EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), effective as of
the
date of the execution of the Purchase Agreement, as defined below,
(such date,
the "Effective Date"), between DEBT RESOLVE, INC., a Delaware
corporation (the
"Company"), and JOHN FARINACCI (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to retain the services of the
Executive and to that end desires to enter into a contract of
employment with
him, upon the terms and conditions herein set forth; and
WHEREAS, the Executive desires to be employed by the Company
upon such terms and conditions;
NOW, THEREFORE, in consideration of the premises and of the
mutual benefits and covenants contained herein, the parties hereto,
intending to
be bound, hereby agree as follows:
1.
APPOINTMENT AND TERM
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Subject to the terms hereof, the Company hereby employs the
Executive, and the Executive hereby accepts employment with the
Company, all in
accordance with the terms and conditions set forth herein, for a
period of three
(3) years commencing on the first business day following the
closing date (the
"Commencement Date") of the acquisition by the Company of all
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of the outstanding limited liability membership interests of
Creditors
Interchange Receivable Management, LLC ("CIRM") contemplated by the
Securities
Purchase Agreement, dated as of April 30, 2007 (the "Purchase
Agreement"), and
ending on the third anniversary of such date (the "Expiration
Date"), unless the
parties mutually agree in writing upon a later date or the
Executive's
employment hereunder is automatically extended as provided in
Section 7(g)
hereof. The Executive shall (i) serve as President of First
Performance
Corporation ("FPC"), as a wholly-owned subsidiary of the Company,
and (ii) serve
as Executive Vice President-Operations of CIRM, as a wholly-owned
subsidiary of
the Company, and shall report directly to the President and CEO of
CIRM, Bruce
Gray. If the Securities Purchase Agreement is terminated without
the occurrence
of the contemplated acquisition, then the Agreement becomes null
and void.
2.
DUTIES
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(a) Executive
will have full operational and decision making
control of FPC, as a wholly-owned subsidiary of the Company, and
shall have such
operational duties, authority and responsibilities commensurate
with running a
wholly-owned subsidiary of the Company, including, but not limited
to,
management of the operations, personnel, profit and loss and budget
of FPC.
Further, in his capacity as Executive Vice President-Operations of
CIRM,
Executive shall have responsibility for all debt-collection
operations of CIRM,
subject to the direction of Bruce Gray, CIRM's President and
CEO.
(b) The Company
agrees that all current department and
management level employees of FPC shall report directly to
Executive. FPC and
FPC's employees shall work
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directly with the Company's corporate personnel staff on issues
pertaining to
public company-wide compliance, as well as on mutually agreed-upon
goals.
(c) During the
term of this Agreement, the Executive shall,
unless prevented by incapacity, devote substantially all of his
time, attention
and ability to the discharge of his duties hereunder and to the
faithful and
diligent performance of such duties and the exercise of such powers
as may be
assigned to or vested in him by the Board of Directors of the
Company (the
"Board"), the Chief Executive Officer of the Company, and the
President and CEO
of CIRM such duties to be consistent with his positions. The
Executive shall
obey the lawful and reasonable directions of the Board, the Chief
Executive
Officer of the Company and the CEO of CIRM and shall use his
diligent efforts to
promote the interests of the Company and to maintain and promote
the reputation
thereof.
(d) The
Executive shall not, during his term of employment
(except as a representative of the Company or with the prior
written consent of
the Chief Executive Officer), be directly or indirectly engaged or
concerned or
interested in any other business or commercial activity, except
through
ownership of an interest of not more than five percent (5%) in any
entity that
does not compete with the Company.
(e)
Notwithstanding the foregoing provisions, the Executive
shall be entitled to serve in various leadership capacities in
civic, charitable
and professional organizations or managing the Executive's personal
and family
passive investments; provided in each case, and in the aggregate,
that such
activities do not materially conflict or interfere with the
performance of the
Executive's duties hereunder. The Executive recognizes that his
primary and
paramount responsibility is to the Company.
