EMPLOYMENT AGREEMENT
EXHIBIT
10.9
This
Employment Agreement (the “Agreement”), made and entered into this [___] day of
July, 2005, by and between Wako Logistics Group, Inc, a Delaware corporation
(the “Company”), and Xxxxx X. Xxxxxx (the
“Executive”).
WITNESSETH
WHEREAS,
the
Company desires to hire the Executive and the Executive desires to become
employed by the Company; and
WHEREAS,
the
Company and the Executive have determined that it is in their respective
best
interest to enter into this Agreement on the terms and conditions as set
forth
herein.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants and promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as
follows:
1. Employment.
The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, upon the terms and conditions set forth
herein.
2. Term.
The
employment of the Executive by the Company pursuant to this Agreement as
provided in Section 1 will commence on [___], 2005 (the “Effective Date”), and
continue until [________], 2008, unless the Executive’s employment is terminated
earlier as provided in Section 6 (the “Initial Term”). This Agreement, and the
Executive’s employment with the Company, may be renewed for additional
successive one (1) year periods, upon the mutual agreement of the Company
and
the Employee (the “Renewal Period”). The Initial Term and any Renewal Period is
hereby collectively referred to as the “Term.”
3. Position
and Duties.
The
Executive shall serve as the Chief Financial Officer (“CFO”), and shall have
such responsibilities, duties and authority as are generally associated with
such office and as may from time to time be assigned to the Executive by
the
Company’s Board of Directors (the “Board”) and the Company’s President and Chief
Executive Officer that are consistent with such responsibilities, duties
and
authority, including, but not limited to, responsibility for the overall
financial health and day-to-day financial operations of the Company on a
worldwide basis. The Executive shall perform his duties diligently and
faithfully and shall devote substantially all his working time and efforts
to
the business and affairs of the Company and its subsidiaries and
affiliates.
The
Executive shall, at all times during the Term, report directly to the President
and Chief Executive Officer. Notwithstanding anything in this Section 3 to
the
contrary, the Executive shall not be required to perform any duties or
responsibilities that would result in a violation of, or noncompliance with,
any
law, regulation, regulatory pronouncement or any other regulatory requirement
applicable to the Company and the conduct of the Company’s business or to the
Executive in his capacity as CFO of
the
Company.
4. Compensation
and Related Matters.
4.1 Base
Salary.
In
consideration of the services rendered to the Company hereunder by the Executive
and the Executive’s covenants hereunder, the Company shall, during the Term, pay
to the Executive an annual base salary at a rate of $185,000 (the “Base
Salary”), less statutory deductions and withholdings, payable in accordance with
the Company’s normal payroll practices. At least annually, the Company will
review the Base Salary for competitiveness, the stage of development of the
Company and appropriateness in the industry.
4.2 Annual
Bonus.
For
each calendar
year during the Term, the Executive shall be eligible to receive a cash bonus
of
up to
100% of the Base Salary (the “Bonus”).
Such
Bonus shall be determined and payable at the sole discretion of the
Board.
4.3 Stock
Options.
The
Company shall grant to Executive an option to purchase 200,000 shares of
the
Company’s common stock (the “Options”).
The
Options shall vest over 2 years in accordance with the following vesting
schedule: (i) 25%
upon
commencement of Employment, and (ii) the
remaining 75%
at
the rate of 3.26% each month thereafter until fully vested. The
term
of the Options shall be ten years from the Effective Date. The Options shall
be
issued pursuant to the Company’s 2005 Stock Incentive Plan and will be evidenced
by a Stock Option Grant Agreement, consistent with the terms of this
Agreement.
The
exercise price for the Options shall be $1.00 per share.
Irrespective of the date of grant, the vesting commencement date for any
Options
issued in accordance with this Section 4.3 will be the Effective Date. The
Options will be granted, to the maximum amount of shares currently permitted
by
law, in the form of incentive stock options and the remainder in non-qualified
options.
