EXHIBIT 10.4
IVDESK MINNESOTA, INC.
EXECUTIVE/OFFICER EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT, dated this 14th day of September,
2012, is by and between IVDesk Minnesota, Inc., a Minnesota corporation (the
"Company"), and Xxxxxxx Xxxxxxxx, a Minnesota resident ("Executive").
R E C I T A L S
WHEREAS, The Company desires to continue to employ Executive as the
Chief Executive Officer of the Company and Executive desires to accept
employment as Chief Executive Officer ("CEO") of the Company on the terms and
conditions set forth below,
NOW, THEREFORE, in consideration of the foregoing premises and the
parties' mutual covenants and undertakings contained in this Agreement, the
Company and Executive agree as follows:
ARTICLE I. DEFINITIONS
Capitalized terms used in this Agreement shall have their defined
meaning throughout the Agreement. The following terms shall have the meanings
set forth below, unless the context clearly requires otherwise.
1.1 "AGREEMENT" means this Executive Employment Agreement, as the same
may from time to time be amended or extended.
1.2 "BASE SALARY" means the total annual cash compensation payable on a
regular periodic basis, without regard to voluntary or mandatory withholdings as
set forth at paragraph 3.1 of this Agreement.
1.3 "BOARD" means the Board of Directors of the Company.
1.4 "CAUSE" has the meaning set forth at paragraph 4.2 of this
Agreement.
1.5 "CHANGE-OF-CONTROL" means a person or entity has become a
Successor, as defined in paragraph 7.2.
1.6 "CONFIDENTIAL INFORMATION" means information that is proprietary to
the Company or proprietary to others and entrusted to the Company, whether or
not trade secrets. Confidential Information means any information not generally
known in Company's business by third parties including by competitors or the
general public. It includes all information about Company, its systems, its
technology, technology development, practices, operations, and trade secrets. It
also includes information about customers, marketing, product positioning,
pricing, sales, data processing, compensation and finances. For example,
confidential information may be contained in marketing plans for proposals,
customer lists, and the particular operations of Company business, the identity
of clients and potential clients and promotional data. Executive further agrees
that the contents of this Agreement are confidential, and shall not be disclosed
to anyone by Executive (including disclosure to other employees of Company)
without the express consent of the Board. Executive may disclose this Agreement,
and the contents thereof, to his or her legal, tax, accounting or other
advisors, and immediate family members, provided they agree to be similarly
bound to maintain the confidentiality of this Agreement. All information that
Executive has a reasonable basis to consider confidential is Confidential
Information, whether or not originated by Executive and without regard to the
manner in which Executive obtains access to this and any other proprietary
information.
1.7 "DATE OF TERMINATION" has the meaning set forth at paragraph 4.6(b)
of this Agreement.
1.8 "DISABILITY" means the unwillingness or inability of Executive to
perform Executive's duties under this Agreement because of incapacity due to
physical or mental illness, bodily injury or disease for a period of twelve (12)
months, as determined by an independent physician selected by Executive. If the
Company provides written notice within ten (10) days to Executive that it
objects to the determination of the independent physician, then the Company
shall select an independent physician within such ten (10) day period and the
named physicians of each of Executive and the Company shall within ten (10) days
thereafter select an examining independent physician. The opinion of the final
examining physician shall be binding upon the Company and Executive. The Company
shall assume the costs for the applicable disability determination.
1.9 "GOOD REASON" has the meaning set forth at paragraph 4.3 of this
Agreement.
1.10 "NOTICE OF TERMINATION" has the meaning set forth at paragraph
4.6(a) of this Agreement.
1.11 "PLAN" means any bonus or incentive compensation agreement, plan,
program, policy or arrangement sponsored, maintained or contributed to by the
Company, to which the Company is a party or under which employees of the Company
are covered, including, without limitation, any stock option, restricted stock
or any other equity-based compensation plan, annual or long-term incentive
(bonus) plan, and any employee benefit plan, such as a thrift, pension, profit
sharing, deferred compensation, medical, dental, disability, accident, life
insurance, automobile allowance, perquisite, fringe benefit, vacation, sick or
parental leave, severance or relocation plan or policy or any other agreement,
plan, program, policy or arrangement intended to benefit employees or Managers
of the Company.
