EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
This
Executive Employment Agreement (this “Agreement”) is made and
entered into as of the Effective Date
shown at the top of the signature block below (the
"Effective
Date"), by and among MobileSmith, Inc., a Delaware corporation
(the “Company”)
and the undersigned individual (the “Executive”). The Company and the
Executive are each a “Party” and collectively the
“Parties” to
this Agreement.
RECITAL
WHEREAS
the Company desires to employ Executive to serve as its Chief
Executive Officer, and the Executive desires to continue to be
employed in the capacity hereinafter stated, each pursuant to the
terms and conditions set forth herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and the
Executive, intending to be legally bound, hereby agree as
follows:
1. Employment.
The Company hereby agrees to employ the Executive as Chief
Executive Officer (“CEO”) of the Company, effective on
the Effective Date and for the duration of the Term unless
terminated earlier pursuant to the terms of Section 2 below. The
Executive accepts such employment and agrees to devote sufficient
time, efforts and skills to diligently perform the duties of such
role as shall reasonably be assigned to him by the Board of Directors of the Company
(“Board”), subject to Section 3 below.
2. Term.
2.1 Term. The initial term of this
Agreement shall be the period beginning on the Effective Date and
ending on December 31, 2020 unless terminated earlier pursuant to
the terms of this Section 2 (the “Initial Term”). This
Agreement may be renewed for additional terms in such duration as
the parties may mutually agree (each a “Renewal Term”).
Absent mutually agreed renewal, this Agreement shall automatically
terminate upon the expiration of the Initial Term and any Renewal
Terms. The Initial Term and any Renewal Terms are referred to
collectively herein as the “Term.” Upon expiration or
termination of the Term under circumstances not involving Cause,
death or Disability, Executive shall remain as an independent
member of the Board.
2.2 Discharge by the Company For
Cause. During the Term, the Executive’s employment may
be terminated by the Company (which shall also constitute a
termination of this Agreement) immediately upon written notice to
the Executive by the Board, detailing the circumstances
constituting Cause. As used herein, “Cause” shall mean any one
or more of the following that continues uncured for thirty (30)
days following receipt of written notice to Executive from the
Board setting forth in detail the circumstances constituting Cause:
(i) failure or refusal to follow the reasonable written
direction of the Board (other than by reason of Disability);
(ii) the Executive’s commission of any crime, the
underlying conduct of which is job related such that it is
consistent with business necessity to terminate Executive’s
employment; (iii) the Executive’s willful material false
statement regarding the Company’s business to the Board,
shareholders of the Company, any lender or insurer, or a regulatory
authority; (iv) the Executive’s breach of this Agreement
in any material respect (other than by reason of Disability); or
(v) other intentional conduct that is or could reasonably be
expected to be materially harmful to the business interests or
reputation of the Company. Immediately upon termination for Cause,
the Company shall pay Executive all compensation, benefits and
reimbursable expenses, accrued through the effective date of
termination or as required by law, and shall comply with the terms
of any applicable benefits plans and agreements between the Company
and the Executive.
2.3 Discharge by the Company Without
Cause. During the Term, the Executive’s employment may
be terminated by the Company (which shall also constitute a
termination of this Agreement) upon thirty (30) days’ written
notice; provided that the Company in its sole discretion may elect
to add any portion of such notice to the Severance Period (defined
below) rather than have Executive work the full notice. In the
event of termination of Executive’s employment by the Company
without Cause, the Company shall pay Executive all compensation,
benefits and reimbursable expenses accrued through the effective
date of termination or as required by law, and shall comply with
the terms of any applicable benefits plans and agreements between
the Company and the Executive; and, in the event that the Company
terminates Executive’s employment without Cause prior to July
1, 2020, and provided that Executive (i) signs and returns to the
Company a timely and effective separation agreement containing a
general release of claims and other customary terms in the form
provided by the Company at the time employment is terminated (the
“Separation Agreement”) and (ii) continues to comply
with his post-employment covenants in this Agreement and any other
agreement between the Executive and the Company, the Company will
continue to pay Executive’s Base Salary, less taxes and other
legally required deductions (“Severance Pay”) for a
period of 3 months following the date of termination
(“Severance Period”), and upon Executive’s timely
election of statutory continuation coverage the Company will pay on
Executive’s behalf or reimburse Executive for the cost of
statutory continuation coverage for eligible group insurance
benefits (minus Executive’s share of the premiums for such
insurance at the same rate as during employment) for the shorter of
the amount of time that Executive continues such benefits and the
remainder of the Initial Term.
