Contract
Exhibit 10.23
This Employment Agreement (“Agreement”), dated as of November 15, 2010 (the “Effective Date”), is made by and among Xxxxxx Xxxxxxx Xxxxxxx (“Executive”) and Xxxx Xxxxx, Inc. or its successor company, a Delaware corporation (the “Company”).
WHEREAS, Executive will be employed by the Company as its Chief Executive Officer (CEO) and will maintain a position of Director on the Company’s Board; and
WHEREAS, the members of the Board of Directors of the Company desire to enter into an employment agreement with Executive, which employment agreement from November 15, 2010 through November 15, 2013; and
WHEREAS, the agreed upon terms and conditions of Executive’s continued employment are embodied in this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive do hereby agree as follows:
Section 1. Employment and Duties. On the terms and subject to the conditions set forth in this Agreement, subject to the approval and ratification of Board of Directors, such approvals to be obtained prior to the Effective Date, the Company agrees to employ Executive as its Chief Executive Officer to render such services as would be customary and to render such other services and discharge such other responsibilities as the Board of Directors of the Company may, from time to time, stipulate and which shall not be inconsistent with the position listed above.
Section 2. Performance.
(a) Executive accepts the employment as set forth in Section 1 herein and agrees to concentrate such time, attention and skill as may be necessary to assure the full performance of the services described therein, including the performance of such other services and responsibilities as the Board of Directors of the Company may from time to time stipulate and which shall not be inconsistent with the position listed above.
(b) Without limiting the generality of the foregoing, Executive ordinarily shall devote not less than five (5) days per week (except for vacations, regular business holidays observed by the Company) on a full-time basis, during normal business hours Monday through Friday. Executive further agrees that when the performance of his duties reasonably requires, he shall be present on the Company’s premises (located in Massachusettes) or engaged in service to or on behalf of the Company at such times except during vacations, regular business holidays or weekends. The executive may continue his existing involvement in an advisory or board capacity with non-competing organizations.
(c) In conducting his duties under this Agreement, the Executive shall report to the Chairman of the Board of Directors of the Company.
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Section 3. Term/Termination.
3.1 Term. The term of employment under this Agreement (the “Employment Period”) shall commence on November 15, 2010 and terminate on November 15, 2013, unless earlier terminated pursuant to the termination provisions set forth herein or extended for successive one year periods outlined below in this paragraph. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that Executive’s employment may only be terminated by the Company for Due Cause (as hereinafter defined). At the end of the Employment Period, this Agreement will be automatically renewed for successive one year terms unless either the Executive or Company shall, upon three months written notice to the other, elect not to renew this Agreement for any year. Non renewal of the Agreement by the Company shall be deemed a termination pursuant to section 3.5 and shall be subject to the severance compensation provisions related to termination under that Section.
3.2 Termination for Due Cause. The Employment Period may only be terminated by the Company for Due Cause. The Company, by a vote of a majority of the Board of Directors (a “Termination Vote”) may terminate the Employment Period for Due Cause, effective upon written notice of such termination to Executive, in the event of Due Cause as defined by (i) a material breach by Executive of his covenants under this Agreement if such material breach is not remedied within sixty (60) calendar days following written notice by the Company; (ii) conviction in a court of law by Executive of theft or embezzlement of property of the Company and/or conviction by Executive of a felony crime resulting in a material injury to the businesses, properties of the Company or any of its affiliates; All compensation paid to Executive shall immediately cease upon termination for Due Cause hereunder except accrued and unpaid compensation and all unvested Stock Options shall immediately expire.
3.3 Termination Due to Death. The Employment Period shall be terminated upon the death of Executive. All compensation paid to Executive shall immediately cease upon such termination except for accrued and unpaid compensation pursuant to Section 4.1 herein and earned but unpaid bonus payments pursuant to Section 4.2 herein. All unvested Stock Options shall immediately become vested.
3.4 Termination Due to Permanent Total Disability. The Employment Period shall be terminated upon the Permanent Total Disability (as defined in this Section 3.4) of Executive following written notice from the Company. Permanent Total Disability is defined as an inability by Executive to perform substantially all of the services required pursuant to this Agreement for a continuous period of ninety (90) days or for a period aggregating at ninety (90) days in any consecutive twelve (12) month period when such inability is caused by illness or a physical or mental disability. Such Permanent Total Disability shall be determined by a physician selected jointly by the parties hereto.
