EXHIBIT 10.1
ACTIVE IQ TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective the 8th
day of May 2002 by and between Xxxxxxx X. Xxxxxxx, a Minnesota resident
("Employee") and Active IQ Technologies, Inc., a Minnesota corporation (the
"Company").
WHEREAS, Employee desires to provide his services to the Company upon
the terms and conditions hereinafter set forth, and
WHEREAS, the Company desires to employ Employee upon the terms and
conditions hereinafter set forth, and
NOW, THEREFORE, in consideration of these premises and the mutual
promises made herein and the mutual benefits to be derived here from, Employee
and the Company, intending to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee as Chief Financial
Officer, and Employee hereby accepts employment with the Company upon the terms
and conditions hereinafter set forth.
2. Term. Employment shall be for an initial term of one (1) year
commencing on May 1, 2002 and continuing until the earlier of (i) April 30,
2003; or (ii) the date Employee's employment terminates pursuant to Section 10
hereof. Unless Executive's employment has been terminated pursuant to Section
10, the term of this Agreement shall be renewed for successive one-year terms if
mutually agreed upon by the Employee and the Chief Executive Officer (the
"CEO").
3. Duties. Employee shall report to and take direction from the CEO.
Employee shall perform those duties that are usual and customary for a Chief
Financial Officer of a software sales, service and development enterprise. He
shall perform his duties in a manner reasonably expected of a Chief Financial
Officer of such a company.
4. Compensation. During the term of his employment, Employee shall
receive the following (collectively, the "Compensation"):
(a) An annual base salary of $120,000 payable in equal installments
in accordance with the Company's payment policy (subject to standard
withholding amounts for local, state and federal taxes); and
(b) A guaranteed bonus of $60,000 in four in equal installments on
or before May 15, 2002, August 15, 2002, November 15, 2002 and February
15, 2003.
(c) 175,000 options (as attached as a separate agreement) priced at
$1.25 with 35,000 options vesting upon the execution of this agreement
and the balance vesting ratably over a four year period.
5. Expenses. Employee shall be reimbursed for authorized traveling and
other out-of pocket business expenses, provided they have been reasonably
incurred in the performance of Employee's duties for the Company. Employee shall
submit to the Company an itemized account detailing the expenses on a form
provided to Employee by the Company, accompanied by receipts. The Company
reserves the right to reject reimbursement of expense submissions not in
compliance with the terms set forth in this Section or which are not in
compliance with Internal Revenue Service statutes, rules, regulations or other
controlling or interpretive authority.
6. Benefits. The Company shall provide Employee with full participation
in the Company's employee benefit plans under the same terms as provided to
other similarly positioned employees of the Company from time to time. Such
benefits are subject to change at any time without notice. Employee is entitled
to Three (3) weeks of vacation per year upon the same terms and conditions as
provided to the other employees of the Company. Vacation time will be scheduled
taking into account the Employee's duties and obligations at the Company. Sick
leave, holiday pay and all other leaves of absence also will be in accordance
with the Company's stated personnel policies.
7. Confidential Information. Employee acknowledges and agrees that in
the course of, or incident to, his employment as an employee hereunder, the
Company may provide to Employee, or Employee may otherwise be exposed to or
obtain, confidential information. Without the prior written consent of the Board
of Directors of the Company, except as shall be necessary in the performance of
Employee's assigned duties, Employee shall not disclose or use for Employee's
direct or indirect benefit the direct or indirect benefit of any third party,
and Employee shall maintain, both during and after Employee's employment by the
Company, the confidentiality of any Confidential Information (as hereinafter
defined) of the Company. In general, "Confidential Information" means any and
all information of the Company, including, but not limited to, any information
relating to: research; processes; inventions; products; methods; computer codes
or instructions and related documentation; and materials prepared by Employee in
the course of, relating to or arising out of his employment by the Company, or
prepared by any other employee or contractor for the Company or the Company's
customers or clients; cost data; business and financial studies; business
procedures; financial information; financial forecasts and projections;
marketing and business development data, methods, plans and efforts; the
identities of customers or clients, contractors and suppliers and prospective
customers or clients, contractors and suppliers; the terms of contracts and
agreements with customers or clients, contractors and suppliers; the Company's
relationship with actual and prospective customers or clients, contractors and
suppliers and the needs and requirements of, and the Company's course of dealing
with, any such actual or prospective customers or clients, contractors and
suppliers; personnel information; customer and vendor credit information; and
any other materials that have not been made available to the general public.
