CONVERGEONE HOLDINGS CORP.
Exhibit 10.21
CONVERGEONE HOLDINGS CORP.
June 16, 2014
Xxxx Xxxxx
00 Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Re: Employment Terms
Dear Xxxx:
On behalf of ConvergeOne Holdings Corp. (the “Company”), I am pleased to confirm your employment terms agreement (the “Agreement”) with the Company. The effective date of this Agreement (the “Start Date”) will be the Closing Date as defined in that certain Stock Purchase Agreement dated May 12, 2014, by and between the C1 Acquisition Corp. and C-1 Holdings, LLC (as amended, modified, or supplemented from time to time in accordance with its terms, the “Purchase Agreement”). If the anticipated Transactions (as defined in the Purchase Agreement) do not close and/or the Purchase Agreement is terminated in accordance with its terms, this Agreement will have no effect, will not be binding on the Company (or any of its Affiliates) or on you, shall terminate as of the termination of the Purchase Agreement, and neither you nor the Company (or any of its Affiliates, as defined below) shall have rights or obligations hereunder.
1. Employment Position; Duties. You will be employed as the President and Chief Executive Officer of North American Communications Resource, Inc., a subsidiary of the Company. In this position, you will report directly to the Company’s Chief Executive Officer, and you will have those duties and responsibilities as customary for this position and as may be directed by the Company’s Chief Executive Officer. Your work duties will include work for, or on behalf of, affiliates of the Company, such as its parent, subsidiaries and other group affiliates (together, the “Affiliates”). You will work from the Company’s offices in Larchmont, New York. During your employment, you will devote your full-time best efforts to the business of the Company.
2. Base Salary; Employee Benefits; and Business Expenses.
(a) Salary. Your initial base salary will be paid at the annual rate of $330,000, less standard payroll deductions and tax withholdings. Your base salary will be paid on the Company’s normal payroll schedule. As an exempt salaried employee, you will be required to work the Company’s normal business hours, and such additional time as appropriate for your work assignments and position. You will not be eligible for extra payment under the overtime laws.
(b) Benefits. As a regular full-time employee, you will be eligible to participate in the Company’s employee benefits (pursuant to the terms and conditions of the benefit plans and applicable policies), as they may be terminated or changed from time to time within the Company’s discretion.
(c) Business Expenses. Your legitimate and documented business expenses will be reimbursed by the Company as provided under its business expense reimbursement policies.
Xxxx Xxxxx
June 16, 2014
Page 2
3. Annual Incentive Compensation. In addition to base salary, you will be eligible to earn discretionary incentive compensation (“Performance Bonus”) at an annual target amount of one hundred percent (100%) of your base salary at target achievement, based on achievement of individual and corporate performance targets, metrics and/or management-by-objective goals (“MBOs”) to be determined in the discretion of, and approved by, the Board or the Compensation Committee thereof. For the remainder of calendar year 2014, you will be eligible to earn the Performance Bonus based on the MBOs in effect for you immediately before the Start Date. The Board will set new MBOs effective for calendar year 2015. The Performance Bonus, if earned, is paid on an annual basis, subject to payroll withholding and deduction, after the close of the fiscal year and after determination by the Board (or the Compensation Committee thereof) of (a) the level of achievement of the applicable individual and corporate performance targets, metrics and/or MBOs, and (b) the amount of the Performance Bonus earned by you (if any). No Performance Bonus is guaranteed and, in addition to the other conditions for earning such compensation, you must remain an employee in good standing of the Company on the scheduled Performance Bonus payment date in order to earn any Performance Bonus. Except as otherwise provided in this Agreement, this Performance Bonus program will be the only incentive compensation, commissions, or other bonus program for which you are eligible.
4. Signing Bonus. You will be eligible for an initial one-time signing bonus in the amount of $23,326.00, less standard payroll deductions and tax withholdings, to be paid to you within your first paycheck following the Start Date and in accordance with the Company’s customary payroll procedures.
