EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.1
This
EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) dated June 27, 2007 (the
“Effective Date”) by and between Heartland, Inc., a Maryland corporation (the
“Company”), and Xxxxx Xxx, an individual (the “Executive”).
The
Company desires to employ the Executive, and the Executive wishes to accept
such
employment with the Company, upon the terms and conditions set forth in this
Agreement.
NOW
THEREFORE, in consideration of the foregoing facts and mutual agreements set
forth below, the parties, intending to be legally bound, agree as
follows:
1. Employment. The
Company hereby agrees to employ Executive, and Executive hereby accepts such
employment and agrees to perform Executive’s duties and responsibilities in
accordance with the terms and conditions hereinafter set forth.
1.1 Duties
and Responsibilities. Executive shall serve as Chief Executive
Officer. In addition, Executive shall be appointed to the Board of
Directors (the “Board”) of the Company and shall serve as the Chairman of the
Board. During the Employment Term (as defined below), Executive shall
perform all duties and accept all responsibilities incident to such positions
and other appropriate duties as may be assigned to Executive by the Company’s
Board of Directors from time to time. The Company shall retain full
direction and control of the manner, means and methods by which Executive
performs the services for which he is employed hereunder and of the place or
places at which such services shall be rendered.
1.2 Employment
Term. The term of Executive’s employment under this Agreement
shall commence as of the Effective Date and shall continue for five (5) years,
unless earlier terminated in accordance with Section 4 hereof. The
term of Executive’s employment shall be automatically renewed for successive one
(1) year periods until the Executive or the Company delivers to the other party
a written notice of their intent not to renew the “Employment Term,” such
written notice to be delivered at least sixty (60) days prior to the expiration
of the then-effective “Employment Term” as that term is defined
below. The period commencing as of the Effective Date and ending five
(5) years thereafter or such later date to which the term of Executive’s
employment under the Agreement shall have been extended by mutual written
agreement is referred to herein as the “Employment Term.”
1.3 Extent
of Service. During the Employment Term, Executive agrees to use
Executive’s best efforts to carry out the duties and responsibilities under
Section 1.1 hereof and to devote substantially all Executive’s business time,
attention and energy thereto.
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1.4 Base
Salary. The Company shall pay Executive a base salary (the “Base
Salary”) at the annual rate of $120,000 (U.S.), payable at such times as the
Company customarily pays its other senior level executives (but in any event
no
less often than monthly). The Base Salary shall be subject to all
state, federal and local payroll tax withholding and any other withholdings
required by law.
1.5 Shares
of Common Stock. The Company shall issue Executive 1,000,000
shares of common stock of the Company that shall be issued within five (5)
days
of the Effective Date. Such shares shall be restricted and affixed with a
restrictive legend.
1.6 Options. The
Company’s Board will make an initial grant of options to the Executive as
follows:
(a) a
five year option, in the form attached hereto as Exhibit A (the
“Option”), to purchase up to 1,822,505 additional shares of common stock at
an
exercise price of $0.33 per share, which shall be exercisable on a cashless
basis and vest quarterly on a pro-rata basis over a period of five years
commencing on the date hereof (the “Vesting Schedule”). In the event
that the Executive is terminated for Cause (as defined below), upon death or
disability as set forth in Section 4.2 of this Agreement or the Executive
terminates the Agreement pursuant to Section 4.4 of this Agreement, then the
Option shall terminate and all shares of common stock that have not vested
shall
be immediately cancelled without any further action of the
Company. All shares issued upon exercise of the Option shall be
affixed with a legend stating that they are restricted; and
(b) The
option agreement will contain a provision that in the event there shall have
been a Change in Control (as defined below) of the Company while the Executive
is an employee of the Company and the Executive’s employment by the Company
thereafter shall have been terminated by the Company (the “Termination Date”) or
by the Executive for Good Reason (as defined below), within two years of the
date upon which the Change in Control shall have occurred, unless such
termination is as a result of (i) the Executive’s death; (ii) the Executive’s
Disability; (iii) the Executive’s Retirement (termination in accordance with the
Company’s retirement plan applicable to its employees or
in accordance with any other retirement arrangements which have been entered
into with the Executive) or (iv) the Executive’s termination for Cause, all
unvested stock options shall immediately and irrevocably vest and the exercise
period of such options shall be automatically extended to the later of the
longest period permitted by the Company’s stock option plans or ten years
following the Termination Date. For purposes of the option agreement,
a “Change in Control” shall be deemed to have occurred if (i) there shall be
consummated (A) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares
of
the Company’s Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company’s Common Stock immediately prior to the merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or
other
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transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of the Company; (ii) the stockholders of the Company shall
approve any plan or proposal for the liquidation or dissolution of the Company,
or (iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the
Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Company or
any employee benefit plan sponsored by the Company, shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities
of
