Exhibit 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of the 30th day of
January, 2006, and deemed effective as of June 1, 2005, by and between Xxxxxx
Xxxxx USA, LLC, a Nevada limited liability company (the "Company") and Xxx
Xxxxxx ("Executive"), an individual resident in the State of Georgia.
WITNESSETH:
WHEREAS, Executive is currently employed by the Company as its
President and Chief Executive Officer;
WHEREAS, Executive and the Company have agreed upon certain terms of
continued employment for a period of five years, including terms relating to
severance and certain incentive payments related to specified events with
respect to the Company; and
WHEREAS, Executive and the Company wish to reflect such agreements in
writing as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Employment.
1.1 Employment and Duties. The Company hereby agrees to continue to
employ Executive for the Term (as hereinafter defined) as its President and
Chief Executive Officer, subject to the direction of the Board of Directors (the
"Board") of the Company and, in connection therewith, to perform such duties as
he shall reasonably be directed by the Board to perform and as are normal and
customary for such title and position. In performing such duties hereunder,
Executive shall comply with the policies and procedures as adopted from time to
time by the Board, shall give the Company the benefit of his special knowledge,
skills, contacts and business experience, shall perform his duties and carry out
his responsibilities hereunder in a diligent manner, and shall devote all of his
business time, attention, ability and energy exclusively to the performance of
his duties and responsibilities hereunder; provided, however, that Executive
may, with the approval of the Board from time to time, serve, or continue to
serve, on the board of directors of, and hold any other offices or positions in,
companies or organizations, which, in the such officer's reasonable judgment,
will not present any conflict of interest with the Company or any of its
affiliates or divisions, or materially adversely affect the performance of
Executive's duties pursuant to this Agreement. Executive hereby accepts such
continued employment and agrees to render such services.
2. Employment Term.
2.1 Term. The term of Executive's employment hereunder (the "Term")
shall commence effective as of the date hereof and shall end on May 31, 2010;
provided that upon payment of the incentive award set forth in Section 3.2, this
Agreement shall terminate and Executive's employment shall continue as an
employee at will. Upon expiration of the Term, Executive's employment with the
Company shall be as an employee at will, subject to the employment policies and
practices of the Company, unless otherwise agreed by the Company and Executive.
3. Compensation and Benefits.
3.1 Cash Compensation.
(1) Base Salary. In consideration of Executive's services
hereunder the Company shall pay Executive an aggregate base salary at an
annualized rate, effective as of the date hereof of $225,000, payable, in each
case, in such nearly equal installments as may be customary for executive
officers employed by the Company (but not less frequently than monthly) or as
may otherwise be agreed to between the Company and Executive, in arrears (the
"Base Salary"). The Base Salary for each year shall be prorated according to the
number of days in such year during which this Agreement is in effect.
(2) Bonuses. Executive shall receive an annual bonus equal to
four percent (4.0%) of the first $10,000,000, and three percent (3.0%) of any
amount in excess of $10,000,000, of the Company's annual net income calculated
in accordance with generally accepted accounting principles and as reflected in
the annual audited financial statements of the Company, as adjusted to exclude
imputed interest on equity and bonuses paid at the operational level and
specific projects as agreed to from time to time. Such bonus will be paid within
four months following the end of the Company's fiscal year.
3.2 Incentive Reward Program. Executive shall be entitled to an
incentive bonus upon the sale of the Company (whether in the form of (i) a sale
of all or substantially all of the Company's assets, (ii) a merger or
combination of the Company with any other entity pursuant to which a majority of
the outstanding equity of the Company is owned following such transaction by a
person or persons who prior to such transaction had no equity ownership in the
Company or (iii) any other such transaction resulting in a similar change of
control (a "Sale of the Company")), or upon consummation of an initial public
offering of equity of the Company (an "IPO"). Such incentive bonus payment shall
be due and owing to Executive upon consummation of any such Sale of the Company
or IPO irrespective of Executive's continued employment by the Company
subsequent to such triggering event.
(1) Upon a Sale of the Company, effective as of the closing of
such transaction, Executive shall receive an amount equal to three percent (3%)
of the excess
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of the aggregate price paid by the buyer or buyers in such Sale of the Company
over the book value of the Company (as determined in good faith by the Board
(the "Book Value")) at the time of such sale; provided that such payment shall
be equal to at least a minimum of $3,000,000. Such payment shall be made to
Executive in the same manner at the same time that the sale proceeds are paid to
the equity owners of the Company.
