EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "AGREEMENT"), is made and
entered into on July 24, 2007, and is effective as of July 1, 2007 (the
"EFFECTIVE DATE"), by and between Blue Holdings, Inc., a Nevada corporation (the
"COMPANY"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a resident of the State of New Jersey
("EXECUTIVE").
PRELIMINARY STATEMENTS
A. The Company desires to employ Executive in the capacity of
Chief Executive Officer and President, upon the terms and conditions hereinafter
set forth; and
B. Executive is willing to enter into this Agreement with respect
to his employment and services upon the terms and conditions hereinafter set
forth.
Now, therefore, for good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, now agree as follows:
STATEMENT OF AGREEMENT
1. TERM OF EMPLOYMENT. The term of employment under this
Agreement shall commence on the Effective Date and shall expire on December 31,
2009, unless such employment is terminated or extended prior to the expiration
of said period as hereinafter provided.
2. DUTIES OF EXECUTIVE. Executive agrees that during the term of
this Agreement, he will devote his full professional and business-related time,
skills and best efforts to the businesses of the Company in the capacity of
Chief Executive Officer and President, or such other capacity as the Company and
Executive may agree upon. In addition, Executive shall devote all necessary time
and his best efforts in the performance of any other duties as may be assigned
to him from time to time by the Board of Directors of the Company ("BOARD").
Executive shall devote his full professional and business skills to the Company
as his primary responsibility. Executive may engage in personal, passive
investment activities provided such activities do not interfere with the
performance of his duties hereunder or violate the provisions of the Employee
Proprietary Information and Inventions Agreement attached hereto as EXHIBIT A.
3. COMPENSATION.
3.1. BASE SALARY. The Company shall pay Executive as
follows: $87,500 for the third quarter of fiscal 2007; $87,500 for the fourth
quarter of fiscal 2007; and at an annual rate of Four Hundred Thousand Dollars
($400,000) (the "BASE SALARY") for the remainder of the term of employment.
Executive's Base Salary shall be reviewed by the Board (or a committee thereof)
on an annual basis no later than January 15 of the applicable year to determine
if Executive's Base Salary should be increased. Executive's Base Salary shall be
subject to all appropriate federal and state withholding taxes and shall be
payable in accordance with the Company's standard payroll practices for
executive employees.
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3.2. ANNUAL BONUS. Executive shall be eligible to receive
an annual bonus equivalent to 2.5% of the Company's earnings before interest,
taxes, depreciation and amortization (EBITDA) for each of the years ended
December 31, 2008 and 2009, which shall be paid no later than March 31st of the
following year. Executive shall be eligible to receive a bonus for the period
ended December 31, 2007, if any, as determined by the Compensation Committee of
the Board by January 31, 2008 and paid no later than March 31, 2008.
3.3. STOCK OPTIONS. Executive shall be granted an option
to purchase 625,000 shares of the Company's Common Stock at an exercise price
per share of $1.40 (the "OPTION"). The Option will be subject to the terms and
conditions set forth in a stock option agreement between the Company and
Executive. Executive shall vest in 125,000 shares on the date of grant and
125,000 shares on each six-month anniversary of the date of grant thereafter
until fully vested. Any unexercised portion of the Option shall terminate at the
opening of business on the date Executive ceases to be employed by the Company.
4. BENEFITS. During Executive's term of employment hereunder,
Executive and, to the extent applicable, Executive's spouse, dependents and
beneficiaries, shall be allowed to enjoy and participate in all benefit plans
and programs, including improvements or modifications of the same, which are
now, or may hereafter be, available to other executive employees of the Company.
Such benefit plans and programs shall be similar to and consistent with the
Company's past practice and shall include, without limitation, medical
insurance, disability insurance, vacation and sick leave plan, and such similar
benefits, plans and programs as may be maintained by the Company. The Company
shall not, however, be obligated to institute, maintain, or refrain from
changing, amending, or discontinuing, any such benefit plan or program, so long
as such changes are similarly applicable to executive employees generally.
5. VACATIONS. The Executive shall be entitled to four (4) weeks
of paid vacation annually; provided, however, that Executive shall not be
entitled to utilize more than two consecutive weeks of vacation at any time
without board approval; and provided, further, that Executive shall not be
entitled to use any vacation days for the six-month period beginning on the
Effective Date. The Executive shall also be entitled to all paid holidays given
by the Company to its senior executives.
