EXHIBIT 10.7
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is made as of October 18, 2005
by and between USN Corporation, a Colorado Corporation (the "COMPANY") and Xxxx
Xxxxxx (the "EXECUTIVE").
The parties are entering into this Agreement in order to set forth the
terms and conditions under which the Executive shall be employed by the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants contained herein, agree as
follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby accepts employment on the terms and conditions set forth
herein. The Executive's employment with the Company shall commence on the date
hereof.
2. EMPLOYMENT AT WILL. The Executive and the Company understand and
agree that the Executive is an employee at will, and that the Executive may
resign, or the Company may terminate the Executive's employment, at any time and
for any or for no reason and consistent with Section 6 of this Agreement.
Nothing in this Agreement or any Related Agreements (as hereinafter defined)
shall be construed to alter the at-will nature of the Executive's employment,
nor shall anything in this Agreement or any Related Agreements be construed as
providing the Executive with a definite term of employment.
3. POSITION. During the Executive's employment with Company, the
Executive shall serve as Chief Executive Officer of the Company and Acting
Chairman of the Board of Directors. The Executive shall perform those duties
generally required of persons in the position, as well as such other duties, not
inconsistent with this Agreement, as the Board of Directors (the "BOARD") may
from time to time direct. The Executive shall report and be responsible to the
Company's Board of Directors.
4. BASE SALARY, COMPENSATION AND BENEFITS.
4.1 BASE SALARY. During the Executive's employment, the
Company agrees to pay, and the Executive agrees to accept, as the Executive's
salary for all services to be rendered by the Executive hereunder, a salary at a
monthly rate of $ 12,500.00 ("BASE SALARY"), payable at the same time that the
Company pays its employees generally. The Base Salary is subject to annual
increases in the sole discretion of the Board.
4.2 STOCK GRANT. The Executive shall be entitled to an initial
stock grant and stock options as referenced on Exhibit A attached hereto.
4.3 INCENTIVES, SAVINGS AND RETIREMENT PLANS. The Executive
shall also be entitled to participate at similar levels in all health,
incentive, savings, and retirement plans, policies and programs made available
by the Company to executive-level employees generally ("PLANS"). Company agrees
to cover the costs of Executive's current Blue Cross health insurance policy or
another similarly situated policy of Executive's choice.
4.4 REIMBURSEMENT. The Company shall reimburse the Executive
(or, in the Company's sole discretion, shall pay directly), upon presentation of
vouchers and other supporting documentation as the Company may reasonably
require, for essential out-of-pocket expenses incurred by the Executive directly
relating to the business or affairs of the Company or the performance of the
Executive's duties hereunder, including, without limitation, direct expenses
with respect to meals, travel and similar items, PROVIDED that the incurring of
such expenses shall have been approved in accordance with the Company's regular
reimbursement procedures and practices in effect from time to time.
4.5 VACATION. In addition to statutory holidays, the Executive
shall be entitled to four (4) weeks paid vacation each calendar year during the
Executive's employment, accruing ratably each month.
4.6 WITHHOLDING. The Company may withhold from the Executive's
compensation all applicable amounts required by law.
5. PAYMENTS UPON TERMINATION OF EMPLOYMENT. In the event the
Executive's employment with the Company terminates for any reason, the Company
shall pay to the Executive any Base Salary including accrued vacation pay,
expense reimbursements, compensation and benefits under any Plan, and any and
all benefits and other similar amounts, accrued but unpaid as of the date of
termination. In addition, upon termination of the Executive's employment with
the Company, and contingent upon the Executive's execution and delivery of a
general release reasonably satisfactory to the Company releasing the Company,
its officers, managers, agents, members, and affiliates from any liability for
any matter other than for payments under this Section 5 and contractual
obligations under other written agreements, the Company shall pay to the
Executive an amount equal to a three (3) month portion of the Base Salary
("SEVERANCE"), to be paid pursuant to Company's payroll cycle for the three (3)
months following termination of employment. The parties further acknowledge that
there are not any express or implied agreements that affect or impair the
ability of Executive or Company to terminate the employment relationship at
will. Upon termination of the Executive's employment any rights to fixed and
contingent compensation including but not limited to stock options, bonuses,
royalties, commissions or any other payment obligations by Employer shall cease.
5.1 RETURN OF RECORDS AND PROPERTY. Upon termination of
Executive's employment with the Company, Executive shall promptly deliver to the
Company any and all Company records and any and all Company property in his
possession or under his control, including without limitation manuals, books,
blank forms, documents, letters, memoranda, notes, notebooks, reports,
printouts, computer disks, computer tapes, source codes, data, tables or
calculations and all copies thereof, documents that in whole or in part contain
any trade secrets or confidential, proprietary or other secret information of
the Company and all copies thereof, and keys, access cards, access codes,
passwords, credit cards, personal computers, telephones and other electronic
equipment belonging to the Company.
