EMPLOYMENT AGREEMENT This Employment Agreement, by and between MODAVOX, INC., a Delaware corporation ("Modavox") and James G. Crawford ("Crawford"), is effective as of the date the Certificate of Merger relating to the merger of Kino Interactive, LLC into Modavox is filed with and accepted by the Delaware Secretary of State (the "Effective Date"). Modavox and Crawford are sometimes referred to individually as the "Party" and collectively as the "Parties." In consideration of the mutual benefits to be derived from this Agreement and of the representations, warranties, conditions and promises hereinafter contained, the Parties hereby agree as follows: 1. ENGAGEMENT. 1.1 EMPLOYMENT TERM. Modavox will employ Crawford and Crawford will accept such employment, for a period commencing on the Effective Date and ending on December 31, 2008 (the "Term"), unless sooner terminated under the circumstances set forth in Sections 6 and 8 below. 1.2 DUTIES AND RESPONSIBILITIES. During the Term and any extensions thereof, Modavox will employ Crawford in the capacity of Director of Technology or in such other capacity as the Board of Directors may determine from time to time, reporting directly to the Chief Executive Officer. Crawford will render exclusive services to Modavox and devote his full time, effort and energies during business hours to his responsibilities for Modavox, and faithfully and to the best of his ability discharge those duties. 1.3 LOCATION. Crawford's services for Modavox will be based at Modavox's headquarters in Phoenix, Arizona unless otherwise approved by the Chief Executive Officer. 2. COMPENSATION. 2.1 SALARY. Subject to the full and complete performance by Crawford of all of Crawford's material obligations hereunder, during the term of this Agreement, Modavox will pay to Crawford a base salary of eightyfive thousand dollars ($85,000) per annum. Crawford's salary will be payable in accordance with Modavox's customary payroll practices, which in no event will be less frequently than on a monthly basis. All salary payments made to Crawford will be subject to such deductions, withholdings and limitations as will from time to time be required by law, governmental regulations or orders. 2.2 FRINGE BENEFITS. Crawford shall be entitled to participate, in accordance with their terms, in all medical and health plans, life insurance and pension plans and such other employment benefits or programs that Modavox maintains for its executive employees from time to time.
2.3 PARTICIPATION IN DEFERRED COMPENSATION AND STOCK OPTION PLANS. Crawford shall be entitled to participate in all executive bonus plans and all employee qualified and non-qualified deferred compensation plans or supplemental income plans or programs maintained by Modavox, including any Section 401(k) plan adopted by Modavox, according to the terms and conditions thereof. Crawford shall also be entitled to participate in all stock option and other incentive plans, according to the terms and conditions thereof. 2.4 PAID VACATIONS. Crawford will be entitled to paid vacation in accordance with Modavox's vacation policy (including, without limitation, any restrictions on the amount of accrued time to be paid at the expiration of the Term). 2.5 EXPENSES. In connection with Crawford's performance of Crawford's duties and obligations hereunder, Crawford will incur certain ordinary and necessary expenses of a business character including, without limitation, travel (including mileage reimbursement), meals (excluding liquor), entertainment, lodging and cell phone expenses. Modavox will reimburse Crawford for all such reasonable business expenses within two (2) weeks following Crawford's presentation of itemized statements therefor in accordance with Modavox's standard policies. 3. FIDUCIARY OBLIGATIONS. Crawford acknowledges that, as an officer of Modavox, he will be bound to exercise his corporate powers as a fiduciary for the common benefit of all of Modavox's stockholders, to wit: 3.1 DUTY OF CARE. Crawford will at all times perform his services hereunder honestly and in good faith, with sound business judgment using the level of care that a reasonably prudent person would use under the given circumstances to make informed decisions on Modavox's behalf. 3.2 DUTY OF LOYALTY. CRAWFORD will at all times perform his services hereunder without divided loyalties or obligations to any other person including, without limitation, to any person who may become an employer of Crawford following the end of the Term. Accordingly, and without limiting the generality of the principle set forth in the preceding sentence, Crawford will breach this Agreement if during the Term he does the following: (a) Without prior written notice and written consent of the Board of Directors, Crawford accepts employment with any business, individual, partnership, corporation, trust, joint venture, unincorporated association or other entity or person other than Modavox at any time during the Term. 2
(b) Crawford becomes financially interested in (other than as a stockholder owning less than two percent (2%) of the outstanding capital stock of any publicly traded corporation) or directly associated with any other business or person engaged in a business that is involved in any business that is competitive with Modavox's business or activities without the prior written consent of Modavox. (c) During the Term, Crawford, for any reason whatsoever, either alone or jointly with or on behalf of others, either directly or indirectly: (i) Diverts or takes away, or attempts to divert or take away, any of Modavox's customers or clients; (ii) Solicits the employment or engagement of, or otherwise entices away from the employment of Modavox or any affiliated entity, any person who is then employed by Modavox or any such affiliated entity, whether or not such person would commit any breach of said person's contract by reason of leaving the service of Modavox or any affiliated entity; or (iii) Solicits the employment or engagement of any person who ceased being employed by Modavox or any affiliated entity, within six (6) months of Crawford's solicitation. 4. EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Crawford acknowledges and confirms his obligations with Modavox under the Proprietary Information and Inventions Agreement attached hereto as Exhibit A executed by Modavox and Crawford as of the date hereof (the "Nondisclosure Agreement"). 5. SUSPENSION/TERMINATION. 5.1 DISABILITY. (a) If Crawford is unable to perform fully his material obligations hereunder due to a long-term disability (as defined in Modavox's disability insurance policy), Modavox may terminate this Agreement on or after the date that Crawford receives his first, periodic long-term disability payment from Modavox's insurance carrier. 3