Notwithstanding
the foregoing, all Options shall vest 100% immediately upon a Change in Control
as defined below. For purposes of this Section, a “Change in Control” shall be
deemed to occur in the event of a change in ownership or control of the Company
effected through any of the following transactions: (i) the acquisition,
directly or indirectly, by any person or related group of persons (other
than
the Company or a person that immediately
before the Change of Control directly
or indirectly controls, or is controlled by, or is under common control with,
the Company) of beneficial ownership (within the meaning of Rule 13d-3 of
the
Securities Exchange Act of 1934, as amended) of outstanding
securities possessing more than fifty percent (50%) of the total combined
voting
power of the Company’s outstanding securities;
or (ii)
the sale, transfer or other disposition of all or substantially all of the
Company’s assets; or (iii) the consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization,
if
more than fifty percent (50%) of the combined voting power of the continuing
or
surviving entity’s securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
stockholders of the Company immediately prior to such merger, consolidation
or
other reorganization.
4.4 Expenses.
The
Executive shall be entitled to receive prompt reimbursement for all reasonable
and customary expenses incurred by the Executive in performing services
hereunder, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
For
the
sake of clarity, reimbursable expenses shall include payment of cell phone
xxxxxxxx and high speed access computer lines.
-2-
4.5 Benefits.
(a) The
Executive shall be entitled to receive full reimbursement for the premium
costs
of any medical and dental plans under which Executive is covered during the
Term.
(b) The
Executive shall be entitled to a car allowance of $750 per month during the
Term.
(c) The
Executive shall be provided with a laptop computer with appropriate software,
as
well as a cell phone capable of making international calls. All cell phone
xxxxxxxx and high speed access line costs shall be reimbursed by the
Company.
(d) The
Executive shall be entitled to reasonable vacation time to be determined
in
consultation with the President/Chief Executive Officer.
(e) The
Executive shall be reimbursed for all costs incurred in connection with
relocating from the East Coast to the West Coast of the United States, including
temporary living costs in the new location, which shall not exceed thirty
(30)
days.
5. Director
and Officer of the Company; D&O Insurance.
(a) As
an
officer and, if elected or appointed as a director of the Company, the Executive
will be covered under all of the Company’s Director’s and Officer’s liability
insurance policies, which are in place and updated over time. The Company
shall
indemnify Executive to the full extent permitted under Delaware law for claims
relating to his service as a director or officer of the Company.
(b) Reserved.
6. Termination.
The
Executive’s employment hereunder may be terminated under the following
circumstances:
6.1 Death
or Disability.
In the
event of the Executive’s death or Disability during the Term of this Agreement,
the Executive’s employment hereunder shall immediately and automatically
terminate, and the Company shall have no further obligation or duty to the
Executive or his estate or beneficiaries other than for the Base Salary earned
under this Agreement to the date of termination, reimbursement of corporate
expenses incurred through the date of termination, and any payments or benefits
due under Company policies or benefit plans
which
shall be paid within a reasonable time following death or
Disability.
For
purposes of this Agreement, "Disability" shall mean
the
physical or mental infirmity of which infirmity causes him to be substantially
unable to perform his duties hereunder for any period of one hundred and
eighty
(180) consecutive days; provided,
however, that notwithstanding anything to the contrary herein and despite
any
termination of Executive’s employment under this Section 6, Executive shall be
entitled in the event of a termination on account of death or
Disability: (i) to retain his disability benefits, which amounts shall not
be
offset by any disability benefits received by Executive from any other source,
(ii) to receive his Base Salary until such time as he has commenced receiving
disability payments under the Company's policies,
(iii) to
receive a prorated portion of the Bonus to
which
Executive would otherwise have been entitled for the calendar year through
the
date of termination (as
determined by
the
Board),
and
(iv) accrued but unused vacation.
Executive, or his legal representative, as the case may be, shall have a
period
of one (1) year following the termination of his employment
pursuant
to
this
Section 6.1 to exercise any vested Options.
-3-
6.2 Cause,
Without Cause Termination by the Executive.