ARTICLE II. EMPLOYMENT, DUTIES AND TERM
2.1 EMPLOYMENT. Upon the terms and conditions set forth in this
Agreement, the Company hereby employs Executive, and Executive accepts such
employment, as CEO of the Company.
2.2 DUTIES. During the term of this Agreement, and excluding any
periods of vacation, sick, disability or other leave to which Executive is
entitled, Executive agrees to devote substantially all business hours to the
business and affairs of the Company and to use Executive's best efforts to
perform faithfully and efficiently such responsibilities. Executive shall comply
with the Company's policies and procedures; provided, that to the extent such
-2-
policies and procedures are inconsistent with this Agreement, the provisions of
this Agreement shall control.
2.3 TERM. Subject to the provisions of Article IV, the term of
employment of Executive under this Agreement shall be for a period of two (2)
years, commencing September 15, 2012, and continuing through September 14, 2014.
The term of this Agreement will be extended automatically, in increments of two
(2) years, unless either party gives written notice of termination no less than
90 days prior to expiration of the then current term.
ARTICLE III. COMPENSATION, BENEFITS AND EXPENSES
3.1 BASE SALARY. During the term of Executive's employment under this
Agreement, the Company shall pay Executive a Base Salary at an annual rate that
is not less than One Hundred Fifty Thousand Dollars ($150,000) or such higher
annual rate as may from time to time be approved by the Board, such Base Salary
to be paid in substantially equal regular periodic payments in accordance with
the Company's regular payroll practices. At the end of the each years
employment, the Board shall review Executive's Base Salary and shall make upward
adjustments as appropriate based on competitive salaries for like positions in
like sized companies and other appropriate considerations. If Executive's Base
Salary is increased from time to time during the term of Executive's employment
under this Agreement, the increased amount shall become the Base Salary for the
remainder of the term and any extensions of Executive's term of employment under
this Agreement and for as long thereafter as required pursuant to Article IV,
subject to any later increases.
3.2 PERFORMANCE BONUSES. Executive shall be entitled to receive bonuses
based upon milestones achieved by the Company as set by the Board from time to
time.
3.3 EQUITY INTERESTS PLAN. Executive shall be entitled to receive
awards of equity interests in accordance with the then-current company employee
equity award interests plan which may be modified from time to time by approval
of the Board.
3.4 OTHER COMPENSATION AND BENEFITS.
(a) The Company shall provide or reimburse Executive for
family medical and dental coverage and provide life insurance benefits
in the amount of one million dollars ($1,000,000) payable to
Executive's designee or, if there be no such designee, to Executive's
estate. The Company shall also provide Executive with such other
benefits as agreed to from time to time by the Executive and the Board.
Executive shall be entitled to participate in or receive benefits under
any Plan made available by the Company in the future to its executives
and key management employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such Plans.
(b) Nothing paid or provided to Executive pursuant to this
paragraph 3.3 or under any Plan made available in the future shall be
deemed to be in lieu of the Base Salary, bonuses, incentives or
compensation of any other nature otherwise payable to Executive.
-3-
3.5 VACATION. For the 2012 calendar year and each subsequent calendar
year that begins during the term of Executive's employment under this Agreement
and for each calendar year thereafter as required pursuant to Article IV of this
Agreement, Executive shall be entitled to five (5) weeks paid vacation. The time
or times at which such vacation days are to be taken shall be reasonably
determined by Executive consistent with Executive's duties and obligations under
this Agreement. Any such vacation days with respect to a calendar year that are
unused as of the last day of such calendar year shall be forfeited.
3.6 BUSINESS EXPENSES. During the term of Executive's employment under
this Agreement and as for as long thereafter as required pursuant to Article IV,
the Company shall bear all reasonable, ordinary, and necessary business expenses
incurred by Executive in performing Executive's duties as CEO of the Company,
including, without limitation, all travel, living and entertainment expenses
while away from home on business in the service of the Company, provided that
Executive accounts promptly for such expenses to the Company in the manner
reasonably prescribed from time to time by the Company.
