EMPLOYMENT AGREEMENT
Exhibit
10.4
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) by and between Smart Online, Inc. a
Delaware corporation (the “Company”), and Xxxxxx Xxxxxxxxx (the “Employee”),
dated as of the 15th
day of
August, 2007.
WITNESSETH
THAT
(a) During
the Employment Period, the Employee shall serve as a full-time employee of
the
Company as Chief Operating Officer with such duties and responsibilities as
are
customarily assigned to such position and such other duties and responsibilities
not inconsistent therewith as may from time to time be assigned to him by the
President, Chief Executive Officer or Board of Directors.
(b) During
the Employment Period, the Employee shall devote his loyalty, attention, and
time to the business and affairs of the Company and, to the extent necessary
to
discharge the responsibilities assigned to the Employee under this Agreement,
use the Employee’s best efforts to carry out such responsibilities faithfully
and efficiently.
(c) The
Employee’s services shall be performed primarily at the Company’s headquarters
in Durham, North Carolina.
(d) All
compensation hereunder shall be subject to all applicable federal and state
withholding, payroll and other taxes.
(b) By
the
Company.
(i) The
Company may terminate the Employee’s employment during the Employment Period for
Cause or without Cause. A termination of the Employee’s employment with Cause
shall be effective when communicated to the Employee by written or verbal
notice. “Cause” means unacceptable conduct, including but not limited
to:
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A. participation
in a fraud or act of dishonesty against the Company;
B. any
chemical dependence which affects the performance of his duties and
responsibilities to the Company;
C. breach
of
Employee’s fiduciary obligations to the Company;
D. Employee
willfully fails to perform his duties;
E. breach
of
the Company’s policies or any material provision of this Agreement;
F. misconduct
resulting in loss to the Company or damage to the reputation of the Company;
or
G. conduct
by the Employee which, in the determination of the Company’s Board of Directors,
demonstrates unfitness to serve.
(ii) “Without
Cause” means termination of Employee’s employment for a reason other than that
listed in Paragraph 4(b)(i) above. A termination of the Employee’s employment
Without Cause shall be effective when communicated to the Employee by verbal
or
written notice.
(a) Termination
by the Company Without Cause or by the Employee for Good Reason. If the Company
terminates the employment of the Employee without Cause (as defined in Section
4(b) above) or if the Employee terminates his employment for Good Reason (as
defined below):
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(i)
|
the
Company shall pay the Employee the portion of his base salary in
termination as he may be entitled to receive for services rendered
prior
to the date of such termination;
and
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(ii)
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for
a period of sixty (60) days following the date on which the Employee’s
employment with the Company terminates, the Company shall continue
to pay
the Employee his base salary in effect at the time of his termination
of
employment and shall continue to provide the Employee with all benefits
specified in this Agreement, with no adverse tax consequences to
the
Employee, as if he had remained employed by the Company pursuant
to this
Agreement during the entire sixty (60) day
period.
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For
purposes of this Agreement, the Employee shall be deemed to have terminated
his
employment for “Good Reason” if he voluntarily terminates his employment with
the Company under any of the following circumstances:
(i)
|
any
demotion or diminution in the Employee’s position, title, reporting
position or duties;
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(ii)
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relocation
of the Employee’s office to a location more than thirty (30) miles outside
of Research Triangle Park, North Carolina;
or
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(iii)
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any
material, continuing breach of this Agreement by the
Company.
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For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if:
(i)
|
the
direct or indirect beneficial ownership (within the meaning of Section
13(d) of the Act and Regulation 13D thereunder) of fifty percent
(50%) or
more of the Company’s common stock is acquired or becomes held by any
person or group of persons (within the meaning of Section 13(d)(3)
of the
Act), but excluding the Company and any employee benefit plan sponsored
or
maintained by the Company; or
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(ii)
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assets
or earning power constituting more than fifty percent (50%) of the
assets
or earning power of the Company and its subsidiaries (taken as a
whole) is
sold, mortgaged, leased or otherwise transferred, in one or more
transactions not in the ordinary course of the Company’s business, to any
such person or group of persons.
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Provided,
however,
that a
Change in Control shall not be deemed to have occurred upon an investment by
one
or more venture capital funds, Small Business Investment Companies (as defined
in the Small Business Investment Act of 1958, as amended) or similar financial
investors.
(a) the
Employee is under no contractual or other restriction or obligation which is
inconsistent with the execution of this Agreement, the performance of duties
hereunder or other rights of the Company hereunder; and
(b) to
the
best of the Employee’s knowledge, the Employee is under no physical or mental
disability which will render him incapable of performing the essential functions
involved in his anticipated duties or that would otherwise hinder the
performance of duties under this Agreement.