6. REIMBURSEMENT OF EXPENSES. The Company recognizes that
Executive will incur legitimate business expenses in the course of rendering
services to the Company hereunder. Accordingly, during the term of this
Agreement, Executive shall be entitled to receive reimbursement, upon
presentation of receipts or other adequate documentation, for all appropriate
business expenses incurred by him in connection with his duties under this
Agreement in accordance with the policies of the Company as in effect from time
to time. In addition, during the term of this Agreement, Executive shall be
entitled to receive reimbursement in an amount up to and not to exceed $2,000
per month for all expenses incurred by him with respect to his personal
automobile including, without limitation, lease payments, insurance, tolls,
parking, maintenance, repairs and gas.
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7. HOUSING/TRAVEL. The Company will provide Executive a furnished
apartment or comparable living space in Los Angeles, California suitable to his
position for the initial twelve months of the term of this Agreement. Executive
agrees that he will permanently relocate to Los Angeles, California no later
than the one year anniversary of the Effective Date. Additionally, the Company
will pay for no more than two coach or economy class round trip tickets from Los
Angeles to New Jersey for Executive to visit with his family for no more than
two weekends, per month prior to Executive's relocation to Los Angeles,
California.
8. TERMINATION. The employment relationship between Executive and
the Company created hereunder shall terminate before the expiration of the
stated term of this Agreement upon the occurrence of any one of the following
events:
8.1. DEATH OR PERMANENT DISABILITY. The death or Permanent
Disability of Executive shall automatically terminate this Agreement. For the
purpose of this Agreement, the "PERMANENT DISABILITY" of Executive shall mean
Executive's inability, because of his injury, illness, or other incapacity
(physical, emotional or mental), to perform the essential functions of the
position contemplated herein, with or without reasonable accommodation to
Executive with respect to such injury, illness or other incapacity, for a
continuous period of one hundred and fifty (150) days or for one hundred and
eighty (180) days out of a continuous period of three hundred and sixty (360)
days. Such Permanent Disability shall be deemed to have occurred on the one
hundred and fiftieth (150th) consecutive day or on the one hundred eightieth
(180th) day within the specified period, whichever is applicable.
8.2. TERMINATION FOR CAUSE. The following events, which
for purposes of this Agreement shall constitute "CAUSE" for termination by the
Company:
(a) a material breach of any provision of this
Agreement after 10 days prior written notice to Executive of the particular
details thereof and the failure of Executive to cure such breach within such
10-day period;
(b) a material breach of the Employee
Proprietary Information and Inventions
Agreement;
(c) conviction of, or a plea of nolo contendere
for, any felony criminal offense or any offense involving dishonesty or moral
turpitude;
(d) engaging in dishonest or fraudulent
activities which are injurious to the Company;
(e) refusal to follow any lawful directives of
the Board;
(f) gross negligence or incompetence or willful
misconduct which is injurious to the Company; or
(g) breach of a fiduciary duty to the Company
which involves personal profit.
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Any notice of discharge shall describe with reasonable
specificity the cause or causes for the termination of Executive's employment,
as well as the effective date of the termination (which effective date may be
the date of such notice). If the Company terminates Executive's employment for
any of the reasons set forth above, the Company shall have no further
obligations hereunder from and after the effective date of termination (other
than as set forth below) and shall have all other rights and remedies available
under this or any other agreement and at law or in equity.
8.3. TERMINATION FOR GOOD REASON. The following events,
which for purposes of this Agreement shall constitute "GOOD REASON" for
termination by Executive:
(a) the assignment to Executive of any duties
materially inconsistent with his positions, duties, responsibilities and status
with the Company, or a material change in his reporting responsibilities, or
titles as of the Effective Date, or any removal of Executive from or any failure
to re-elect Executive to any such positions, except in connection with the
expiration of the term of this Agreement or the termination of his employment
for Cause, death, Disability, or retirement, or by Executive other than for Good
Reason; or
(b) a reduction in Executive's base salary or
any significant reduction in the aggregate value of Executive's benefits (unless
such reduction is pursuant to a general change in benefits applicable to all
similarly situated employees of the Company and its affiliates);
PROVIDED, HOWEVER, that prior to Executive's termination of
employment under this SECTION 8.3, Executive must give written notice to the
Company of any such event and such event remains uncorrected for thirty (30)
days following such written notice.
