EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.2
THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”) is made and
entered effective as of March 14, 2008 (“Effective Date”), between GTX Corp, a
Nevada corporation, (the “Company”), and Xxxxxxx
Xxxxxxxx, an individual (the “Executive”).
RECITALS:
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A.
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The
Company is a Personal Location Service business that integrates GPS
technology into footwear and other products (the
“Business”).
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B.
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Executive
wishes to work for the Company and the Company wishes to employ Executive
pursuant to the terms and provisions of this
Agreement.
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NOW, THEREFORE, in
consideration of the mutual agreements herein made, the Company and the
Executive hereby agree as follows:
1. Employment. The
Company hereby agrees to employ Executive as Chief Executive Officer of the
Company, and Executive hereby accepts such employment, upon the terms and
conditions hereinafter set forth. During the "Term" (including any
renewals thereof), as defined herein, Executive’s duties and responsibilities
shall be duties generally performed by Chief Executive Officers of publicly
traded companies with a similar Business. Executive shall report to
the Board of Directors of the Company. The Company will provide
appropriate staff and office space within Los Angeles County or Orange
County. Executive shall devote the time and effort necessary to
perform his duties to the Company, provided, however, that Executive shall not
be prevented from serving as a director in other companies or investing his
personal assets or personal time in investments or business entities which are
not a Competitive Business, as hereinafter defined.
2. Compensation/Benefits.
a. Salary. Company
shall pay Executive a base salary of One Hundred and Fifty Thousand Dollars
($150,000) per year. Said salary shall be paid in twenty-four (24)
equal payments which shall be paid on the 15th and the
last day of each calendar month (the “Base Salary”).
b. Equity
Compensation. As a signing bonus, Executive shall receive One
Hundred and Fifty Thousand (150,000) shares of the Company’s common stock
pursuant to the Company’s 2008 Equity Compensation Plan. In addition,
Executive shall receive Seven Hundred and Fifty Thousand (750,000) Incentive
Stock Options to acquire shares of the Company’s common stock at a price equal
to the fair market value on the date such options are granted by the Company’s
board of directors (hereafter, the “Options”). So long as the
Executive remains employed by the Company, the Options shall vest over 36 months
with one-third (250,000) vesting on the first anniversary of this Agreement and
two-thirds (500,000) vesting at a rate of 20,834 each month for Twenty Three
(23) months beginning on the 13-month anniversary of the Effective Date and the
remaining 20,818 Options shall vest on the 3-year anniversary of the Effective
Date. The vested Options may be exercised at any time following the date of
vesting for a period of three years. Vested Options may be exercised
for 90 days after termination of Executive’s employment with the
Company.
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c. Performance
Bonus. The Company shall pay Executive a bonus, as determined
by the Board of Directors, in an amount not less than Fifteen Percent (15%) of
Executive’s yearly compensation, to be paid in cash or stock at the Company’s
sole discretion, if the Company has in increase in year over year revenues and
the Executive performs his duties (i) within the time frame budgeted for such
duties and (ii) at or below the cost budgeted for such duties.
d. Additional
Bonus. The Company shall pay Executive a bonus, to be paid in
cash or stock at the Company’s sole discretion, equal to $12,500 for every one
million warrants that are exercised by Jupili.
e. Employee
Benefits. The Executive shall be entitled to participate in
all benefit programs of the Company currently existing or hereafter made
available by the Board of Directors to other executive employees, including, but
not limited to, pension and other retirement plans, including any 401K Plan,
group life insurance, dental, hospitalization, surgical and major medical
coverage, sick leave, salary continuation, vacation and holidays, long-term
disability and other benefits.
f. Other Benefits. The
Company shall pay Executive an amount equal to Ten percent (10%) of his annual
salary to be used for expenses for (a) the lease, maintenance and operation of
an automobile, (b) cellular telephone charges, (c) undesignated travel and
entertainment expenses, and (d) medical, dental and vision expenses if the
Company does not have a medical, dental and vision plan in place within Six (6)
months of the Effective Date; and such amount shall be payable in Twenty Four
(24) equal monthly installments on the 15th and
last day of each calendar month.
g. Vacation. During
each calendar year of the Company, the Executive shall be entitled to Three (3)
weeks of paid vacation time in year one and Four (4) weeks of paid vacation time
in year two, in addition to standard legal holidays in both years.
h. Business Expense
Reimbursement. The Executive shall be entitled to receive
reimbursement for reasonable, out-of-pocket expenses incurred in accordance with
Company policies established by the Board of Directors and Executive shall
provide appropriate written documentation evidencing such expenses so as to
enable the Company to deduct them for federal income tax purposes.