(b) If Modavox does not have a long-term disability policy covering Crawford, and Crawford is prevented from performing fully his material obligations hereunder by reason of the occurrence of a long-term disability for a period of twelve (12) consecutive weeks or sixteen (16) weeks in the aggregate within any given six (6) calendar month period, Modavox may terminate this Agreement by giving thirty (30) days prior written notice to Crawford and by providing a total of twelve (12) months salary in severance benefits following the date of the termination notice, payable in accordance with Modavox's normal payroll policies but in no event in less than twelve (12) monthly installments. An independent physician reasonably selected by Modavox will determine the existence of Crawford's long-term disability. 5.2 TERMINATION FOR CAUSE. (a) Modavox may terminate this Agreement immediately upon written notice to Crawford for "Cause." For purposes of this Agreement, "Cause" means: (i) Crawford's commission of a willful act of fraud or dishonesty, the purpose or effect of which materially and adversely affects Modavox; (ii) Crawford's conviction of a felony (other than the first offense of driving under the influence following the date hereof) or any admission thereof (whether by plea of NOLO CONTENDERE or otherwise) or Crawford's being determined by a governmental authority to have violated, or enjoined from violating, any federal or state securities law; or (iii) Crawford's breach of any material covenant to Modavox relating to noncompetition, nonsolicitation, nondisclosure of proprietary information or surrender of records, inventions or patents; (iv) Crawford's misconduct or negligence, including conduct detrimental to SurfNet, its reputation, properties, operations or activities; or (v) Crawford's unwillingness or inability to adequately perform his job duties, or insubordination. (b) In the event of Crawford's termination for Cause, Modavox is obligated to pay Crawford only the specified salary, bonuses, fringe benefits, expenses and vacation accrued through the date of termination. 6. EQUITABLE RELIEF FOR BREACH. Crawford acknowledges that a violation of any of the provisions of Sections 4 and 5 will cause Modavox irreparable injury and damage, the exact amount of which may be impossible to ascertain and that, for such reason, among others, Modavox will be entitled, in addition to the remedy set forth at Section 8, to seek injunctive relief, both PENDENT LITE and permanently, against Crawford to restrain any further violation of such provisions. Crawford hereby (i) consents to any initiation by Modavox in a court of competent jurisdiction of any action to enjoin immediately the breach of Sections 4 and 5, and (ii) hereby releases Modavox from the requirement of posting any bond in connection with temporary or interlocutory injunctive relief, to the extent permitted by law. This provision will not, however, be construed as a waiver of any other rights and remedies Modavox may have against Crawford, including, but not limited to, the recovery for damages. 4
7. BREACH BY MODAVOX. If Modavox breaches this Agreement, Crawford will give Modavox written notice thereof. If Modavox does not cure such breach within thirty (30) days of receiving written notice thereof, Crawford's remedy will be limited to compulsory arbitration as set forth at Section 8; provided, however, the foregoing will not be deemed a waiver of Crawford's statutory or common law right to discontinue rendering services hereunder in the event of a material breach by Modavox of this Agreement. 8. COMPULSORY ARBITRATION. Except as provided in Section 6, any controversy, claim and/or dispute arising out of or relating to this Agreement or the breach hereof or subject matter hereof (including any action in tort) will be finally and fully settled by arbitration in Maricopa County, Arizona in accordance with the then-existing Commercial Arbitration Rules of the American Arbitration Association (the "AAA"), and judgment upon the award rendered by the arbitrators may be entered in any court having applicable jurisdiction. Written notice of demand for arbitration will be given to the other Party and to the AAA within six (6) months after the controversy, claim or dispute has arisen or be barred, and in no event after the date when the institution of court proceedings based on such dispute would be barred by the applicable statute of limitations. Controversies, claims and/or disputes will be resolved by one arbitrator selected by the mutual agreement of the Parties or, failing that agreement within forty-five (45) days after written notice demanding arbitration, by the AAA. There will be limited discovery prior to the arbitration hearing as follows: (i) exchange of witness lists and copies of documentary evidence and documents related to or arising out of the issues to be arbitrated, and (ii) depositions of all Party witnesses. Depositions will be conducted in accordance with the rules or code of Civil Procedure of the jurisdiction in which the arbitration is conducted, and a court reporter will record all hearings, with such record constituting the official transcript of such proceedings. All decisions of the arbitrator will be in writing, and the arbitrator will provide reasons for the decision. Each Party shall bear its own respective attorney's fees and costs in accordance with any dispute or arbitration. 5
9. MISCELLANEOUS. 9.1 OBLIGATIONS TO OTHER COMPANIES. Crawford certifies that his employment with Modavox will not breach any existing agreement or covenant that Crawford has signed with any other person or entity, or violate any legal duty that Crawford owes to such other person or entity. Crawford will not disclose to Modavox, or use on Modavox's behalf, any trade secrets or proprietary information belonging to any of Crawford's prior employers or any other person or entity. 9.2 ASSIGNMENT. This Agreement will not be assignable, in whole or in part, by either Party without the written consent of the other Party, except that Modavox may, without the consent of Crawford, assign this Agreement upon the consummation of (i) a merger or consolidation of Modavox with any other corporation or entity or any other form of business combination pursuant to which the outstanding stock of Modavox is exchanged for cash, securities or other property paid, issued or caused to be issued by the surviving or acquiring corporation or entity; or (ii) a sale, transfer or lease by Modavox of all, or substantially all, of Modavox's assets. 