3.5 Termination Other Than Due Cause, Death, Disability or Resignation. In the event that Executive’s employment is terminated for reasons other than Due Cause, death, Permanent Total Disability or resignation, then all Stock Options scheduled to vest within one year of the date of such termination shall vest immediately and the Company shall pay as severance compensation to Executive eighteen (18) months salary compensation at his then annual salary compensation rate, including bonus earned as of the termination date. Any severance compensation paid to Executive shall be paid ratably over the remaining payment period following termination. Any bonus compensation earned as of the termination date shall be paid to Executive pursuant to the bonus payment schedule set forth in Section 4.2 herein.
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3.6 Termination by Executive. Executive may terminate the Employment Period (i) in the event the Company has breached a material term or condition of this Agreement which is not cured or remedied within thirty (30) days following written notice by Executive to Board of Directors of Company of such breach or (ii) at Executive’s convenience. In the event that Executive’s resignation is due to an uncured breach by the Company, such resignation shall be deemed a termination by the Company as without Due Cause for purposes of vesting of Stock Options pursuant to Section 4.3 herein and for payments of salary and bonus compensation as set forth in Sections 4.1 and 4.2, respectively, herein. In the event that the Employment Period is terminated by Executive at his convenience, then Executive will be due any earned but unpaid salary, vacation and bonus compensation as set forth in Sections 4.1 and 4.3, respectively, herein. All vested stock options not exercised by Executive within ninety (90) days following the termination date shall be cancelled. Any unvested Stock Options shall be cancelled as of this termination date.
3.7 Surrender of Position and Properties. Upon termination of Executive’s employment with the Company, regardless of the cause therefore, Executive shall promptly be deemed to have resigned from the Company’s Board of Directors and as an officer and director of any of the Company’s affiliates, if serving as such at that time, and shall surrender to the Company or its affiliates all property provided to him by the Company or its affiliates, as applicable, for use in relation to his employment and further, Executive shall surrender to the Company or its affiliates, as applicable, any and all sales materials, lists of customers and prospective customers, investment performance reports, files, patent applications, records, models or other materials and information of or pertaining to the Company or its affiliates or their customers or prospective customers or the products, businesses and operations of the Company or its affiliates.
3.8 Survival of Covenants. The covenants of Executive set forth in Section 5 herein shall survive the termination of the Employment Period or termination of this Agreement.
Section 4. Compensation/Expenses.
4.1 Salary. In exchange for the services to be rendered by Executive hereunder, the Company agrees to pay, during the Employment Period, a salary at an annual rate of; Year One: $200,000
Year Two: $225,000
Year Three: $295,000 (Only if the Company has $5,000,000 in cash at the commencement of year three. If company has less than $5,000,000 then the salary will be negotiated 30 days prior to the start of year three and will in no case be less than $225,000).
Salary will be paid b-weekly.
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4.2 Bonus.
The Company shall establish an annual bonus plan of which certain management employees of the Company shall be eligible to participate, which annual bonus plan shall comprise a calendar year (the “Plan Year”). Executive will be eligible to participate in such annual bonus plan during the term of this Agreement with goals (the “Annual Goals”) established and approved by the Board of Directors. Pursuant to this annual bonus plan, Executive shall be eligible for discretionary performance and incentive bonuses if and as may be determined in the sole discretion of the Board of Directors of the Company. The goals that shall be tied to the Company’s Long Term Financial Pro forma (as adopted by the Company upon execution of this Agreement) and shall serve as the basis of evaluation for any payments awarded pursuant to the Company’s annual bonus plan shall be established and approved by the Board of Directors. At the conclusion of the Plan Year, the Board of Directors shall determine the level of success achieved by the Executive against the Annual Goals and recommend the amount of the annual bonus plan payment. If Executive’s employment is terminated for reasons other than Due Cause or his voluntary resignation, he will be entitled to receive any bonus earned up to the date of termination as reasonably determined by the Board of Directors. All payments related to the annual bonus plan are subject to the prior approval by the Board of Directors and the Company’s ability to make such payments when considering the cash position of the Company.