9. COMPENSATION UPON TERMINATION.
9.1. GENERAL. Upon the termination of Executive's
employment under this Agreement before the expiration of the stated term hereof
for any reason, Executive shall be entitled to (a) the unpaid Base Salary earned
by him before the effective date of termination, as provided in SECTION 3.1,
prorated on the basis of the number of full days of service rendered by
Executive during the year to the effective date of termination, (b) any accrued,
but unpaid, vacation or sick leave benefits, and (c) any authorized but
unreimbursed business expenses.
9.2. TERMINATION WITHOUT CAUSE, DEATH OR DISABILITY OR FOR
GOOD REASON. If the employment relationship is terminated (a) by the Company for
any reason other than Executive's death or Permanent Disability or for Cause or
(b) by Executive for Good Reason, then Executive shall be entitled to receive as
a severance payment an amount equal to 12 months Base Salary plus a pro-rated
bonus for such 12-month period. The Company shall also maintain medical coverage
for Executive until the earlier of (i) the end of the 12-month period described
above and (ii) Executive obtaining alternate medical insurance coverage.
9.3. TERMINATION FOR CAUSE, DEATH OR DISABILITY. If the
employment relationship hereunder is terminated by the Company for Cause or
Executives death or Permanent Disability, Executive shall not be entitled to any
severance compensation, except as provided in SECTION 9.1.
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9.4. PAYMENT OF COMPENSATION. All compensation payable
pursuant to termination shall be payable to Executive in a lump sum payment
within thirty (30) days immediately following the effective date of Executive's
termination.
10. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Executive
shall be required, as a condition to employment with the Company, to sign the
Company's Employee Proprietary Information and Inventions Agreement attached
hereto as EXHIBIT A.
11. PROPERTY OF COMPANY. Executive acknowledges that from time to
time in the course of providing services pursuant to this Agreement Executive
shall have the opportunity to inspect and use certain property, both tangible
and intangible, of the Company, and Executive hereby agrees that such property
shall remain the exclusive property of the Company, and Executive shall have no
right or proprietary interest in such property, whether tangible or intangible,
including, without limitation, Executive's customer and supplier lists, contract
forms, books of account, computer programs and similar property.
12. EQUITABLE RELIEF. Executive acknowledges that the services to
be rendered by him are of a special, unique, unusual, extraordinary, and
intellectual character, which gives them a peculiar value, and the loss of which
cannot reasonably or adequately be compensated in damages in an action at law,
and that a breach by him of any of the provisions contained in this Agreement
will cause Company irreparable injury and damage. Executive further acknowledges
that he possesses unique skills, knowledge and ability and that a breach of the
provisions of this Agreement or the Employee Proprietary Information and
Inventions Agreement would be extremely detrimental to Company. By reason
thereof, Executive agrees that Company shall be entitled, in addition to any
other remedies it may have under this Agreement or otherwise, to injunctive and
other equitable relief to prevent or curtail any breach of this Agreement by
him.
13. SUCCESSORS BOUND. This Agreement shall be binding upon Company
and Executive, their respective heirs, executors, administrators or successors
in interest.
14. SEVERABILITY AND REFORMATION. The parties hereto intend all
provisions of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.
15. INTEGRATED AGREEMENT. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
and there are no agreements, understandings, specific restrictions, warranties
or representations relating to said subject matter between the parties other
than those set forth herein or herein provided for.
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16. NOTICES. Any notice required to be given or delivered to the
Company or Executive shall be in writing and addressed to the below addresses,
as applicable, or at such other addresses as shall be specified by the parties
by like notice. All notices shall be deemed effectively given upon personal
delivery, (a) five (5) days after deposit in the United States mail by certified
or registered mail (return receipt requested), (b) two (2) business day after
its deposit with any return receipt express courier (prepaid), or (c) one (1)
business day after transmission by facsimile.
If to the Company: If to Executive:
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17. FURTHER ACTIONS. Whether or not specifically required under
the terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order for such
party to perform all of his or its obligations specified herein or reasonably
implied from the terms hereof.
18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to its conflict of law principles.
19. ASSIGNMENT. This Agreement is personal to Executive and may
not be assigned in any way by Executive without the prior written consent of the
Company. This Agreement shall not be assignable or delegable by the Company,
other than to an affiliate of Company, PROVIDED, HOWEVER, if there is a change
of control of the Company, the Company may assign its rights and obligations
hereunder to the person, corporation, partnership or other entity that has
gained such control.
20. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will take effect as an original and all of which shall evidence
one and the same Agreement.
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
BLUE HOLDINGS, INC. EXECUTIVE
By:
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(Signature)
Name:
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Title:
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EXHIBIT A
Employee Proprietary Information and Inventions Agreement