3.7 AUTO ALLOWANCE. During the term of Executive's employment under
this Agreement and as for as long thereafter as required pursuant to Article IV,
the Company shall provide Executive an allowance of Five Hundred Dollars ($500)
per month for use of an automobile of Executive's choosing. This allowance is in
lieu of any mileage or expense of any type related to automobile usage exclusive
however, of any necessary use of rental vehicles while on business away from
home. The Board shall annually review the amount of the auto allowance and
adjust it upward to reflect increases in Executive's transportation costs.
3.8 SIGNING BONUS. In anticipation of future services, and in
consideration of the other promises herein, the Company shall pay to Executive
the sum of Thirty Thousand Dollars ($30,000) as a bonus upon signature by both
parties to this Agreement.
ARTICLE IV. EARLY TERMINATION
4.1 EARLY TERMINATION. Subject to the respective continuing obligations
of the parties pursuant to Article V, this Article IV sets forth the terms for
early termination of Executive's employment under this Agreement.
4.2 TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
this Agreement for Cause. For purposes of this Agreement, "Cause" means (a) an
act or acts of serious dishonesty, fraud, or material and deliberate injury
taken by Executive, in each case related to the Company or its business,
including but not limited to conduct resulting in substantial personal
enrichment of Executive at the expense of the Company; (b) repeated violations
by Executive of his obligations under paragraph 2.2 which are not remedied
within a reasonable period after Executive's receipt of notice of such
violations from the Company; or (c) unlawful or criminal conduct that is
materially and demonstrably injurious to the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interests of the Company.
-4-
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable notice to Executive
and an opportunity for Executive, together with Executive's counsel, to be heard
before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of the conduct set forth above in this paragraph 4.2 and
specifying the particulars thereof in detail.
4.3 TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate
Executive's employment under this Agreement for Good Reason in accordance with
the ensuing provisions of this paragraph 4.3. Termination by Executive for "Good
Reason" shall mean termination of employment based on any one or more of the
following:
(a) An adverse change in Executive's status or position as CEO
of the Company, including, without limitation, any adverse change in
Executive's status or position as a result of a material diminution in
Executive's duties, responsibilities or authority as of the date of
this Agreement (or any status or position to which Executive may be
promoted after the date hereof) or the assignment to Executive of any
duties or responsibilities which are inconsistent with Executive's
status or position, or any removal of Executive from or any failure to
reappoint or reelect Executive to such positions (except in connection
with the termination of Executive's employment for Cause in accordance
with paragraph 4.2 hereof or Disability or death in accordance with
paragraph 4.4 hereof);
(b) A reduction by the Company in Executive's Base Salary as
in effect as of the date of this Agreement or as the same may be
increased from time to time or a failure by the Company to otherwise
comply with Article III; and
(c) The taking of any action by the Company that would
adversely affect Executive's participation or materially reduce
Executive's benefits under any Plan, except for any such action that
affects in a similar manner all other employees covered by such Plan.
4.4 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. The term of
Executive's employment under this Agreement shall terminate in the event of
Executive's death or Disability.
4.5 TERMINATION BY MUTUAL AGREEMENT. The parties may terminate
Executive's employment under this Agreement at any time by mutual written
agreement.
4.6 NOTICE OF TERMINATION; DATE OF TERMINATION. The provisions of this
paragraph 4.6 shall apply in connection with any early termination of
Executive's employment under this Agreement pursuant to this Article IV.
(a) For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provisions in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide the
basis for such termination. Any purported termination by the Company or
by Executive pursuant to this Article IV (other than a termination by
-5-
mutual agreement pursuant to paragraph 4.5 or death) shall be
communicated by written Notice of Termination to the other party
hereto.
(b) For purposes of this Agreement, "Date of Termination"
shall mean: (1) if Executive's employment is terminated due to death,
the last day of the month first following the month during which
Executive's death occurs, (2) if Executive's employment is to be
terminated for Disability, the end of the month following the month
during which a determination of Disability is made and Notice of
Termination is given, (3) if Executive's employment is terminated by
the Company for Cause or by Executive for Good Reason, the date
specified in the Notice of Termination, or (4) if Executive's
employment is terminated by mutual agreement of the parties, the date
specified in such agreement.
4.7 COMPENSATION UPON TERMINATION, DEATH OR DURING DISABILITY.
(a) During any period that Executive fails to perform
Executive's duties hereunder as a result of a Disability, Executive
shall continue to receive all Base Salary and other compensation and
benefits to which Executive is otherwise entitled under this Agreement
and any Plan until Executive's Date of Termination.