4.3 Stock. The Company hereby grants, as part of the Company’s Employee Stock Option Plan (ESOP), to Executive the right to purchase the Company’s common stock at ten ($.10) Cents per share. As of the Effective Date of this Agreement, the Company grants Executive one million three hundred and seventy five thousand (1,375,000) options of Company’s common stock on a one-for-one conversation as of 2010. The Executive Options will vest on a quarterly basis over a three year period. The Executive will be granted
a) The Company will allow the Executive to purchase one hundred and twenty-five thousand (125,000) shares at par value $.001, upon the signing of this Agreement.
b) Accelerated Vesting of Options. Upon the sale, merger or any transaction resulting in the majority of the Company stock being obtained, then all of the Executives’ options not vested will vest immediately and become excercisable.
4.4 Insurance. Executive if he so elects and if permissible by the Company plans, will be entitled to participate in fringe benefit, health insurance, life insurance, and other programs which Company may adopt from time to time for executives of Company. Participation will be in accordance with any plans and any applicable policies adopted by Company.
4.5 Business Expenses. Executive shall be reimbursed for business-related expenses that he incurs pursuant to his employment with the Company, such expenses to be timely submitted and reasonable, and subject to the Company’s then standing Expense Reimbursement Policy and the review and approval of the Board of Directors or its authorized designate. Executive shall provide the Company with expense reports detailing business-related expenses and supporting documentation and other substantiation of such expenses that conform to the reporting requirements of the Company and requirements of the Internal Revenue Service. Expenses will be reimbursed to Executive within 15 days of receipt by Company. Executive is located in the state of New Hampshire and Executive will not have to relocate. Executive as part of this engagement is required to commute to Company and shall have expenses paid accordingly.
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4.7 Vacation. Executive shall be entitled to vacations in accordance with Company policy in effect from time to time. Until written policies are adopted, Executive will accrue three (3) weeks vacation during the Initial Term and four (4) weeks vacation during each Additional Term.
4.8 A percentage of the Company will be afforded the Executive in the following manner; -A sale of the Company and or disposition of assets that results in a gross receipt, to the Company, of $100,000,000 will result in the CEO receiving 5% of the Gross Receipt to the Company. If the sale of the Company and or assets results in a Gross Receipt at or above $150,000,000 the CEO will receive 10% of the Gross Receipt of income to the Company. The CEO, in his own discretion, may chose to allocate percentages or basis points of his Compensation to certain executives at his own discretion. This section will survive Termination of this Agreement for one year.
Section 5. Covenants of Executive.
5.1 Confidentiality. During the Employment Period and for one year following the termination thereof for any reason, Executive shall not disclose or make any use of, for his own benefit or for the benefit of a business or entity other than the Company or its affiliates, any secret or confidential information, lists of customers and prospective customers or any other information of or pertaining to the Company or its affiliates that is not generally known within the trade of the Company or its affiliates or which is not publicly available.
5.2 Inventions and Secrecy. Except as otherwise provided in this Section 5.2, Executive (i) shall hold in a fiduciary capacity for the benefit of the Company and its affiliates, all secret and confidential information, knowledge, or data of the Company and its affiliates obtained by Executive during his employment by the Company, which is not generally know to the public or recognized as standard practice (whether or not developed by Executive) and shall not, during his employment by the Company and for one year following the termination of such employment for any reason, communicate or divulge any such information, knowledge or data to any person or entity other than the Company or its affiliates or persons or entities designated by the Company; (ii) shall promptly disclose to the Company all inventions, ideas, devices and processes made or conceived by him along or jointly with others, from the time of entering the Company’s employ and until such employment is terminated relevant or pertinent in any way, whether directly or indirectly, to the Company or its affiliates or resulting from or suggested by any work which he may have done for or at the request of the Company or its affiliates; (iii) shall at all times during his employment with the Company, assist the Company and its affiliates in every proper way (at the expense of the Company) to obtain and develop for the benefit of the Company inventions, ideas, devices and processes, whether or not patented; and (iv) shall perform all such acts and execute, acknowledge and deliver all such instruments as may be necessary or desirable in the opinion of the Company to vest in the Company, the entire interest in such inventions, ideas, devices and processes referred to in this Section 5.2. Executive and Company each agree that all documents, reports, files, analyses, drawings, designs, tools, equipment, plans (including, without limitation, marketing and sales plans), proposals, customer lists, computer software or hardware, and similar materials that are made by Executive or come into his or its possession by reason of and during the term of Executive’s engagement with Company are the property of Company and will not be used by his in any way adverse to Company’s interests. Executive also agrees not to allow any such documents or things, or any copies, reproductions or summaries to be delivered to or used by any third party without the specific consent of Company. Executive agrees to deliver to the Company, upon demand, and in any event upon the termination of Executive’s engagement, all of such documents and things which are in Executive’s possession or under his or its control. Executive expressly agrees that all of his work product shall be and remain the sole and exclusive property of the Company. Accordingly, all work products eligible for any form of copyright protection shall be deemed a “work made for hire” under the copyright laws and shall be owned by the Company.