Failure to xxxx any of the Confidential Information as confidential or
proprietary shall not affect its status as Confidential Information under the
terms of this Agreement. The obligations of this Section shall survive the
termination of this Agreement.
8. Inventions or Discoveries. Employee acknowledges that inventions,
other discoveries, innovations, designs, improvements and software (whether or
not they are in writing or
2
reduced to practice) or works of authorship (whether or not they can be patented
or copyrighted) may be developed, conceived or otherwise made by Employee during
the term of this Agreement (collectively, "Inventions"). Employee agrees that
all Inventions shall be the exclusive property of Company. With respect to all
Inventions, Employee agrees to:
(a) Keep accurate, complete and timely records, which shall be
Company's property and shall be retained on Company's premises; and
(b) Promptly and fully disclose and describe all Inventions to
Company; and
(c) Assign (and Employee does hereby assign) to Company all of
Employee's rights to the Inventions, and to application for letters
patent or copyrights in all counties and to letters patent or
copyrights granted upon these Inventions in all countries; and
(d) To do such other acts as may be necessary or helpful in the
opinion of Company to preserve property rights to these inventions
against forfeiture, abandonment or loss and to obtain and maintain
letters patent or copyrights and to vest the entire right and title
thereto exclusively in Company.
The obligations of this Section shall continue beyond the
termination of this Agreement with respect to Inventions conceived or otherwise
developed during the term of this Agreement and for the one-year period
following the termination of this Agreement and shall be binding upon assigns,
executors, administrators and other legal representatives. Notwithstanding
anything to the contrary contained herein, the foregoing Section 7 shall not
apply to Employee's rights in any invention that the Employee developed entirely
on his own time without using the Company's equipment, supplies, facilities or
trade secret information except for those inventions that either: (1) relate at
the time of conception or reduction to practice of the invention to the
Company's business, or actual or demonstrable anticipated research or
development of the Company; or (2) result from any work performed by Employee
for the Company.
9. Property. During the term of this Agreement and thereafter, Employee
shall not remove from the Company's offices or premises any documents, records,
notebooks, files, correspondence, reports, memoranda, computer tapes, computer
disks or similar materials of or containing confidential information of the type
identified in Section 7 hereof, or other materials or property of any kind,
unless necessary in accordance with Employee's duties and responsibilities of
employment, and in the event that any of such material or property is removed,
all of the foregoing shall be returned to their proper files or places of
safekeeping as promptly as possible after the removal shall have served its
specific purpose; nor shall Employee make, retain, remove or distribute any
copies of any of the foregoing for any reason whatsoever, except as may be
necessary in the discharge of Employee's assigned duties; and upon the
termination of Employee's employment by the Company, Employee shall leave with
or return to the Company all originals and copies of the foregoing, then in
Employee's possession, whether prepared by Employee or by others.
10. Termination of Employment.
(a) Termination by the Company. The Company or Employee may
terminate employment under this Agreement at any time for any reason.
The termination shall be
3
effective as of the date specified by the party initiating the
termination in a written notice delivered to the other party, which
date shall not be earlier than the date such notice is delivered to the
other party. This Agreement shall terminate in its entirety immediately
upon the death of Employee. Except as expressly provided to the
contrary in this section or applicable law, Employee's rights to pay
and benefits shall cease on the date his employment under this
Agreement terminates.
(b) Disability. If Employee has become disabled such that he
cannot perform the essential functions of his job with or without
reasonable accommodation, and the disability continues for a period of
more than ninety (90) days, the Board may; its discretion, in terminate
his employment under this Agreement.
