(Xxxxxx X. Xxxxxxx)
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(a) Scope. Employee shall be responsible for the management and running of the day-to-day operations of the Company and shall focus his time and energy on the business development, sales, research and development and marketing for the Company. Employee agrees to devote such time, attention, skills, and best efforts to the performance of these duties. The Company acknowledges that the Employee is also currently engaged as the Chief Financial Officer and a Director of Nology Engineering, Inc. (“Nology”), and the Chief Financial Officer of Performance Stores, Inc. (“Performance Stores”), as well as various other ventures, and that Employee may continue in such capacity, without limitation. Employee agrees that Nology and Performance Stores are not engaged in any activity currently in direct competition with the business of the Company and that Employee shall refrain from engaging in any business related directly or indirectly to the business of the Company.
(b) Employee’s salary shall be payable upon the same schedule that the Company pays its employees generally. Base Salary will be reviewed from time to time by the Board of Directors of the Company.
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Options will be fully vested on the second anniversary of the Effective Date. These Options will be exercisable for a period of seven (7) years from the Effective Date and will be incentive stock options to the extent permitted by applicable law. In the event that the Employment Period is extended as contemplated by Section 2 hereof, Company shall grant to Employee additional options within 10 days of the commencement of each year of the extended Employment Period exercisable for up to 25,000 shares of the Company’s common stock (as adjusted for stock splits, combinations, recapitalizations, and the like occurring on and after the Effective Date) (all such options “Additional Options”). All Additional Options shall vest and be exercisable immediately upon grant, shall have a per-share exercise price equal to the per-share fair market value of the common stock at the time of grant, shall be exercisable for a period of seven (7) years from the date of grant, and shall be incentive stock options to the extent permitted by applicable law. Notwithstanding the foregoing, if on the date of grant of any such Additional Options the exercise price is required, because of the percentage of the Employee’s stockholdings in the Company, to be greater than the market price as of the date of grant, at the Employee’s election, such Additional Options shall either have the exercise price required by law or shall not be incentive stock options. The options shall be granted pursuant to the Company’s 2011 Long-Term Incentive Plan, as it may be amended and adopted from time to time.
(g) Other. During the Employment Period, Employee and, to the extent applicable, Employee’s family, dependents, and beneficiaries, shall be allowed to participate in all benefits, plans, and programs, including improvements or modifications of the same, that are now or may hereafter be available to Executive officers of the Company generally. Such benefits, plans, and programs may include a profit sharing plan, a thrift plan, group medical insurance, dental insurance, vision insurance, travel and accident insurance, short-term and long-term disability insurance, life insurance, and a pension plan. The Company shall not, however, by reason of this subsection 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 officers of the Company generally.
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(a) Termination by the Company for Cause. The Company shall have the right to terminate Employee’s employment with the Company “For Cause” (as such term is hereinafter defined), effective upon notice of termination to Employee. As used herein, the term “For Cause” shall mean (i) Employee’s repeated failure, in the reasonable judgment of the Company’s board of directors, to substantially perform his assigned duties or responsibilities as President and Chief Employee Officer of the Company as reasonably directed or assigned by the Company’s board of directors (other than a failure resulting from the Employee’s Disability); (ii) Employee engaging in knowing and intentional illegal conduct that was or is materially injurious to the Company; (iii) Employee’s knowing violation of a federal or state law or regulation directly or indirectly applicable to the business of the Company, which violation was or is reasonably likely to be injurious to the Company; (iv) Employee’s material breach of the terms of any confidentiality agreement or invention assignment agreement between Employee and the Company; (v) repeated misuse (following at least one written warning from the Company) of alcohol, narcotics, or other controlled substances that is materially detrimental to the Company and that materially interferes with Employee’s performance of his duties hereunder; or (vi) Employee being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude or fraud against, or the misappropriation of material property belonging to the Company, provided, however, in all cases other than Employee being convicted of, or entering a plea of nolo contendere to, a felony, that prior to the Company having the right to terminate Employee’s employment with the Company For Cause pursuant to this Subsection 6(a), (1) the Company’s board of directors must first provide written notice to Employee describing in reasonable detail the basis upon which the Company would terminate Employee’s employment with the Company For Cause and the Employee must have had opportunity to address the Company’s board of directors, with counsel, regarding such alleged basis and (2) Employee shall have failed, during the period of 30 days following such opportunity to address the Company’s board of directors, to remedy any such alleged basis for “For Cause” termination. In the event Employee’s employment is terminated in accordance with this Subsection 6(a), the Company shall pay to Employee all amounts accrued through the Termination Date (as hereinafter defined), any unreimbursed expenses incurred pursuant to Subsection 5(h) of this Agreement, and any other benefits specifically provided to Employee under any benefit plan.