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(f) The
Executive shall be based in the Buffalo, New York
area, except for required travel on the Company's business.
3.
REMUNERATION
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(a) Base Salary.
As compensation for his services pursuant
hereto, the Executive shall be paid a base salary during his
employment
hereunder at the salary of $300,000 per year. This amount shall be
subject to
all applicable withholding and other taxes and shall be payable in
equal
periodic installments in accordance with the usual payroll
practices of the
Company. The Chief Executive Officer, the Compensation Committee of
the Board of
the Company and the CEO of CIRM, shall review the compensation of
the Executive
annually, and in their sole discretion, may from time to time
authorize
increases in the base salary of the Executive. The Executive's base
salary may
only be reduced at the direction of the Compensation Committee of
the Board of
the Company.
(b) Annual
Bonus. The Executive shall be eligible to receive a
bonus (the "Annual Bonus"), which shall be determined in accordance
with Exhibit
A attached hereto. No modifications to Exhibit A hereof shall be
made without
the prior written approval of each of (i) the Executive, (ii) the
CEO, and (iii)
the Compensation Committee of the Board.
(c) Stock
Options. The Executive shall be granted stock
options (the "Stock Options"), which entitle him to purchase
400,000 shares of
common stock, par value $.001 per share, of the Company at an
exercise price
equal to the price at of the Company's common stock on the close of
trading on
the day upon which the Purchase Agreement is executed, which
options shall vest,
(1) as to 33% of such shares, on the first anniversary of the
Effective Date,
(2) as to 33% of such shares, on the second anniversary of the
Effective Date,
and (3) as to 34% of
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such shares, on the third anniversary of the Effective Date, and in
each case
pursuant to a customary stock option agreement which will contain
the terms
pertaining to the Stock Options contained in this Section 3(c),
which the
Executive and the Company shall enter into within five (5) days
after the
execution of this Agreement. Except as otherwise expressly provided
in this
Agreement, the Stock Options will expire ten years after they are
granted.
Further, the Executive shall be entitled to participate in the
Company's stock
option grant program for the grant of stock options, on the same
basis as other
executives of the Company, which plan the Company shall use best
efforts to have
in place by December of 2007.
(d) The Company
shall cause CIRM to adhere to its current
policy of providing to Executive a car allowance, use of a cell
phone, laptop
computer, Blackberry Wireless Handheld Device, and reimbursement
for gas
expenses and mileage during business trips.
(e) Except as
provided above, and in Sections 4, 6, and 7
hereof, the Executive shall not be entitled to receive any
additional
compensation, remuneration or other payments from the Company.
4.
HEALTH INSURANCE AND OTHER FRINGE BENEFITS.
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The Company agrees that the current level of health, dental,
medical and other plans or benefits currently provided to the
Executive by CIRM
shall be maintained by the Company for at least the term of this
Agreement. The
Company further agrees that the costs associated with Executive's
(i) health
insurance with prescription drug coverage, (ii) dental insurance,
(iii)
long-term disability insurance, (iv) short-term disability
insurance and (v)
life insurance shall continue to be paid for him by CIRM.
Notwithstanding the
immediately
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preceding sentence, if during the term of this Agreement the
Company procures
insurance coverage for the Company's employees that provide more
favorable terms
than those provided to the Executive, then the Executive shall be
entitled to
participate in the more favorable insurance coverage. Further, if
and to the
extent that the Company wishes to find a lower cost provider with
respect to
plans or benefits provided to the Executive (even if such lower
cost provider
shall provide the same level of benefits), the Company agrees to
obtain the
prior written consent of the Executive prior to changing providers
of plans or
benefits provided to the Executive. In addition to the foregoing,
the Executive
shall participate on an equitable basis in any other plans,
programs, and
benefits of the Company, if any, to the extent his position,
tenure, salary,
age, health, or other qualifications make him eligible to
participate.
5.