9.3 NOTICES. All notices and other communications required or permitted under this Agreement will be delivered to the Parties at the address set forth below their respective signature blocks, or at such other address that they hereafter designate by notice to the other Party in accordance with this Section. All notices and communications will be deemed to be received in accordance with the following: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of facsimile transmission, on the date on which the sender receives confirmation by facsimile transmission that such notice was received by the addressee, provided that a copy of such transmission is additionally sent by mail as set forth in (iv) below; (iii) in the case of overnight air courier, on the second business day following the day sent, with receipt confirmed by the courier; and (iv) in the case of mailing by first class certified mail, postage prepaid, return receipt requested, on the fifth business day following such mailing. 9.4 GOVERNING LAW. This Agreement will be deemed to have been executed in the State of Arizona and will be governed and construed as to both substantive and procedural matters in accordance with the laws of the State of Arizona, but excepting (i) any State of Arizona rule which would result in judicial failure to enforce the arbitration provisions of Section 8 hereof or any portion thereof and (ii) any State of Arizona rule which would result in the application of the law of a jurisdiction other than the State of Arizona. Any dispute arising from this Agreement must be filed in Maricopa County, Arizona. 6
9.5 COMPLETE AGREEMENT. This Agreement, along with the Crawford Promissory Note and the Nondisclosure Agreement, contains the entire agreement of the Parties relating to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, with respect to such subject matter, and the Parties have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein. If a conflict is determined to exist among any of the aforementioned agreements, the terms of this Agreement will control. 9.6 AMENDMENT. This Agreement may not be amended, modified, superseded, canceled or terminated, and any of the matters, covenants, representations, warranties or conditions hereof may not be waived, except by written instrument executed by the Parties or, in the case of a waiver, by the Party to be charged with such waiver. 9.7 COUNTERPARTS. This Agreement may be executed by any one or more of the Parties in any number of counterparts, each of which will be deemed to be an original, but all such counterparts will together constitute one and the same instrument. 9.8 WAIVER. The failure of a Party to insist upon strict adherence to any term, condition or other provision of this Agreement will not be considered a waiver or deprive that Party of the right thereafter to insist upon strict adherence to that term or any other term, condition or other provision of this Agreement. 9.9 HEADINGS. The headings of this Agreement are solely for convenience of reference and will not affect its interpretation. 9.10 INDEMNITY. Modavox will indemnify and hold harmless Crawford from and against any and all liability, costs, damages and expenses (including reasonable attorneys' fees and court costs) which Crawford may sustain or suffer by reason of any third-party claim which is not caused by a breach by Crawford hereunder. 9.11 SEVERABILITY. If any one clause or part of this Agreement is deemed invalid, unenforceable or illegal by the arbitrators or court of competent jurisdiction, then it is severed from this Agreement and the rest of this Agreement remains in full force and effect. Crawford acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid and enforceable to the maximum extent possible under applicable law. 9.12 FURTHER ASSURANCES. The Parties will sign such other instruments, cause such meetings to be held, resolutions passed and by-laws enacted, exercise their vote and influence, do and perform and cause to be done and performed such further and other acts and things as may be necessary or desirable in order to give full effect to this Agreement. 7
9.13 CRAWFORD ACKNOWLEDGES THAT THE DRAFTER OF THIS AGREEMENT IS A LICENSED ATTORNEY, THAT SUCH PERSON DRAFTED THIS AGREEMENT WITH CRAWFORD'S FULL KNOWLEDGE AND CONSENT AND THAT CRAWFORD HAS HAD THE OPPORTUNITY TO CONSULT WITH THE ADVISOR OF HIS CHOICE AND THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. Modavox: MODAVOX, INC. By: David J. Ide Chief Executive Officer Crawford: James G. Crawford 8
EXHIBIT A PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT 9
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT This Proprietary Information and Inventions Agreement by and between MODAVOX , INC., a Delaware corporation ("Modavox") and James G. Crawford ("Crawford"), is effective as of the date the Certificate of Merger relating to the merger of Kino Interactive, LLC into Modavox is filed with and accepted by the Delaware Secretary of State (the "Effective Date"). Modavox and Crawford are sometimes referred to individually as the "Party" and collectively as the "Parties." Capitalized terms not otherwise defined herein have the meaning set forth at the end of this Agreement. In consideration of the mutual benefits to be derived from this Agreement, which is a material part of the consideration for Crawford's employment by Modavox, and of the representations, warranties, conditions and promises hereinafter contained, the Parties hereby agree as follows: 1. Modavox possesses and will possess Proprietary Information (as hereinafter defined) and Documentation (as hereinafter defined) which is important to its Business (as hereinafter defined). 2. Crawford's employment creates a relationship of confidence and trust between Modavox and Crawford with respect to Proprietary Information (i) applicable to the Business; or (ii) applicable to the business of any customer of Modavox; or (iii) which Modavox is under a contractual obligation to keep confidential which may be made known to Crawford by Modavox or by any customer of Modavox, or learned by Crawford during the period of Crawford's employment. 3. The Proprietary Information, whether now or hereafter furnished to Crawford in whole or in part, is confidential. Modavox's business and prospects could be damaged if the Proprietary Information is disclosed to third parties without Modavox's consent. 4. As a condition to sharing with Crawford, whether in writing or orally, Proprietary Information, in consideration of Crawford's employment by Modavox and the compensation received by Crawford from Modavox from time to time, Crawford hereby acknowledges and agrees as follows: (a) All Proprietary Information and all intellectual property rights associated therewith ("Rights") are the sole property of Modavox. Crawford assigns to Modavox any Rights Crawford may have or acquire in such Proprietary Information. At all times, both during Crawford's employment by Modavox and after its termination, Crawford will keep in confidence and trust and will not use or disclose (or permit the use or disclosure of) any Proprietary Information or anything relating to it for a purpose detrimental to the Business and without the prior written consent of Modavox except as may be necessary and appropriate in the ordinary course of performing Crawford's duties to Modavox. 10