2.4 Death or Disability.
Executive’s employment (and this Agreement) shall terminate
automatically upon the death of Executive, and may be terminated by
the Company upon written notice to Executive of termination of his
employment due to Disability (which shall also constitute a
termination of this Agreement). As used herein, “Disability” shall mean
the inability of Executive to perform his material duties hereunder
due to a physical or mental incapacity for 180 days (including
weekends and holidays) in any 365-day period, with reasonable
accommodations if required by applicable state and federal
disability laws. To the extent necessary, the existence of a
Disability shall be determined by an independent physician selected
by the Executive and reasonably acceptable to Company. In the event
of termination of Executive’s employment due to death or
Disability, the Company shall pay to Executive (or to his qualified
personal representative in the event of his death during the Term)
all compensation, benefits and reimbursable expenses accrued
through the effective date of termination or as required by law,
and shall comply with the terms of any applicable benefits plans
and agreements between the Company and the Executive.
2.5 Voluntary Resignation by
Executive. The Executive may terminate his employment (which
shall also constitute a termination of this Agreement) upon at
least thirty (30) days’ written notice by Executive to the
Company. In the event Company chooses to effect Executive’s
termination prior to the end of the notice period provided by
Executive, Company will remain obligated to pay Executive for the
full notice period. Upon termination by Executive pursuant to this
Section 2.4, the
Company shall pay Executive all compensation, benefits and
reimbursable expenses accrued through the effective date of
termination or as required by law, and shall comply with the terms
of any applicable benefits plans and agreements between the Company
and the Executive.
2.6 Resignation by Executive for Good
Reason. The Executive may terminate his employment (which
shall constitute a termination of this Agreement) upon thirty (30)
days’ written notice to the Company of his resignation for
Good Reason (as defined below), detailing the circumstances
constituting Good Reason; provided that the Company in its sole
discretion may elect to add any portion of such notice to the
Severance Period (defined below) rather than have Executive work
the full notice. As used herein, “Good Reason” shall mean
any of the following without the Executive’s consent: (i)
breach by the Company of this Agreement or any other Agreement
between the Company and Executive; (ii) a requirement that
Executive do anything that the Executive believes in good faith to
be illegal after consulting with an attorney duly licensed to
practice and in good standing with the Bar of the applicable state;
or (iii) a material reduction in Executive’s compensation or
benefits, provided that the foregoing factors (i) – (iii)
shall only constitute “Good Reason” in the event that
Executive provides the Company written notice of the circumstances
that would constitute “Good Reason” if not cured as
provided herein and the Company does not cure such circumstances
within thirty (30) days of receipt of such written notice. In the
event of termination of Executive’s employment for Good
Reason, the Company shall pay Executive all compensation, benefits
and reimbursable expenses accrued through the effective date of
termination or as required by law, and shall comply with the terms
of any applicable benefits plans and agreements between the Company
and the Executive; and, in the event that the Executive resigns his
employment hereunder with Good Reason prior to July 1, 2020, and
provided that Executive (i) signs and returns to the Company a
timely and effective separation agreement containing a general
release of claims and other customary terms in the form provided by
the Company at the time employment is terminated (the
“Separation Agreement”) and (ii) continues to comply
with his post-employment covenants in this Agreement and any other
agreement between the Executive and the Company, the Company will
continue to pay Executive’s Base Salary, less taxes and other
legally required deductions (“Severance Pay”) for a
period of 3 months following the date of termination
(“Severance Period”), and upon Executive’s timely
election of statutory continuation coverage the Company will pay on
Executive’s behalf or reimburse Executive for the cost of
statutory continuation coverage for eligible group insurance
benefits (minus Executive’s share of the premiums for such
insurance at the same rate as during employment) for the shorter of
the amount of time that Executive continues such benefits and the
remainder of the Initial Term..
3. Position
and Duties.
3.1 Service with the Company. For
the duration of his employment during the Term, the Executive
agrees to perform such duties and on such basis as shall be
consistent with those customarily associated with the
Executive’s position and assigned to him from time to time by
the Board. In addition, for the duration of the Term, Executive
shall maintain a seat on the Board. Upon expiration or termination
of the Term under circumstances not involving Cause, death or
Disability, Executive shall remain as an independent member of the
Board.
