EMPLOYMENT AGREEMENT
Exhibit
10.3
This Employment Agreement (this “Agreement”) is entered into as of the
21st
day of
June, 2005 (the “Effective Date”), between Summus, Inc., a Delaware corporation
(the “Company”),
and
Xxxxxx X. Xxxxx (the “Executive”).
RECITALS:
WHEREAS, the Company desires to employ Executive, and Executive desires to
be
employed by the Company, on the terms and subject to the conditions set forth
herein;
WHEREAS,
the Company has previously entered into an employment agreement with the
Executive dated July 28, 2004 (the “Existing Employment Agreement”); and
WHEREAS,
the Company and the Executive desire to cancel the Existing Employment Agreement
with the Executive as of the Effective Date of this Agreement and replace
it in
its entirety with this Agreement.
NOW, THEREFOR, in consideration of the mutual premises herein contained,
the
parties agree as follows:
1. Employment;
Cancellation of Existing Employment Agreement.
The Company hereby employs Executive as Chief Executive Officer and Executive
hereby accepts such employment, on the terms and subject to the conditions
hereinafter set forth. As of the Effective of this Agreement, the Existing
Employment Agreement shall be cancelled, void of no effect.
2. Duties
of Executive.
2.1 Executive shall report
directly to the
Chief Executive Officer, and shall perform such duties consistent with his
position as Chief Financial Officer and General Counsel pursuant to the
direction of the Chief Executive Officer and the Board.
2.2 Executive shall be required
to devote
his full business time, attention and effort to the Company’s business and
affairs except for vacation time and reasonable periods of absence due to
sickness, personal injury or other disability and shall perform diligently
such
duties as are customarily performed by executives in similar positions with
companies similar in character or size to the Company, all subject to the
direction of the Board, together with such other duties as may be reasonably
requested from time to time by the Board, which duties shall be consistent
with
his positions as set forth above. Executive agrees to use all of
his
skills and business judgment and render services to the best of his ability
to
serve the interests of the Company. Subject to the terms of Section
8
hereof, this shall not preclude Executive from serving on community and civic
boards, participating in industry associations, pursuing his personal financial
and legal affairs or otherwise engaging in other activities, so long as such
activities do not unreasonably interfere with his duties to the
Company.
1
3. Support
Services.
Executive shall be entitled to all the administrative, operational and facility
support customary to a similarly situated executive. This support
shall
include, without limitation, a suitably appointed private office, and payment
of
or reimbursement for reasonable cellular telephone expenses, travel and
entertainment expenses, reasonable expenses of Executive maintaining his
professional license and standing and any and all other business expenses
reasonably incurred on behalf of or in the course of performing duties for
the
Company, all in accordance with the expense reimbursement policies established
from time to time by the Company. Executive agrees to provide
documentation of these expenses as may be reasonably required.
4. Term.
Unless
earlier terminated as provided herein, the Executive’s employment shall be for a
continuing term (the “Term”) of one year from the Effective Date of this
Agreement which shall be automatically extended (without further action of
the
Company, the Board of Directors or the Compensation Committee) each day for
an
additional day so that the remaining term shall continue to be one (1) year;
provided that either party may at any time, by written notice to the other
party, fix the Term to a finite term of one year, without automatic extension,
commencing with the date of such notice.
5. Compensation.
Throughout the Term, the Company shall pay or provide, as the case may be,
to
Executive the compensation and other benefits and rights set forth in this
Section 5.
5.1 Base
Salary.
The Company shall pay to Executive a base salary (“Base Salary”), payable
in accordance with the Company’s usual pay practices (and in any event no less
frequently than monthly), of $144,000 per annum (the “Initial Base
Salary”). The Compensation Committee shall annually review Executive’s
Base Salary in light of the base salaries paid to other executive officers
of
the Company and the performance of Executive, and the Compensation Committee
may, in its discretion, increase such Base Salary by an amount it determines
is
appropriate. If any other executive officer of the Company is granted an
increase in their Base Salary, Executive shall also be entitled to a comparable
increase in Base Salary. Notwithstanding any other provisions in this Agreement,
Executive’s Base Salary shall automatically be increased:
(a) to
1.5 times the Executive’s Initial Base Salary once the Company achieves a fiscal
year gross revenue of $10,000,000 and
has net
income for such fiscal year period; such increase shall be effective
automatically upon the date of the attainment of the milestones set forth
in
this Section 5.1(a); and
(b) to
2.0 times the Executive’s Initial Base Salary once the Company achieves a fiscal
year gross revenue of $20,000,000 and
has net
income for such fiscal year period; such increase shall be effective
automatically upon the date of the attainment of the milestones set forth
in
this Section 5.1(b).