(b) If Executive's employment under this Agreement is
terminated on account of Disability or death, the Company shall, within
ten (10) calendar days following the Date of Termination, pay any
amounts due to Executive for Base Salary through the Date of
Termination, together with any other unpaid and pro rata amounts to
which Executive is entitled as of the Date of Termination pursuant to
Article III hereof, including, without limitation, amounts which
Executive is entitled under any Plan in accordance with the terms of
such Plan, and further, including, without limitation, a pro rata
portion (prorated through the Date of Termination) of any annual or
long-term bonus or incentive payments (for performance periods in
effect at the Date of Termination) to which Executive would have been
entitled had Executive remained continuously employed through the end
of such performance periods and continued to perform Executive's duties
in the same manner as performed immediately prior to the Executive's
death or disability.
(c) If Executive's employment under this Agreement is
terminated by the Company for Cause or by Executive for other than Good
Reason, the Company shall pay Executive the Base Salary through the
Date of Termination and any amounts to which the Executive is entitled
under any Plan in accordance with the terms of such Plan.
(d) If Executive's employment under this Agreement is
terminated by the mutual agreement of the parties under paragraph 4.5,
the Company shall provide Executive with the payments and benefits
specified in the mutual agreement.
ARTICLE V. CONFIDENTIAL INFORMATION
5.1 PROHIBITIONS AGAINST USE. Executive will not during or subsequent
to the termination of Executive's employment under this Agreement use or
disclose, other than in connection with Executive's employment with the Company,
any Confidential Information to any person not employed by the Company or not
authorized by the Company to receive such Confidential Information, without the
-6-
prior written consent of the Company. Executive will use reasonable and prudent
care to safeguard and protect and prevent the unauthorized use and disclosure of
Confidential Information. The obligations contained in this paragraph 5.1 will
survive for as long as the Company in its sole judgment considers the
information to be Confidential Information. The obligations under this paragraph
5.1 will not apply to any Confidential Information that is now or becomes
generally available to the public through no fault of Executive or to
Executive's disclosure of any Confidential Information required by law or
judicial or administrative process.
ARTICLE VI. NON-COMPETITION
6.1 Executive agrees to the following non-competition restrictions.
(a) NON-COMPETITION. Executive agrees that during the term of
this Agreement and for a period of two years (2) years following
termination of employment for any reason, Executive will not directly
or indirectly, alone or as a partner, officer, director, shareholder or
employee of any other firm or entity, engage in any commercial activity
in competition with any part of the Company's business as conducted
during the term of the Agreement or as of the date of such termination
of employment or with any part of the Company's contemplated business
with respect to which Executive has Confidential Information. For
purposes of this clause (a), "shareholder" shall not include beneficial
ownership of less than five percent (5%) of the combined voting power
of all issued and outstanding voting securities of a publicly held
corporation whose stock is traded on a major stock exchange or quoted
on NASDAQ.
(b) NON-SOLICITATION - CUSTOMERS AND OTHERS. Executive agrees
that for a period of two (2) years following termination of Executive's
employment with the Company for any reason, that he will not, directly
or indirectly, for Executive's account or business, or the account or
business of any other person, in any capacity whatsoever, solicit or
induce any customers, consultants, or prospective customers of the
Company, to terminate, breach, limit or refrain from entering into,
continuing, or otherwise altering such person or organization's
relationship with or obligations to the Company.
(c) NON-SOLICITATION - EMPLOYEES AND OTHERS. Executive also
agrees that for a period of two (2) years following termination of
Executive's employment with the Company for any reason, that he will
not, directly or indirectly, for Executive's account or business, or
the account or business of any other person, in any capacity
whatsoever, solicit or induce any employees of the Company to leave
their employment with the Company or to become employed with or render
services to another business.
ARTICLE VII. GENERAL PROVISIONS
7.1 NO ADEQUATE REMEDY. The parties declare that it is impossible to
accurately measure in money the damages which will accrue to either party by
reason of a failure to perform any of the obligations under this Agreement.
