EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
This EXECUTIVE EMPLOYMENT
AGREEMENT, is dated as of this 31st day of December, 2009 (the “Agreement”), by and
between Cinnabar Ventures, Inc., a Nevada corporation (the “Company”), and
Xxxxxxx Xxxxx Xxxx (the “Executive”).
BACKGROUND
WHEREAS, the Company is
engaged in the business of developing, manufacturing and marketing consumer and
business technology services including both software and hardware products
distributed nationally and internationally;
WHEREAS, the Company believes
that the Executive possesses the skills and abilities necessary for the Company
to meet its current and future objectives;
WHEREAS, the Executive desires
to provide such services to the Company in such capacities, on and subject to
the terms and conditions hereof; and
NOW, THEREFORE, in
consideration of the mutual covenants set forth below, the parties hereby agree
as follows.
AGREEMENT
Section
1. Employment.
1.1 Employment. Subject
to all of the terms and conditions hereof, the Company does hereby employ the
Executive and the Executive does hereby accept the employment.
1.2 Term. This Agreement
shall be in effect for a period of five (5) years (the “Initial Term”)
beginning on the date of execution of this Agreement (the “Effective Date”), and
shall renew for an additional five (5) year term, unless otherwise agreed by the
parties in writing, and then shall automatically be renewed for additional one
(1) year terms unless terminated by either party as set forth
below.
1.3 Duties.
(a) Capacity. So
long as he is employed by Company, Executive shall be employed as the President
and Chief Operating Officer (“COO”) of the Company
and will be an employee of the Company at all times during the term of this
Agreement. Company and Executive acknowledge and agree that Executive’s position
is the President and COO and shall be entitled to the rights and benefits that
are afforded to the responsibilities of a President and COO. Executive will
report directly to the Company’s Chief Executive Office. Executive will also
serve as a member of the Company’s Board of Directors (the “Board of Directors”).
The duties and corresponding authority will be negotiated between the Company’s
Chief Executive Officer, the Chairman of the Board and Executive on an annual
basis (collectively, the “Employment”).
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(b) Schedule. So
long as he is employed by Company, Executive shall devote the majority of
Executive’s working time and attention, as necessary, to faithfully and fully
carry out his duties described herein; provided, however, Executive may (i)
serve as a director of other business organizations with the prior written
approval of Company (ii) devote time to and invest in non-competing side
activities, provided that such activities do not individually or in the
aggregate interfere with his duties so as to adversely affect Company’s
business. Executive shall at all times perform his duties and obligations
faithfully, diligently and to the best of Executive’s ability.
(c) Key Man Insurance.
Company may, for its benefit and at its own expense, insure Executive’s life.
Executive agrees to submit to such physical examination and supply such
information as may be reasonably required in connection therewith.
Section
2. Compensation.
2.1 Base
Compensation. Subject to increases pursuant to the cost of
living adjustment described below in Section 2.3, Company shall pay to Executive
an annual base salary (the “Base Salary”)
according to the following schedule: (i) Year 1 of employment: Three Hundred and
Fifty Thousand US Dollars (US$350,000.00); (ii) Years 2 thru 5 of Employment:
Six Hundred Thousand US Dollars (US$600,000.00). During the term of this
Agreement or such greater amount as may be determined upon a review of
Executive’s performance to be undertaken pursuant to Company policy regarding
performance reviews by the Chief Executive Officer and the Chairman of the Board
at least once annually.
2.2 Schedule of Compensation
payment. Executive’s Base Salary shall be payable according to
the following schedule:
(a) Year 1 of Employment. Executive’s
Base Salary shall be payable according to the following schedule: (i) Fifty
Thousand US Dollars (US$50,000.00) upon joint signature (Company and Executive)
of this Agreement; (ii) An additional Seventy Five Thousand US Dollars
(US$75,000.00) due upon the first day of employment with the Company; and (iii)
the balance of Two Hundred and Twenty Five Thousand US Dollars (US$225,000.00)
payable in twelve (12) equal installments through the balance of the first
year.
(b) Years 2 through 5 of Employment.
Executive’s Base Salary shall be payable according to the following schedule:
Executive shall be paid Six Hundred Thousand US Dollars (US$600,000.00) in 26
equal installments made every two weeks of each year.