the Company representing 51% or more of the combined voting power of the
Company’s then outstanding securities ordinarily (and apart from rights accruing
in special circumstances) having the right to vote in the election of directors,
as a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise. “Good Reason” shall mean any of
the following events unless it occurs with the Executive’s express prior written
consent:
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(i)
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any
assignment to the Executive by the Company of any duties inconsistent
with, or any diminution of, the Executive’s position, duties, titles,
offices, responsibilities and status with the Company immediately
prior to
a Change in Control of the Company, or any removal of the Executive
from
or any failure to reelect the Executive to any of such positions
or
offices, except in connection with the termination of the Executive’s
employment for Disability, Retirement or Cause or as a result of
the
Executive’s death;
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(ii)
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any
reduction by the Company in the Executive’s base salary as in effect on
the date hereof or as the same may be increased from time to time
during
the term of the Agreement or the Company’s failure to increase (within 15
months of the Executive’s last increase in base salary) the Executive’s
base salary after a Change in Control of the Company in an amount
which is
at least equal, on a percentage basis, to the average percentage
increase
in base salary for all officers of the Company effected during the
preceding 12 months;
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(iii)
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any
failure by the Company to continue in effect any benefit or incentive
plan
or arrangement (including,
without limitation, the Company’s Retirement Plan, Stock Option Plan for
Key Employees, Employee Stock Purchase Plan, 401(k) Savings Plan,
group
life insurance plan, medical, dental accident and disability insurance
plans, annual bonus and contingent bonus arrangement, and any plan
or
arrangement to receive and exercise stock appreciation rights, or
to
acquire stock or other securities of the Company) in which the Executive
is participating at the time of a Change in Control of the Company
(or to
substitute and continue other plans providing the Executive with
substantially similar benefits) hereinafter referred to as “Benefit
Plans”), the taking of any action by the Company which would adversely
affect the Executive’s participation in or materially reduce the
Executive’s benefits under any such Benefit Plan or deprive the Executive
of any material employee benefit enjoyed by the Executive at the
time of a
Change in Control of the Company, or any failure by the Company to
provide
the Executive with the number of paid vacation days to which the
Executive
is entitled in accordance with the vacation policies in effect at
the time
of a Change of Control of the
Company;
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(iv)
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a
substantial increase in business travel obligations of the Executive
over
such obligations as they existed at the time of a Change in Control
of the
Company;
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(v)
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any
material breach by the Company of any provision of the stock option
agreement;
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(vi)
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any
failure by the Company to obtain the assumption of the stock option
agreement by any successor or assign of the Company;
or
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(vii)
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any
purported termination of the Executive’s employment after a Change in
Control which is not effected pursuant to a Company Notice of Termination
and, for purposes of the stock option agreement, no such purported
termination shall be effective. For purposes of the stock
option agreement, a “Company Notice of Termination” shall mean a written
notice which shall indicate the specific termination provision in
this
Agreement relied upon and which sets forth in reasonable detail the
facts
and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so
indicated.
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(c) the
Board or any committee appointed by the Board in exercising its unrestricted
discretion may grant such additional options to the Executive each year of
the
Employment Term as it deems appropriate.
1.8 Other
Benefits. During the Employment Term, Executive shall be entitled
to participate in all employee benefit plans and programs made available to
the
Company’s senior level executives as a group or to its employees generally, as
such plans or programs may be in effect from time to time (the “Benefit
Coverages”), including, without limitation, medical, dental, hospitalization,
short-term and long-term disability and life insurance plans, accidental death
and dismemberment protection and travel accident insurance. Executive
shall be provided office space and staff assistance appropriate for Executive’s
position and adequate for the performance of her duties.
1.9 Reimbursement
of Expenses; Vacation; Sick Days and Personal Days. Executive
shall be provided with reimbursement of expenses related to Executive’s
employment by the Company on a basis no less favorable than that which may
be
authorized from time to time by the Board, in its sole discretion, for senior
level executives as a group. Executive shall be entitled to vacation
and holidays in accordance with the Company’s normal personnel policies for
senior level executives, but not less than three (3) weeks of vacation per
calendar year, provided Executive shall not utilize more than ten (10)
consecutive business days without the express consent of the Chief Executive
Officer. Unused vacation time will be forfeited as of December 31 of
each calendar year of the Employment Term. Executive shall be
entitled to no more than an aggregate of ten (10) sick days and personal days
per calendar year.