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(a)
The
parties acknowledge that the Company is an enterprise whose success is
attributable largely to the ownership, use and development of certain valuable
confidential and proprietary information (the “Confidential Data”), and that the
Employee’s employment with the Company will involve the Employee’s access to and
work with such information. The Employee acknowledges that his relationship
with
the Company is a confidential relationship. The Employee covenants and agrees
that (i) he shall keep and maintain the Confidential Data in strictest
confidence, and (ii) he shall not, either directly or indirectly, use any
Confidential Data for his own benefit, or divulge, disclose, or communicate
any
Confidential Data in any manner whatsoever to any person or entity other than
the employees or agents of the Company having a need to know such Confidential
Data, and only to the extent necessary to perform their responsibilities on
behalf of the Company, and other than in the performance of the Employee’s
duties in the employment by the Company. The Employee’s agreement not to
disclose Confidential Data shall apply to all Confidential Data, whether or
not
the Employee participated in the development thereof. Upon termination of
employment for any reason, the Employee will return to the Company all
documents, notes, programs, data and any other materials (including any copies
thereof) in his/her possession.
(b) For
purposes of this Agreement, the term “Confidential Data” shall include any and
all information related to the business of the Company, or to its products,
sales or businesses which is not general public knowledge, specifically
including (but without limiting the generality of the foregoing) all financial
and accounting data; computer software; processes; formulae; inventions;
methods; trade secrets; computer programs; engineering or technical data,
drawings, or designs; manufacturing techniques; patents, patent applications,
copyrights and copyright applications (in any such case, whether registered
or
to be registered in the United States of America or elsewhere) applied for,
issued to or owned by the Company; information concerning pricing and pricing
policies; marketing techniques; suppliers; methods and manner of operations;
and
information relating to the identity, needs and location of all past, present
and prospective customers. The parties stipulate that as between them the
above-described matters are important and confidential and gravely affect the
successful conduct of the business of the Company and that any breach of the
terms of this paragraph shall be a material breach of this
Agreement.
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(a) The
Employee acknowledges and agrees that the Company does business on an
international basis and that the Employee will assist Company in developing
Company’s business in both the United States and Europe, with customers
throughout the United States and additionally existing in Europe, particularly
servicing France, Spain, the United Kingdom and Germany, and that any breach
of
the Employee’s covenants contained herein would materially damage the Company,
regardless of the area of the world in which the activities constituting such
breach were to occur. Accordingly, the terms and provisions of this Agreement
shall apply in the following Noncompetition Area:
(b) The
State
of North Carolina;
(c) Any
state
other than North Carolina where Company conducts the “Business” and in or for
which the Employee assists or performs services assisting Company;
(d) Any
political subdivision of foreign countries where Company does “Business” or will
do “Business” during the period of employment; and
(e) Any
other
state, country, or political subdivision where Company does “Business” and in or
for which the Employee assists or performs services assisting
Company.
16. BUSINESS.
For the purposes of this Agreement, the “Business” shall include any business,
service, or product engaged in, provided, or produced by the Company from the
date of this Agreement to the date of the termination of the employment,
including, but not limited to: (i) the business of development, production,
marketing, design, manufacturing, leasing or selling software related to
business plans, legal services, whether for use by professionals or consumers;
(ii) providing
web-hosted applications and technology infrastructure syndication and/or (iii)
any other business conducted by the Company immediately prior to the date of
termination of Employee’s employment or in which the Company shall at the time
of termination of Employee’s employment with the Company be actively preparing
to enter.
17. MISCELLANEOUS.
(a) This
Agreement shall be subject to and governed by the substantive laws of the State
of North Carolina, without giving effect to the conflicts of laws provisions
thereof. The Employee hereby submits to the jurisdiction and venue of the state
and federal courts of North Carolina.
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(b) The
Company’s failure to insist upon strict compliance with any provision of this
Agreement shall not be deemed a waiver of such provision or any other
provision.
(c) This
Agreement may not be modified except by an agreement in writing executed by
the
parties. The parties expressly waive their right to orally modify this
provision.
(d) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision.
(e) This
Agreement shall not be assignable without the written consent of the Company
and
the Employee.
(f) This
Agreement shall inure to the benefit of and be binding upon the Company and
it
successors and assigns.
(g) This
Agreement expresses the whole and entire Employment Agreement between the
parties and supersedes and replaces any prior employment Agreement,
understanding or arrangement between Company and the Employee.
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SMART
ONLINE, INC.
By:
/s/
Xxxxxx Xxxxxxx Xxxxx
Name:
Title:
EMPLOYEE
/s/
Xxxxxx X. Xxxxxxxxx
Name:
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EXHIBIT
A
Restricted
Stock Agreement
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