3. Term. The Term
of employment hereunder will commence as of the Effective Date and end two (2)
years from the Effective Date (“Term”), unless terminated pursuant to Section 4
of this Agreement. The Term shall automatically renew (“Renewal
Term”) for successive one (1) year terms, unless written notification is
provided by either party no less than 60 days prior to the expiration of the
Term.
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4. Death, Disability and
Termination.
a. Death. In
the event of the death of the Executive during the Term or the Renewal Term of
the Agreement, salary shall be paid to the Executive's designated beneficiary,
or, in the absence of such designation, to the estate or other legal
representative of the Executive only for the period ending at the date of death.
The Company shall also pay to the Executive's estate or heirs, as the case may
be, any accrued and unpaid Bonus.
b. Disability.
(i) In
the event of the Executive's disability, as hereinafter defined, the Executive
shall only be entitled to compensation in accordance with the Company’s
disability compensation practice for senior executives, including any separate
arrangement or policy covering the Executive, but in all events the Executive
shall continue to receive the Executive’s salary for a period ending at the date
of termination for Disability as determined below. Any amounts
provided for in this Section 4(b) shall be offset by other long-term disability
benefits provided to the Executive by the Company.
(ii) “Disability”
for the purposes of this Agreement, shall be deemed to have occurred in the
event (a) the Executive is unable by reason of sickness or accident to perform
the Executive's duties under this Agreement for a cumulative total of twelve
(12) weeks within any one calendar year or (b) the Executive is unable to
perform Executive’s duties for ninety (90) consecutive days or (c) the Executive
has a guardian of the person or estate appointed by a court of competent
jurisdiction. Termination due to disability shall be deemed to
have occurred upon the first day of the month following the determination of
Disability as defined in the preceding sentence.
Anything
herein to the contrary notwithstanding; if, following a termination of
employment hereunder due to Disability as provided in the preceding paragraph,
the Executive becomes reemployed, whether as an Executive or a consultant, any
salary, annual incentive payments or other benefits earned by the Executive from
such employment shall offset any salary continuation due to the Executive
hereunder commencing with the date of reemployment.
c. Termination by the Company
for Cause.
(i) Nothing
herein shall prevent the Company from terminating the Executive’s employment for
“Cause” as hereinafter defined. The Executive shall continue to receive salary
only for the period ending with the date of such termination as provided in this
Section 4(c). Any rights and benefits the Executive may have in
respect of any other compensation shall be determined in accordance with the
terms of such other compensation arrangements or such plans or
programs.
(ii) “Cause”
shall mean (a) committing or participating in an injurious act of fraud, gross
neglect, misrepresentation, embezzlement or dishonesty against the Company;
(b) committing or participating in any other injurious act or omission
wantonly, willfully, recklessly or in a manner which was grossly negligent
against the Company (monetarily or otherwise); (c) engaging in a criminal
enterprise involving moral turpitude; (d) conviction of an act or acts
constituting a felony under the laws of the United States or any state thereof,
(e) Executive's failure to substantially perform his material duties
hereunder or to substantially comply with any other material provision of this
Agreement, (f) a willful act by Executive as a result of which
he knowingly receives an improper material personal benefit at the expense of
the Company, (g) any other willful misconduct by Executive that is materially
injurious to the business or business reputation of Employer, or (h) any other
circumstance which constitutes “cause” under applicable law.
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(iii) Notwithstanding
anything else contained in this Agreement, this Agreement will not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a notice of termination from the Board of Directors of the
Company stating that the Executive committed one of the types of conduct set
forth in this Section 4(c) contained in this Agreement and specifying the
particulars thereof and the Executive shall be given a Ten (10) day period to
cure such conduct set forth in Section 4(c).
d. Termination by the Company
Other than for Cause.
(i) The
foregoing notwithstanding, the Company may terminate the Executive's employment
for whatever reason it deems appropriate; provided, however, that in the event
such termination is not based on Cause, as provided in Section 4(c) above, the
Company shall continue to be obligated to pay to Executive his base salary
through the earlier of (A) twelve (12) months or (B) the remaining term of this
Agreement. In such event, Executive shall have a duty to mitigate
such payments.
(ii) In
the event that the Executive's employment with the Company is terminated
pursuant to this Section 4(d), then Section 5 of this Agreement and all
references thereto shall be inapplicable as to the Executive and the
Company.
e. Voluntary
Termination. In the event the Executive terminates the
Executive's employment on the Executive's own volition prior to the expiration
of the Term or Renewal Term of this Agreement, including any renewals thereof,
such termination shall constitute a voluntary termination and in such event the
Executive shall receive base salary only for the period ending with the date of
such termination. Any rights and benefits the Executive may have in
respect of any other compensation shall be determined in accordance with the
terms of such other compensation arrangements or such plans or
programs.