Notwithstanding the provisions of Section 2 of this Agreement, the Executive’s
employment hereunder may terminate prior to the expiration of the Initial
Term,
or any Renewal Period thereafter, under the following
circumstances:
(a) Termination
by the Company for Cause.
The
Board may terminate this Agreement for Cause at any time, upon written notice
to
the Executive setting forth in reasonable detail the nature of such Cause.
For
purposes of this Agreement, Cause is defined as (i) the Executive’s material
breach of Sections 7,
8, or 10
of this
Agreement; (ii) the Executive’s commission of any felony or any crime involving
moral turpitude; or (iii) gross neglect
or
willful misconduct by the Executive in connection with the performance of
his
material
duties
hereunder, or his refusal to perform such material
duties
reasonably requested
in the
ordinary course;
provided, however, that the Company shall give Executive thirty (30) days’
written notice and opportunity to cure prior to any termination for Cause
based
on the grounds specified (iii) above. Upon
the
termination for Cause of Executive’s employment, the Company shall have no
further obligation or liability to the Executive other than for Base Salary
earned under this Agreement prior to the date of termination, and reimbursement
for corporate expenses incurred through the date of termination. Executive’s
vested but unexercised Options shall expire immediately upon his termination
for
Cause pursuant to this Section 6.2(a).
(b) Termination
by the Company Without Cause.
The
Executive’s employment hereunder may be terminated without Cause by the Company
upon written notice to the Executive, provided, however, that if the Company
terminates the Executive’s employment without Cause,
or
the
Executive terminates his employment for Good Reason, as defined below, the
Company shall (i) (A) continue to pay the Executive the Base Salary and shall
reimburse medical and dental premiums, under the same conditions as exist
at the
time of termination, for a severance period of 9 months, provided termination
occurs after six months and before the completion of 12 months from the
Effective Date or (B) continue to pay the Executive the Base Salary and shall
reimburse medical and dental premiums, under the same conditions as exist
at the
time of termination, for a severance period until the end of the Initial
Term or
the then current Renewal Period, provided termination occurs after of twelve
(12) months from the Effective Date; (ii) reimburse Executive for corporate
expenses incurred through the date of termination, (iii)
cause any unvested Options granted to the Executive to immediately
vest,
(iv) in
the
event
the board had approved a bonus, such amount would be paid in the case of
a
termination without cause
and
(v) pay Executive for any accrued but unused vacation.
The
Company's obligations under this Section 6.2(b) are not subject to any right
of
setoff and impose no duty to mitigate on Executive. As a condition of receiving
severance benefits pursuant to this Agreement, the Executive shall execute
and
deliver to the Company prior to his receipt of such benefits a general
release
in
substantially the form set forth in Annex A hereto. The
obligations of the Company under this Section 6.2(b) are subject to Executive's
compliance with Sections 7 and 8 hereof.
-4-
(c) Termination
by the Executive.
The
Executive may terminate his employment hereunder for any reason
upon one
(1) month’s written notice to the Company
(the
“Notice Period”).
In the
event Executive provides notice of termination pursuant to this subsection
6.2(c), the Company may elect to terminate Executive at any time during the
Notice Period without such termination being deemed a termination by the
Company
under this Agreement; provided that the Company shall nevertheless
pay the
Executive for
any
remaining portion of the
Notice Period an amount equal to
the Base
Salary and benefits at the rate of compensation the Executive was receiving
immediately before the
Notice Period. The
Executive may also terminate his employment hereunder for “Good Reason,” within
sixty
(60)
days
after the occurrence of any of the following events (i) a material breach
of
this Agreement by the Company; (ii) a material change
in the
Executive’s duties or responsibilities
inconsistent with his position as CFO,
including any reduction in Base Salary; or (iii) a change in the Executive’s
reporting relationship so that he no longer reports
directly to the President and/or Chief Executive Officer.
The
Executive shall give the Company thirty (30) days’ written notice and
opportunity to cure prior to any termination for Good Reason based on the
grounds specified in (i) through (iii) above.
