EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement
(this “Agreement”) is made as of the 27th day of October, 2009 by and between
InferX Corp., a Delaware corporation (the “Company”), and X.X. Xxxxx, a natural
person, residing in the Commonwealth of Virginia (“Executive”).
WHEREAS, the Company and the Executive
entered into an Executive Employment Agreement dated May 1, 2006 pursuant to
which the Executive was employed as President of the Company;
WHEREAS, the Company and the Executive
agree to terminate the May 1, 2006 Executive Employment Agreement;
WHEREAS, the Company wishes to employ
Executive as its President of the Company’s Technology Solutions Group and
Executive wishes to accept such employment;
WHEREAS, the Company and Executive wish
to set forth the terms of Executive’s employment and certain additional
agreements between Executive and the Company.
NOW, THEREFORE, in consideration of the
foregoing recitals and the representations, covenants and terms contained
herein, the parties hereto agree as follows:
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1.
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Employment
Period
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The
Company will employ Executive, and Executive will serve the Company, under the
terms of this Agreement commencing October 27, 2009 (the “Commencement Date”)
for a term of five (5) years unless earlier terminated under Section 4
hereof. The period of time between the commencement and the
termination of Executive’s employment hereunder shall be referred to herein as
the “Employment Period.”
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2.
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Duties
and Status
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The
Company hereby engages Executive as its President of its Technology Solutions
Group on the terms and conditions set forth in this Agreement. including the
terms and conditions of the Employee Proprietary Information, Inventions, and
Non-Competition Agreement attached hereto as Exhibit A and
incorporated herein (the “Non-Disclosure Agreement”). Executive agrees to devote
the Executive’s entire business time, attention and energies to the business and
interests of the Company during the Employment Period. During the Employment
Period, Executive shall report directly to the President of the Company and
shall exercise such authority, perform such executive functions and discharge
such responsibilities as are reasonably associated with Executive’s position,
commensurate with the authority vested in Executive pursuant to this Agreement
and consistent with the governing documents of the Company.
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3.
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Compensation
and Benefits
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(a)
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Salary. During
the Employment Period, the Company shall pay to Executive, as compensation
for the performance of his duties and obligations under this Agreement, a
base salary of $200,000 per annum, payable semi-monthly, which base salary
shall increase to $230,000 per annum when the Company first achieves
EBITDA equal to at least $1,000,000 as reported in the Company’s quarterly
reports or in the annual report filed with the Securities and Exchange
Commission or, if not a reporting company under the Securities Exchange
Act of 1934, as amended, the financial statements reviewed by the
Company’s independent accounting
firm.
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(b)
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Bonus. During
the Employment Period, Executive shall be eligible for a bonus to be paid
in cash, stock or both on terms that shall be mutually acceptable to the
Board of Directors (the “Board”) and Executive. In the event
that the Company sells or licenses its software product for at least
$1,000,000 or generates EBITDA of $1,000,000 as set forth in Section 3(a)
the Company shall pay Executive $122,000 which is equal to Executive’s
unpaid salary for 2009 under Executive’s May 1, 2006 Executive Employment
Agreement.
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(c)
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Preferred Shares. Upon
execution of this Agreement, Executive shall receive 1,000,000
shares of the Company’s preferred stock with each share having voting
rights along with holders of the Corporation’s shares of common stock
equal to 100 votes per share per merger agreement. The Company will issue
the Executive 300,000 restricted shares of the Company’s common stock
within five (5) days after execution of the
Agreement.
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(d)
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Options. Upon execution
of this Agreement, Executive shall also be entitled to receive restricted
stock and stock options under the Company’s 2006 Stock Incentive Plan to
acquire shares of the Company’s common stock at the discretion of the
Board. Executive shall be granted an option to acquire 1,750,000 shares of
the Company’s common stock at the market price on the date of grant under
the Company’s 2006 Stock Incentive Plan on the effective date of the
merger between InferX Corporation and The Irus Group, Inc. under Delaware
law. 750,000 options shall vest upon execution of this Agreement and
1,000,000 options shall vest on December 31,
2009.
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(e)
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Other
Benefits. During the Employment Period, Executive shall
be entitled to participate in all of the employee benefit plans, programs
and arrangements of the Company in effect during the Employment Period
which are generally available to senior executives of the Company, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans, programs and arrangements. In
addition, during the Employment Period, Executive shall be entitled to
fringe benefits and perquisites comparable to those of other senior
executives of the Company including, but not limited to, standard
holidays, twenty (20) days of vacation pay plus five (5) sick/personal
days, to be used in accordance with the Company’s vacation pay policy for
senior executives.