3.2 Work Location. For the duration
of his employment during the Initial Term, the Executive shall
perform his duties under this Agreement remotely, without provision
or reimbursement for any expenses associated with maintaining an
office or other remote workspace. In the event that the Term is
extended beyond the Initial Term, the Executive may elect at any
time in his sole discretion to make the Company’s
headquarters in Raleigh, North Carolina his primary work location,
in which case the Company will reimburse Executive for a
pre-approved, reasonable amount of expenses associated with moving
to a residence in or near Raleigh, North Carolina. For the duration
of the Term, Executive may be required to travel for Company
business, at the reasonable cost and expense of the Company,
including but not limited to traveling to the offices of the
Company, offices of clients, prospective clients, and
vendors.
3.3 Personnel Policies. Except as
may be inconsistent with this Agreement, for the duration of his
employment during the Term, the Executive shall be subject to the
personnel policies of the Company applicable to executive level
employees in effect from time to time, and any amendments or
revisions thereto. In the event of a conflict between this
Agreement and the Company’s personnel policies, the terms of
this Agreement shall control.
3.4 No Conflicting Duties. For the
duration of his employment during the Term, the Executive shall
devote sufficiently necessary business time and attention to the
performance of his duties hereunder and shall not serve as an
officer, director, employee, consultant, or advisor to any
competing business; provided that Executive may and it shall not be
considered a breach of this Agreement for Executive to serve on
boards of community and industry organizations or otherwise
participate in charitable, community and industry activities so
long as such activities do not compete with the Company’s
business or otherwise interfere with Executive’s duties
hereunder.
4. Compensation
and Benefits. During the Term of this Agreement, the Company
will provide to the Executive the following compensation and benefits:
4.1 Base Salary. During the Term,
Executive shall be entitled to a base salary of $25,000.00
per month (which annualizes to
$300,000.00 per year), pro-rated for any partial month, less
applicable tax and other withholdings (“Base Salary”), which
shall be paid in accordance with the
Company’s normal payroll practices and applicable state and
federal law. The Base Salary may be increased but not
decreased in the sole discretion of the Board.
4.2 Board Member Compensation &
Benefits. The compensation provided by this Agreement shall
be in lieu of any compensation that would otherwise be due to
Executive as a result of his position as a member of the Board
during the Term, provided that any other benefits extended to Board
members that are not provided hereunder shall be extended to
Executive during the Term. At all times after the Term, for so long
as Executive serves as a Board member, Executive shall be entitled
to Director compensation and benefits on the same terms and
conditions as other Board members.
4.3 Annual Bonus. Executive shall
not be entitled to an annual bonus for the Initial Term. Any
bonuses for the initial term will be the sole discretion of the
Board. In the event that the Term is extended beyond the Initial
Term, Executive shall be entitled to such bonuses, on such terms
and conditions for such bonuses, as the Parties may
agree.
4.4 Commissions. Executive shall
not be eligible for commissions on any sales or for any sales
involvement.
4.5 Options. Executive shall be
granted awards of options to purchase shares of the Company’s
Common Stock, subject to vesting and exercise requirements and
other terms and conditions of the Company’s Equity
Compensation Plan and associated award documents, and contingent
upon Executive signing the applicable Incentive Stock Option
Agreement in form and substance acceptable to the Company, as
follows:
4.4.1 375,000
options awarded within thirty (30) days after the Effective Date;
and
4.4.2 375,000
options awarded upon proof of Peri application viability (2 unique
Peri customer sales).
4.6 Employee Benefits. During the
Term, Executive will be eligible to participate in any and all
employee benefit plans made available to similarly situated
employees of the Company from time to time and on the same terms as
similarly situated employees, except to the extent duplicative of
or in conflict with a benefit provided hereunder, subject to plan
terms and applicable Company policies. As of the Effective Date,
such benefits include group health and dental, life and disability
insurance and a 401(k) plan.
4.7 Paid Time Off. During the Term,
in addition to holidays observed by the Company, Executive shall be
entitled to take such paid time off (“PTO”) in his
discretion, so long as it does not interfere with his effective
performance of his duties and responsibilities
hereunder.
4.8 Expenses. The Company will pay
or reimburse the Executive for all reasonable out-of-pocket
expenses incurred by Executive in the performance of his duties
hereunder, subject to applicable Company policies as in effect from
time to time.
5. Assignment.
This Agreement shall not be assignable, in whole or in part, by
either Party without the written consent of the other Party, except
that the Company may assign its rights and obligations under this
Agreement to any successor or affiliate of the Company, or to any
corporation, firm or other business entity (i) with or into
which the Company may merge or consolidate, (ii) to which all
or substantially all of the ownership interests in the Company may
be transferred or (iii) to which the Company may otherwise
sell or transfer all or substantially all of its assets. After any
such assignment such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement
including this Section 5.