7. Confidentiality,
Disclosure of Information.
(a) The
Executive recognizes and acknowledges that the Executive has had and will
have
access to Confidential Information (as defined below) relating to the business
or interests of the Company or of persons with whom the Company may have
business relationships. Except as permitted herein, the Executive will not
during the Term, or at any time thereafter, use, disclose or permit to be
known
by any other person or entity, any Confidential Information of the Company
(except as required by applicable law or as Executive deems
necessary
in
connection with the performance of the Executive’s duties and responsibilities
hereunder). The term “Confidential Information” means information relating to
the Company’s business affairs, proprietary technology, trade secrets, patented
processes, research and development data, know-how, market studies and
forecasts, competitive analyses, pricing policies, employee lists, employment
agreements (other than this Agreement), personnel policies, the substance
of
agreements with customers, suppliers and others, marketing arrangements,
customer lists, commercial arrangements,
or
any
other information relating to the Company’s business that is not generally known
to the public or to actual or potential competitors of the Company (other
than
through a breach of this Agreement). This obligation shall continue until
such
Confidential Information becomes publicly available, other than pursuant
to a
breach of this Section 7 by the Executive, regardless of whether the Executive
continues to be employed by the Company.
(b) It
is
further agreed and understood by and between the parties to this Agreement
that
all “Company Materials,” which include, but are not limited to, computers,
computer software, computer disks, tapes, printouts, source, HTML and other
code, flowcharts, schematics, designs, graphics, drawings, photographs, charts,
graphs, notebooks, customer lists, sound recordings, other tangible or
intangible manifestation of content, and all other documents whether printed,
typewritten, handwritten, electronic, or stored on computer disks, tapes,
hard
drives, or any other tangible medium, as well as samples, prototypes, models,
products and the like, shall be the exclusive property of the Company and,
upon
termination of Executive’s employment with the Company, and/or upon the request
of the Company, all Company Materials, including copies thereof, as well
as all
other Company property then in the Executive’s possession or control, shall be
returned to and left with the Company.
-5-
8. Non-Competition
and Non-Solicitation.
The
Executive acknowledges that the Company has invested substantial time, money
and
resources in the development and retention of its inventions, improvements,
discoveries, processes, formulae, methods and other intellectual property,
whether or not patentable or copyrightable (collectively, “Inventions”),
Confidential Information (including trade secrets), customers, accounts and
business partners, and further acknowledges that during the course of the
Executive’s employment with the Company the Executive will have access to the
Company’s Inventions and Confidential Information (including trade secrets), and
will be introduced to existing and prospective customers, accounts and business
partners of the Company. The Executive acknowledges and agrees that any and
all
“goodwill” associated with any existing or prospective customer, account or
business partner belongs exclusively to the Company, including, but not limited
to, any goodwill created as a result of direct or indirect contacts or
relationships between the Executive and any existing or prospective customers,
accounts or business partners. Additionally, the parties acknowledge and
agree
that Executive possesses skills that are special, unique or extraordinary
and
that the value of the Company depends upon his use of such skills on its
behalf.
In
recognition of this, the Executive covenants and agrees that:
(a) During
the Term, and for a period of eighteen (18) months thereafter, the Executive
may
not, without the prior written consent of the Board, (whether as an employee,
agent, owner, partner, consultant, independent contractor, representative,
stockholder or in any other capacity whatsoever) participate
in any business that offers products or services competitive in any way to
those
offered by the Company or that were under active development by the Company
during the Term, provided that nothing herein shall prohibit the Executive
from
owning securities of corporations which are listed on a national securities
exchange or traded in the national over-the-counter market in an amount which
shall not exceed 2% of the outstanding shares of an such
corporation.
(b) During
the Term, and for a period of eighteen (18) months thereafter, the Executive
may
not entice, solicit or encourage any Company employee to leave the employ
of the
Company or any independent contractor to sever its engagement with the Company,
absent prior written consent to do so from the Board.