11. Effect of Termination of Employment. Except as expressly set forth
herein, upon the termination of Employee's employment hereunder, neither the
Employee nor his beneficiary or estate shall have any further rights or claims
against the Company under this Agreement or otherwise.
12. Covenant Not to Compete.
(a) Prohibition on Direct Competition. Regardless of whether
or not this Agreement or the Employee's employment is terminated, for
the duration of Employee's employment and for the twelve (12) month
period following the termination of Employee's employment (hereinafter,
the "Restricted Period"), Employee shall not compete, directly or
indirectly, in any geographic area in which the Company conducted
business or in such area in which the Company intends to conduct
business within the six (6) month period following the termination of
this Agreement, with the day-to-day business activities of the Company,
which shall include, but shall not be limited to, the offering of
services and/or products and/or other deliverables similar to products
or services or other deliverables sold, offered, or proposed to be sold
in the twelve (12) month period prior to the Restricted Period. For
purposes of this Section 12, the term "Company" shall include all
entities related to the Company, including all parent and sister
entities and all subsidiaries of the Company or any of the foregoing.
(b) Prohibition on Indirect Competition. Employee shall be
deemed to be competing (for the purposes of this Section 12), if
Employee shall engage, directly or indirectly, in any business offering
products or services similar to those offered or proposed to be offered
by the Company in its day-to-day business, whether for his own account
or that of any other person, firm, corporation, partnership or other
business entity, and whether his participation shall be as a
stockholder, general or limited partner, or investor possessing an
ownership interest exceeding one percent (10%) in any such entity, or
as a principal agent, proprietor, officer, director, employee, sales
representative, consultant, lender or in any other capacity.
(c) Non-Solicitation of Customers. Regardless of whether or
not this Agreement or the Employee's employment is terminated, during
the Restricted Period, neither Employee or his Affiliate shall directly
or indirectly, solicit, divert, take away or induce customers or
clients (wherever located) of the Company to avail themselves of the
services or products of others that are competitive with any of the
Company's services or
4
products, it being agreed that such actions would require Employee to
violate the Company's right to its secret or proprietary information.
For purposes of this Agreement, "Affiliate" shall mean any person or
entity controlled by Employee.
(d) Non-Solicitation of Employees and Consultants. Regardless
of whether or not this Agreement or the Employee's employment is
terminated, during the Restricted Period, neither Employee or his
Affiliate shall (i) solicit, divert, take away or induce any employee
or consultant of the Company to leave the employ of or sever the
relationship with the Company; or (ii) employ or bite any person who
was an employee or consultant of the Company at any time during the
past twelve (12) rolling months.
(e) Consideration. Employee agrees that the restrictions set
forth in this Section 12 are given in consideration for Company's
selection of Employee Chief as Financial Officer, Employee's continued
employment and his being granted access to Confidential Information.
Employee agrees that these restrictions are reasonable under the
circumstances, and Employee understands that the Company would not
agree to employment without Employee's agreement to the restrictions
set forth in this Section 12. Furthermore, in connection with
Employees' employment with the Company, the restrictions set forth in
this Section 12 are designed to protect the Company's proprietary
rights and property rights including, but not limited to, customer
lists and trade secrets.
(f) Enforcement. If the scope of the restrictions in this
Section 12 is determined by a court of competent jurisdiction to be too
broad to permit enforcement of such restrictions to their full extent,
then such restrictions shall be construed or rewritten so as to be
enforceable to the maximum extent permitted by law, and Employee hereby
consents, to the extent he may lawfully do so, to the judicial
modification of the scope of such restrictions in any proceeding
brought to enforce them.