VACATION
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The Executive shall be entitled to four (4) weeks vacation (in
addition to the usual national holidays) during each contract year
during which
he serves hereunder. Such vacation shall be taken at such time or
times as
reasonably requested by the Executive. Vacation not taken during a
calendar year
may not be carried forward.
6.
REIMBURSEMENT FOR EXPENSES
--------------------------
The Executive shall be reimbursed for reasonable and necessary
documented business expenses incurred in connection with the
business of the
Company in accordance with practices and policies established by
the Company.
With respect to credit cards used for business, travel (including
mileage and
gas reimbursement) and other business use in connection with
discharging duties
and obligations for CIRM, Executive agrees to adhere to the
Company's internal
policies to assure that there is compliance with all applicable
rules and
regulations
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(including without limitation, regulations promulgated pursuant to
the
Sarbanes-Oxley Act of 2002) and the use of business credit cards
only for
business purposes.
7.
TERMINATION
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(a) This
Agreement shall terminate in accordance with the
terms of Section 7(b) hereof; provided, however, that such
termination shall not
affect the obligations of the Executive pursuant to the terms of
Sections 8 and
9 hereof.
(b) This
Agreement shall terminate on the Expiration Date; or
as follows:
(i) Upon the
written notice to the Executive by the
Company at any time, because of (v) the willful and material
malfeasance,
dishonesty or habitual drug or alcohol abuse by the Executive
demonstrably
related to or demonstrably affecting the performance of his duties;
(w) the
Executive's continuing and intentional breach, non-performance or
non-observance
of any of the terms or provisions of this Agreement, but only after
notice by
the Company of such breach, nonperformance or nonobservance and the
failure of
the Executive to cure such default within thirty (30) days after
the Company's
delivery of such notice; (x) the conduct by the Executive which the
Board in
good faith determines could reasonably be expected to have a
material adverse
effect on the business, assets, properties, results of operations,
financial
condition, personnel or prospects of the Company (within each
category, taken as
a whole), but only after notice by the Company of such conduct and
the failure
of the Executive to cure same within thirty (30) days after the
Company's
delivery of such notice; (y) upon the Executive's conviction of a
felony, any
crime involving moral turpitude (including, without limitation,
sexual
harassment) related to or affecting the performance of his duties
or any act of
fraud, embezzlement, theft or willful breach of fiduciary duty
against the
Company; or (z)
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the determination, during the one-year period following the Closing
under, and
as defined in, the Purchase Agreement, that the representations
made by the
Executive in Section 4 of the Purchase Agreement contained any
material
misrepresentations (clauses (v)-(z), collectively referred to as
"Cause") .
(ii) In the event the
Executive, by reason of physical or
mental disability, shall be unable to perform the services required
of him
hereunder with or without reasonable accommodation for a period of
more than 90
consecutive days, or for more than a total of 120 non-consecutive
days in the
aggregate during any period of twelve (12) consecutive calendar
months, on the
91st consecutive day, or the 121st day, as the case may be. The
Executive
agrees, in the event of any dispute under this Section 7(b)(ii),
and after
written notice by the Board, to submit to a physical examination by
a licensed
physician practicing in Western New York selected by the Board, and
reasonably
acceptable to the Executive.
(iii) In the event the Executive dies while employed
pursuant hereto, on the last day of the month in which his death
occurs.
(iv) Upon sixty (60)
days' written notice by the
Executive to the Company, in the event that the Company (A) shall
not comply
with any material provision of this Agreement and shall not have
cured any such
failure within thirty (30) days after written notice of such
noncompliance has
been given by the Executive to the Company, (B) shall assign to the
Executive
any duties that are materially inconsistent with his status or that
materially
diminish his duties, responsibilities, or authority hereunder, (C)
reduces the
Executive's Base Salary, (D) dimishes the Executive's then title,
or (E) causes
the Executive to relocate outside of Buffalo, New York.
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(v) Upon sixty
(60) days' prior written notice by t