(c) During
the Term, and for a period of eighteen (18) months thereafter, the Executive
may
not, directly or indirectly, entice, solicit or encourage any customer or
prospective customer of the Company to cease doing business with the Company,
reduce its relationship with the Company or refrain from establishing or
expanding a relationship with the Company.
Provided,
however, that this Section 8 shall not apply if the Company terminates the
Executive Without Cause or Executive terminates this Agreement for Good
Reason.
9. Provisions
Necessary and Reasonable.
(a) The
Executive agrees that (i) the provisions of Sections 7 and 8 of this Agreement
are necessary and reasonable to protect the Company’s Confidential Information,
Inventions, and goodwill; (ii) the specific temporal, geographic and substantive
provisions set forth in Section 8 of this Agreement are reasonable and necessary
to protect the Company’s business interests; and (iii) in the event of any
breach of any of the covenants set forth herein, the Company would suffer
substantial irreparable harm and would not have an adequate remedy at law
for
such breach. In recognition of the foregoing, the Executive agrees that in
the
event of a breach or threatened breach of any of these covenants, in addition
to
such other remedies as the Company may have at law, without posting any bond
or
security, the Company shall be entitled to seek and obtain equitable relief,
in
the form of specific performance, and/or temporary, preliminary or permanent
injunctive relief, or any other equitable remedy which then may be available.
The seeking of such injunction or order shall not affect the Company’s right to
seek and obtain damages or other equitable relief on account of any such
actual
or threatened breach.
-6-
(b) If
any of
the covenants contained in Sections 7or 8 hereof, or any part thereof, are
hereafter construed to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be given full effect
without regard to the invalid portions.
(c) If
any of
the covenants contained in Sections 7or 8 hereof, or any part thereof, are
held
to be unenforceable by a court of competent jurisdiction because of the temporal
or geographic scope of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce
the duration and/or geographic area of such provision and, in its reduced
form,
such provision shall be enforceable.
10. Representations
Regarding Prior Work and Legal Obligations.
(a) The
Executive represents that the Executive has no agreement or other legal
obligation with any prior employer, or any other person or entity, which
restricts the Executive’s ability to accept employment with, or to perform any
function for, the Company.
(b) The
Executive has been advised by the Company that at no time should the Executive
divulge to or use for the benefit of the Company any trade secret or
confidential or proprietary information of any previous employer. The Executive
expressly acknowledges that the Executive has not divulged or used any such
information for the benefit of the Company.
(c) The
Executive acknowledges that the Executive has not and will not misappropriate
any Invention that the Executive played any part in creating while working
for
any former employer.
(d) The
Executive acknowledges that the Company is basing important business decisions
on these representations, and affirms that all of the statements included
herein
are true.
11. Successors;
Binding Agreement.
This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die, all amounts due following the Executive’s
death, unless otherwise provided herein, shall be paid in accordance with
the
terms of this Agreement to the Executive’s devisee, legatee, or other designee
or, if there is no such designee, to the Executive’s estate.
12. Notice.
For the
purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to
have
been duly given when delivered or (unless otherwise specified) mailed by
United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
-7-
If
to the
Executive:
Xxxxx
X.
Xxxxxx
Address
to be advised
PERSONAL
AND CONFIDENTIAL
If
to the
Company:
Wako
Logistics Group, Inc.
Address
to be advised
Attn:
Corporate Secretary
or
to
such other address as any party may have furnished to the other in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
13. Miscellaneous.
No
provisions of this Agreement may be amended, modified, waived or discharged
unless such amendment, waiver, modification or discharge is agreed to in
writing
signed by the Executive and such officer of the Company as may be specifically
designated by the Board. No waiver by either party hereto at any time of
any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed
a waiver of similar or dissimilar provisions or conditions at the same or
at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by
either party which are not set forth expressly in this Agreement. This Agreement
shall be binding on all successors to the Company.
14. Severability.
The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of
this
Agreement, which shall remain in full force and affect.
15. Dispute
Resolution.