2.3 Cost of Living
Adjustment. Executive’s Base Salary at the commencement of the
second and each subsequent year shall be adjusted to provide for all cost of
living increases based upon the percentage increase (if any) in the Consumer
Price Index for All Urban Consumers (l967=l00; All Cities), prepared by the
United States Bureau of Labor Statistics, or any successor thereto, over said
Index in effect at the commencement of the preceding calendar year. During the
term of this Agreement, the Executive’s Base Salary will be equal to or greater
than all other salaries of employees of the Company, except for such salaries of
superior officers as designated by the Chairman of the Board.
2.4 Minimum Income
Guarantee. The Company agrees to fully compensate Executive for the first
two years of income (US$950,000.00) as the minimum amount to be earned over the
term of this Agreement (the “Minimum Income
Guarantee”). The Minimum Income Guarantee shall survive all instances of
termination as provided for in Section 4 of this Agreement.
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2.5 Alternative
Compensation. In the event the Chief Executive Officer
determines that the Company cannot afford to pay Executive any portion of
Minimum Income Guarantee, Executive may, at his sole option elect one of the
following:
(a) Elect
to receive compensation from the company thru immediate divesture or sales of
Company assets so as to satisfy any balance owed for the income guarantee in
section 2.4.
(b) Agree
to defer receipt of his Base Salary until such time as the Company has the funds
to pay him. In the event that Executive elects this option, the unpaid salary
shall be paid with no interest. However, the Company, as additional
compensation, shall immediately issue Executive an amount of Common Stock equal
to 20% of the deferred Salary based upon a market value determined to be the
average 30-day trading price prior to each such election; or
(c) Elect
to convert all, or a portion of the unpaid Salary into the Company’s common
stock (the “Common
Stock”) at a market value equal to 80% of the average 30-day trading
price prior to each election.
2.6 Signing
Bonus. In addition to the Base Salary, Company shall issue to
the Executive as a signing bonus (i) Three Hundred Thousand (300,000) options to
purchase Common Stock at a strike price of one cent ($0.01), to be fully vested
upon the mutual completion of this Agreement and (ii) One Hundred and Sixty
Thousand (160,000) options to purchase Common Stock at a strike price of one
cent ($0.01), to be vested in equal amounts of Forty thousand (40,000) shares
per year over the four years following the first year of Employment with the
Company (the “Signing
Bonus”).
2.7 Relocation Expenses.
The Company shall pay the Executive’s reasonable moving expenses for his
relocation from Chicago, Illinois to Phoenix, Arizona. In the event
that the Company cannot afford to pay said moving expenses at the time they are
incurred, the Executive shall be reimbursed as soon as is reasonably practicable
thereafter, but not more than six (6) months from the date
hereof. The Company shall pay all the Executive’s reasonable expenses
in connection with the Executive’s services hereunder.
2.8 Bonus
Compensation.
2.8.1. Additional Stock
Grants. In addition to the Base Salary and Signing Bonus, the Company
shall issue to the Executive 100,000 shares of Common Stock on each one (1) year
anniversary while employed with the Company.
2.8.2. Automatic Contract
Surrender. In the event of merger or acquisition of the
Company, this contract has a minimum buy-out clause of Ten Million US Dollars
(US$10,000,000). The purchaser or acquirer may demand buy-out for any reason by
notice and payment. This action accelerates vesting period for all
stock options and additional stock grants under the term length of this
agreement.
2.8.3. Quarterly Revenue
Bonus. Company shall pay Executive a quarterly revenue bonus of one-half
percent (0.5%) of Company revenue. This is to be paid in once per fiscal quarter
distributions within four weeks of each fiscal quarterly close.