(b) All Documentation constitutes the sole property of Modavox. During Crawford's employment by Modavox, Crawford will not remove any Documentation from the business premises of Modavox or deliver any Documentation to any person or entity outside Modavox for a purpose detrimental to the Business and except as Crawford may be required to do in connection with performing the duties of Crawford's employment. Immediately upon the termination of Crawford's employment for any reason, or during Crawford's employment if so requested by Modavox, Crawford will return all Documentation, equipment and other physical property, or any reproduction of such property, excepting only (i) Crawford's personal copies of records relating to Crawford's compensation; (ii) Crawford's personal copies of any materials previously distributed generally to stockholders of Modavox; and (iii) Crawford's copy of this Agreement. (c) Crawford will promptly disclose in writing to Crawford's immediate supervisor or to any persons designated by Modavox, all Inventions (as hereinafter defined) related to the Business made or conceived or reduced to practice or developed by Crawford, either alone or jointly with others, during the term of Crawford's employment. Crawford will not disclose Inventions covered by this Agreement to any person outside Modavox unless Crawford is requested to do so by his duly authorized supervisor. All Inventions related to Modavox's Business which Crawford makes, conceives, reduces to practice or develops (in whole or in part, either alone or jointly with others) during Crawford's employment belong solely to Modavox to the maximum extent permitted by applicable law, and Crawford assigns such Inventions and all Rights therein to Modavox and Modavox is the sole owner of all Rights in connection therewith. (d) Crawford will perform, during and after Crawford's employment, all reasonable acts deemed necessary or desirable by Modavox to permit and assist it, at Modavox's expense, in evidencing, perfecting, obtaining, maintaining, defending and enforcing Rights and/or Crawford's assignment with respect to such Inventions in any and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Crawford hereby irrevocably designates and appoints Modavox and its duly authorized officers and agents, as Crawford's agents and attorneys-in-fact to act for and in Crawford's behalf and instead of Crawford, to sign and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if signed by Crawford. (e) Crawford has attached hereto, as Attachment A, a complete list of all existing Inventions to which Crawford claims ownership as of the date of this Agreement which are related to the Business and that Crawford desires to specifically clarify are not subject to this Agreement. (f) Crawford's performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by Crawford in confidence or in trust prior to Crawford's employment by Modavox. Crawford has not entered into, nor will Crawford enter into, any Agreement either written or oral in conflict herewith or in conflict with Crawford's employment with Modavox. 11
(g) Crawford's obligation of secrecy and confidentiality with respect to Proprietary Information which constitutes trade secrets under the Uniform Trade Secrets Act (or other similar applicable law) will run for as long as such information remains a trade secret. Crawford's obligation of confidentiality with respect to Proprietary Information that is not covered under the Uniform Trade Secrets Act (or other similar applicable law), will run for three (3) years from the date Crawford's employment by Modavox ceases. (h) This Agreement is not an employment contract and, as an employee of Modavox, Crawford has obligations to Modavox which are not set forth in this Agreement. (i) Any dispute in the meaning, effect or validity of this Agreement will be resolved in accordance with the laws of the State of Arizona without regard to the conflict of laws provisions thereof. (j) If one or more provisions of this Agreement are held to be illegal or unenforceable under applicable Arizona law, such illegal or unenforceable portion(s) will be limited or excluded from this Agreement to the minimum extent required so that this Agreement will otherwise remain in full force and effect and enforceable in accordance with its terms. (k) Wrongful disclosure or use of Proprietary Information in contravention of the provisions of this Agreement will give rise to irreparable injuries not adequately compensable in damages. If preliminary injunctive relief to maintain the status quo is required, Modavox may seek such relief from any court of competent jurisdiction. Crawford is bound by any and all orders rendered by such court. (l) No failure or delay in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege. (m) No modification of this Agreement is valid unless made in writing and signed by Crawford and a duly authorized officer of Modavox. (n) This Agreement will survive termination of Crawford's employment, regardless of the circumstances of such termination. (o) This Agreement is effective as of the first day of Crawford's employment by Modavox. 12