2
Once
Executive’s Base Salary is increased, it shall not thereafter be reduced for any
reason.
5.2 Performance
Bonus.
(a) The
Executive shall receive a cash bonus of 100% of his then current Base Salary
upon the achievement of the Company’s annual objectives, as set by the Board of
Directors.
Any
cash
bonus earned by the Executive pursuant to the provisions of this Section
5.2 or
any other provision of this Agreement shall not be paid to the Executive
unless
and until the Company has achieved a cash flow positive position, which will
be
certified to the Board of Directors by an executive officer of the Company.
(b) The
Company may also consider the Executive for a cash bonus for each fiscal
year,
or part thereof that he is employed by the Company, in an amount to be
determined at the discretion of the Board, provided that such bonus shall
be
commensurate with other bonuses paid to other executive officers of the Company.
If any other executive officer of the Company is granted a cash bonus, the
Executive shall also be entitled to a comparable cash bonus.
5.3 Option
Grants.
In
addition to the grant of options to the Executive as set forth in the Existing
Employment Agreement, the Company shall grant to the Executive options to
purchase 225,000 shares of the Company’s common stock on the terms as set forth
in the Stock Option Agreement attached to this Agreement as Appendix A, which
is
incorporated into this Agreement for all purposes.
All
options and/or warrants previously granted to the Executive in lieu of cash
compensation forgone by the Executive shall be amended to have a life of
ten
(10) years from the date of each such respective grant while Executive is
employed by the Company or a life of three years from the date of termination
of
the Executive’s employment.
5.4 Insurance.
The Company shall provide medical, vision, hospitalization, disability and
dental insurance for Executive, his spouse and eligible family members, subject
to and in accordance with the Company’s policy, the proportion of the cost
thereof to be borne by the Company and Executive to be in accordance with
such
policy.
5.5 Employee
Benefit Plans.
Executive shall be eligible to participate in all retirement and other benefit
plans of the Company generally available from time to time to employees of
the
Company and for which Executive qualifies under the terms thereof (and nothing
in this Agreement shall, or shall be deemed to, in any way affect Executive’s
rights and benefits thereunder except as expressly provided
herein).
3
5.6 Other
Benefit Plans.
Executive shall be entitled to participate in any equity or other employee
benefit plan that is generally available to senior executive officers, as
distinguished from general management, of the Company, at the highest level
provided for any employee. Executive’s participation in and benefits under
any such plan shall be on the terms and subject to the conditions specified
in
the governing document of the particular plan.
5.7 Vacation.
Executive shall be entitled to Twenty (20) days of vacation allowance each
year,
which shall accrue at the rate of five (5) days per calendar quarter, but
may be
used in advance of accrual. Vacation days not used in one calendar
year
shall carry over to the following calendar year(s) up to a maximum of ten
days.
Executive shall also be entitled to a sick leave allowance as provided under
the
Company’s vacation and sick leave policy for executive officers.
6.
Permanent
Disability.
6.1 For purposes of this
Agreement,
Executive’s “Permanent Disability” shall be deemed to have occurred one day
after one hundred eighty (180) days in the aggregate during any consecutive
twelve (12) month period, or one day after one hundred twenty consecutive
days,
during which the 180 or 120 day period, as the case may be, Executive, by
reason
of his physical or mental disability or illness, shall have been unable to
discharge fully his duties under this Agreement.
6.2 If either the Company
or Executive,
after receipt of notice of Executive’s Permanent Disability from the other,
disputes that Executive’s Permanent Disability shall have occurred, Executive
shall promptly submit to a physical examination by a physician at any major
accredited hospital and, unless such physician shall issue his written statement
to the effect that, in his opinion, based on his diagnosis, Executive is
capable
of resuming his employment and devoting his full time and energy to discharging
fully his duties hereunder within thirty (30) days after the date of such
statement, such Permanent Disability shall be deemed to have occurred on
the day
above specified.
7. Termination.
7.1 Bases
for Termination.