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(f)
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Business
Expenses. During the Employment Period, the Company
shall promptly reimburse Executive for all appropriately documented,
reasonable business expenses incurred by Executive in the performance of
his duties under this Agreement, including telecommunications expenses and
travel expenses.
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(g)
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Automobile
Allowance. The Company shall pay $600 per month for an
automobile expense for the
Executive.
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(h)
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Life
insurance. The Company shall pay premiums on life
insurance with a face value not to exceed $1,000,000. The
premiums will be taxable to Executive and Executive shall have the right
to designate the beneficiaries of such
policies.
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(i)
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Health
Club. The Company shall pay the monthly cost of the
health club of Executive’s choice.
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4.
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Termination
of Employment
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(a)
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Termination for
Cause. The Company may terminate Executive’s employment
hereunder for Cause (defined below). For purposes of this
Agreement and subject to Executive’s opportunity to cure as provided in
Section 4(c) hereof, the Company shall have Cause to terminate Executive’s
employment hereunder if such termination shall be the result
of:
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(i)
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a
material breach
of fiduciary duty or material breach
of the terms of this Agreement or any other agreement between Executive
and the Company (including without limitation any agreements regarding
confidentiality, inventions assignment and
non-competition);
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(ii)
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the
commission by Executive of any act of embezzlement, fraud, larceny or
theft on or from the Company;
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(iii)
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substantial
and continuing neglect or inattention by Executive of the duties of his
employment or the willful misconduct or gross negligence of Executive in
connection with the performance of such duties which remains uncured for a
period of fifteen (15) days following receipt of written notice from the
Board specifying the nature of such
breach;
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(iv)
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the
commission and indictment by Executive of any crime involving moral
turpitude or a felony; and
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(v)
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Executive’s
performance or omission of any act which becomes known to any of the
customers, clients, stockholders or regulators of the Company, and, as
found by the Board, threatens to have or has a material and adverse impact
on the business of the Company.
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(b)
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Termination for Good
Reason. Executive shall have the right at any time to
terminate his employment with the Company upon not less than thirty (30)
days prior written notice of termination for Good Reason (defined
below). For purposes of this Agreement and subject to the
Company’s opportunity to cure as provided in Section 4(c) hereof,
Executive shall have Good Reason to terminate his employment hereunder if
such termination shall be the result
of:
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(i) the
Company’s material breach of this Agreement;
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(ii)
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A
requirement by the Company that Executive perform any act or refrain from
performing any act that would be in violation of any applicable
law;
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(iii)
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A
material and substantial reduction of the Employee’s responsibilities that
is inconsistent with the Employee’s status as a senior executive of the
Company, but in each case subject to the limitations on the Employee's
rights and responsibilities set forth in Section 2;
or
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(iv)
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A
requirement that Executive relocate his permanent residence more than
thirty (30) miles from his current
address.
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(c)
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Notice and Opportunity to
Cure. Notwithstanding the foregoing, it shall be a
condition precedent to the Company’s right to terminate Executive’s
employment for Cause and Executive’s right to terminate for Good Reason
that (i) the party seeking termination shall first have given the other
party written notice stating with specificity the reason for the
termination (“breach”) and (ii) if such breach is susceptible of cure or
remedy, a period of fifteen (15) days from and after the giving of such
notice shall have elapsed without the breaching party having effectively
cured or remedied such breach during such 15-day period, unless such
breach cannot be cured or remedied within fifteen (15) days, in which case
the period for remedy or cure shall be extended for a reasonable time (not
to exceed an additional thirty (30) days) provided the breaching party has
made and continues to make a diligent effort to effect such remedy or
cure.
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(d)
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Voluntary
Termination. Executive, at his election, may terminate
his employment upon not less than sixty (60) days prior written notice of
termination other than for Good
Reason.
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(e)
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Termination Upon Death or
Permanent and Total Disability. The Employment Period
shall be terminated by the death of Executive. The Employment
Period may be terminated by the Board if Executive shall be rendered
incapable of performing his duties to the Company by reason of any
medically determined physical or mental impairment that can be reasonably
expected to result in death or that can be reasonably be expected to last
for a period of either (i) six (6) or more consecutive months from the
first date of Executive’s absence due to the disability or (ii) nine (9)
months during any twelve-month period (a “Permanent and Total
Disability”). If the Employment Period is terminated by reason
of a Permanent and Total Disability of Executive, the Company shall give
thirty (30) days’ advance written notice to that effect to
Executive.