(2) If the Company engages in an IPO, upon the closing of the
IPO, Executive shall be entitled to a payment equal to three percent (3%) of the
amount by which the aggregate market value of the Company at such time, based on
the valuation applied in the IPO, exceeds the then Book Value, subject to a
minimum payment of $3,000,000. If possible, such payment will be made by
issuance to Executive of equity stock in the Company with an aggregate value
equal to the amount of the payment owed, otherwise, such payment shall be made
in cash or some other mutually agreed upon method.
3.3 Participation in Benefit Plans. The payments provided in Section 3
hereof are in addition to any benefits to which Executive may be, or may become,
entitled under any benefit plan or program of the Company for which key
executives are or shall become eligible, including, without limitation, pension,
401(k), life and disability insurance benefits and/or plans. Further, Executive
shall be eligible to receive during the period of his/her employment under this
Agreement, all benefits for which executives are eligible under every such plan
or program to the extent permissible under the general terms and provisions of
such plans or programs and in accordance with the provisions thereof.
3.4 Vacation. Executive shall be subject to the Company's vacation
policy in force from time to time. Vacation may be taken at times which do not
unreasonably interfere with the performance of Executive's duties hereunder.
3.5 Health Insurance. During the term of this Agreement and continuing
until Executive reaches the age of 65 on February 26, 2012, Executive and
Executive's spouse shall be entitled to participate in the health insurance plan
of the Company then provided to employees, whether or not Executive is then
employed by the Company, irrespective of the reason for termination, including
voluntary retirement. Following Executive's employment with the Company,
Executive and Executive's spouse will remain eligible for coverage by such then
in effect health insurance plan of the Company on the same terms as if Executive
had remained an active employee of the Company. Executive's contribution toward
the cost of such health coverage shall be the same as such contribution would be
if Executive remained in the employ of the Company. In the event of any sale or
merger of the Company or other transaction resulting in a change of control of
the Company, as a condition to the Company's consummation of such transaction,
the Company shall require that the acquiring entity provide health insurance
coverage to Executive and Executive's spouse on the same terms as provided to
its then active employees until February 26, 2012 on terms substantially similar
to those set forth in this Section 3.5.
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4. Termination.
4.1 General. The Company shall have the right to terminate the
employment of Executive as set forth in this Section 4.
4.2 Termination for Cause. In addition to any other remedies which the
Company may have at law or in equity, the Company may immediately terminate
Executive's employment under this Agreement by giving Executive written notice
of such termination upon or at any time following the good-faith determination
by the Company's Board that any of the following events has occurred, and each
such termination shall constitute a termination for "cause":
(1) Executive acted dishonestly or engaged in willful misconduct
in the performance of his duties;
(2) Executive breached a fiduciary duty for personal profit;
(3) Executive intentionally failed to perform reasonably assigned
duties;
(4) Executive willfully violated any law, rule or regulation
(other than traffic violations or similar offenses); or
(5) Executive was grossly negligent in the performance of duties.
Upon the early termination of Executive's employment under this Agreement by the
Company for "cause" the Company shall pay to Executive (i) an amount equal to
Executive's Base Salary accrued through the effective date of termination at the
rate in effect at the time notice of termination is given; and (ii) for each
completed year of employment with the Company from June 1, 2005 to May 31, 2009,
a payment of $400,000 and for a completed year of employment for June 1, 2009 to
May 31, 2010, a payment of $1,400,000; and, upon payment of such amounts, the
Company shall have no further obligation to Executive under this Agreement. Such
amounts shall be paid within 90 days of termination.