5. Covenant Not to
Compete. Executive acknowledges and recognizes the highly
competitive nature of Company's business and the goodwill and business strategy
of the Company and continued patronage constitute a substantial asset of the
Company. Executive further acknowledges and recognizes that during the course of
the Executive's employment Executive will receive specific knowledge of
Company's business, access to trade secrets and Confidential Information, as
defined in Section 6, participate in business acquisitions and corporate
decisions, and that it would be impossible for Executive to work for a
Competitive Business without using and divulging this valuable confidential
information. Executive acknowledges that Company is without an adequate remedy
at law in the event this covenant is violated. Executive further acknowledges
that this covenant not to compete is an independent covenant within this
Agreement. The Executive recognizes that the terms of this covenant are
reasonable and necessary for the protection of the Company's business because
the value of Executive's services will be enhanced by his association with the
Company. Accordingly, Executive agrees to the following:
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a. That
during the term of this Agreement (including any renewals or extensions thereof)
and for so long thereafter, if any, that Executive receives any payments from
the Company under or related to this Agreement (the “Restricted Period”),
Executive will not individually or in conjunction with others, directly or
indirectly engage in the business of developing, producing, marketing or selling
products or rendering services of the kind or type developed or being developed,
produced, marketed, sold or rendered by the Company, nor shall he assist anyone
else in doing so, other than on behalf of the Company and as agreed by the
Company and Executive, whether as an officer, director, proprietor, employer,
employee, partner, joint venturer, contractor, investor (other than as a holder
of less than one percent (1%) of the outstanding capital stock of a publicly
traded corporation), consultant, advisor, agent or in any other capacity
whatsoever.
b. That
during the Restricted Period, Executive will not, indirectly or directly,
compete with the Company by soliciting, inducing or influencing any of the
Company's customers or employees at any time during the Restricted Period to
discontinue or reduce the extent of such relationship with the
Company.
c. That
during the Restricted Period, Executive will not (i) directly or indirectly
recruit or solicit any employee or agent of the Company to discontinue such
employment or agency relationship with the Company, or (ii) employ or seek to
employ, or cause to permit any Competitive Business to employ or seek to employ
for any Competitive Business any person who is then (or was at any time within
three (3) months prior to the date Executive or the Competitive Business employs
or seeks to employ such person) employed by the Company.
d. That
during the Restricted Period, Executive will not interfere with, disrupt or
attempt to disrupt any past, present or prospective relationship contractual or
otherwise, between the Company and any of the Company's employees or
agents.
e. The
provision of this Section 5 will not be in effect for any corporation or
partnership the Company is a direct or indirect shareholder or interest holder,
and/or has entered into any kind of joint venture relationship or partnership
with the Company.
6. Non-Disclosure of
Confidential Information.
a. Executive
acknowledges that the Company's trade secrets, private or secret processes,
methods and ideas as they exist from time to time, information concerning the
Company's products, business records and plans, inventions, acquisition
strategy, price structure and pricing, discounts, costs, computer programs and
listings, source code and/or subject code, copyright trademark proprietary
information, formulae, protocols, forms, procedures, training methods,
development technical information, know-how, show-how, new product and service
development, advertising budgets, past, present and future marketing, activities
and procedures, method for operating the Company's Business, credit and
financial data concerning the Company's Clients and customer lists, which
customer lists shall not only mean one or more of the names and address of the
customers of the Company, but it shall also encompass any and all information
whatsoever regarding them, including their needs, and marketing; advertising,
promotional and sales strategies, sales presentations, research information,
revenues, acquisitions, practices and plans and information which is embodied in
written or otherwise recorded form, and other information of a confidential
nature not known publicly or by other companies selling to the same markets and
specifically including information which is mental, not physical (collectively,
the "Confidential Information"), are valuable, special and unique assets of the
Company, access to and knowledge of which have been provided to Executive by
virtue of Executive's association with the Company. In light of the highly
competitive nature of the industry in which the Company’s business is conducted,
Executive agrees that all Confidential Information, heretofore or in the future
obtained by Executive as a result of Executive's association with the Company
shall be considered confidential.