1.10 No
Other Compensation. Except as expressly provided in Sections 1.4
through 1.9, Executive shall not be entitled to any other compensation or
benefits.
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2. Confidential
Information. Executive recognizes and acknowledges that by reason
of Executive’s employment by and service to the Company before, during and, if
applicable, after the Employment Term, Executive will have access to certain
confidential and proprietary information relating to the Company’s business,
which may include, but is not limited to, trade secrets, trade “know-how,”
product development techniques and plans, formulas, customer lists and
addresses, financing services, funding programs, cost and pricing
information, marketing and sales techniques, strategy and programs, computer
programs and software and financial information (collectively referred to as
“Confidential Information”). Executive acknowledges that such
Confidential Information is a valuable and unique asset of the Company and
Executive covenants that he will not, unless expressly authorized in writing
by
the Company, at any time during the course of Executive’s employment use any
Confidential Information or divulge or disclose any Confidential Information
to
any person, firm or corporation except in connection with the performance of
Executive’s duties for the Company and in a manner consistent with the Company’s
policies regarding Confidential Information. Executive also covenants
that at any time after the termination of such employment, directly or
indirectly, he will not use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Executive or except
when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent jurisdiction
to order Executive to divulge, disclose or make accessible such
information. All written Confidential Information (including, without
limitation, in any computer or other electronic format) which comes into
Executive’s possession during the course of Executive’s employment shall remain
the property of the Company. Except as required in the performance of
Executive’s duties for the Company, or unless expressly authorized in writing by
the Company, Executive shall not remove any written Confidential Information
from the Company’s premises, except in connection with the performance of
Executive’s duties for the Company and in a manner consistent with the Company’s
policies regarding Confidential Information. Upon termination of
Executive’s employment, the Executive agrees to return immediately to the
Company all written Confidential Information (including, without limitation,
in
any computer or other electronic format) in Executive’s possession.
3. Non-Competition;
Non-Solicitation.
3.1 Non-Compete. The
Executive hereby covenants and agrees that during the term of this Agreement
and
for a period of one year following the end of the Employment Term, the Executive
will not, without the prior written consent of the Company, directly or
indirectly, on his own behalf or in the service or on behalf of others, whether
or not for compensation, engage in any business activity, or have any interest
in any person, firm, corporation or business, through a subsidiary or parent
entity or other entity (whether as a shareholder, agent, joint venturer,
security holder, trustee, partner, consultant, creditor lending credit or money
for the purpose of establishing or operating any such business, partner or
otherwise) with any Competing Business in the Covered Area. For the
purpose of this Section 3.1, (i) “Competing Business” means any company or
entity (whether or not organized for profit) that is engaged in the business
of
the Company as described in the Company’s Form 10KSB for the year ended December
31, 2006 as filed with the Securities and Exchange Commission (ii) “Covered
Area” means all geographical areas of the United
States. Notwithstanding the foregoing, the Executive may own shares
of companies whose securities are publicly trades, so long as such securities
do
not constitute more than one percent (1%) of the outstanding securities of
any
such company.
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3.2 Non-Solicitation. The
Executive further agrees that as long as the Agreement remains in effect and
for
a period of one (1) year from its termination, the Executive will not divert
any
business of the Company and/or its affiliates or any customers or suppliers
of
the Company and/or the Company’s and/or its affiliates’ business to any other
person, entity or competitor, or induce or attempt to induce, directly or
indirectly, any person to leave his or her employment with the
Company.
3.3 Remedies. The
Executive acknowledges and agrees that his obligations provided herein are
necessary and reasonable in order to protect the Company and its affiliates
and
their respective business and the Executive expressly agrees that monetary
damages would be inadequate to compensate the Company and/or its affiliates
for
any breach by the Executive of his covenants and agreements set forth
herein. Accordingly, the Executive agrees and acknowledges that any
such violation or threatened violation of this Section 3 will cause irreparable
injury to the Company and that, in addition to any other remedies that may
be
available, in law, in equity or otherwise, the Company and its affiliates shall
be entitled to obtain injunctive relief against he threatened breach of this
Section 3 or the continuation of any such breach by the Executive without the
necessity of proving actual damages.