6. Successors.
This Agreement shall inure to the benefit of and be enforceable by
the Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
7. Miscellaneous.
7.1 Governing Law; Arbitration of
Disputes. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of North Carolina
applicable to contracts executed and fully performed within such
State. All claims and disputes arising out of the interpretation,
application or enforcement of this letter agreement shall be
settled by final and binding arbitration in Wake County, North
Carolina, in accordance with the then current employment
arbitration rules of the American Arbitration Association (AAA), by
a single arbitrator appointed in accordance with such rules, and
judgment on the arbitration award shall be final, binding and
enforceable by any court of competent jurisdiction. The arbitrator
shall be authorized to make any decision or award allowed by law,
including but not limited to any remedy provided by law or equity.
The Parties shall each bear their own attorneys’ fees and
costs associated with such arbitration and shall share equally the
arbitrator's fees and administrative fees charged by any entity
that may administer the arbitration, subject to reapportionment of
costs by the arbitrator in accordance with applicable law. The
foregoing notwithstanding, a Party may seek and be awarded
injunctive or other equitable relief in accordance with applicable
law by any court of competent jurisdiction, in addition to any
other remedies available at law or in equity.
7.2 Entire Agreement. This
Agreement contains the entire agreement of the Parties relating to
the subject matter hereof and supersedes all prior agreements and
understandings with respect to such subject matter, and the Parties
hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set
forth herein.
7.3 Withholding Taxes. The Company
may withhold from any amounts payable under this Agreement all
federal, state, city or other taxes or amounts as may be required
or allowed to be withheld pursuant to any law or governmental
regulation, ruling or court order.
7.4 409A Compliance. The provisions
of this Agreement are intended and shall be interpreted and
administered so as to not result in the imposition of additional
tax or interest under Section 409A of the Code (as defined below)
where applicable. References herein to the termination of
Executive’s employment shall, only to the extent required by
Code Section 409A, be construed to mean “Separation from
Service” within the meaning of Section 409A(a)(2)(A)(i) of
the Code. To the extent any such cash payment or continuing benefit
payable upon Executive’s separation from service is
nonqualified deferred compensation subject to Code Section 409A,
then, only to the extent required by Code Section 409A, such
payment or continuing benefit shall not commence until the date
which is six (6) months and one day after the date of separation
from service. To the extent any reimbursements or in-kind benefit
payments under this Agreement are subject to Code Section 409A,
such reimbursements and in-kind benefit payments shall be made in
accordance with Section 1.409A-3(i)(l)(iv) of the Treasury
Regulations (as defined below) (or any similar or successor
provisions), and payments with respect to such reimbursements or
in-kind benefits shall be made on or before the last day of the
calendar year following the calendar year in which the relevant
expense is incurred. If under this Agreement, an amount is paid in
two or more installments, for purposes of Code Section 409A, each
installment shall be treated as a separate payment. For purposes of
this Agreement, (i) the “Code” shall mean the
United States Internal Revenue Code of 1986, as amended, and (ii)
“Treasury
Regulations” shall mean all final regulations
promulgated under the Code as from time to time in
effect.
7.5 Amendment and Waiver. This
Agreement may not be amended except by an instrument in writing
signed by the Parties hereto. To be effective, a waiver by a Party
of any of its rights hereunder or of any obligation of another
Party hereto, or of any breach thereof, must be set forth in a
written instrument or document that has been signed by the Party to
be charged by that waiver and no waiver of any term or condition
hereof shall be construed as a future or continuing waiver of the
same or any other term or condition hereof or, in the case of any
breach by a Party of any obligation hereunder, of any other breach,
whether or not similar.
7.6 Severability. To the extent any
provision of this Agreement shall be found by any court of
competent jurisdiction to be invalid or unenforceable, it shall not
affect the enforceability of the remainder of such provision, or
the validity or enforceability of such provision in any other
jurisdiction, and the remainder of this Agreement shall be
unaffected thereby and shall continue in full force and
effect.
7.7 Counterparts. This Agreement
may be executed in one or more counterparts and by the different
Parties hereto in separate counterparts, each of which when
executed, together with any facsimile copies or photocopies
thereof, shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Parties have executed this Executive
Employment Agreement to be effective as of March 18, 2020 (the
“Effective Date”
of this Agreement).
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“COMPANY”
By:
Name:
Title:
Date:
|
EXECUTIVE:
Signature:
/s/ Xxxxx
Xxxxxx
Xxxxx
Xxxxxx
Date:
3/19/2020
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