JERRY T. KENDALL EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
XXXXX X. XXXXXXX
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement"), dated as of March 1, 2006, by and between VILLAGEEDOCS, a California corporation, ("Company"), and XXXXX X. XXXXXXX ("Executive").
Throughout the term of this Agreement, the Executive shall devote his best efforts and substantially all of his business time and services to the business and affairs of the Company provided; however, that nothing herein shall preclude Executive from (i) serving or continuing to serve as an officer or on the board of directors of entities that do not compete with the Company or (ii) serving or continuing to serve on the boards or advisory committees of charitable or other similar organizations.
Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the current term of this Agreement expires, as described in Section 5(d).
Additionally, any stock options granted Executive prior to this employment agreement that are vested or being vested as of the date of this agreement may be exercised at any time within 7 years after the date executive's termination for any reason. The stock option grants shall further provide that, if at any time when there is not an effective Registration Statement on Form S-8 covering the option shares, the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of 1933 of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act), the Company provide the Executive with written notice of such determination and, if the Executive so desires, the Company will cause the registration under the Securities Act of such number of option shares as the Executive shall designate. The Company shall use its best efforts to register, and maintain the effectiveness of the registration, for resale all of the Option Shares granted to Executive pursuant to a Form S-8 (or any successor form) registration statement under the Securities Act.
In addition to the benefits provided pursuant to the preceding paragraphs of this Agreement, the Executive shall be eligible to participate in such other executive compensation and retirement plans of the Company as are applicable generally to other officers, and in such welfare benefit plans, programs, practices and policies of the Company as are generally applicable to other key employees.
If the termination is not for death, disability as described in paragraph (b), for Cause as described in paragraph (c) or a voluntary termination by the Executive as described in paragraph (d), the Company shall also be obligated to make a series of monthly payments to the Executive for each month during the remaining term of this Agreement, but not more than six months if the termination occurs within the first twelve months from the effective date and not less than twelve (12) months if subsequent to the first twelve months from the effective date. Each monthly payment shall be equal to one-twelfth (1/12th) of the Executive's annual base salary, as in effect on the date of termination. Executive shall also be permitted to continue to participate at the Company's expense in all benefit and insurance plans, coverage and programs in which he was participating in during the period of monthly payments described earlier in this paragraph.
For purposes of this Agreement, the term "Cause" shall be limited to (i) any action by the Executive involving willful disloyalty to the Company, such as embezzlement, fraud, misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10 below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of any lesser crime or offense committed in connection with the performance of his duties hereunder or involving fraud, dishonesty or moral turpitude; or (iv) the intentional gross misconduct or willful gross neglect of the Executive in carrying out his duties hereunder resulting in material economic harm to the Company (other than resulting from the Executive's incapacity due to physical or mental disability) if Executive acted without a good faith belief that the act or omission was in the best interest of the Company. Notwithstanding the foregoing, no termination pursuant to subsection (iv) shall be treated as termination for cause unless the Board has provided executive with at least thirty (30) days prior written notice specifying in reasonable detail the alleged breach and giving the Executive a minimum of one hundred twenty (120) days or such longer period as is reasonably necessary to correct such alleged breach.
For purposes of this paragraph, a resignation by the Executive shall not be deemed to be voluntary, but shall be deemed termination without cause, if the Executive resigns during the period of three months after the date he is (i) assigned to a position other than President of the Company (other than for Cause, or by reason of permanent disability), (ii) assigned duties materially inconsistent with such position, (iii) transferred to a geographic location of employment more than 20 miles from the current location of employment, (iv) directed to report to anyone other than the Company's Chief Executive Officer.
6. EFFECT OF NON RENEWAL OF AGREEMENT
If ninety days prior to the end of the initial term or renewal term of this Employment Agreement, the Executive has not received a renewal offer consistent with the terms of this Agreement, it shall be considered a non-renewal of the Executive Employment Agreement
In the event of a non-renewal of Executive Employment Agreement, the Executive will:
(a) Vest 25% of the unvested portion of the stock option granted under section 3(d) and shall have a seven (7) year period to exercise the newly vested options
(b) Vest 25% of the unvested portion of any stock options granted Executive prior to this employment agreement and shall have a seven (7) year period to exercise the newly vested options
(c) Have a modified term of the Covenant Not To Compete to be equal to the number of months of severance pay granted, but not to be reduced to less than twelve (12) months
(d) The Company shall also be obligated to make a series of monthly payments to the Executive for a minimum of twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the Executive's annual base salary, as in effect at the end of the term.
7. EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, the vesting of any restricted stock, stock options or other awards granted to the Executive under the terms of the Company's stock plans or any written agreement with Executive shall become immediately vested in full and, in the case of stock options, exercisable in full.
In addition, if, at any time during the period of twelve (12) consecutive months following or six (6) months prior to the occurrence of a Change in Corporate Control, the Executive is involuntarily terminated (other than for Cause) by the Company, the Executive shall be entitled to receive as severance pay from the Company in a lump sum payment within 30 days the amount equal to the sum of 100% of the Executive's annual base salary in effect at the time of the Change in Corporate Control.
(b) For purposes of this Agreement, a "Change in Corporate Control" shall include any of the following events:
(1) The acquisition in one or more transactions of more than fifty percent (50%) of the Company's outstanding Common Stock by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);
(2) Any merger or consolidation of the Company into or with another corporation in which the Company is not the surviving entity, or any transfer or sale of substantially all of the assets of the Company or any merger or consolidation of the Company into or with another corporation in which the Company is the surviving entity and, in connection with such merger or consolidation, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for other stock or securities of any other person, or cash, or any other property.
In the event that any payment or benefits received or to be received by Executive pursuant to this Agreement ("Benefits") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any comparable successor provisions, and (ii) but for this subsection, would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the "Excise Tax"), then benefits to which Executive will be entitled pursuant to this Section 7 (the "Benefits") shall be either: (i) provided to Executive in full, or (ii) provided to Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and Executive otherwise agree in writing, any determination required under this subsection shall be made in writing in good faith by an accountant selected by the mutual agreement of Executive and the Company (the "Accountant"). The Company shall bear all costs the Accountant may reasonably incur in connection with any calculations contemplated by this subsection.
The Executive recognizes that because his work for the Company will bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 10 are required for the reasonable protection of the Company and its investments and for the Company's reliance on and confidence in the Executive.
12. INJUNCTIVE RELIEF. The Executive acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants set forth in Sections 10 and 11 of this Agreement and accordingly agrees that the Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions in any action or proceeding instituted in any court in the State of California having subject matter jurisdiction. This provision with respect to injunctive relief shall not, however, diminish the Company's right to claim and recover damages.
It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable.
The Executive acknowledges and confirms that (a) the restrictive covenants contained in Sections 10 and 11 hereof are reasonably necessary to protect the legitimate business interests of the Company, and (b) the restrictions contained in Sections 10 and 11 hereof (including without limitation the length of the term of the provisions of Sections 10 and 11 hereof) are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive further acknowledges and confirms that his full, uninhabited and faithful observance of each of the covenants contained in Sections 10 and 11 hereof will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company is such as would cause the Company serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company in violation of the terms of Sections 10 and 11 hereof. The Executive further acknowledges that the restrictions contained in Sections 10 and 11 hereof are intended to be, and shall be, for the benefit of and shall be enforceable by, the Company's successors and assigns.
If the Executive shall be in violation of any provision of Sections 10 and 11, then each time limitation set forth in the applicable section shall be extended for a period of time equal to the period of time during which such violation or violations occur. If the Company seeks injunctive relief from such violation in any court, then the covenants set forth in Sections 10 and 11 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Executive.
Sections 10, 11 and 12 of this Agreement shall survive the termination or expiration of this Agreement.
16. GOVERNING LAW. This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of California, other than the conflict of laws provisions of such laws.
VILLAGEEDOCS EXECUTIVE:
By: /s/ K. Xxxxx Xxxxxx /s/ Xxxxx X. Xxxxxxx
Name: X. Xxxxx Xxxxxx Xxxxx X. Xxxxxxx
Title: Chief Executive Officer