4.3 Death or Disability of Executive. This Agreement shall
automatically terminate upon the death of Executive and subject to applicable
law, if Executive shall become ill or be injured or otherwise become disabled or
incapacitated such that, in the opinion of the Board, he cannot fully carry out
and perform his duties hereunder, and such disability or incapacity shall
constitute permanent disability under the Company's policies and practices, the
Board may, at any time thereafter, by giving Executive prior written notice,
fully and finally terminate his employment under this Agreement. Upon the early
termination of this Agreement as a result of death or disability, the Company
shall pay Executive's estate or Executive, as the case may be: (i) an amount
equal to Executive's Base
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Salary accrued through the effective date of termination at the rate in effect
at the effective date of termination; (ii) an amount equal to the greater of:
(A) $3,000,000 or (B) a prorated portion (based on the portion of the term of
this Agreement that has expired divided by five years) of three percent (3%) of
the excess of the public market value of the Company (based on the good-faith
determination of the Board of what an IPO of Company would yield as the market
value of the Company at such time ("Public Market Value")) over the Book Value
of the Company at the time of death or permanent disability; and (iii) any
amounts to which Executive is entitled under any other benefit plan of the
Company, in each case at the time such payments would by their terms become due
any payable, and the Company shall have no further obligations to Executive
under this Agreement. Payment will be made within 60 days of termination of the
amount set forth in clause (i) and, of the amount set forth in clause (ii),
$400,000 for each completed year of service with the Company from June 1, 2005
to May 31, 2009 and $1,400,000 for a completed year of employment for June 1,
2009 to May 31, 2010, with the remainder of the amount specified in clause (ii)
to be paid within 12 months of termination. Payment of any amounts owed under
any other benefit plan will occur pursuant to the timing set forth therein.
4.4 Termination Without Cause. Executive's employment under this
Agreement may be terminated without cause by giving Executive written notice
thereof, effective as of the date provided in such notice. Upon such termination
of the employment of Executive, the Company shall pay to Executive: (i) an
amount equal to Executive's Base Salary accrued through the effective date of
termination at the rate in effect at the effective date of termination; (ii) an
amount equal to the greater of: (A) an amount equal to the sum of one year's
Base Salary at the rate in effect at the effective date of termination plus a
bonus payable pursuant to Section 3.1(2) hereof based on projections for the
Company's net income for the following 12 months plus an amount equal to a bonus
calculated in accordance with Section 3.1(2) hereof based on a pro rata share of
net income for the current fiscal year to the date of termination, or (B) an
amount equal to the sum of a bonus calculated in accordance with Section 3.1(2)
hereof pro rated based on net income for the current fiscal year through the
date of termination plus three percent (3.0%) of the excess of the Public Market
Value of the Company over Book Value subject to a minimum of $3,000,000. Such
amounts would be payable within 60 days of the date of termination and upon such
payments, the Company shall have no further obligations to Executive under this
Agreement.
4.5 Termination by Executive. Executive may, with or without cause,
terminate his employment under this Agreement by giving the Company at least six
(6) months' prior written notice of such termination. Upon such termination of
employment by Executive, the Company shall pay to Executive: (i) an amount equal
to Executive's base salary accrued through the effective date of termination at
the rate in effect at the effective date of termination; and (ii) for each
completed year of service with the Company from June 1, 2005 to May 31, 2009, a
payment of $400,000 and for a completed year of employment for June 1, 2009 to
May 31, 2010, a payment of $1,400,000 and upon payment of such amounts,
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the Company shall have no further obligation to Executive under this Agreement.
Such payments will be made in four (4) equal annual installments, beginning
within thirty (30) days after the effective date of termination, and will not
bear interest.
4.6 Termination of Employment Upon Expiration of this Agreement. If
the parties agree to the termination of Executive's employment upon the
expiration of the Term of this Agreement, Executive will be entitled to a
payment equal to three percent (3%) of the excess of the Public Market Value of
the Company over the Book Value subject to a minimum payment of $3,000,000. Such
payment shall be made within 30 days of the date of termination of this
Agreement and upon such payment the Company shall have no further obligation to
Executive under this Agreement.
4.7 Termination of Employment Upon Sale of the Company. If Executive's
employment is not continued with the Company following consummation of a Sale of
the Company as defined in Section 3.2 hereof, in addition to the amounts
specified in Section 3.2, Executive shall receive an amount equal to (i)
Executive's base salary accrued to the effective date of termination at the rate
in effect at the effective date of termination; and (ii) an amount equal to a
bonus calculated in accordance with Section 3.1(2) hereof based on a pro rated
share of net income for the current fiscal year to the date of termination. Such
amount will be payable at the same time payment is made pursuant to Section 3.2
hereof.