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2.8.4. Certain
Benefits. Executive shall be entitled to participate in all
employee benefit programs established by the Company from time to time for
employees or executives of Company, to the extent that executives or senior
management employees of Company generally are eligible to participate in such
programs. Executive shall be further entitled to an annual paid vacation of five
(5) weeks and other benefits in accordance with Company’s policies as from time
to time established by the Company or the Company’s Board of Directors for
employees and/or senior executive officers and the following: (i) full medical,
dental, vision, life, and disability insurance plans for Executive and/or his
immediate family; (ii) a per month automobile leasing, operating, insurance and
maintenance expense allowance of $2,000 per month or the cash equivalent in the
form of an expense reimbursement; (iii) cell phone, personal computer, internet
access, and other communication device acquisition and operating expenses; (iv)
out of state living expenses not to exceed $2,500 per month; (v) a managed 401K
and retirement investment account program with a qualified investment firm to be
paid for by Company; (vi) an unlimited expense account via a Company paid
American Express card; and (vii) upon request access to a Company paid private
jet service to be prudently used at the discretion of Executive pursuant to
execution of the duties of President and COO.
2.8.5 Severance Compensation for
Termination Without Cause. In the event that Executive’s employment is
terminated by Company without cause including but not limited to an involuntary
change of position (other than as a result of the termination of this Agreement
pursuant to Sections 3.1. or 3.2) or terminated by Executive as a result of a
material breach of this Agreement by Company (any of the foregoing, an “Involuntary
Termination”), Executive shall receive from Company, on the effective
date of the Involuntary Termination, a lump sum amount equal to two times the
Executive’s then current Base Salary plus the full quarterly revenue bonus for
one full year then in effect. Further, all stock options, including those
contained in the Signing Bonus, that Executive would be eligible to receive
through the natural term of this Agreement will immediately become fully vested.
In the event Executive or her family is ineligible under the terms of any
insurance to continue to be covered, the Company shall provide Executive and
Executive’s family with substantially equivalent coverage through other sources
or will provide Executive with a lump sum payment equal to the agreed upon value
of the continuation of such insurance coverage to which Executive is entitled
under this Section not to exceed, not to exceed Twenty Five Thousand US Dollars
(US$25,000.00).
Section
3. Proprietary Rights.
3.1 Confidentiality. The
Executive recognizes and acknowledges that certain confidential business and
technical information used by the Executive in connection with his duties
hereunder is a valuable and unique asset of the Company. Executive agrees that
he shall at all times maintain the confidentiality of the proprietary
information and trade secrets of the Company, and that he shall, during the
Restricted Period (as defined herein), refrain from disclosing any such
information to the disadvantage of the Company.
3.2 Non-Competition. The
Executive covenants and agrees that for so long as he is providing services
under this Agreement and for a period of twelve (12) months after this Agreement
terminates (such period of time hereinafter referred to as the “Restricted Period”),
the Executive shall not directly or indirectly, own, manage, control, operate,
invest in or become principal of, employee of, director of, or consultant to,
any business, entity or venture that is in direct competition with the Company.
For purposes of this section, “in competition with the company” means soliciting
a customer for products that directly compete with those of the Company being
produced and/or marketed by the Company or products that Executive is aware the
Company intends to develop, produce and/or market.
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3.2.1. During the Restricted Period,
the Executive shall not, directly or indirectly:
(i) solicit, in competition with the
Company, any person who is a customer of any business conducted by the Company;
or
(ii) in any manner whatsoever induce,
or assist others to induce, any supplier of the Company to terminate its
association with the Company or do anything, directly or indirectly, to
interfere with the business relationship between the Company, and any of their
respective current or prospective suppliers.
3.2.2. During the Restricted Period the
Executive shall not, directly or indirectly, solicit or induce any employee of
the Company to terminate his employment for any purpose, including without
limitation, in order to enter into employment with any entity which competes
with any business conducted by the Company.
3.3 Company. For
purposes of this Section 3, “Company” shall mean the Company and any and all of
its subsidiaries and affiliates.
3.4 Remedies. It
is expressly understood and agreed that the services to be rendered hereunder by
the Executive are special, unique, and of extraordinary character, and in the
event of the breach by the Executive of any of the terms and conditions of this
Agreement on his part to be performed hereunder, or in the event of the breach
or threatened breach by the Executive of the terms and provisions of this
Section 3 of this Agreement, then the Company shall be entitled, if it so
elects, to institute and prosecute any proceedings in any court of competent
jurisdiction, either in law or equity, for such relief as it deems appropriate,
including without limiting the generality of the foregoing, any proceedings, to
obtain damages for any breach of this Agreement, or to enforce the specific
performance thereof by the Executive.