6. CONFIDENTIALITY. In the course of developing its business and
goodwill, Company has developed and continues to develop unique techniques,
processes, and compilations of information that it uses in the design, styling,
pricing, selling and marketing of its products and services. This non-public
information is a valuable asset, allows Company to maintain a competitive
advantage, and is deemed propriety, confidential, and is a trade secret of
Company. Therefore, Company desires to maintain and preserve the confidentiality
of its trade secrets and other confidential information (collectively
"Confidential Information") regarding its business from any unauthorized
disclosures. To enable Executive to perform the Services contemplated hereunder,
Company may disclose or authorize the disclosure of Confidential Information to
Executive. Executive acknowledges and expressly agrees that Company's
Confidential Information is a valuable asset. Confidential Information may
include, but not be limited to, designs, devices, methods, techniques,
compilations, processes, product specifications, future plans, financial
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information, cost and pricing information, computer programs, formulas and
equations, the names, buying habits or practices of any of Company's suppliers,
the costs of materials, the prices Company obtains or has obtained, or at which
it sells or has sold its products, sales cost, written business records,
documents, specifications, plans and compilations of information, reports,
correspondence, sales records, account lists, budgets, indexes, invoices,
telephone records, or any other material relating in any manner whatsoever to
the customers, sales representatives or Executives (including the salaries of
employees other than Executive and their abilities) of Company. Executive agrees
that all Confidential Information, or any copy, extract or summary, whether
originated or prepared by Executive or by or for Company, is and shall remain
the exclusive property of Company. Executive agrees to not disclose to others,
either directly or indirectly, or take or use for Executive's own purposes or
the purposes of others, the Confidential Information of Company. Executive shall
not disclose the name of any Executive, customer, sales representative or
independent contractor of Company to any third party, unless the disclosure
occurs during Executive's employment with Company, and is reasonably required to
further the interests of Company. These restrictions shall also apply to: (i)
trade secrets or confidential information conceived by or belonging to third
parties which are in Company's possession; and (ii) trade secrets or
Confidential Information conceived, originated, discovered or developed by
Executive within the scope of Executive's employment.
6.1 OWNERSHIP OF INTELLECTUAL PROPERTY. During the Term of
Executive's employment, and for the Restrictive Period (as defined below in
Section 10.4), Executive may develop or participate in the development of
trademarks, copyrights, customer and vendor lists and other proprietary
information, including processes and methods relating to the business of
Company. If it is determined that any of the information identified above is, in
whole or in part, not entitled to protection as a trade secret, it shall be
Confidential Information that is protected by this Agreement. Executive
acknowledges and expressly agrees that Company's property shall include any
invention, improvement, development, copyrightable matter, design, idea or
suggestion conceived, made, devised or developed by Executive, solely or jointly
with others: (i) during regular working hours or with the use of Company's
equipment, resources, supplies, facilities, Confidential Information or trade
secrets; (ii) during the term of Executive's employment whether during regular
working hours or not, which relates to business of Company; or (iii) during the
term of Executive's employment, and after, which embodies, uses or is the result
of any Confidential Information of Company that Executive has knowledge of shall
become the sole property of Company. As to each invention, improvement,
development, copyrightable matter, design, idea, suggestions or other matter
described above, Executive assigns to Company all rights, including all
copyright, trademark and patent right and all other claims of ownership which
Executive has or may have in the future. Executive agrees that, upon request by
Company, Executive shall promptly execute all instruments and documents
requested by Company, including but not limited to applications for Letters
Patent and assignment of the rights thereto. Upon the termination of Executive's
employment, or whenever required by Company, Executive shall immediately deliver
to Company all property and materials in Executive's possession or under
Executive's control belonging to Company, or developed by Executive while
employed by Company, including but not limited to, all physical embodiments of
Confidential Information. This Provision does not apply to any invention that
qualifies under the provisions of Section 2870 of the California Labor Code.
6.2 NON-SOLICITATION. During the term of Executive's
employment with the Company and for a period of 12 consecutive months from the
date of the termination of such employment, Executive shall not, directly or
indirectly, hire, engage or solicit any person who is then an employee of the
Company or who was an employee of the Company at the time of Executive's
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employment, in any manner or capacity, including without limitation as a
proprietor, principal, agent, partner, officer, director, stockholder,
Executive, member of any association, consultant or otherwise.