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(f)
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Termination at the Election of
the Company. At the election of the Company, otherwise
than for Cause as set forth in Section 4(a) above, upon not less than
sixty (60) days prior written notice of
termination.
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(g)
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Termination for Business
Failure. Anything contained herein to the contrary
notwithstanding, in the event the Company’s business is discontinued
because continuation is rendered impracticable by substantial financial
losses, lack of funding, legal decisions, administrative rulings,
declaration of war, dissolution, national or local economic depression or
crisis or any reasons beyond the control of the Company, then this
Agreement shall terminate as of the day the Company determines to cease
operation with the same force and effect as if such day of the month were
originally set as the termination date hereof. In the event
this Agreement is terminated pursuant to this Section 4(g), the Executive
will not be entitled to severance
pay.
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5.
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Consequences
of Termination
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(a)
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By Executive for Good Reason
or the Company Without Cause. In the event of a
termination of Executive’s employment during the Employment Period by
Executive for Good Reason pursuant to Section 4(b) or the Company without
Cause pursuant to Section 4 (f) the Company shall pay Executive (or his
estate) and provide him with the following, provided that Executive enter
into a release of claims agreement agreeable to the Company and
Executive:
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(i)
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Cash
Payment. A cash payment, payable in equal installments
over a six (6) month period after Executive’s termination of employment,
equal to the sum of the following:
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(A)
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Salary. The
equivalent of the greater of (i) twenty-four (24) months of Executive’s
then-current base salary or (ii) the remainder of the term of this
Agreement (the “Severance Period”);
plus
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(B)
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Earned but Unpaid
Amounts. Any previously earned but unpaid salary through
Executive’s final date of employment with the Company, and any previously
earned but unpaid bonus amounts prior to the date of Executive’s
termination of employment.
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(C)
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Equity. All
restricted stock, options, warrants and other equity grants (“Equity”)
vested at time of termination shall be retained by Executive and
all Equity that has not vested shall be accelerated and be
deemed vested for purposes of this Section
5.
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(ii)
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Other
Benefits. The Company shall provide continued coverage
for the Severance Period under all health, life, disability and similar
employee benefit plans and programs of the Company on the same basis as
Executive was entitled to participate immediately prior to such
termination, provided that Executive’s continued participation is possible
under the general terms and provisions of such plans and
programs. In the event that Executive’s participation in any
such plan or program is barred, the Company shall use its commercially
reasonable efforts to provide Executive with benefits substantially
similar (including all tax effects) to those which Executive would
otherwise have been entitled to receive under such plans and programs from
which his continued participation is barred. In the event that
Executive is covered under substitute benefit plans of another employer
prior to the expiration of the Severance Period, the Company will no
longer be obligated to continue the coverages provided for in this Section
5(a)(ii).
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(b)
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Other Termination of
Employment. In the event that Executive’s employment
with the Company is terminated during the Employment Period by the Company
for Cause (as provided for in Section 4(a) hereof) or by Executive other
than for Good Reason (as provided for in Section 4(b) hereof), the Company
shall pay or grant Executive any earned but unpaid salary, bonus, and
Options through Executive’s final date of employment with the Company, and
the Company shall have no further obligations to
Executive.
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(c)
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Withholding of
Taxes. All payments required to be made by the Company
to Executive under this Agreement shall be subject only to the withholding
of such amounts, if any, relating to tax, excise tax and other payroll
deductions as may be required by law or
regulation.
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(d)
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No Other
Obligations. The benefits payable to Executive under
this Agreement are not in lieu of any benefits payable under any employee
benefit plan, program or arrangement of the Company, except as
specifically provided herein, and Executive will receive such benefits or
payments, if any, as he may be entitled to receive pursuant to the terms
of such plans, programs and arrangements. Except for the
obligations of the Company provided by the foregoing and this Section 5,
the Company shall have no further obligations to Executive upon his
termination of employment.
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(e)
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Mitigation or
Offset. Executive shall not be required to mitigate the
damages provided by this Section 5 by seeking substitute employment or
otherwise and there shall not be an offset of the payments or benefits set
forth in this Section 5.
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6.
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Governing
Law
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This Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with the laws
of the Commonwealth of Virginia, without giving effect to the principles of
conflict of laws.
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7.
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Indemnity
and Insurance
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The Company shall indemnify and save
harmless Executive for any liability incurred by reason of any act or omission
performed by Executive while acting in good faith on behalf of the Company and
within the scope of the authority of Executive pursuant to this Agreement and to
the fullest extent provided under the Bylaws, the Articles of Incorporation and
the Stock Corporation Act of Virginia, except that Executive must have in good
faith believed that such action was in, or not opposed to, the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such conduct was unlawful.