(p) This Agreement is binding upon Crawford's heirs, executors, administrators or other legal representatives. (q) Notwithstanding the foregoing, nothing contained herein will prohibit Crawford from disclosing to anyone the amount of Crawford's wages. (r) This Agreement constitutes the full, complete and exclusive Agreement between Modavox and Crawford with regard to this Agreement's subject matter. This Agreement supersedes any previous agreements or representations, whether oral or written, express or implied between Modavox and Crawford with respect to their subject matter. (s) The following terms have the following meanings: (i) "Business" means the actual business of Modavox on today's date, as well as any other business that Modavox acquires, develops or initiates during the term of this Agreement, including each of its current and future subsidiaries, affiliates, business units and divisions. (ii) "Documentation" means tangible paper or electronic media that contain or embody Proprietary Information or any other information concerning the business, operations or plans of Modavox, whether Crawford or others have prepared such documents. By way of illustration but not limitation, Documentation includes blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes or printouts, sound recordings and other printed, typewritten or handwritten documents, as well as samples, prototypes, models, products and the like. (iii) "Inventions" means all data, discoveries, designs, developments, formulae, ideas, improvements, inventions, know-how, processes, programs, and techniques, whether or not patentable or registerable under copyright, trademark or similar statutes, and all designs, trademarks and copyrightable works that Crawford made or conceived or reduced to practice or learned, either alone or jointly with others, during the period of Crawford's employment which (A) are related or useful in Modavox's business, research, design, development, experimental production, financing, manufacturing, licensing, distribution or marketing activity, or (B) result from tasks Modavox assigned Crawford, or (C) result from use of premises or equipment owned, leased or contracted for by Modavox. (iv) "Proprietary Information" means information from which Modavox might derive economic value, actual or potential, from such information not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and which is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. By way of illustration but not limitation, Proprietary Information includes: (A) inventions, confidential knowledge, trade secrets, ideas, data, programs, works of authorship, know-how, improvements, discoveries, designs, techniques and sensitive information Modavox receives from its customers or receives from a third party under obligation to keep confidential; (B) technical information relating to Modavox's existing and future products and services, including, where appropriate and without limitation, software, firmware, information, patent 13
disclosures, patent applications, development or experimental work, formulae, engineering or test data, models, techniques, processes and apparatus relating to the same disclosed by Modavox to Crawford or obtained by Crawford through observation or examination of information or developments; (C) confidential marketing information (including without limitation marketing strategies, customer names and requirements and product and services, prices, margins and costs); (D) confidential future product plans; (E) confidential financial information provided to Crawford by Modavox; (F) personnel information (including without limitation employee compensation); (G) merger and acquisition strategies (including without limitation target lists); and (H) other confidential business information. 14
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5. CRAWFORD HAS READ THIS AGREEMENT CAREFULLY AND CRAWFORD UNDERSTANDS AND ACCEPTS THE OBLIGATIONS WHICH IT IMPOSES UPON HIM WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO CRAWFORD TO INDUCE CRAWFORD TO SIGN THIS AGREEMENT. CRAWFORD SIGNS THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT ONE COUNTERPART WILL BE RETAINED BY MODAVOX AND THE OTHER COUNTERPART WILL BE RETAINED BY CRAWFORD. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. Modavox: MODAVOX, INC. By: David J. Ide Chief Executive Officer Crawford: James G. Crawford 16
ATTACHMENT A The following is a complete list of Inventions relevant to the subject matter of Crawford's employment by Modavox, Inc. relating to Modavox's Business that have been made or conceived or first reduced to practice by Crawford alone or jointly with others prior to Crawford's employment by Modavox that Crawford desire to clarify are not subject to Modavox's Proprietary Information and Inventions Agreement. List of Inventions: None. Crawford propose to bring to Crawford's employment the following materials and documents of a former employer: None. IN WITNESS WHEREOF, Crawford has executed this Attachment A to the Proprietary Information and Inventions Agreement with Modavox dated as of the date first above written. Crawford: James G. Crawford 17
[LOGO, AUDIO EYE] June 1, 2006 Mr. Nathan Bradley Mr. David Ide Managing Members Modavox Communications LLC 5151 Broadway Tucson, Arizona Dear Nathan and David: As agreed, this letter and the attached contract will serve as confirmation of a business agreement between Modavox, Inc. and AudioEye Inc. The business agreement has Modavox continuing to provide hosting, support, and third party contract oversight to ensure un-interrupted technical service to AudioEye, as well as begin a sales/marketing relationship with AudioEye under the terms and fees outlined in Appendix A and Appendix B of the attached contract. Technical service date began June 1, 2005 and Modavox Communications has been invoicing AudioEye Inc. since that date. This agreement will run for three (3) years and will be automatically optioned for three (3) additional years unless cancelled by either party given thirty (30) days written notice. AGREEMENT SUMMARY AudioEye is in the process of raising funds for strategic operations and build out of its software, therefore it is agreed to by Modavox, Inc. and AudioEye Inc the following: o Once operational funds are secured, all 2005 expenses incurred by Modavox/Modavox in support of AudioEye and invoiced will be paid in full on an agreed upon payment schedule (attached). o AudioEye will pay Modavox for any Modavox services or expenses incurred on AudioEye's behalf beginning January 1, 2006, and agreed upon in writing by both parties on after client invoicing. o Modavox, Inc. presently sells its services via a direct sales force. AudioEye agrees to have Modavox sell, service, and represent AudioEye products to potential clients. Modavox will have the right to outsource, or assign the sales/services agreement to a third party if agreed to by AudioEye Inc. Terms and fees are outlined in Appendix B. It is noted that Modavox Communications LLC is a shareholder in AudioEye Inc, and members of AudioEye Inc's management team are members of Modavox Communications LLC. In the estimation of Modavox Communications LLC, and AudioEye Inc, the terms and conditions agreed to are in the best interests of Modavox Inc. and AudioEye Inc. shareholders. Thank you for your service. Please sign this memo below and return one copy for our records. Also, please sign the contract and return as well. I look forward to working with you in 2006. 38
On Behalf of: AudioEye Inc.
On Behalf of: Modavox, Inc.