Executive’s employment under this Agreement and the Term shall be terminated
immediately on the death of Executive and may be terminated by the
Board:
(a)
at any time after the Permanent Disability of Executive
(b)
at any time without Cause prior to a Change of Control;
(c)
at any time without Cause upon a Change of Control; or
4
(d)
at any time for “Cause” (as defined in Section 7.8 hereof);
7.2 Termination
by Death.
If Executive’s employment is terminated by death, Executive’s estate or
designated beneficiaries shall be entitled to receive:
(a) any accrued but
unpaid
salary;
(b) a
cash lump sum payment in respect of accrued but unused vacation days pursuant
to
the terms of this Agreement;
(c)
life insurance benefits pursuant to any life insurance policy purchased by
the
Company on the Executive;
(d)
a pro rata portion of the bonus applicable to the calendar year in which
such
termination occurs, payable when and as such bonus is determined under Section
5.2;
(e)
acceleration of the vesting of one hundred percent (100%) of the unvested
portion of all of Executive’s stock options or other stock-based awards,
together with the right to exercise such stock options or awards for a period
equal to the remaining term for exercising such options or awards under the
applicable agreement and/or plan; and
(f)
reimbursement for all expenses incurred by Executive pursuant to Section
3
hereof.
7.3 Termination
for Permanent Disability.
If Executive’s employment is terminated by the Company for Permanent Disability,
Executive shall be entitled to receive:
(a)
his then current Base Salary under Section 5.1 hereof, payable at such times
as
his Base Salary would have been paid if his employment had not been terminated
for a period of six (6) months, minus any amounts payable under any short-term
disability insurance policy provided by the Company.
(b)
a pro rata portion of the bonus applicable to the calendar year in which
such
termination occurs, payable when and as such bonus is determined under Section
5.2;
(c)
continuation of the insurance provided by the Company pursuant to Section
5.4
for 12 months;
(d)
acceleration of the vesting of one hundred percent (100%) of the unvested
portion of all of Executive’s stock options or other stock-based awards,
together with the right to exercise such stock options or awards for a period
equal to the remaining term for exercising such options or awards under the
applicable agreement and/or plan;
5
(e)
reimbursement for all expenses incurred by Executive pursuant to Section
3 prior
to his termination.
7.4 Termination
by the Company without Cause prior to a Change of Control.
If Executive’s employment is terminated by the Company without Cause (as defined
in Section 7.8(a)) prior to a Change of Control, Executive shall be entitled
to
receive:
(a)
accrued but unpaid
Base Salary to the
date of such termination;
(b) a
cash lump sum payment in respect of accrued but unused vacation days pursuant
to
the terms of this Agreement;
(c) a
cash lump sum payment equal to his then-current Base Salary under Section
5.1
hereof payable within ten (10) days of Executive’s termination;
(d)
a cash lump sum payment of the bonus applicable to the calendar year in which
such termination occurs; this cash lump sum payment shall be payable within
ten
(10) days after the determination that the annual objectives, as set by the
Board of Directors pursuant to Section 5.2 of this Agreement, have been
met;
(e)
acceleration of the vesting of one hundred percent (100%) of the unvested
portion of all of Executive’s stock options or other stock-based awards,
together with the right to exercise such stock options or awards for a period
equal to the remaining term for exercising such options or awards under the
applicable agreement and/or plan;
(f)
continuation of the insurance provided by the Company pursuant to Section
5.4
for 12 months; and
(g)
reimbursement for all expenses incurred by Executive pursuant to Section
3 prior
to his termination.
7.5
Termination
by the Company without Cause Upon a Change of Control or by Executive for
Good
Reason at Any Time.
If Executive’s employment is terminated by the Company without Cause (as defined
in Section 7.8(a)) upon a Change of Control (as defined in Section 7.8 (c))
or
by Executive for Good Reason (as defined in Section 7.8(e)) at any time,
Executive shall be entitled to receive:
(a)
accrued but unpaid Base Salary to the date of such termination;
(b)
a cash lump sum payment in respect of accrued but unused vacation days pursuant
to the terms of this Agreement;
6
(c)
a cash lump sum payment of up two (2) times his then-current Base Salary
under
Section 5.1 hereof based on the closing price of the Company’s common stock on
the date of termination pursuant to this Section 7.5. The Executive shall
receive the multiple of his Base Salary as set forth below based on such
closing
common stock price. This amount shall be paid within ten (10) days of
Executive’s date of termination
|
Multiple
of Base Salary
|
Closing
Stock Price at Date of
Change
of Control or Date of
Termination
|
|
1.00
times Base Salary
|
$3.50
or lower
|
|
1.25
times Base Salary
|
$4.00
|
|
1.50
times Base Salary
|
$4.50
|
|
1.75
times Base Salary
|
$5.00
|
|
2.00
times Base Salary
|
$5.50
|
(d)
a cash lump sum payment of up to two (2) times the bonus applicable to the
calendar year in which such termination occurs based on the closing price
of the
Company’s common stock on the date of termination pursuant to this Section 7.5.