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5.4 Acknowledgement. Executive acknowledges that the restrictions set forth in this Section 5 are reasonable in scope and essential to the preservation of the businesses and proprietary properties of the Company and its affiliates and that the enforcement thereof will not in any manner preclude Executive, in the event of his termination of employment with the Company, from becoming gainfully employed in such manner and to such extent as to provide a reasonable standard of living for himself, the members of his family and those dependent upon him of at least the sort and fashion to which he and they have becom
5.5 Severability - Covenants. The covenants of Executive contained in this Section 5 shall each be construed as any agreement independent of any other provision in this Agreement and the existence of any claim or cause of action of Executive against the Company or its affiliates, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company or its affiliates of such covenants. The parties hereto expressly agree and contract that it is not the intention of any party to violate any public policy, statutory or common law, and that if any sentence, paragraph, clause or combination of the same of this Agreement is in violation of the law of any state where applicable, such sentence, paragraph, clause or combination of the same shall be void in the jurisdictions where it is unlawful and the remainder of such provision and this Agreement shall remain binding on the parties to make the covenants of this Agreement binding only to the extent that it may be lawfully done under existing applicable laws. In the event that any part of any covenant of this Agreement is determined by a court of law to be overly broad thereby making the covenant unenforceable, the parties hereto agree, and it is their desire, that such court shall substitute a judicially enforceable limitation in its place, and that as so modified the covenant shall be binding upon the parties as if originally set forth herein.
Section 6. Indemnification. In addition to any rights Executive may have under the Company's charter or by-laws, the Company agrees to indemnify Executive and hold Executive harmless, both during the Term and thereafter, against all costs, expenses (including, without limitation, fines, excise taxes and attorneys' and accountants’ fees) and liabilities (other than settlements to which the Company does not consent, which consent shall not be unreasonably withheld) (collectively, "Losses") reasonably incurred by Executive in connection with any claim, action, proceeding or investigation brought against or involving Executive with respect to, arising out of or in any way relating to Executive's employment with the Company or Executive's service as a director of the Company; provided, however, that the Company shall not be required to indemnify Executive for Losses incurred as a result of Executive's intentional misconduct or gross negligence (other than matters where Executive acted in good faith and in a manner he reasonably believed to be in and not opposed to the Company's best interests). Executive shall promptly notify the Company of any claim, action, proceeding or investigation under this paragraph and the Company shall be entitled to participate in the defense of any such claim, action, proceeding or investigation and, if it so chooses, to assume the defense with counsel selected by the Company; provided that Executive shall have the right to employ counsel to represent him (at the Company's expense) if Company counsel would have a "conflict of interest" in representing both the Company and Executive. The Company shall not settle or compromise any claim, action, proceeding or investigation without Executive's consent, which consent shall not be unreasonably withheld; provided, however, that such consent shall not be required if the settlement entails only the payment of money and the Company fully indemnifies Executive in connection therewith. The Company further agrees to advance any and all expenses (including, without limitation, the fees and expenses of counsel) reasonably incurred by the Executive in connection with any such claim, action, proceeding or investigation. The Company currently maintains a policy of directors' and officers' liability insurance covering Executive and, notwithstanding the expiration or earlier termination of this Agreement, the Company shall maintain a directors' and officers' liability insurance policy covering Executive for a period of time following such expiration or earlier termination equal to the statute of limitations for any claim that may be asserted against Executive for which coverage is available under such directors' and officers' liability insurance policy. The provisions of this paragraph shall survive the termination of this Agreement for any reason.
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Section 7. Notice. Any notice required or permitted hereunder shall be made in writing (i) either by actual delivery of the notice into the hands of the party hereunder entitled, or (ii) by the mailing of the notice in the United States mail, certified mail, return receipt requested, all postage prepaid and addressed to the party to whom the notice is to be given at the party’s respective address set forth below, or such other address as the parties may from time to time designate by written notice as provided herein and (iii) via facsimile to the fax number provided by the Parties below with a confirmation receipt. Notice will hereby be deemed to be satisfied via the delivery of any of the methods listed above.