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b. The
Executive agrees that the Executive shall (i) hold in confidence and not
disclose or make available to any third party any such Confidential Information
obtained directly or constructively from the Company, unless so authorized
in writing by the
Company; (ii) exercise all reasonable efforts to prevent third parties from
gaining access to the Confidential Information; (iii) not use, directly or
indirectly the Confidential Information except in order to perform the
Executive's duties and responsibilities to the Company; (iv) restrict the
disclosure or availability of the Confidential Information to those who have
agreed to maintain the confidentiality of the Confidential Information and who
have a need to know the information in order to achieve the purposes of this
Agreement; (v) not copy or modify any Confidential Information without prior
written consent of the Company, provided, however, that such copy or
modification of any Confidential Information does not include any modifications
or copying which would otherwise prevent the Executive from performing his/her
duties and responsibilities to the Company; (vi) take such other protective
measures as may be reasonably necessary to preserve the confidentiality of the
Confidential Information; (vii) relinquish all rights it may have in any matter,
such as drawings, documents, models, samples, photographs, patterns, templates,
molds, tools or prototypes, which may contain, embody or make use of the
Confidential Information; and (viii) promptly deliver to the Company any such
matter as the Company may direct at any time, and not retain any copies or other
reproductions thereof.
c. Executive
further agrees (i) that Executive shall promptly disclose in writing to the
Company all ideas, inventions, improvements and discoveries which may be
conceived, made or acquired by Executive as the direct or indirect result of the
disclosure by the Company of the Confidential Information to Executive; (ii)
that all such ideas, inventions, improvements and discoveries conceived, made or
acquired by Executive, alone or with the assistance of others, relating to the
Confidential Information in accordance with the provisions hereof shall belong
to the Company, and that Executive shall not acquire any intellectual property
rights under this Agreement except the limited right to use set forth in this
Agreement; and (iii) that Executive shall assist in the preparation and
execution of all applications, assignments and other documents which the Company
may deem necessary to obtain patents, copyrights and the like in the United
States and in jurisdictions foreign thereto, and to otherwise protect the
Company.
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d. Excluded
from the Confidential Information, and therefore not subject to the provisions
of this Agreement, shall be any information which the Executive can show (i) at
the time of disclosure, is in the public domain as evidenced by printed
publications; (ii) after the disclosure, enters the public domain by way of
printed publication through no fault of the Executive; (iii) by written
documentation was in its possession at the time of disclosure and which was not
acquired directly or indirectly from the Company; or (iv) by written
documentation was acquired, after disclosure, from a third party who did not
receive it from the Company, and who had the right to disclose the information
without any obligation to hold such information confidential. The foregoing
exceptions shall apply only from and after the date that the information becomes
generally available to the public or is disclosed to the Executive by a third
party, respectively. Specific information shall not be deemed to be within the
foregoing exceptions merely because it is embraced by more general information
in the public domain. Additionally, any combination of features shall not be
deemed to be within the foregoing exceptions merely because individual features
are in the public domain. If the Executive intends to avail himself/herself of
any of the foregoing exceptions, the Executive shall notify the Company in
writing of his/her intention to do so and the basis for claiming the
exception.
e. Upon
written request of the Company, Executive shall return to the Company all
written materials containing the Confidential Information. Executive shall also
deliver to the Company written statements signed by Executive certifying all
materials have been returned within five (5) days of receipt of the
request.
7. Indemnification by the
Company. The Company shall, to the maximum extent permitted by
law, indemnify, defend and hold Executive harmless for any acts or decisions
made in good faith while performing services for the Company. To the
same extent, the Company shall pay, and subject to any legal limitations,
advance all expenses, including reasonable attorneys’ fees incurred by Executive
in connection with the defense of any action, suit or proceeding and in
connection with any appeal, which has been brought against Executive by reason
of his service as an officer or agent of the Company.
8. Unfair
Competition. Executive acknowledges and agrees that the sale
or unauthorized use or disclosure of any of the Company's trade secrets obtained
by Executive during the course of Executive's employment under this Agreement,
including information concerning the Company's current or any future and
proposed work, services or products, the facts that any such work, services or
products are planned, under consideration, or in production, as well as any
descriptions thereof, constitute unfair competition. Executive
promises and agrees not to engage in any unfair competition with the Company at
any time, whether during or following the completion of Executive's
employment.
9. Ownership of Work
Product.
a. Executive
agrees that Executive will promptly and fully inform the Company of all
inventions, designs, improvements and discoveries which Executive now has or may
hereafter have during the term of this Agreement which pertain or relate to the
business of the Company, whether conceived by the Executive alone or with others
and whether or not conceived during regular working hours. All such
inventions, designs, improvements and discoveries shall be the exclusive
property of the Company.