The Executive shall receive the multiple of his bonus as set forth below
based
on such closing common stock price. This cash lump sum payment shall be payable
within ten (10) days after the determination that the annual objectives,
as set
by the Board of Directors pursuant to Section 5.2 of this Agreement, have
been
met the full amount of any Bonus (es) applicable to the calendar year in
which
such termination occurs, payable when and as such bonus is determined under
Section 5.2;
|
Multiple
of Base Salary
|
Closing
Stock Price at Date of
Change
of Control or Date of
Termination
|
|
1.00
times Bonus
|
$3.50
or lower
|
|
1.25
times Bonus
|
$4.00
|
|
1.50
times Bonus
|
$4.50
|
|
1.75
times Bonus
|
$5.00
|
|
2.00
times Bonus
|
$5.50
|
(e) acceleration
of the vesting of one hundred percent (100%) of the unvested portion of
Executive’s stock options or other stock-based awards, together with the right
to exercise such stock options or awards for a period equal to the remaining
term for exercising such options or awards under the applicable agreement
and/or
plan;
(f) continuation
of the insurance provided by the Company pursuant to Section 5.4 for 12 months;
and
(g)
reimbursement for all expenses incurred by Executive pursuant to Section
3 prior
to his termination.
7.6
Termination
by the Company for Cause or by Executive without Good Reason upon a Change
of
Control.
If Executive’s employment is terminated by the Company for Cause or by Executive
without Good Reason upon a Change of Control (other than as a result of
Executive’s Permanent Disability or Death), the Company shall not have any other
or further obligations to Executive under this Agreement, except
(a)
as may be provided in accordance with the terms of retirement and other benefit
plans pursuant to Sections 5.5 and 5.6 hereof;
(b)
as to that portion of any unpaid Base Salary and other benefits accrued and
earned under this Agreement through the date of such termination;
(c)
all stock option grants that have vested as of the Executive’s date of
termination pursuant to this Section 7.6 for the remainder of the term of
such
option grants;
(d)
as to benefits, if any, provided by any insurance policies in accordance
with
their terms; and
(e)
reimbursement for all expenses incurred by Executive pursuant to Section
3 prior
to his termination).
In
addition, if Executive’s employment is terminated by the Company for Cause at
any time during the Term, Executive shall immediately forfeit any and all
unvested stock rights, stock options and other such unvested incentives or
awards previously granted to him by the Company and any Bonus(es) earned
by him
but not paid pursuant to Section 5.2 of this Agreement. The foregoing
sentence shall be in addition to, and not in lieu of, any and all other rights
and remedies which may be available to the Company under the circumstances,
whether at law or in equity.
7.7 Termination
Upon Cessation of Business.
The Company shall have the right to immediately terminate Executive’s employment
under this Agreement upon a Cessation of Business (as defined in Section
7.8(b)). Upon termination in connection with a Cessation of Business,
the
Company shall pay to Executive any accrued but unpaid Base Salary until the
date
of Cessation of Business. The Company may make such payments in accordance
with
its regular payroll schedule or in a single lump sum payment in its sole
discretion.
7.8 Definitions.
As used herein:
(a)
“Cause”
shall
mean:
7
(1)
active participation by Executive in fraudulent conduct against the Company,
conviction of or a plea of guilty or nolo
contendere
with
respect to a felony involving theft or moral turpitude, an act or series
of
deliberate acts which were not taken in good faith by Executive and which,
in
the reasonable judgment of the Board, results or will likely result in material
injury to the business, operations or business reputation of the Company,
or an
act or series of acts constituting willful malfeasance or gross misconduct;
(2)
a substantial and continual refusal by Executive in breach of this Agreement
to
perform the duties, responsibilities or obligations assigned to Executive
pursuant to the terms hereof, which breach has not been cured (if it is of
a
nature that can be cured) to the Board’s reasonable satisfaction within ten (10)
days after the Company gives written notice thereof to Executive; or
(3)
excessive absenteeism by Executive; provided that absenteeism (i) related
to
illness or otherwise covered by Section 6 hereof, (ii) required to be permitted
under applicable federal or state laws, or (iii) permitted under Company
policy,
shall not be deemed to be excessive.