5. Non-Solicitation/Interference Covenant
5.1 Covenant. During Executive's employment hereunder and for a period
of two years following termination of Executive's employment with the Company
for any reason, Executive will not for his own account or for any other person
or entity, (i) solicit, employ or otherwise engage as an employee, independent
contractor, or otherwise, any person who is an employee of the Company or any of
its subsidiaries or affiliates; (ii) in an manner attempt or actually induce,
any person who is an employee of the Company or any of its subsidiaries or
affiliates to terminate his or her employment; or (iii) interfere with the
relationship of the Company or any of its subsidiaries or affiliates with any
person or entity that, at any time during Executive's employment with the
Company was an employee, supplier, contractor, customer, partner or
joint-venturer of the Company or any of its subsidiaries or affiliates.
5.2 Breach. Executive hereby recognizes and acknowledges that
irreparable injury or damage shall result to the Company in the event of a
breach or threatened breach by Executive of any of the terms or provisions of
this Section 5, and Executive therefore agrees that the Company shall be
entitled to an injunction restraining Executive from engaging in any activity
constituting such breach or threatened breach. Nothing contained herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to the Company at law or in equity for such breach or threatened breach,
including but not limited to, the recovery of damages from Executive and, if
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Executive is an employee of the Company, the termination of his employment with
the Company in accordance with the terms and provisions of this Agreement.
5.3 Survival. Notwithstanding the termination of the employment of
Executive or the termination of this Agreement, the provisions of this Section 5
shall survive and be binding upon Executive unless a written agreement which
specifically refers to the termination of the obligations and covenants of this
Section 5 is executed by the Company.
6. Successors; Assigns.
6.1 This Agreement is personal to Executive and without the prior
written consent of the Company shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by Executive's legal representatives.
6.2 The Company shall have the right to assign this Agreement and to
delegate all of its rights, duties and obligations hereunder to any entity which
controls the Company or which may be the result of the merger, consolidation,
acquisition or reorganization of the Company and another entity. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns.
6.3 The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform Section 3.5 of this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
7. Miscellaneous.
7.1 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
7.2 Any notices to be given hereunder by either party to the other may
be effected by personal delivery in writing, via facsimile transmission or by
mail, registered or certified, postage prepaid with return receipt requested.
Notices shall be addressed to the parties as follows:
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If to the Company: Xxxxxx Xxxxx USA, LLC
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx 000, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
If to Executive: Xxx Xxxxxx
<>
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Any party may change his or its address by written notice in accordance with
this Section 7.2. Notices delivered personally shall be deemed communicated as
of actual receipt; notices sent via facsimile transmission shall be deemed
communicated as of receipt by the sender of written confirmation of transmission
thereof; mailed notices shall be deemed communicated as of three (3) days after
proper mailing.
7.3 This Agreement supersedes any and all other prior or
contemporaneous agreements, either oral or in writing, between the parties
hereto with respect to the subject matter hereof and this Agreement contains all
of the covenants and agreements between the parties with respect to employment
of Executive by the Company.
7.4 The failure of Executive or the Company to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right Executive or the Company may have hereunder shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
7.5 Except as otherwise provided in Section 7.6 hereof, no amendment
or modification of this Agreement shall be deemed effective unless and until
executed in writing by each party hereto.
7.6 All agreements and covenants contained herein are severable and in
the event any of them shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or covenants were
not contained herein. Should any court or other legally constituted authority
determine that for any such agreement or covenant to be effective that it must
be modified to limit its duration or scope, the parties hereto shall consider
such agreement or covenant to be amended or modified with respect to duration
and/or scope so as to comply with the orders of any such court or other legally
constituted authority, and as to all other portions of such agreement or
covenants they shall remain in full force and effect as originally written.
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7.7 All headings set forth in this Agreement are intended for
convenience only and shall not control or affect the meaning, construction or
effect of this Agreement or of any of the provisions hereof.
7.8 This Agreement may be executed via facsimile transmission
signature and in counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same instrument.
7.9 All matters to be determined by the Board pursuant to the terms of
this Agreement shall be determined by the members of the Board or any duly
authorized committee thereof.
7.10 The Company may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation. All payments made
pursuant to this Agreement shall be structured in a manner to maximize tax and
accounting planning for the Company.
7.11 To the extent that any payments under Section 3.2 or Section 4.7
of this Agreement will be deemed to be "excess parachute payments" under Section
280G and related provisions of the Internal Revenue Code and the regulations
promulgated thereunder, as determined in good faith by the Company's counsel or
independent auditors, such "excess parachute payments" will not be due and
payable to the Executive until such payments have been approved by the Company's
equity holders.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
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Xxx Xxxxxx
XXXXXX XXXXX USA, LLC
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By:
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Its:
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