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b. Executive
will have access to and become acquainted with various trade secrets, consisting
of formulas, patterns, devices, inventions, processes, and compilations of
information, records and specifications, which are owned by the Company and
which are regularly used in the operation of the business of the
Company. Executive shall not disclose any of the aforesaid trade
secrets, directly or indirectly, or use them in any way, either during the term
of this Agreement or at any time thereafter, except as required in the course of
Executive's employment. All files, records, documents, drawings,
specifications, equipment, and similar items relating to the business of the
Company, whether prepared by Executive or otherwise coming into Executive's
possession, shall remain the exclusive property of the Company under any
circumstances whatsoever.
c. Executive
shall return to the Company, promptly at the Company's request, all confidential
materials. Any materials the return of which is specifically
requested shall be returned promptly at the conclusion of the work on the
project to which the materials relate.
10. Remedies.
a. The
Executive acknowledges and agrees that the Company’s remedy at law for a breach
or threatened breach of any of the provisions of Section 5 and Section 6 herein
would be inadequate and the breach shall be per se deemed as causing irreparable
harm to the Company. In recognition of this fact, in the event of a
breach by the Executive of any of the provisions of Section 5 or Section 6, the
Executive agrees that, in addition to any remedy at law available to the Company
including, but not limited to, monetary damages, the Company, without posting
any bond, shall be entitled to obtain, and the Executive agrees not to oppose
the Company's request for equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available to the Company.
b. The
Executive acknowledges that the granting of a temporary injunction, temporary
restraining order or permanent injunction merely prohibiting the use of
Confidential Information would not be an adequate remedy upon breach or
threatened breach of Section 5 or Section 6 and consequently agrees, upon proof
of any such breach, to the granting of injunctive relief prohibiting any form of
involvement with any Competitive Business. Nothing herein contained
shall be construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach.
c. In the
event that the Executive shall be in violation of the aforementioned restrictive
covenants as set forth in Section 5 or Section 6, then the time limitation
during which breach or breaches should occur, and in the event the Company
should be required to seek relief from such breach in any court or other
tribunal, then the covenant shall be extended for a period of time equal to the
pendency of such proceedings, including appeal.
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11. Amendments. This
Agreement shall not be modified or amended except by written agreement duly
executed by the parties hereto.
12. Headings. All
sections and descriptive headings of this Agreement are inserted for convenience
only, and shall not affect the construction or interpretation
hereof.
13. Counterparts. This
Agreement may be executed in any number of counterparts, each of which, when
executed and delivered, shall be an original, but all counterparts shall
together constitute one and the same instrument.
14. Entire
Agreement. This Agreement hereto constitutes the entire
understanding between the parties. Nothing in this Agreement will
prevent or restrict Executive from serving on the Board of Directors of public
or private companies and receive compensation from such service.
15. Governing
Law. This Agreement is to be construed and enforced according
to the laws of the State of California. This Agreement shall not be
construed more strictly against one party than the other, merely by virtue of
the fact that it may have been prepared by counsel for one of the parties, it
being recognized that both Company and Executive have contributed substantially
and materially to the negotiation and preparation of this
Agreement.
16. Venue. Venue
in any action arising from this Agreement shall be in Orange County,
California.
17. Attorneys’
Fees. In connection with any controversy arising out of this
Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees
and costs at pretrial, trial, and appellate levels from the non-prevailing
party.
18. Severability. Inapplicability
or unenforceability of any provision of this Agreement shall not limit or impair
the operation or validity of any other provision of this Agreement or any such
other instrument.
19. Non-Assignability. This
Agreement is personal in nature and not assignable by any party
hereto.
20. Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties, its’ successors, transferees and assigns.
21. Construction. In
construing this Agreement, the singular shall include the plural and the plural
shall include the singular, and the use of any gender shall include every other
and all genders.
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19. Relationship and Covenants
of Executive. Executive acknowledges that the relationship between the
parties hereto is exclusively that of Company and employee. The
Company shall be the sole owner of all the fruits and proceeds of Executive's
services hereunder, including, but not limited to, all ideas, concepts, formats,
software designs, suggestions, developments, arrangements, articles, stories,
writings, compilations, campaigns, packages, programs, promotions and other
intellectual properties which Executive may create in connection with
Executive’s activities as an employee of the Company during the Term
("Executive's Work Product"), free and clear of any and all claims by Executive
(or anyone claiming under or through Executive). Executive is
rendering his services hereunder as an employee-for-hire by the Company and that
all such writings and materials developed by Executive in connection with the
Company’s business are work-made-for-hire under the copyright law of the United
States.
IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written in Los
Angeles, California.
THE
COMPANY
By:
/s/ Xxxxx Xxxxxxxxx
Name:
Xxxxx Xxxxxxxxx
Its:
Director
EXECUTIVE
/s/ Xxxxxxx Xxxxxxxx
Xxxxxxx
Xxxxxxxx
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