(g) Enforcement where Termination Without Cause. In the event
that Employee's employment is terminated at any time without Cause,
Employee shall receive a nine-month severance. For the purposes of this
Agreement, "Cause" shall mean (i) willful misconduct that is injurious
to the Company monetarily or otherwise, including, but not limited to,
misappropriation of funds; (ii) conviction of a crime punishable by
imprisonment for a term in excess of one (1) year or involving moral
turpitude; or (iii) failure of Employee to perform the duties assigned
to Employee by the CEO or his/her assignee.
(h) Enforcement where there is a Change in Control. In the
event of a Change in Control, Employee shall receive his base salary
plus bonus under Section 4(a) of this Agreement for a nine month
period.
As used in this Agreement, "Change in Control" shall mean
a change in control which would be required to be reported in response
to item 6(e) on Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not the Company is then subject to such reporting
requirement, including, without limitation, if:
(i) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, including any affiliate or
associate as defined in Rule 12(b)-2 under
5
the Exchange Act of such person, other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their
ownership of stock of the Company) becomes a "beneficial
owner" (as defined in 13d-Rule 3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) less than a majority of the Board of Directors is
comprised of the individuals described below; or
(iii) the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into
another corporation or other enterprise in which the holders
of outstanding stock of the Company entitled to vote in
elections of directors immediately before such merger or
consolidation hold less than 50% of the voting power of the
survivor of such merger or consolidation or its parent, or
approve a plan of liquidation; or
(iv) at least 90% of the Company's assets are sold and
transferred to another corporation or other enterprise that is
not a subsidiary, direct or indirect, or other affiliate of
the Company.
"Board of Directors", for purposes of this
Section 12(h), shall mean individuals who on the date hereof
constituted the Board of the Company, and any new director who
subsequently was elected or nominated for election by a
majority of the individuals who on the date hereof constituted
the Board of Directors and those individuals, if any, who were
previously elected or nominated as provided for in this
Section.
13. Intellectual Property.
(a) Employee acknowledges that any and all writings,
documents, inventions, discoveries, computer programs or instructions
(whether in source code, object code, or any other form), algorithms,
plans, memoranda, tests, research, designs, specifications, models,
data, diagrams, flow charts, and/or techniques (whether reduced to
written form or otherwise) that Employee makes, conceives, discovers or
develops, either solely or jointly with any other person, at any time
during the term of Employee's employment, whether during working hours
or at the Company's facility at any or other time or location, and
whether upon the request or suggestion of the Company or otherwise,
that relate to or are useful in any way in connection with any business
now or hereafter carried on by the Company (collectively, "Intellectual
Work Product") shall be the sole and exclusive property of the Company,
Employee shall promptly disclose to the Company all Intellectual Work
Product, and Employee shall have no claim for additional compensation
for the Intellectual Work Product.
(b) Employee acknowledges that all the Intellectual Work
Product that is copyrightable shall be considered a work made for hire
under United States copyright law. To the extent that any copyrightable
Intellectual Work Product may not be considered a work made for hire
under the applicable provisions of copyright law, or to the extent
that,
6
notwithstanding the foregoing provisions, Employee may retain an
interest in any Intellectual Work Product that is not copyrightable,
Employee hereby irrevocably assigns and transfers to the Company any
and all right, title, or interest that Employee may have in the
Intellectual Work Product under copyright, patent, trade secret and
trademark law in perpetuity or for the longest period otherwise
permitted by law, without the necessity of further consideration. The
Company shall be entitled to obtain and hold in its own name all
copyrights, patents, trade secrets, and trademarks with respect
thereto.
(c) At the request and sole expense of the Company, either
before or tier the termination of Employee's employment, Employee shall
assist the Company in acquiring and maintaining copyright, patent\trade
secret, and trademark protection upon, and confirming the Company's
title to, any Intellectual Work Product. Employee's assistance will
include signing all applications for copyrights and patents and other
papers, cooperating in legal proceedings, and taking any other steps
considered desirable by the Company.
14. Disclosure. Employee hereby represents that Employee is not subject
to any other agreement that Employee will violate by signing this Agreement.
Employee shall disclose the existence and terms of this Agreement for any
employer that Employee may work for after the termination of Employee's
employment at the Company.