Therefore, if either party shall institute any action or proceeding to enforce
the provisions hereof, other than a claim by Executive for a payment pursuant to
paragraph 4.7, the party against whom such action or proceeding is brought
-7-
hereby waives the claim or defense that such party has an adequate remedy at
law, and such party shall not assert in any such action or proceeding the claim
or defense that such party has an adequate remedy at law.
7.2 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the
benefit of any Successor of the Company, and any such Successor shall
absolutely and unconditionally assume all of the Company's obligations
hereunder. Upon Executive's written request, the Company will seek to
have any Successor, by agreement in form and substance satisfactory to
Executive, assent to the fulfillment by the Company and the Successor
of the obligations under this Agreement. Failure to obtain such assent
at least three (3) business days prior to the time a person or entity
becomes a Successor (or where the Company does not have at least three
(3) business days' advance notice that a person or entity may become a
Successor, within one (1) business day after having notice that such
person or entity may become or has become a Successor) shall constitute
Good Reason for termination by Executive of employment pursuant to
paragraph 4.3. For purposes of this Agreement, "Successor" shall mean
any corporation, individual, group, association, partnership, firm,
venture or other entity or person that, subsequent to the date hereof,
succeeds to the actual or practical ability to control (either
immediately or with the passage of time), all or substantially all of
the Company's business and/or assets, directly or indirectly, by
merger, consolidation, recapitalization, purchase, liquidation,
redemption, assignment, similar corporate transaction, operation of law
or otherwise.
(b) This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die, all such
amounts as defined in Article IV 4.7 b), shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or
other designee or, if there be no such designee, to Executive's estate.
(c) Executive may not assign this Agreement, in whole or in
any part, without the prior written consent of the Company.
7.3 NOTICES. All notices, requests and demands given to or made
pursuant hereto shall, except as otherwise specified herein, be in writing and
be personally delivered or mailed postage prepaid, registered or certified U.S.
mail, to any party at its address set forth on the last page of this Agreement.
Either party may, by notice hereunder, designate a changed address. Any notice
hereunder shall be deemed effectively given and received: (a) if personally
delivered, upon delivery; or (b) if mailed, on the registered date or the date
stamped on the certified mail receipt.
7.4 WITHHOLDING. To the extent required by any applicable law,
including, without limitation, any federal or state income tax or excise tax law
or laws, the Federal Insurance Contributions Act, the Federal Unemployment Tax
Act or any comparable federal, state or local laws, the Company retains the
right to withhold such portion of any amount or amounts payable to Executive
-8-
under this Agreement as the Company (on the written advice of outside counsel)
deems reasonably necessary.
7.5 CAPTIONS. The various headings or captions in this Agreement are
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
7.6 GOVERNING LAW. This Agreement shall be construed and governed by
the laws of the State of Minnesota. Any disputes arising out of this Agreement
shall be determined in the state and federal courts located in Hennepin County,
Minnesota. Each of the parties consents to the exclusive jurisdiction of such
courts for any disputes arising hereunder.
7.7 CONSTRUCTION. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
7.8 WAIVERS. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by any related document or by law.
7.9 MODIFICATION. This Agreement may not be modified or amended except
by written instrument signed by the parties hereto.
7.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between the parties hereto in reference to all the matters
herein agreed upon. This Agreement replaces in full all prior employment
agreements or understandings of the parties hereto, and any and all such prior
agreements or understandings are hereby rescinded by mutual agreement.
7.11 COUNTERPARTS. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
7.12 SURVIVAL. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied terms extend
beyond the termination of Executive's employment hereunder (including, without
limitation, the provisions of paragraph 4.7 (relating to compensation)) or
beyond the termination of this Agreement (including, without limitation, the
provisions of paragraph 5.1 (relating to confidential information) and Article
VI (relating to non-competition)), shall continue in full force and effect
notwithstanding Executive's termination of employment hereunder or the
termination of this Agreement, respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Executive
Employment Agreement to be duly executed and delivered as of the day and year
first above written.
-9-
COMPANY: EXECUTIVE:
IVDESK MINNESOTA, INC.
/s/ Xxxxx Xxxxxxxxx /s/ Xxxxxxx Xxxxxxxx
------------------------------------- -----------------------------
(signature) (signature)
Date signed: 9/14/2012 Date signed: 9/14/2012
-10-