If to the Company:
Attn: General Counsel
Xxxxx Xxxxxx
Address:
0000 X. Xxxxxxx Xx
Xxx Xxxxxxx, XX 00000
If to Xxxxxxx Xxxxxxx:
Address:
00 Xxxxxxxxxx Xx.
Xxxxxxx, XX 00000
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The notice shall be deemed to be received in case (i) on the date of actual receipt by the party and in case (ii) three days following the date of the mailing.
Section 8. Amendment and Waiver. No amendment or modification of this Agreement shall be valid or binding upon: (i) the Company unless made in writing and signed by an officer of the Company, duly authorized by the Board of Directors of the Company or; (ii) Executive unless made in writing and signed by him. The waiver by the Company or Executive of the breach of any Provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of such party.
Section 9. Governing Law/Waiver of Claims/Arbitration. (a) The validity and effect of this Agreement and the rights and obligations of the parties hereto shall be governed by, and construed in accordance with, the laws of the State of Massacusettes without giving effect to the principles of conflicts of laws thereof.
(b) Each Party to this Agreement hereby waives any claim it may have on such other Party due to any past business dealings between the Parties prior to the Effective Date of this Agreement. Additionally, the parties hereto agree that in the event of any and all disagreements and controversies arising from this Agreement or any other agreements between the Company and Executive the breach, termination or validity thereof or the present and future dealings between the parties, such disagreements and controversies shall be subject to a two step mediation and binding arbitration process. The first step will be to a one time mediation session to be held in accordance with the Massachusettes Bar Associations Mediation guidelines and to be heard in front of a Mediation expert that has been practicing for a period of at least 5 years. If the Parties fail to resolve their dispute via Mediation, the Parties agree to a second step of binding arbitration as arbitrated in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association (the “AAA”) to be held in Boston, Massachusettes before one neutral arbitrator with one discovery allowd by each party to this Agreement. Such arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of written notice of a continuing dispute following mediation of said disagreement or controversy. If the parties cannot mutually agree to an arbitrator within thirty (30) days, then the AAA shall designate the arbitrator. Either party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Without waiving any remedy under this Agreement, either party may also seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunal’s determination of the merits of the controversy). In the event of any such disagreement or controversy, neither party shall directly or indirectly reveal, report, publish or disclose any information relating to such disagreement or controversy to any person, firm or corporation not expressly authorized by the other party to receive such information or use such information or assist any other person in doing so, except to comply with actual legal obligations of such party or unless such disclosure is directly related to an arbitration proceeding as provided herein, including, but not limited to, the prosecution or defense of any claim in such arbitration. The costs and expenses of the arbitration (including attorneys’ fees) shall be paid by the non-prevailing Party or as determined by the arbitrator. Executive shall have a limit of liability; in no case shall Executive be liable for a judgment greater than one hundred thousand dollars. This paragraph shall survive the termination of this Agreement.
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Section 10. Entire Agreement. This Agreement contains all of the terms agreed upon by the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements and communications between the parties dealing with such subject matter, whether oral or written, but limited to the Employment Period.
Section 11. Reservation of Right. Notwithstanding any other provision of this Agreement, other than Sections 4.1, 4.2 and 4.3, 4.5, 4.7 and 4.8, Company reserves the right to modify, suspend or discontinue any and all benefit plans, practices, policies and programs, except sections 4.1, 4.2 and 4.3, 4.5, 4.7 and 4.8 at any time whether before or after termination of this Agreement with advance notice of 90 days to Executive.
Section 12. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the transferees, successors and assigns of the Company, including any company or entity with which the Company may merge or consolidate.
Section 13. Headings. Numbers and titles to paragraphs hereof are for information purposes only and, where inconsistent with the text, are to be disregarded.
Section 14. Severability – General. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof
Section 15. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first set forth above.
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Xxxx Xxxxx, Inc.
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Xxxxxxx Xxxxxxx
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By:
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/s/ Xxxxxx X. Xxxxxxx III
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By:
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/s/ Xxxxxxx Xxxxxxx
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Printed: Xxxxxx X. Xxxxxxx III
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Printed: Xxxxxxx Xxxxxxx
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Title: Chairman
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Date: November 15, 2010
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Date: November 15, 2010
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