Incentive Plan adopted by the Merged Entity
(the “Incentive Plan”). Such grant shall be evidenced
by an Option Agreement, as contemplated by the Incentive Plan. The
per share exercise price of the Options shall be $1.00, which
represents the contemplated fair market value per share of the
Merged Entity’s common stock on the date of the contemplated
Reverse Merger. The term of the Option shall be three years from
the Commencement Date. One-twelfth (1/12) of the Options shall
become exercisable each quarter that Executive remains employed by
the Merged Entity. Upon a change of control, defined as a change of
a controlling interest in the Merged Entity (over 50% of the voting
shares) all unvested Options will immediately vest.
(ii)
Founders’ Stock .
Immediately following execution of this Agreement and
Executive’s execution of a lock-up agreement, substantially
in the form of
Exhibit A ,
the Company shall grant Executive 500,000 shares of common stock
(the “Founders’ Stock”). The Founders’
Stock shall be fully (100%) vested upon grant.
(iii)
Future Grants .
Executive shall be eligible for grants of Options, restricted stock
and other permissible awards under the Incentive Plan, as the Board
or Compensation Committee of the Merged Entity shall, in its
absolute and sole discretion, determine.
5.
Termination .
Executive’s employment by the Company shall terminate under
the following circumstances:
(a)
Death .
If Executive dies, Executive’s employment shall be terminated
effective as of the end of the calendar month during which
Executive died.
(b)
Disability .
In the event Executive, by reason of physical or mental incapacity,
shall be substantially unable to perform his duties hereunder for a
period of three (3) consecutive months, or for a cumulative period
of six (6) months within any twelve (12) month period (such
incapacity deemed to be “Disability”), the Company
shall have an option, at any time thereafter, to terminate
Executive’s employment hereunder as a result of such
Disability. Such termination will be effective ten (10) days after
the Board gives written notice of such termination to Executive,
unless Executive shall have returned to the full performance of his
duties prior to the effective date of the notice. Upon such
termination, Executive shall be entitled to any benefits as to
which he and his dependents are entitled by law, and except as
otherwise expressly provided herein, all obligations of the Company
hereunder shall cease upon the effectiveness of such termination
other than payment of salary earned through the date of Disability,
provided that such termination shall not affect or impair any
rights Executive may have under any policy of long term disability
insurance or benefits then maintained on his behalf by the Company.
Executive’s base salary shall continue to be paid during any
period of incapacity prior to and including the date on which
Executive’s employment is terminated for
Disability
(c)
Cause .
The Company shall have the right to terminate Executive's
employment for “Cause.” For purposes of this Agreement,
“Cause” shall mean:
(i)
the
willful or continued failure by Executive to substantially
perform his duties, including, but not limited to, acts of
fraud, willful misconduct, gross negligence or other act of
dishonesty;
(ii)
a
material violation or material breach of this Agreement which
is not cured within 10 days written notice to
Executive;
(iii)
misappropriation
of funds, properties or assets of the Company by Executive or
any action which has a materially adverse effect on the
Company or its business;
(iv)
the
conviction of, or plea of guilty or no contest to, a felony or
any other crime involving moral turpitude, fraud, theft,
embezzlement or dishonesty; or
(v)
abuse
of drugs or alcohol which impairs Executive’s ability to
perform his duties as CFO.
(d)
Good Reason .
Executive may terminate his employment for “Good
Reason.” For purposes of this Agreement, “Good
Reason” shall mean: (i) a material diminution of
Executive’s authority or duties with the Company (other than
as a result of Executive’s incapacity or disability); (ii) a
reduction in Executive’s base salary; (iii) if Executive must
relocate his principal office more than one hundred (100) miles
from any office that the Company is then maintaining for Executive
as Executive’s principal office or (iv) if the Company fails
to raise at least $2,000,000 in a private placement within thirty
(30) business days following the Commencement Date (the
“Guaranty Date”) and each of Barry Honig and Michael
Brauser fails to honor his obligation under the Guaranty within
three business days following the Guaranty Date (a “Guaranty
Default”). Prior to Executive terminating his employment with
the Company for “Good Reason,” Executive must provide
written notice to the Company that such “Good Reason”
exists and setting forth, in detail, the grounds Executive believes
constitutes such “Good Reason” (a “Good Reason
Notice”). If the Company does not cure the grounds upon which
Executive believes “Good Reason” exists within thirty
(30) days after being provided with notice by Executive, then
Executive’s employment shall be deemed terminated; provided,
however that in the event of a Guaranty Default, Executive’s
employment shall be deemed terminated immediately upon
Executive’s delivery of a Good Reason Notice to the
Company.
(e)
Without Cause .
The Company shall have the right to terminate Executive’s
employment hereunder without cause at any time by providing
Executive with written notice of such termination, which
termination shall take effect 10 days after the date such notice is
provided.
(f)
Voluntary Resignation .
Executive shall have the right to terminate his employment
hereunder by providing the Company with a written notice of
resignation. Such notice must be provided 60 days prior to the date
upon which Executive wishes such resignation to be effective. Upon
receipt of such resignation, the Company shall have the option to
accelerate the resignation to a date prior to the expiration of the
60 day period.
6.
Payments Due Upon Termination .
In the event Executive’s employment is terminated pursuant to
Section 5(d) or (e) above, then (a) any unvested Options held by
Executive shall immediately vest, (b) the Company shall continue
pay to Executive his base salary as in effect on the date of
termination for a period of twelve (12) months and (c) the Company
shall reimburse Executive for the costs of obtaining comparable
medical benefits for twelve (12) months, unless Executive obtains
other employment which provides for comparable medical benefits as
Executive received while employed by the Company. In the event
Executive’s employment is terminated for any other reason,
then Executive shall be entitled to receive his base salary though
the effective date of termination and the Company shall reimburse
Executive for any reasonable expenses previously incurred for which
Executive had not been reimbursed prior to the termination of
employment. Executive acknowledges and agrees that prior to
receiving any payments under this Section, and as a material
condition thereof, Executive shall, if requested by the Company,
sign and agree to be bound by a general rel
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