Executive shall be permitted to respond and defend himself before the Board
within thirty (30) days after delivery to Executive of written notification
of
any proposed termination for Cause which specifies in detail the reasons
for
such termination. If the majority of the members of the Board (excluding
Executive) do not confirm that the Company had grounds for a “Cause”
termination, Executive shall have the option to treat his employment as not
having terminated or as having been terminated pursuant to a termination
without
Cause.
(b)
“Cessation
of Business”
shall
mean the Company’s ceasing to operate in the ordinary course of business,
whether by dissolution, liquidation, or in connection with a good faith
determination by the Board that the continuing operation of the business
in its
ordinary course is reasonably likely to render the Company unable to meet
its
liabilities as they mature.
(c)
A “Change
in Control”
shall
occur if:
(1)
there shall be consummated any consolidation or merger of the Company in
which
the Company is not the continuing or surviving corporation;
(2)
any Person (as defined in Section 2(a)(2) of the Securities Act of 1933,
as
amended) other than the Company, subsequently becomes the beneficial owner,
directly or indirectly (including by holding securities which are exercisable
for or convertible into shares of capital stock of the Company) of forty
percent
(40%) or more of the combined voting power of the then outstanding shares
of
capital stock of the Company entitled to vote generally in the election of
directors;
8
(3)
the Company sells, leases, exchanges or otherwise transfers all or substantially
all of its property and assets (in a transaction or series of transactions
contemplated or arranged by any party as a single plan);
(4)
Continuing Directors cease to constitute at least a majority of the Board;
or
(5)
a majority of the Outside Directors determine that a Change in Control has
occurred.
(d)
“Continuing
Directors”
shall
mean the members of the Board in office on July 16, 2004, and any successor
to
any such director whose nomination or selection was approved by a majority
of
the directors in office at the time of the director’s nomination or selection.
(e) “Good
Reason”
means a
termination of Executive’s employment by Executive within ninety (90) days
following:
(1)
a reduction in Executive’s Base Salary or incentive compensation or equity
participation opportunity;
(2)
a material reduction in Executive’s position(s), duties and responsibilities or
reporting lines from those described in Section 2 hereof;
(3)
a change in the location of the Company’s headquarters or of the office of
Executive from the Raleigh-Durham metropolitan area;
(4)
a material breach of this Agreement by the Company if such breach is not
cured
within 15 days of written notice thereof by Executive to the Company; or
(5)
any failure by the Company to obtain from any successor to the Company an
agreement reasonably satisfactory to Executive to assume and perform this
Agreement, as contemplated by Section 11.3 hereof.
Notwithstanding the foregoing, a termination shall not be treated as a
termination for Good Reason (A) if Executive shall have consented in writing
to
the occurrence of the event giving rise to the claim of termination for Good
Reason, or (B) unless Executive shall have delivered a written notice to
the
Board within thirty (30) days of his having actual knowledge of the occurrence
of one of such events stating that he intends to terminate his employment
for
Good Reason and specifying the factual basis for such termination, and such
event, if capable of being cured, shall not have been cured within ten (10)
days
of the receipt of such notice.
9
(f)
“Outside
Director”
means a
member of the Board who is not, and who during the past six months was not,
an
employee of officer of the Company.
(g)
“Termination
Upon a Change in Control”
means:
(1)
a termination by Executive for Good Reason within one year following a Change
in
Control;
(2)
declination by Executive of an offer of employment from the Company or the
Company’s successor, for Good Reason at or in anticipation of a Change in
Control, if Executive would not have been permitted to retain Executive’s
existing position; or
(3)
termination of Executive’s employment by the Company or the Company’s successor
within one year following a Change in Control other than a termination for
Cause
or a termination resulting from Executive’s death or Permanent
Disability.
7.9 Mitigation
of Damages.