The Company shall provide that
Executive is covered by Directors and Officers insurance that the Company
provides to other senior executives and/or board members.
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8.
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Cooperation
with the Company After Termination of
Employment
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Following termination of Executive’s
employment for any reason, Executive shall fully cooperate with the Company in
all matters relating to the winding up of Executive’s pending work on behalf of
the Company including, but not limited to, any litigation in which the Company
is involved, and the orderly transfer of any such pending work to other
employees of the Company as may be designated by the
Company. Following any notice of termination of employment by either
the Company or Executive, the Company shall be entitled to such full time or
part time services of Executive as the Company may reasonably require during all
or any part of the sixty (60)-day period following any notice of termination,
provided that Executive shall be compensated for such services at the same rate
as in effect immediately before the notice of termination.
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9.
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Notice
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All
notices, requests and other communications pursuant to this Agreement shall be
sent by overnight mail or by fax with proof of transmission to the following
addresses:
If to Executive:
X.X.
Xxxxx
00000
Xxxxx Xxxxx Xxxxx
Xxxxxxx,
XX 00000
Phone:
000 000-0000
Fax: 000-000-0000
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If to the Company:
Attn: Xxxxx Xxxx, President and
CEO
00000
Xxxxxxxx Xxxx Xxxxx
Xxxxx
000
Xxxxxxxx,
Xxxxxxxx 00000
Phone: (000)
000-0000
Fax: (000)
000-0000
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10.
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Waiver
of Breach
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Any waiver of any breach of this
Agreement shall not be construed to be a continuing waiver or consent to any
subsequent breach on the part of either Executive or of the
Company.
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11.
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Non-Assignment
/ Successors
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Neither party hereto may assign his/her
or its rights or delegate his/hers or its duties under this Agreement without
the prior written consent of the other party; provided, however, that (i) this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale or all or substantially all of the
Company’s assets, or upon any merger, consolidation or reorganization of the
Company with or into any other corporation, all as though such successors and
assigns of the Company and their respective successors and assigns were the
Company; and (ii) this Agreement shall inure to the benefit of and be binding
upon the heirs, assigns or designees of Executive to the extent of any payments
due to them hereunder. As used in this Agreement, the term “Company”
shall be deemed to refer to any such successor or assign of the Company referred
to in the preceding sentence.
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12.
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Severability
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To the extent any provision of this
Agreement or portion thereof shall be invalid or unenforceable, it shall be
considered deleted there from and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full force and
effect.
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13.
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Counterparts
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This Agreement may be executed in one
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.
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14.
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Arbitration
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Executive and the Company shall submit
to mandatory and exclusive binding arbitration, any controversy or claim arising
out of, or relating to, this Agreement or any breach hereof where the amount in
dispute is greater than or equal to $50,000, provided, however, that the
parties retain their right to, and shall not be prohibited, limited or in any
other way restricted from, seeking or obtaining equitable relief from a court
having jurisdiction over the parties. In the event the amount of any
controversy or claim arising out of, or relating to, this Agreement, or any
breach hereof, is less than $50,000, the parties hereby agree to submit such
claim to mediation. Such arbitration shall be governed by the Federal
Arbitration Act and conducted through the American Arbitration Association
(“AAA”) in the District of Columbia, before a single neutral arbitrator, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association in effect at that time. The
parties may conduct only essential discovery prior to the hearing, as defined by
the AAA arbitrator. The arbitrator shall issue a written decision
which contains the essential findings and conclusions on which the decision is
based. Mediation shall be governed by, and conducted through, the
AAA. Judgment upon the determination or award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
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15.
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Entire
Agreement
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This Agreement and all schedules and
other attachments hereto constitute the entire agreement by the Company and
Executive with respect to the subject matter hereof and, except as specifically
provided herein, supersedes any and all prior agreements or understandings
between Executive and the Company with respect to the subject matter hereof,
whether written or oral. This Agreement may be amended or modified
only by a written instrument executed by Executive and the Company.
[Signature Page
Follows]
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IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date above
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/s/Xxxxx Xxxx
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By:
Xxxxx Xxxx
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Its: President
and CEO
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/s/
X.X. Xxxxx
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X.X.
Xxxxx
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[Signature Page to X.X. Xxxxx
Executive Employment Agreement]
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Exhibit A
Employee Proprietary
Information, Inventions, and Non-Competition Agreement
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