3.5 Notwithstanding anything contained
herein to the contrary regarding the Effective Date of this Agreement, Executive
shall be bound by the terms and conditions of this Section 3, immediately upon
the date of execution of this Agreement.
Section
4. Termination.
4.1 Death. This Agreement
shall terminate upon Executive’s death. In the event of Executive’s death while
in the employ of Company, Company shall pay to such person or persons as the
Executive may specifically designate (successively or contingently) by filing a
written beneficiary designation with Company during Executive’s lifetime (the
“Designated
Beneficiaries”) 100% of Executive’s Base Salary as in effect immediately
prior to Executive’s death, payable to Executive’s Designated Beneficiaries at
the beginning of each month for a period of twelve (12) months following
Executive’s death.
4.2 Termination for
Cause. Company shall have the right to terminate this Agreement and
Executive’s employment hereunder for cause upon written notice to Executive. The
term “cause” shall mean Executive must have (i) been willful, gross or
persistent in Executive’s inattention to Executive’s duties or Executive
committed acts which constitute willful or gross misconduct and, after written
notice of the same has been given to Executive and he has been given an
opportunity to cure the same within one hundred and eighty (180) days after such
notice; or (ii) committed fraud against the Company. If Executive’s employment
is terminated for cause, as defined above, and Executive does not consent to
such termination, the existence of such cause shall be determined by an
independent arbitrator appointed by the American Arbitration Association. In
connection with the appointment of an arbitrator, both parties agree to submit
the question to final and binding arbitration by an appointee of the American
Arbitration Association and to cooperate with the arbitrator, with all costs of
arbitration paid by the Company.
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4.3 Indemnification of
Executive. Company shall defend and indemnify Executive at Company’s sole
expense to the full extent of applicable state, federal, and international law
with respect to all claims, causes of action and adversarial proceedings of
every nature to which Executive is or may become subjected in his role as an
Officer or Director of Company and Executive shall have the right to select his
own counsel. Company’s indemnification duty shall survive the termination or
expiration of this Agreement. In the event that Company elects to change
coverage or carriers for its Directors and Officers insurance (“D & O
Insurance”), Company shall notify Executive of such change and arrange to
purchase, at a minimum, a five-year tail policy for such former insurance policy
at the sole expense of Company and deliver evidence of such tail policy to
Executive within five (5) days after termination of Company’s existing D & O
Insurance.
Section
5. General.
5.1 Applicable Law. This
document shall, in all respects, be governed by the laws of the State of Florida
excluding any conflicts of laws provisions.
5.2 Arbitration. Any
dispute arising out of or relating to this Agreement shall be arbitrated before
a single arbitrator in accordance with the commercial arbitration rules of the
American Arbitration Association. Arbitration shall take place in Xxx
County, Florida, and each Party waives any objection which it may now or
hereafter have to the venue of any such suit, action or proceeding. The
arbitrator shall rule on all matters including without limitation, emergency
injunctive relief and attorneys’ fees.
5.3 Survival. The
Parties agree that the covenants contained in Section 3 above shall survive any
termination of employment by the Executive and any termination of this
Agreement. In addition, the Parties agree that any compensation or right which
shall have accrued to the Executive as of the date of any termination of
employment or termination hereof shall survive any such termination and shall be
paid when due to the extent accrued on the date of such
termination.
5.4 Assignability. All
of the terms and provisions contained herein shall inure to the benefit of and
shall be binding upon the Parties and their respective heirs, personal
representatives, successors and assigns. The obligations of the
Executive may not be delegated, except as set forth herein, however, and the
Executive may not, without the Company’s written consent thereto, assign,
transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this
Agreement or any interest therein. Any such attempted delegation or
disposition shall be null and void and without effect. The Company
and the Executive agree that this Agreement and all of the Company’s rights and
obligations hereunder may be assigned or transferred by the Company to and may
be assumed by and become binding upon and may inure to the benefit of any
affiliate of or successor to the Company. The term “successor” shall
mean, with respect to the Company or any of its subsidiaries, and any other
corporation or other business entity which, by merger, consolidation, purchase
of the assets, or otherwise, acquires all or a material part of the assets of
the Company. Any assignment by the Company of its rights and
obligations hereunder to any affiliate of or successor shall not be considered a
termination of employment for purposes of this Agreement.