Executive is not required to mitigate the amount of any payments to be made
by
the Company pursuant to this Agreement following his termination by seeking
other employment or otherwise. In addition, the amount of any
post-termination payments provided for in this Agreement shall, except as
otherwise expressly provided herein, not be reduced by any remuneration earned
by Executive during the period following the termination of his employment
as a
result of employment by another employer or otherwise after the date of
termination of his employment with the Company.
8.
Covenants and Confidential Information.
8.1 Restrictive
Covenants.
Executive acknowledges the Company’s reliance on and expectation of Executive’s
continued commitment to performance of his duties and responsibilities during
the term. In light of such reliance and expectation on the part of
the
Company, during the applicable period hereafter specified in Section 8.2,
Executive shall not
(a) directly
or indirectly, do or suffer any of the following;
(1)
own, manage, control or participate in the ownership, management or control
of,
or be employed or engaged by or otherwise affiliated or associated as a
consultant, independent contractor or otherwise with, any other corporation,
partnership, proprietorship, firm, association or other business entity engaged
in the business of, or otherwise engage in the business of, information
processing of multimedia over mobile and wireless networks within
the
United States in competition with the Company; provided, however, that the
beneficial and/or record ownership of not more than 4.9% of any class of
publicly traded securities of any entity shall not be deemed a violation
of this
covenant;
10
(2)
solicit any business or contracts from any customers of the Company or its
affiliates, any past customers of the Company or its affiliates, or any
prospective customers of the Company or its affiliates (i.e., potential
customers from which the Company or its affiliates has solicited business
at any
time during the one year period preceding the expiration or termination of
the
Term), except as necessitated by Executive’s position with the Company and then
only in furtherance of the business interests of the Company or its affiliates;
(3)
induce or attempt to induce any such customer to alter its business relationship
with the Company or its affiliates except as necessitated by Executive’s
position with the Company and then only in furtherance of the business interests
of the Company or its affiliates;
(4)
solicit or induce or attempt to solicit or induce any employee of the Company
or
its affiliates to leave the employ of the Company or any of its affiliates
for
any reason whatsoever or hire any employee or any person who was an employee
of
the Company or its affiliates within the twelve (12) month period prior to
such
hiring;
or
(b) disclose, divulge,
discuss, copy or
otherwise use or suffer to be used in any manner, other than in accordance
with
Executive’s duties hereunder, any confidential or proprietary information
relating to the Company’s business, prospects, finances, operations or
properties or other trade secrets of the Company, it being acknowledged by
Executive that all such information regarding the business of the Company
compiled or obtained by, or furnished to, Executive while Executive shall
have
been employed by or associated with the Company is confidential and/or
proprietary information and the Company’s exclusive property; provided, however,
that the foregoing restrictions shall not apply to the extent that such
information: (A) is clearly obtainable in the public domain; (B) becomes
obtainable in the public domain, except by reason of the breach by Executive
of
the terms hereof or by another person barred by a similar duty of
confidentiality; or (C) is required to be disclosed by rule of law or by
order
of a court or governmental body or agency.
8.2 Applicable
Periods.
The applicable periods shall be:
(a)
so long as Executive is an employee of the Company;
(b)
as to Section 8.1(b), at any time after Executive is no longer an employee
of
the Company; and
(c)
for a period of 6 months after termination of employment.
11
8.3 Injunctive
Relief.
Executive agrees and understands that the remedy at law for any breach by
him of
this Section 8 will be inadequate and that the damages flowing from such
breach
are not readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that the Company shall be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened
or
further breach. Nothing in this Section 8 shall be deemed to limit
the
Company’s remedies at law or in equity for any breach by Executive of any of the
provisions of this Section 8 which may be pursued or availed of by the
Company.
8.4 Acknowledgment
by Executive.
Executive has carefully considered the nature and extent of the restrictions
upon him and the rights and remedies conferred upon the Company under this
Section 8, and hereby acknowledges and agrees that the same are reasonable
in
time and territory, are designed to eliminate competition which otherwise
would
be unfair to the Company, do not stifle the inherent skill and experience
of
Executive, would not operate as a bar to Executive’s sole means of support, are
fully required to protect the legitimate interests of the Company, and do
not
confer a benefit upon the Company disproportionate to the detriment of
Executive.
8.5 Survival.
Executive acknowledges that Executive’s obligations under this Section 8 shall
survive in accordance with Section 8.2 hereof regardless of whether Executive’s
employment by the Company is terminated, voluntarily or involuntarily, by
the
Company or Executive, with Cause or without Cause, or the Executive with
or
without Good Reason.