Xxxxxxx Employment Agreement
(i) without the Employee’s express written consent, the assignment to the Employee of any duties or the reduction of the Employee’s duties, either of which results in a significant diminution in the Employee’s position or responsibilities with the Company in effect immediately prior to such assignment, or the removal of the Employee from such position and responsibilities; provided, however, that upon and following the consummation of a Change of Control, Employee may not terminate his employment for Good Reason pursuant to this subsection, unless Employee is assigned a title lower than that of an Employee Vice President of the controlling entity following the Change of Control or Employee is assigned any duties or his duties are reduced to a level inconsistent with the role of an Employee Vice President or higher role with such controlling entity;
(ii) without the Employee’s express written consent, a substantial reduction, without good business reasons, as determined by the Company’s board of directors, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction;
(iii) a material reduction by the Company in the Base Salary or bonus opportunity of the Employee as in effect immediately prior to such reduction;
(iv) a material reduction by the Company in the kind or level of Employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced;
(vi) the failure of the Company to obtain the assumption of this Agreement by any successor; or
(vii) any material breach by the Company of any material provision of this Agreement.
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including any position as a manager, officer, agent or trustee of the Company or any Affiliate of the Company. Upon the request of the Company, Employee shall deliver to the Company such written confirmation of such resignation as the Company may reasonably request.
10. Confidential Information. The Company hereby agrees to provide the Employee with, and the Employee hereby acknowledges that he will be made aware of, certain confidential business information, trade secrets, innovations and inventions, expertise and know-how, customer information, and other nonpublic information concerning the business of Company and the Related Companies including (a) any and all trade secrets concerning the business and affairs of the Company, costs, bidding practices, price lists, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing and distribution methods and processes, customer lists, current and anticipated customer requirements, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures and architectures (and related processes, formulae, compositions, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information of the Company), and any other information, however documented; and (b) any and all information concerning the business and affairs of the Company (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials); and (c) any and all notes, analysis, compilations, studies, summaries, and other material prepared by or for the Company containing or based, in whole or in part, on any information included in the foregoing (“Confidential Information”). Employee further acknowledges that such information, even though it may be contributed, developed, or acquired by the Employee, constitutes valuable, special, and unique assets of the Company, which are to be used by the Employee solely for the Company’s benefit. The Employee further acknowledges that the Confidential Information includes “trade secrets.” In addition to the other protections provided herein, all trade secrets shall be accorded the protections and benefits of the Uniform Trade Secrets Act and any other applicable law.
11. Confidentiality of Information. The Employee shall not, during the Employee’s employment and for a period of two (2) years thereafter, divulge or disclose to any third person, firm, or company, or make personal or non-Company use of, any Confidential Information. These obligations of nondisclosure shall not apply to information that: (a) is in the public domain or is generally known or available, or hereafter becomes part of the public domain or is generally known or available through no violation of this Agreement; (b) is henceforth lawfully acquired by the Employee from any third party not bound, to the actual knowledge of the Employee, by an obligation of confidence to the Company; (c) is required, pursuant to judicial action or governmental regulations or other requirements, to be disclosed by the Employee, provided that the Employee has notified the Company of such imminent disclosure and cooperates with the Company in the event that the Company elects to contest and avoid such disclosure; or (d) is approved for release by prior written authorization from the Company. Notwithstanding anything to the contrary contained herein, Employee may disclose this Agreement and any other agreement to which Employee is or to which Employee may become a party to Employee’s immediate family, attorneys, accountants, auditors, tax preparers, and financial advisors and otherwise insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law.