4. Termination.
4.1 By
Company. The Company, by action of the Board, may, in its
discretion and at its option, terminate the Executive’s employment with or
without Cause, and without prejudice to any other right or remedy to which
the
Company or Executive may be entitled at law or in equity or under this
Agreement. In the event the Company desires to terminate the
Executive’s employment without Cause, the Company shall give the Executive not
less than sixty (60) days advance written notice. Termination of
Executive’s employment hereunder shall be deemed to be “for Cause” in the event
that Executive violates any provisions of this Agreement, is guilty of any
criminal act other than minor traffic violations, is guilty of willful
misconduct or gross neglect, or gross dereliction of his duties hereunder or
refuses to perform his duties hereunder after notice of such refusal to perform
such duties or directions given to Executive by the Board.
4.2 By
Executive’s Death or Disability. This Agreement shall also be
terminated upon the Executive’s death and/or a finding of permanent physical or
mental disability, such disability expected to result in death or to be of
a
continuous duration of no less than twelve (12) months, and the Executive is
unable to perform his usual and essential duties for the Company.
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4.3 Compensation
on Termination. In the event the Company terminates Executive’s
employment with Cause, all payments under this Agreement shall cease, except
for
Base Salary to the extent already accrued. In the event of
termination by reason of Executive’s death and/or permanent disability,
Executive or his executors, legal representatives or administrators, as
applicable, shall be entitled to an amount equal to Executive’s Base Salary
accrued through the date of termination and for an additional one year period,
plus a pro rata share of any annual bonus to which Executive would otherwise
be
entitled for the year which death or permanent disability
occurs. Upon termination of Executive without Cause, the Executive
shall receive, in full settlement of any claims Executive may have related
to
his employment by the Company, Base Salary for a period of one year from the
date of termination, provided Executive is in full compliance with the
provisions of Sections 2 and 3 of this Agreement; provided, however, Executive
shall not be entitled to receive any other compensation under Section 1 of
this
Agreement.
5. General
Provisions.
5.1 Modification:
No Waiver. No modification, amendment or discharge of this
Agreement shall be valid unless the same is in writing and signed by all parties
hereto. Failure of any party at any time to enforce any provisions of
this Agreement or any rights or to exercise any elections hall in no way be
considered to be a waiver of such provisions, rights or elections and shall
in
no way affect the validity of this Agreement. The exercise by any
party of any of its rights or any of its elections under this Agreement shall
not preclude or prejudice such party from exercising the same or any other
right
it may have under this Agreement irrespective of any previous action
taken.
5.2 Notices. All
notices and other communications required or permitted hereunder or necessary
or
convenient in connection herewith shall be in writing and shall be deemed to
have been given when hand delivered or mailed by registered or certified mail
as
follows (provided that notice of change of address shall be deemed given only
when received):
If to the Company,
to:
Heartland, Inc.
000X
Xxxxxxx Xxxx
Xxxxxx,
Xxxxxxx 00000
If to Executive,
to:
Xxxxx
Xxx
X.X.
Xxx 0000
Xxxxxxxxxx, XX 00000
Or
to
such other names or addresses as the Company or Executive, as the case may
be,
shall designate by notice to each other person entitled to receive notices
in
the manner specified in this Section.
5.3 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
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5.4 Further
Assurances. Each party to this Agreement shall execute all
instruments and documents and take all actions as may be reasonably required
to
effectuate this Agreement.
5.5 Severability. Should
any one or more of the provisions of this Agreement or of any agreement entered
into pursuant to this Agreement be determined to be illegal or unenforceable,
then such illegal or unenforceable provision shall be modified by the proper
court or arbitrator to the extent necessary and possible to make such provision
enforceable, and such modified provision and all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement
shall be given effect separately from the provisions or portion thereof
determined to be illegal or unenforceable and shall not be affected
thereby.
5.6 Successors
and Assigns. Executive may not assign this Agreement without the
prior written consent of the Company. The Company may assign its
rights without the written consent of the executive, so long as the Company
or
its assignee complies with the other material terms of this
Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of the Company, and the Executive’s rights under this
Agreement shall inure to the benefit of and be binding upon his heirs and
executors. The Company’s subsidiaries and controlled affiliates shall
be express third party beneficiaries of this Agreement.
5.7 Entire
Agreement. This Agreement supersedes all prior agreements and
understandings between the parties, oral or written. No modification,
termination or attempted waiver shall be valid unless in writing, signed by
the
party against whom such modification, termination or waiver is sought to be
enforced.
5.8 Counterparts;
Facsimile. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original,
and all of which taken together shall constitute one and the same
instrument. This Agreement may be executed by facsimile with original
signatures to follow.
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IN
WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed
this Agreement as of the date first written above.
By: /s/Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Chief Executive Officer
/s/Xxxxx
Xxx
Xxxxx
Xxx
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