9. Proprietary
Rights.
9.1 At all times during the
Term, all right,
title and interest in all copyrightable material which Executive shall conceive
or originate, either individually or jointly with others, and which arise
out of
the performance of this Agreement, will be the property of the Company and
are
by this Agreement assigned to the Company along with ownership of any and
all
copyrights in the copyrightable material. At all times during the
Term,
Executive agrees to execute all papers and perform all other acts necessary
to
assist the Company to obtain and register copyrights on such materials in
any
and all countries, and the Company agrees to pay expenses associated with
such
copyright registration. Works of authorship created by Executive
for the
Company in performing his responsibilities under this Agreement shall be
considered “works made for hire” as defined in the U.S. Copyright Act. In
addition, Executive hereby assignees to the Company all proprietary rights,
including but not limited to, all patents, copyrights, trade secrets and
trademarks Executive might otherwise have, by operation of law or otherwise,
in
all inventions, discoveries, works, ideas, information, knowledge and data
related to Executive’s access to confidential information of the Company during
the Term.
9.2 All know-how and trade
secret
information conceived or originated by Executive which arises out of the
performance of his obligations or responsibilities under this Agreement during
the Term shall be the property of the Company, and all rights therein are
by
this Agreement assigned to the Company.
12
9.3 If, during the term,
Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in such project, program or venture shall belong to the Company.
Except as formally approved by the Board, Executive shall not be entitled
to any
interest in such project, program or venture or to any commission, finder’s fee
or other compensation in connection therewith other than the compensation
to be
paid to Executive as provided in this Agreement.
9.4 Upon termination of the
Term, Executive
shall deliver promptly to the Company all records, manuals, books, documents,
letters, memoranda, notes, notebooks, reports, data, tables, calculations,
customer and prospective customer lists, and copies of all of the foregoing,
which are the property of the Company, and all other property, trade secrets
and
confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession
or
under his control.
9.5 The obligations of Executive
under this
Section 9 shall survive the termination or expiration of the Term.
10. Indemnification.
During the Term, the Company shall indemnify Executive and hold Executive
harmless from and against any claim, loss or cause of action arising from
or out
of Executive’s performance as an officer, director or employee of the Company or
any of its subsidiaries or in any other capacity, including any fiduciary
capacity, in which Executive serves at the request of the Company to the
maximum
extent permitted by applicable law. If any claim is asserted hereunder
with respect to which Executive reasonably believes in good faith he is entitled
to indemnification, the Company shall pay Executive’s legal expenses (or cause
such expenses to be paid), on a monthly basis, provided that Executive shall
reimburse the Company for such amounts if Executive shall be found by a court
of
competent jurisdiction not to have been entitled to indemnification.
In
addition, the Company agrees to provide Executive with coverage under a
directors and officers liability insurance policy.
11. Miscellaneous.
11.1 Representation
and Warranty by Executive.
Executive represents and warrants that he is not a party to any agreement,
contract or understanding, whether employment or otherwise, which would restrict
or prohibit him from undertaking or performing employment in accordance with
the
terms and conditions of this Agreement.
11.2 Severability.
The provisions of this Agreement are severable and if any one or more provisions
may be determined to be illegal or otherwise unenforceable, in whole or in
part,
the remaining provisions and any partially unenforceable provision, to the
extent enforceable in any jurisdiction, nevertheless shall be binding and
enforceable.
13
11.3 Assignment.
This Agreement shall be binding upon and inure to the benefit of the heirs
and
representatives of Executive and the assigns and successors of the Company,
but
neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Executive (except by
will or
by operation of the laws of intestate succession) or by the Company, except
that
the Company may assign this Agreement to any successor (whether by merger,
purchase or otherwise) to all or substantially all of the stock, assets or
business of the Company, and the Company shall require such successor to
expressly agree to assume the obligations of the Company hereunder.
11.4 Dispute
Resolution.
Any controversy or claim arising out of or relating to this Agreement, or
the
breach thereof, shall be settled by mediation, and if not settled within
14 days
of the submission to meditation, by arbitration in accordance with the Voluntary
Arbitration Rules of the American Arbitration Association, and the arbitration
shall be held in the Raleigh, North Carolina area. The arbitrator
shall be
acceptable to both the Company and Executive. If the parties cannot
agree
on an acceptable arbitrator, the dispute shall be heard by a panel of three
(3)
arbitrators, one appointed by each of the parties and the third appointed
by the
other two arbitrators. Judgment upon the award rendered by the arbitrator
or arbitrators may be entered in any court having jurisdiction thereof.