15. Conflicting Business. Employee agrees that he will not transact
business with the Company personally, or as agent, owner, partner, or
shareholder of any other entity. Employee further agrees that he will not engage
in any business activity or outside employment that may be in conflict with the
Company's proprietary or business interests.
16. Successors and Assigns. The Company may assign this Agreement to,
and this Agreement shall bind and inure to the benefit of, any parent,
subsidiary, affiliate or successor of the Company. This Agreement shall not be
assignable by Employee.
17. Entire Agreement; Amendments. This Agreement contains the entire
agreement and understanding of the parties relating to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of every nature between them other than the Merger Agreement. This Agreement may
not be changed or modified, except by an agreement in writing signed by both of
the parties hereto.
18. Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement. Failure of a party to enforce any provision
hereof shall not be deemed a waiver of such party's right to enforce right such
provision in the future.
19. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota, without regard to conflicts
of law principles of Minnesota or any other jurisdiction.
20. Invalidity. In case any one or more of the provisions or portions
of the provisions contained in this Agreement shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect the validity of any other provision or
portion of any provision of this Agreement, and any such provision or any such
7
portion of any provision shall be deemed modified to the extent necessary to
make it enforceable. In the event that a court of competent jurisdiction
determines that one or more of the provisions or portions of the provisions
contained in this Agreement is over broad or over reaching, such provision or
portion thereof shall be doomed modified to the extent necessary to make it
enforceable to the maximum extent allowed by law. If any provision herein is not
enforceable as written, the parties hereto agree that such court shall reform
the provision to provide the maximum restriction enforceable against Employee
and that the provision as reformed, shall be enforceable.
21. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
22. Gender; Number. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
23. Enforcement. Employee acknowledges that it is impossible to
measure fully, in money, the injury that will be caused to the Company in the
event of a breach or threatened breach of this Agreement, and Employee waives
the claim or defense that the Company has an adequate remedy at law. Employee
shall not, in any action or proceeding to enforce the provisions of this
Agreement, assert the claim or defense that such a remedy at law exists. The
Company shall be entitled to injunctive relief to enforce the provisions of this
Agreement, without prejudice to any other remedy the Company may have at law or
in equity.
24. Consent to Suit. Except as otherwise provided by the last sentence
of this Section 24, each of the Company and Employee irrevocably and
unconditionally (a) agrees that any suit, action or other legal proceeding
arising out of or relating to this Agreement brought by either of them or any of
their affiliates or any combination thereof, shall only be instituted in
Minneapolis, Minnesota; (b) consents and submits to the jurisdiction of such
courts in any suit, action or other legal proceeding arising out of or related
to this Agreement (c) consents to personal jurisdiction in such court and
further agrees that service of process upon Employee may be effected by
certified mail or by any other means permitted by law; (d) waives any objection
which Employee may have to the laying of venue of any such suit, action or
proceeding in any such court; and (e) waives any claim or defense of
inconvenient forum. This Section 24 shall not prevent the Company from seeking
to enforce this Agreement in any other court of competent jurisdiction.
25. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given (i) on the same day if given in person; (ii)
the next business day if sent by overnight courier service to the parties at the
addresses set forth below or to such other addresses as shall be specified by
notice to the other parties hereunder or (iii) the next business day if sent by
telefax, electronic confirmation requested:
8
If to the Company; with a copy to:
Active IQ Technologies, Inc. Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxx Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
Xxxxxxxxxx, XX 00000 3300 Xxxxx Fargo Center
Attention: CEO 00 Xxxxx 0xx Xxxxxx
Telefax No.: 000-000-0000 Xxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telefax No.: (000) 000-0000
To Employee:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
26. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.
27. Survival of Provisions. Sections 7 through 27 shall survive the
termination of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
ACTIVE IQ TECHNOLOGIES, INC.
By /s/ D. Xxxxxx Xxxx 5/8/02
--------------------------------
Title: CEO
-----------------------------
/s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
9