Xxxxxxx Employment Agreement
13. Noncompetition. While Employee is an employee of the Company (the “Noncompetition Period”), Employee agrees that Employee will not, singly, jointly, or as a partner, member, employee, agent, officer, director, stockholder (except as a holder, for investment purposes only, of not more than 4.99% of the outstanding stock of any company listed on a national securities exchange or actively traded in a national over-the-counter market), equity holder, lender, consultant, independent contractor, or joint venturer of any other person, or in any other capacity, directly or beneficially, own, manage, operate, join, control, participate in the ownership, management, operation or control of, permit the use of his name by, work for, provide consulting, financial or other assistance to a Competing Business (as hereinafter defined) anywhere in the Protected Territory (as hereinafter defined). Notwithstanding the above, nothing in this Section 13 shall (i) prohibit Employee’s continued association as an officer, director or shareholder of Nology or Performance Stores.
14. Nondisparagement. Employee shall not, during or after the term of this Agreement (a) attempt or seek to cause any of the customers of the Company to refrain from maintaining, selling to, or acquiring from or through the Company any service or product relating to the Company’s business as conducted during the term of this Agreement; or (b) openly disparage the Company or any of its equity holders, directors, officers, Employees, or agents, which has or may reasonably be expected to have a material adverse effect on a current or prospective business relationship with a current or prospective customer, supplier, investor, direct or indirect equity owner, or creditor.
15. Nonsolicitation. For a period of two years following the Termination Date (the “Nonsoliciation Period”), Employee agrees that Employee shall not: (a) employ, retain, engage (as an Employee, consultant, or independent contractor), or induce or attempt to induce to be employed, retained, or engaged, any person that is or was during the Noncompetition Period an Employee, consultant, or independent contractor of the Company; (b) induce or attempt to induce any person that during the Noncompetition Period is an Employee, consultant, or independent contractor of the Company to terminate his or her employment or other relationship with the Company; (c) induce or attempt to induce any person that is a customer of the Company or that otherwise is a contracting party with the Company during the Noncompetition Period to terminate any written or oral agreement, understanding, or other relationship with the Company; or (d) solicit any direct or indirect customers of the Company or any Related Company within the Protected Territory for a Competing Business.
16. Employee’s Representations and Warranties. Except for Employee’s current and continued association with Nology and Performance Stores, as set forth above, Employee represents and warrants that Employee is not a party to any other employment, noncompetition, or other agreement or restriction that could interfere with Employee’s employment with the Company or Employee’s or the Company’s rights and obligations hereunder and that Employee’s acceptance of employment with the Company and the performance of Employee’s duties hereunder will not breach the provisions of any contract, agreement, or understanding to which Employee is party or any duty owed by Employee to any other person. Employee further warrants that Employee has provided to the Company a copy of any employment agreement, consulting agreement, noncompetition covenant, nondisclosure agreement, or other agreement, covenant, understanding, or restriction with respect to any employment, consultancy, or confidentiality of information thereunder, to which Employee is subject or a party, and that such copy is a true and correct representation of such agreement, provided that the Employee may redact from such document any provision specifying the amount of financial remuneration and other highly sensitive information. The Employee hereby represents and warrants to the Company that he has the legal capacity
Xxxxxxx Employment Agreement
to execute and perform this Agreement, that this Agreement is a valid and binding agreement enforceable against him according to its terms, and that the execution and performance of this Agreement by him does not violate the terms of any existing agreement or understanding, written or oral, to which the Employee is a party or any judgment or decree to which the Employee is subject.
17. Excise Tax and Gross-Up Payments. If any payment Employee receives or would receive pursuant to this Agreement (any such payment a “Payment”) will be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties are incurred by Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Employee will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount equal to the Excise Tax imposed upon the Payments made to the Employee in excess of 10% above the capped limit of 2.99 times the base amount as such term is defined in Section 280G of the Internal Revenue Code, and any Excise Tax imposed upon the Gross-Up Payment. An initial determination (the “Determination”) as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company’s expense by an accounting firm selected by the Company (the “Accounting Firm”). The Accounting Firm shall provide its Determination, together with detailed supporting calculations and documentation to the Company and Employee within 30 days of the effective date of the Termination Date, or such other time as requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by Employee with respect to a Payment, it shall furnish Employee with an opinion that no Excise Tax will be imposed with respect to any such Payment. Employee shall have 30 days to dispute the Determination. The Company shall pay the Gross-Up Payment, if any, to Employee within 30 days of the receipt of the Determination, regardless of whether Employee has disputed the Determination. Upon the final resolution of a dispute, the Company shall promptly pay to Employee any additional amount required by such resolution and such resolution shall be binding, final, and conclusive upon the Company and Employee. If there is no dispute, the Determination shall be binding, final, and conclusive upon the Company and Employee. Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment, the Company shall pay to the applicable government taxing authorities, as Excise Tax withholding, the amount of the Excise Tax that the Company withholds from the Payment.