/s/ Nathan T. Bradley --------------------------------Nathan T. Bradley Chief Technology Officer Director
/s/ David J. Ide --------------------------------David J. Ide Chief Executive Officer
AUDIOEYE - MODAVOX COMMUNICATIONS SERVICES AGREEMENT 6/1/2006 This Agreement is entered into by and between AudioEye, Inc, a corporation organized under the laws of the State of Delaware, with its principal offices at 9901 Kentsdale Drive, Potomac, MD, 20854 (hereafter referred to as "AudioEye") and Modavox, Inc with its principal offices at 2617 South 46th Street, Phoenix, AZ, 85034 (hereafter referred to as "Modavox") AudioEye and Modavox hereby agree to enter into a Services contract for Modavox to provide management, technical, and sales services (collectively hereinafter referred to as "Service") to AudioEye under the terms and conditions as set forth herein. 1. SERVICES. The Service to be provided pursuant to this Agreement shall be comprised of those items specified on the Schedule of Services ("Schedule of Services") annexed hereto. Both parties may enhance the Services from time to time and offer additional capabilities at an addition fees to be mutually agreed upon. 2. PAYMENT FOR SERVICE. For the Services provided by Modavox, AudioEye shall pay the annual or monthly charge specified on the Price List annexed hereto. The payment terms are net cash, without discount, payable on receipt of invoice. Monthly charges shall be invoiced each calendar month in advance. Modavox may increase monthly charges upon sixty (60) days prior written notice to AudioEye in the event of (i) any increase in charges payable to parties other than Modavox, or (ii) any increase in costs for changes to Service, Equipment or Software required by parties other than Modavox. In addition, on each anniversary of this Agreement, Modavox may increase the annual or monthly charges et forth herein in proportion to the percentage increase, if any in the United States Consumer Price Index (All Urban Consumers) ("CPI"), as published by the US Department of Labor, during the most recent twelve (12) month period for which such statistics are available at the time of the increase. Any payment not received within 30 days of the date of the invoice by AudioEye shall be subject to a service charge from the due date at a rate of one and a half percent (1-1/2%) per month on the delinquent balance. 3. TERM OF AGREEMENT: TERMINATION. a. Except as herein provided, the initial term of this Agreement shall be a period commencing on the date of this Agreement and continue for 36 months from June 1, 2005 (the original agreement date with Kino Communications, LLC). Except as provided in Section 3(b), thereafter, the Service will be renewed for additional thirty-six (36) months (or any longer term as agreed to by the parties) subject to the terms of this Agreement unless Modavox receives written notice of termination at least sixty (60) days prior to the expiration of the then current term of the Agreement. After the initial 12 months, Modavox may increase prices on the Price list at any time upon not less then sixty (60) days prior written notice to AudioEye. AudioEye shall have the right to terminate this Agreement within sixty (60) days of the effective date of any price increase. b. Modavox shall have the right to terminate this Agreement upon ten (10) days prior written notice to AudioEye in the event of the breach of this Agreement by the AudioEye, unless AudioEye cures such breach within such ten (10) day period. Such breach may include improper use that reflects negatively upon the Modavox Service. 4. LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES. ALTHOUGH MODAVOX ENDEAVORS TO USE CARE IN RESPECT TO PROVIDING THE SERVICES, MODAVOX MAKES NO REPRESENTATION OR WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, WITH RESPECT TO ANY ASPECT OF THE SERVICE ( INCLUDING ANY SOFTWARE, DATA OR EQUIPMENT PROVIDED AS PART THEREOF). NEITHER MODAVOX NOR ANY THIRD PARTY DATA, SOFTWARE OR EQUIPMENT PROVIDERS WARRANT THAT THE SERVICE WILL BE UNINTERRUPTED OR ERROR FREE, NOR DO THEY MAKE ANY WARRANTIES AS TO THE RESULTS TO BE OBTAINED FROM USE OF THE SERVICE. AUDIOEYE EXPRESSLY AGREES THAT USE OF THE SERVICE IS AT AUDIOEYE'S SOLE RISK. ACCORDINGLY, NEITHER MODAVOX NOR ANY DATA, SOFTWARE, OR EQUIPMENT PROVIDERS WILL IN ANY WAY BE LIABLE TO AUDIOEYE OR TO ANY OTHER
ENTITY FOR ANY INACCURACIES, ERRORS, OMISSIONS OR DELAYS REGARDLESS OF CAUSE IN THE SERVICE OR IN ANY DATA, INFORMATION OR SOFTWARE CONTAINED 39
THEREIN, OR CAUSED BY ANY MODAVOX OR THIRD PARTY EQUIPMENT OR SOFTWARE USED IN CONNECTION THEREWITH, OR FOR ANY DAMAGES (WHETHER DIRECT OR INDIRECT, OR CONSEQUENTIAL, PUNTIVE, SPECIAL OR EXEMPLARY, INCLUDING, BUT NOT LIMITED TO LOSS OF PROFITS) RESULTING THEREFROM, REGARDLESS OF CAUSE AND REGARDLESS OF WHETHER OR NOT MODAVOX OR ANY SUCH THIRD PARTIES ARE DEEMED LIABLE IN ANY MANNER, THEN SUCH LIABILITY, WHETHER ARISING FROM CONTRACT, WARRANTY, NELIGENCE OR OTHERWISE SHALL, IN NO EVENT, EXCEED THE AMOUNT AUDIOEYE HAS PAID FOR THE SERCIVE DURING THE PRECEDING 12 MONTH PERIOD. MODAVOX SHALL NOT BE LIABLE TO ANY AUDIOEYE FOR ANY DELAY IN PERFORMANCE OR FAILURE TO PERFORM ANY TERM OR CONDITION CAUSED DIRECTLY OR INDIRECTLY BY FIRE, EXPLOSION, ACCIDENT, FLOOD, LABOR TROUBLE, WEATHER CONDITION, ANY REGULATION, RULE OR ACT OF ANY GOVERNMENT OR GOVERNMENT AGENCY, OR THE INABILITY TO OBTAIN OR SHORTAGE OF SUITABLE MATERIAL, COMPONENTS, PARTS, EQUIPMENT, MACHINERY, FUEL, POWER, COMMUNICATION FACILTIES OR TRANSPORTATION, ACT OF GOD, ARMED CONFLICTS, CIVIL COMMOTION OR ANY OTHER CAUSE OF LIKE CHARACTER BEHOND THE REASONABLE CONTROL OF MODAVOX. 5. USE RESTRICTIONS; SOFTWARE AND DATA. a. AudioEye agrees not to use the Service (including, without limitation, any data or software that is provided as part of the Service) in any manner except as expressly permitted hereunder and further agrees not to reverse engineer, decompile, disassemble or otherwise seek to duplicate the performance characteristics of the software or any part thereof nor to sell, assign, disclose, furnish or redistribute the Service or any data or software provided therewith, to any other person firm corporation or entity and shall confine knowledge of and access to the software and data only to its employees who require such knowledge and access in the ordinary course and scope of their employment by AudioEye. b. AudioEye acknowledges that installation and ongoing operation of the Services may, from time-to-time, require changes to Modavox software resident on AudioEye's hardware; Software for such changes shall be made available by Modavox at Modavox's expense provided that AudioEye agrees to install such software on its hardware and renders reasonable cooperation to Modavox (such cooperation to include without limitation, modification or upgrade to AudioEye's equipment and software), Should AudioEye not do so, Modavox may, in its discretion cease supporting the Services. 6. PROPRIETARY RIGHTS. AudioEye acknowledges and agrees that all proprietary rights in the Service are and shall remain the property of Modavox and its third party licensors, unless the software and services are property or a creation of AudioEye. Both Parties acknowledges that the Service was compiled, prepared, selected, and arranged by Modavox, AudioEye, and its licensors through the expenditure of substantial time, effort, and money and that constitutes valuable property of Modavox, AudioEye, and its licensors. 7. CHARGES. On written notice to Modavox, AudioEye may add to the Service as designated in the Modavox Price List or add additional features as offered from time to time by Modavox. Additions will be invoiced at the then-current Modavox price. 8. TRAINING & SUPPORT AudioEye shall pay all training and support expenses as required for AudioEye's staff unless specified as included in the Service.