Any
controversy or claim arising out of this Agreement or any aspect of the
Executive’s relationship with the Company including the cessation thereof (other
than disputes with respect to alleged violations of the covenants contained
in
Sections 7, 8, or 9 hereof), shall be resolved by arbitration in accordance
with
the then existing Employment Dispute Resolution Rules of the American
Arbitration Association, in Arlington, Virginia, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The parties
shall split equally the costs of arbitration, except that each party shall
pay
its own attorneys’ fees. The parties agree that the award of the arbitrator
shall be final and binding..
-8-
16.
Governing Law.
The
validity, interpretation, construction and performance of this Agreement
shall
be governed by and construed and enforced in accordance with the internal
laws
of the State of Delaware without regard to the principle of conflicts of
laws.
17. Counterparts.
This
Agreement may be executed in two counterparts, each of which shall be deemed
to
be an original but both of which together will constitute one and the same
instrument.
18. Survivorship.
The
respective rights and obligations of the parties to this Agreement shall
survive
the termination of this Agreement or the Executive’s employment hereunder for
any reason to the extent necessary to the intended preservation of such rights
and obligations.
19. Representation.
The
Company represents and warrants that it is fully authorized and empowered
to
enter into this Agreement and that the performance of its obligations hereunder
shall not violate any agreement between the Company and any other person,
firm
or organization.
20. Entire
Agreement.
This
Agreement sets forth the entire agreement of the parties hereto in respect
of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto; and any prior agreement of the parties hereto in respect
of
the subject matter contained herein is hereby terminated and
cancelled.
21. Headings.
The
parties acknowledge that the headings in this Agreement are for convenience
of
reference only and shall not control or affect the meaning or construction
of
this Agreement.
22. Advice
of Counsel.
The
Executive and the Company hereby acknowledge that each party has had adequate
opportunity to review this Agreement, to obtain the advice of counsel with
respect to this Agreement, and to reflect upon and consider the terms and
conditions of this Agreement. The parties further acknowledge that each party
fully understands the terms of this Agreement and has voluntarily executed
this
Agreement.
[Signatures
appear on following page]
-9-
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date and year first above
written.
|
EXECUTIVE
|
Wako Logistics Group, Inc | ||
| By: |
|
||
|
Xxxxx
X. Xxxxxx
|
|
||
| Title: |
|
||
|
Dated:
__________________, 2005
|
Dated:
_______________, 2005
|
||
SIGNATURE
PAGE TO EMPLOYMENT AGREEMENT
OF
XXXXX X. XXXXXX
-10-
Annex
A
-- Form of Release
Employee
hereby expressly waives, releases, acquits and forever discharges the Company
and its divisions, subsidiaries, affiliates, parents, related entities,
partners, officers, directors, shareholders, investors, executives, managers,
employees, agents, attorneys, representatives, successors and assigns
(hereinafter collectively referred to as “Releasees”), from any and all claims,
demands, and causes of action which Employee has or claims to have, whether
known or unknown, of whatever nature, which exist or may exist on Employee’s
behalf from the beginning of time up to and including the date of this
Agreement. As used in this paragraph, “claims,” “demands,” and “causes of
action” include, but are not limited to, claims based on contract, whether
express or implied, fraud, stock fraud, defamation, wrongful termination,
estoppel, equity, tort, retaliation, intellectual property, personal injury,
spoliation of evidence, emotional distress, public policy, wage and hour law,
statute or common law, claims for severance pay, claims related to stock options
and/or fringe benefits, claims for attorneys’ fees, vacation pay, debts,
accounts, compensatory damages, punitive or exemplary damages, liquidated
damages, and any and all claims arising under any federal, state, or local
statute, law, or ordinance prohibiting discrimination on account of race, color,
sex, age, religion, sexual orientation, disability or national origin, including
but not limited to, the Age Discrimination in Employment Act, Title VII of
the
Civil Rights Act of 1964 as amended, the Americans with Disabilities Act, the
Family and Medical Leave Act or the Employee Retirement Income Security
Act.
-11-