Xxxxxxx Employment Agreement
(i) all amounts accrued to Employee through the Termination Date, any unreimbursed expenses incurred pursuant to Subsection 5(h) of this Agreement, and any other benefits specifically provided to Employee under any benefit plan;
(ii) the continuation of Employee’s Base Salary for 12 months, payable on the Company’s payroll payment dates;
(iii) the greater of (1) the minimum annual bonus for each of the four quarters in the year in which such termination occurs, and (2) the additional bonus earned by Employee for the four fiscal quarters immediately preceding such termination;
(v) the continuation, at the Company’s expense, of group medical coverage under the same terms as in effect at the Termination Date for the earlier of (1) three months past the Termination Date, or (2) until Employee obtains alternate health insurance coverage, in addition to any health insurance continuation obligation under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA); and
(vi) full acceleration of all vesting of Options and any other options or shares of capital stock that may be subject to vesting, so that all Options and any other options and shares subject to any vesting will be immediately vested and exercisable as of and for a period of two years following the Termination Date.
(d) Person. The term “person” shall mean an individual, partnership, corporation, limited liability company, association, trust, joint venture, unincorporated organization, and any government, governmental department or agency, or political subdivision thereof.
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consummation of a sale of all or substantially all of the assets of the Company in a single transaction or series of related transactions.
(i) all amounts accrued to Employee through the Termination Date, any unreimbursed expenses incurred pursuant to Subsection 5(h) of this Agreement, and any other benefits specifically provided to Employee under any benefit plan;
(ii) the continuation for a period of 12 months of Employee’s Base Salary, payable on the Company’s regular payroll payment dates;
(iii) the continuation, at the Company’s expense, of group medical coverage under the same terms as in effect at the Termination Date for the earlier of (1) two months past the Termination Date, or (2) until Employee obtains alternate health insurance coverage, in addition to any health insurance continuation obligation under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA); and
(iv) full acceleration of all vesting of Options and any other options or shares of capital stock that may be subject to vesting, so that all Options and any other options and shares subject to any vesting will be immediately vested and exercisable as of and for a period of two years following the Termination Date.
23. Notices. Any notice, demand, request, or other communication permitted or required under this Agreement shall be in writing and shall be deemed to have been given as of the date so delivered, if personally served; as of the date so sent, if transmitted by facsimile and receipt is confirmed by the facsimile operator of the recipient; as of the date so sent, if sent by electronic mail and receipt is acknowledged by the recipient; one day after the date so sent, if delivered by overnight courier service; or five days after the date so mailed, if mailed by certified mail, return receipt requested, addressed as follows:
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If to the Company, addressed to:
0000 Xxxxx Xxxxxx Xxxxx Xx Xxxx
Xxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Employee: To the address set forth on the signature page of this Agreement or at the current address listed in the Company’s regular payroll records.
(a) Jurisdiction. Each of the parties hereto hereby consents to the jurisdiction of all state and federal courts located in San Diego County, California, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, for the purpose of any suit, action, or other proceeding arising out of, or in connection with this Agreement or any of the transactions contemplated hereby, including any proceeding relating to ancillary measures in aid of arbitration, provisional remedies, and interim relief, or any proceeding to enforce any arbitral decision or award. Each party hereby expressly waives any and all rights to bring any suit, action, or other proceeding in or before any court or tribunal other than the courts described above and covenants that it shall not seek in any manner to resolve any dispute other than as set forth in this section, or to challenge or set aside any decision, award, or judgment obtained in accordance with the provisions hereof.
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COMPANY: EMPLOYEE:
| /s/ Xxxxxx Xxxx |
|
/s/ Xxxxxx X. Xxxxxxx |
| By: Xxxxxx Xxxx |
|
Xxxxxx X. Xxxxxxx |
| Title: President and CEO |
|
|
Xxxxxxx Employment Agreement