9. ASSIGNMENT. This Agreement may not be assigned by either Party without the written consent of the other Party, which consent will not be unreasonably withheld. During the term of this contract, the contract licenses and services provided by Hostway and Akami to Modavox in fulfillment and servicing of AudioEye's needs and Services will not be terminated or assigned without the written permission from AudioEye. 10. TRADEMARK AND COPYRIGHT INFRINGEMENT. a. Modavox shall indemnify AudioEye and hold it harmless against all claims and damages, including without limitation, reasonable attorney's fees, which AudioEye incurs as a result of any claim against AudioEye that the Service infringes any copyright or proprietary right of any third party, provided that: (i) AudioEye notifies Modavox promptly in writing of the assertion of such claims; (ii) Modavox has sole control over the defense or settlement of such claim; and (iii) AudioEye's use of the Service has been in accordance with the restrictions imposed under Paragraph 5 of this Agreement. b. In the event of a claim for infringement, Modavox reserves the right to terminate this Agreement with respect to the allegedly infringing portion of the Service and either to substitute another, or substantially similar Service therefore or to refund to AudioEye the pro rata share of any prepaid fees relating to such terminated Service. 11. APPLICABLE LAW. This Agreement shall be construed in accordance with the law in the state of Delaware. 12. SEVERABILITY. Each paragraph and provision of this contract is severable from the contract and if one provision or part is declared invalid, the remaining provisions or parts shall nevertheless remain in full force and effect. 13. ENTIRE AGREEMENT. This Agreement embodies the entire Agreement and understanding between the AudioEye and Modavox and supersedes any and all prior agreements and understandings, express or implied, relating to the subject matter hereof. No other agreement or understanding verbal or otherwise, exists between the parties except as herein set forth. IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS OF THE DATE WRITTEN BELOW.
BY: /s/ Nathan T. Bradley -------------------------------NATHAN T. BRADLEY
BY: /s/ David Ide ----------------------------------DAVID IDE CHIEF EXECUTIVE OFFICER 06.08.06 ----------------------------------DATE
SCHEDULE OF SERVICES APPENDIX A HOSTING, SUPPORT, AND THIRD PARTY CONTRACT OVERSIGHT SERVICE DESCRIPTION Modavox has provided hosting and other services in respect to technical, data delivery, and support services for AudioEye Inc since June, 2005. AudioEye will continue to leverage contracts Modavox has with AKAMAI AND HOSTWAY. AudioEye's patent pending software consists of a content management and navigation proprietary code. As the picture below portrays, the AudioEye content management system can index and catalog voice, html, xml, audio, and text streams and encode such streams into tagged audio streams that are stored at AKAMAI, Modavox's contracted CDN. AudioEye's intelligent navigation index and database is stored in AudioEye servers at Hostway, a contracted hosting facility. AGREEMENT SUMMARY Modavox will continue to provide hosting, support, and third party contract oversight to ensure un-interrupted technical service to AudioEye under the terms outlined in the contract and the terms and fees detailed below. Technical service date began June 1, 2005 and Modavox has been invoicing AudioEye Inc. since that date. This agreement will run for three years unless extended by both parties. AudioEye is in the process of raising funds for strategic operations and build out of its software, therefore it is agreed to by Modavox and AudioEye Inc the following: o Once operational funds are secured, all 2005 expenses incurred by Modavox in support of AudioEye and invoiced will be paid in full on an agreed upon payment schedule o AudioEye will pay Modavox for any Modavox services or expenses incurred on AudioEye's behalf beginning January 1, 2006, and agreed upon in writing by both parties on a net forty-five days after client invoicing. [GRAPHIC]
TERMS AND FEES Modavox Communications will calculate each month what percent of their Akamai and Hostway invoices are associated with AudioEye based business. Presently those fees are approximately $2000 per month for Hostway. Akamai invoices will be produced separately each month with the fees to AudioEye as follows: $250.00 base per month with up to 100 GB of transfer. Storage fees will be at $15.00 per month per GB and overage on transfer will be invoiced at $.0025 per MB. AudioEye agrees to pay cost plus of its share of the Akamai and Hostway invoices associated with the AudioEye based business. Modavox will provide a detailed invoice to AudioEye each month detailing services provided. Modavox may add a service charge of up to 25% on top of its cost to cover billing and personnel charges it may incur. AudioEye must pay the invoices on a timely basis not to exceed 30 days. If invoices have not been paid within the schedule then Modavox may charge AudioEye 1 1/2 % each month interest on any outstanding amount. AudioEye will compensate Modavox $75.00 per hour for Technical Support, Development Support, Design Elements, and Voice Over Talent. Those Fees will be invoices separate from any standing monthly invoices produced by Modavox and all hours will be calculated and presented for review within five (5) days following each calendar month.