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5.5 Notices. Any and all
notices required or desired to be given hereunder by either party shall be in
writing and shall be validly given or made to the other if delivered either
personally, by telex, facsimile transmission, same day delivery service,
overnight expedited delivery service, or if deposited in the United States Mail,
certified or registered, postage prepaid, return receipt requested. If
notice is served personally, notice shall be deemed effective upon receipt. If
notice is served by telex or by facsimile transmission, notice shall be deemed
effective upon transmission, provided that such notice is confirmed in writing
by the sender within one day after transmission. If notice is served by same day
delivery service or overnight expedited delivery service, notice shall be deemed
effective three (3) days after it is sent. In all instances, notice shall be
sent to the parties at the following addresses:
If to the Company:
Cinnabar Ventures, Inc.
00000 X. Xxxxxxx Xxxxx
#000
Xx. Xxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Executive:
Xxxxxxx X. Xxxx
000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Either
party may change its address for the purpose of receiving notices by a written
notice given to the other party.
5.6 Modifications or
Amendments. No amendment, change or modification of this document shall
be valid unless in writing and signed by each of the parties.
5.7 Waiver. No reliance
upon or waiver of one or more provisions of this Agreement shall constitute a
waiver of any other provisions hereof.
5.8 Severability. If any
provision of this Agreement as applied to either party or to any circumstances
shall be adjudged by a court of competent jurisdiction to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement or the validity or enforceability of this Agreement. If any
court construes any of the provisions to be unreasonable because of the duration
of such provision or the geographic or other scope thereof, such court may
reduce the duration or restrict the geographic or other scope of such provision
and enforce such provision as so reduced or restricted.
5.9 Separate
Counterparts. This document may be executed in one or more separate
counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one and the
same instrument.
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5.10 Headings. The
captions appearing at the commencement of the sections hereof are descriptive
only and are for convenience of reference. Should there be any
conflict between any such caption and the section at the head of which it
appears, the substantive provisions of such section and not such caption shall
control and govern in the construction of this document.
5.11 Specific Performance.
It is agreed that the rights granted to the parties hereunder are of a special
and unique kind and character and that, if there is a breach by either party of
any material provision of this document, the other party would not have any
adequate remedy at law. It is expressly agreed, therefore, that the
rights of the parties may be enforced by an action for specific performance and
other equitable relief.
5.12 Further
Assurances. Each of the parties shall execute and deliver any
and all additional papers, documents and other assurances, and shall do any and
all acts and things reasonably necessary in connection with the performance of
their obligations hereunder and to carry out their intentions as set forth
herein.
5.13 Entire Agreement.
This Agreement constitutes the entire understanding and agreement of the parties
with respect to the subject matter of this Agreement, and any and all prior
agreements, understandings or representations are hereby terminated and canceled
in their entirety.
5.14 Neutral Construction.
Neither party may rely on any drafts of this Agreement in any interpretation of
the Agreement. Each party to this Agreement has reviewed this Agreement and has
participated in its drafting and, accordingly, neither party shall attempt to
invoke the normal rule of construction to the effect that ambiguities are to be
resolved against the drafting party in any interpretation of this
Agreement.
5.15 Attorneys’ Fees. In
the event that either party hereto commences litigation against the other to
enforce such party’s rights hereunder, the prevailing party shall be entitled to
recover all costs, expenses and fees, including reasonable attorneys’ fees
(including in-house counsel), paralegals’ fees, and legal assistants’ fees
through all appeals.
[-signature
page follows-]
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INWITNESS WHEREOF, the Parties
hereto have caused this Agreement to be duly executed as of the date first above
written.
CINNABAR VENTURES,
INC.,
a Nevada
Corporation
By:
__________________________
Name:
Xxxxxxx Xxxxxxxxx
Title:
Chief Executive Officer
By:
___________________________
Name:
Xxxxxxx X. Xxxx
Title:
President and COO
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