6.3 NON-DISPARAGEMENT AND NO PUBLICITY. Executive recognizes
that goodwill is a valuable asset of the Company and therefore agrees that he
will not make any negative or disparaging comments or attempt to cast either the
Company or its employees, shareholders, founders, officers, directors, agents or
affiliates in a negative light. Executive represents and warrants that that he
will not converse, corresponded or file any report, complaint or charges that
casts the Company and all related holding, parent and subsidiary corporations
(including their employees, shareowners, founders, officers, directors, agents
or affiliates) in a negative light with the media or any association, group,
agency or individual. Executive shall obtain prior written permission to grant
interviews, correspond outside of the normal course of business, publish or
cause to be published any article, book, textbook, play, audio or tape
recordings, television broadcasts, films, internet or electronic publications,
or any other form of communication concerning Company or the business of Company
or concerning any of it's employees, shareholders, founders, officers,
directors, agents or affiliates. Company may grant or withhold this permission
in its sole discretion. This section shall survive the term of this Agreement.
6.4 CONFLICTS OF INTEREST. Executive shall not do anything
conflicting with the interest of USN during the term of Executive's employment.
Executive shall avoid conflicts of interest and acknowledges that violation of
this provision will lead to termination. Executive, during the term of
employment and for twelve (12) months following termination of employment, shall
not perform any services or accept any employment with any competitor of the
Company. This prohibition includes acting as an advisor or consultant, unless
that activity is required as part of the Executive's direct job
responsibilities. Executive must immediately disclose in writing to the Company
any financial interest Executive or Executive's immediate family has, during the
term of employment, in any firm which does business with, or which competes with
Company. Executive and Executive's immediate family are not to, during the term
of employment, accept gifts from any person or firm doing, or seeking to do
business with Company. The meaning of gifts for purposes of this Agreement
includes the acceptance of entertainment, travel and lodging. Executive, during
the term of employment, shall also not give, offer, or promise anything of value
to any representative of a company with which Company does business.
6.5 BLUE PENCIL DOCTRINE. If the duration of, the scope of or
any business activity covered by any provision of this Section 6 is in excess of
what is valid and enforceable under applicable law, such provision shall be
construed to cover only that duration, scope or activity that is valid and
enforceable. Executive hereby acknowledges that this Section shall be given the
construction which renders its provisions valid and enforceable to the maximum
extent, not exceeding its express terms, possible under applicable law.
6.6 ACKNOWLEDGMENT. Executive hereby acknowledges that the
provisions of this Sections 8 are reasonable and necessary to protect the
legitimate interests of the Company and that any violation of these provisions
by Executive shall cause substantial and irreparable harm to the Company to such
an extent that monetary damages alone would be an inadequate remedy. Therefore,
in the event that Executive violates any of these provisions, the Company shall
be entitled to an injunction, in addition to all the other remedies it may have,
restraining Executive from violating or continuing to violate such provision.
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7. WAIVERS AND AMENDMENTS. The respective rights and obligations of the
Company and the Executive under this Agreement may be waived (either generally
or in a particular instance, either retroactively or prospectively, and either
for a specified period of time or indefinitely) or amended only with the written
consent of a duly authorized representative of the Company and the Executive.
8. SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the Company's successors and assigns.
9. ENTIRE AGREEMENT. This Agreement and the Related Agreements
constitute the full and entire understanding and agreement of the parties with
regard to the subjects hereof and supersede in their entirety all other or prior
agreements, whether oral or written, with respect thereto.
10. NOTICES. All demands, notices, requests, consents and other
communications required or permitted under this Agreement shall be in writing
and shall be personally delivered or sent by facsimile machine (with a
confirmation copy sent by one of the other methods authorized in this Section),
reputable commercial overnight delivery service (including Federal Express and
U.S. Postal Service overnight delivery service) or, deposited with the U.S.
Postal Service mailed first class, registered or certified mail, postage
prepaid, as set forth below:
If to the Company, addressed to:
USN Corporation
2121 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Board of Directors
Fax: (000) 000-0000
If to the Executive, to the address set forth on the signature page of
this Agreement or at the current address listed in the Company's records.
Notices shall be deemed given upon the earlier to occur of (i) receipt
by the party to whom such notice is directed; (ii) if sent by facsimile machine,
on the day (other than a Saturday, Sunday or legal holiday in the jurisdiction
to which such notice is directed) such notice is sent if sent (as evidenced by
the facsimile confirmed receipt) prior to 5:00 p.m. Pacific Time and, if sent
after 5:00 p.m. Pacific Time, on the day (other than a Saturday, Sunday or legal
holiday in the jurisdiction to which such notice is directed) after which such
notice is sent; (iii) on the first business day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
the day the same is deposited with the commercial courier if sent by commercial
overnight delivery service; or (iv) the fifth day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
deposit thereof with the U.S. Postal Service as aforesaid. Each party, by notice
duly given in accordance therewith, may specify a different address for the
giving of any notice hereunder.
11. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of Delaware (without giving effect to
any conflicts or choice of laws provisions thereof that would cause the
application of the domestic substantive laws of any other jurisdiction).
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12. ARBITRATION. Except for ancillary measures in aid of arbitration
and for proceedings to obtain provisional remedies and interim relief,
including, without limitation, injunctive relief, any controversy, dispute or
claim arising out of or in connection with or relating to this Agreement or any
related Agreements, or the breach, termination or validity thereof or any
transaction contemplated hereby or thereby (any such controversy, dispute or
claim being referred to as a "DISPUTE") shall be finally settled by arbitration
conducted expeditiously in accordance with the Commercial Arbitration Rules then
in force (the "AAA RULES") of the American Arbitration Association (the "AAA").
Any such Dispute must be made within one year of the act that gave rise to the
complaint. There shall be a panel of three arbitrators who shall be appointed
pursuant to AAA procedures, in each case, within fifteen (15) business days of
the demand for arbitration by the respondent(s) in any such proceeding. Each of
the arbitrators shall be an attorney with no less than fifteen (15) years'
experience in the practice of business law (preferably with experience in
securities law). Any arbitration pursuant to this Section shall take place in
Los Angeles County, California. A final award shall be rendered as soon as
reasonably possible and, in any event, within ninety (90) days of the filing
with AAA any demand for arbitration; PROVIDED, however, that if the arbitrators
determine by majority vote that fairness so requires, such ninety (90) day
period may be extended by no more than sixty (60) additional days. The parties
agree that the arbitrators shall have the right and power to shorten the length
of any notice periods or other time periods provided in the AAA Rules and to
implement "Expedited Procedures" under the AAA Rules in order to ensure that the
arbitration process is completed within the time frames provided herein. The
arbitration decision or award shall be in writing. Judgment on the decision or
award rendered by the arbitrators may be entered and specifically enforced in
any court having jurisdiction thereof. Notwithstanding the provisions of Section
6, any arbitration held pursuant to the provisions of this Section shall be
governed by the Federal Arbitration Act. All arbitrations commenced pursuant to
this Agreement or any other Related Agreements shall be consolidated and heard
by the initially constituted panel of arbitrators.
13. EQUITABLE REMEDIES. The parties hereto agree that irreparable harm
would occur in the event that any of the agreements and provisions of this
Agreement were not performed fully by the parties hereto in accordance with
their specific terms or conditions or were otherwise breached, and that money
damages are an inadequate remedy for breach of this Agreement because of the
difficulty of ascertaining and quantifying the amount of damage that will be
suffered by the parties hereto in the event that this Agreement is not performed
in accordance with its terms or conditions or is otherwise breached. It is
accordingly hereby agreed that the parties hereto shall be entitled to an
injunction or injunctions to restrain, enjoin and prevent breaches of this
Agreement by the other parties and to enforce specifically such terms and
provisions of this Agreement, such remedy being in addition to and not in lieu
of, any other rights and remedies to which the other parties are entitled to at
law or in equity.
14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY VOLUNTARILY
AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHER PROCEEDING BROUGHT
IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY.
15. SEVERABILITY; TITLES AND SUBTITLES; GENDER; SINGULAR AND PLURAL;
COUNTERPARTS; FACSIMILE.
(a) In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
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(b) The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
(c) The use of any gender in this Agreement shall be deemed to
include the other genders, and the use of the singular in this Agreement shall
be deemed to include the plural (and vice versa), wherever appropriate.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
constitute one instrument.
(e) Counterparts of this Agreement (or applicable signature
pages hereof) that are manually signed and delivered by facsimile transmission
shall be deemed to constitute signed original counterparts hereof and shall bind
the parties signing and delivering in such manner.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above specified.
COMPANY: EXECUTIVE:
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USN CORPORATION
By: /S/ XXXXX XXXXXXXX /S/ XXXX X. XXXXXX
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Name: Xxxxx Xxxxxxxx Xxxx X. Xxxxxx
Title: CEO
Address: 0000 XXXXXXXXX XXX
XXXXXXXX, XX 00000
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SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
EXHIBIT A
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STOCK COMPENSATION
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1. INITIAL STOCK GRANT. Executive will be granted stock options
totaling 100,000 shares of common stock in USN Corporation. The Stock Options
shall be set at $.01 and will be exercisable immediately.
2. ADDITIONAL STOCK OPTIONS. Executive will also be granted stock
options totaling 400,000 shares of common stock in USN Corporation. The Stock
Options shall be set at $1.50 and will vest ratably 1/48th per month over a 48
month vesting period; PROVIDED, that, as of each relevant vesting date, the
Executive is then employed by the Company or any Subsidiary.
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