SCHEDULE OF SERVICES APPENDIX B SALES AND MARKETING. SERVICE DESCRIPTION Modavox presently sells its services via a direct sales force. AudioEye agrees to have Modavox sell, service, and represent AudioEye products to a designated client base. Modavox will have the right to outsource, or assign the sales/services agreement to a third party if agreed to by AudioEye Inc
TERMS AND CONDITIONS PRODUCTS PRICING CLIENT TARGETS AUDIOEYE NAVIGATION AND CONTENT SOFTWARE [GRAPHIC] MODAVOX may sell to any client though it is assumed Modavox will be selling to its client base. Once a month, MODAVOX will submit in writing clients in their pipeline. See Sales Process Method and procedures for reporting. The coordination of pipeline is necessary to avoid sales channel conflict Identify and close new business opportunities within the North American sector. Modavox shall report this sales progress to William O'Conor, CEO AudioEye. JANUARY 1, 2006 TO January 1, 2008. May be renewed thirty days from end-date depending upon performance. Commissions will be paid to Modavox LLC and not directly to Sales People. It is up to Modavox LLC to distribute.
FEES AND TERMS OF PAYMENT:
COMPENSATION FOR RESELLER MODAVOX, INC. - 30 % commission on invoice amount - 50% payable on invoice; 50% payable on payment. - Payment will be Net of cancels received. - Modavox will invoice all clients direct for AudioEye sales - AudioEye will invoice Modavox using NET30 Terms for all sales - Modavox & AudioEye will reconcile all charges by the 5th of each calendar month * Commission for any other Customer Agreement terms to be agreed with AEYE prior to contract execution * Terms of payment is net 30 days from invoice date. SALES METHOD/APPROACH TO BE FOLLOWED: 1. Modavox will submit to AudioEye via email, notice of all client calls or meetings that were completed. Email should be sent to email@example.com. 2. Only those clients where an email was received will be considered for commission payments. 3. If a conflict between the Modavox and AudioEye direct sales people occurs due to overlap of pipeline, the email notice date mentioned in #1 above will be a deciding factor. William O'Conor will be the ultimate authority on whether commission was earned by Modavox. 4. Modavox will utilize standard AudioEye pricing, proposals, documentation, and contracts. This information will be provided upon signature of this contract. Any deviation from the standard must be approved in writing in advance. 5. Modavox will go through quarterly training of the software use and positioning of the product and company. An initial sales training will be accomplished within 30 days of signing this contract. 6. Modavox will not sign any contract or bind AudioEye in anyway. All contracts must be approved and signed by William O'Conor, CEO AudioEye for commissions to be paid. 7. Modavox will not represent that that they are full-time employees of AudioEye. 8. AudioEye personnel will support the efforts of the Modavox, but it is up to the Modavox to understand the product, the technology, the positioning and approach for the company. This is not a lead generation contact. It is up to the Modavox to sell the service.
APPENDIX B-1 AEYE QUALITY POLICY Since its inception, AudioEye has committed itself to develop and maintain a reputation for outstanding quality. Our result will be AudioEye becoming an end-to-end, world-class social technology company, and our goal is to continue building on this achievement and practices. In so doing, we will continue to be guided by the principles on which the company was founded. We will continue to guarantee our clients the highest level of expertise, along with rigorous planning, careful monitoring of results, and tight control over costs and schedules. We will strive constantly to find the best solutions for our clients through innovative approaches and systematic assessment of client satisfaction. We recognize that client needs, information technologies, and the business environment are constantly changing. AudioEye's success in meeting changing client's expectations, and hence our success as a business, depends on our quality system. This system is based on constantly assessing our stakeholders' satisfaction and improving our practices, methods and procedures. At AudioEye, our quality system is a set of principles and methods for continuously improving the service that we give our clients. All our managers and members play a key role in delivering quality, because the distinctive way we work with our clients emphasizes partnership and teamwork. That is why our quality system that will be implemented and managed includes procedures for managing and training members to fulfill our clients' expectations. Senior management's commitment to quality is reflected in many concrete ways throughout the organization. Our quality system will be an agenda items at every meeting of the AudioEye Management group. William C. O'Conor CEO
Exhibit 23.7 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors of Modavox, Inc.: We consent to the incorporation by reference in the registration statements of Modavox, Inc. on Form S-8 (File No. 333-57818) filed as of July 19, 2004, of our report dated June 13, 2006, on the consolidated balance sheet of Modavox, Inc. as of February 28, 2006 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the two-year period ended February 28, 2006, which report appears in the February 28, 2006 annual report on Form 10-KSB of Modavox, Inc.
/s/ Epstein, Weber & Conover P.L.C. ----------------------------------Scottsdale, Arizona June 13, 2006
Exhibit 31.13 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David J. Ide, the Chief Executive Officer and Principal Financial Officer of Modavox Inc., certify that: 1. I have reviewed this annual report on Form 10-KSB of Modavox Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this annual report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the issuer and have: a) designed such disclosure controls and procedures to ensure that material information relating to the issuer is made known to me by others, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the issuer's disclosure controls and procedures as of the end of the period covered by this annual report (the "Evaluation Date"); and c) presented in this annual report my conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. I have disclosed, based on our most recent evaluation, to the issuer's auditors and the audit committee of issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial data and; b) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal controls; and
Date: June 14, 2006 /s/ David J. Ide ---------------David J. Ide Chief Executive Officer and Principal Financial Officer
Exhibit 32.9 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Modavox Inc. (the "Company") on Form 10-KSB for the period ended February 28, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David J. Ide, the Chief Executive Officer and Principal Financial Officer of Modavox Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) as applicable, of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents in all material respects, the financial condition and results of operation of the Company.
Date: June 14, 2006 /s/ David J. Ide ---------------David J. Ide
Chief Executive Officer and Principal Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in types form within the electronic version of this written statement required by Section 906, has been provided to Modavox, Inc. and will be retained by Modavox, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.