The arbitrator or arbitrators shall be deemed to possess the power to issue
mandatory orders and restraining orders in connection with such arbitration;
provided, however, that nothing in this Section 11.4 shall be construed so
as to
deny the Company the right and power to seek and obtain injunctive relief
in a
court of equity for any breach or threatened breach by Executive of his
covenants contained in Section 8 hereof. All costs and expenses of
arbitration shall be paid one-half by the Company and one-half by
Executive.
11.5 Notices.
All notices and other communications required or permitted under this Agreement
shall be in writing, and shall be deemed properly given if delivered personally,
mailed by registered or certified mail in the United States mail, postage
prepaid, return receipt requested, send by facsimile or sent by Express Mail,
Federal Express or other nationally recognized express delivery service,
as
follows:
|
If
to Summus:
|
If
to Executive:
|
|
000
Xxxxxxxxxxxx Xxxxxx
|
00000
Xxxxx Xxxxx Xxxxx
|
|
Xxxxx
000
|
Xxxxxxx,
Xxxxx Xxxxxxxx 00000
|
|
Xxxxxxx,
Xxxxx Xxxxxxxx 00000
|
|
|
Attn:
Chief Executive Officer
|
Notice given by hand, certified or registered mail, or by Express Mail, Federal
Express or other such express delivery service, shall be effective upon
receipt. Notice given by facsimile transmission shall be effective
upon
actual receipt if received during the recipient’s normal business hours, or at
the beginning of the recipient’s next business day after receipt if not received
during the recipient’s normal business hours. All notices by facsimile
transmission shall be confirmed promptly after transmission in writing by
certified mail or personal delivery.
14
Any party may change any address to which notice is to be given to it by
giving
notice as provided above of such change of address.
11.6 Amendment.
This Agreement may only be amended by written agreement of the parties
hereto.
11.7 Beneficiaries;
References.
Executive shall be entitled to select (and change, to the extent permitted
under
applicable law) a beneficiary or beneficiaries to receive any compensation
or
benefit payable hereunder following Executive’s death, and may change such
election, in either case by giving the Company written notice thereof.
In
the event of Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to Executive shall be deemed, where appropriate,
to
refer to his beneficiary, estate or other legal representative. Any
reference to the masculine gender in this Agreement shall include, where
appropriate, the feminine.
11.8 Survivorship.
The respective rights and obligations of the parties hereunder shall survive
any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations. The provisions of this
Section are in addition to the survivorship provisions of any other section
of
this Agreement.
11.9 Governing
law.
This Agreement shall be construed, interpreted and governed in accordance
with
the laws of the State of North Carolina without reference to rules relating
to
conflicts of law. For purposes of jurisdiction and venue, the Company
hereby consents to jurisdiction and venue in any suit, action or proceeding
with
respect to this Agreement in any court of competent jurisdiction in the state
in
which Executive resides at the commencement of such suit, action or proceeding
and waives any objection, challenge or dispute as to such jurisdiction or
venue
being proper.
11.10 Effect
of Prior Agreements.
This Agreement contains the entire understanding between the parties hereto
with
respect to the subject matter hereof, and supersedes in all respects any
prior
or other agreement or understanding between the Company or any affiliate
of the
Company and Executive with respect to the subject matter hereof.
11.11 Withholding.
The Company shall be entitled, to the extent permitted or required by law,
to
withhold from any payment of any kind due Executive under this Agreement
to
satisfy the tax withholding obligations of the Company under applicable
law.
11.12 Counterparts.
This Agreement may be executed in two counterparts, each of which shall be
deemed an original.
[Remainder
of this page is blank]
15
IN
WITNESS WHEREOF, the
parties hereto, having duly been authorized, have executed this Agreement
as of
June 29, 2005.
|
SUMMUS,
INC.
|
XXXXXX
X. XXXXX
|
|
|
|
|
By:
/s/ Xxxx X.
Ban
|
/s/
Xxxxxx X. Xxxxx
|
|
|
|
|
Name: Xxxx
X. Ban
|
|
|
Title:
Chief Executive Officer
|
|
16