5. Management Incentive Fee. You will be eligible to earn an annual management incentive fee in the amount of $11,663.00 (prorated for calendar year 2014), less standard payroll deductions and tax withholdings (“Management Incentive Fee”). Any Management Incentive Fee earned shall be paid in the final payroll period of the applicable calendar year and in accordance with the Company’s customary payroll procedures; provided, that you must remain an employee in good standing of the Company on the scheduled payment date in order to earn a Management Incentive Fee for such year. Award of a Management Incentive Fee is not guaranteed in any year and it may be suspended at any time in its entirety or for any year in the discretion of the Board based upon the Company’s financial performance, liquidity position and/or otherwise to comply with certain lender requirements.
6. Equity. You acknowledge and agree that in connection with the Transactions, you have entered into a certain Contribution Agreement, along with C1 Investment Corp., C1 Intermediate Corp., and C1 Acquisition Corp., whereby you will receive Parent Shares in C1 Investment Corp. (as defined in the Contribution Agreement), pursuant to the terms and conditions of the Contribution Agreement. A copy of the Contribution Agreement is attached as Exhibit A.
7. Compliance With Proprietary Information Agreement and Company Policies. As a condition of employment, you shall sign and comply with the Employee Proprietary Information, Inventions, Non-Competition and Non-Solicitation Agreement (the “Proprietary Information Agreement”) which is attached as Exhibit B. In addition, you are expected to follow the Company’s policies and procedures, as modified from time to time within the Company’s discretion, and acknowledge in writing that you have read and understand the Company’s Employee Handbook (and provide additional such acknowledgements as the Handbook may be modified from time to time).
Xxxx Xxxxx
June 16, 2014
Page 3
8. Protection of Third Party Information and Outside Activities.
(a) Third Party Information. In your work for the Company, you will be expected not to make any unauthorized use or disclosure of any confidential information or materials, including trade secrets, of any former employer or other third party; and not to violate any lawful agreement that you may have with any third party. By signing this Agreement, you represent that you are able to perform your job duties within these guidelines, and you are not in unauthorized possession or control of any confidential documents, information, or other property of any former employer. In addition, you represent that you have disclosed to the Company in writing any agreement you may have with any third party (e.g., a former employer) which may limit your ability to perform your duties to the Company or which could present a conflict of interest with the Company, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations or competitive activities.
(b) Outside Activities. Throughout your employment with the Company, you may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of your duties hereunder or present a conflict of interest with the Company. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board, you may engage in other types of business or public activities. The Board may withdraw such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s business interests or conflict with your duties to the Company.
(c) Non-Competition. During your employment by the Company, you will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint venturer, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, any Competing Business; provided, however, that you may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. “Competing Business” means: (i) any business that is engaged in the business of selling, installing, servicing and maintaining enterprise telephony equipment and communication systems and/or associated software applications, or (ii) any other business in which any of ConvergeOne Holdings Corp. or its Affiliates engages. In addition, you will be subject to certain restrictions (including restrictions continuing after your employment ends) relating to competition and non-solicitation under the terms of your Proprietary Information Agreement.
9. At-Will Employment Relationship. Your employment relationship with the Company is employment at-will. Accordingly, you may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company; and the Company may terminate your employment at any time with or without Cause or prior notice. In addition, the Company retains the discretion to modify your other employment terms from time to time, including but not limited to your position, duties, reporting relationship, work location, compensation (including base salary and bonus terms), and benefits.
Xxxx Xxxxx
June 16, 2014
Page 4
10. Severance Benefits.
(a) Severance Benefits for Qualifying Termination. If (i) your employment is terminated by the Company without Cause (other than due to your death or disability), and (ii) you satisfy the Release Requirement (defined below), then you will receive the Severance Payments (as defined below) as your sole severance benefits, and you will not be eligible for severance benefits under any other policy, plan or agreement. Specifically, you will receive severance pay in the form of continuation of your final base salary for a period of twelve (12) months, subject to required payroll deductions and tax withholdings (the “Severance Payments”). Subject to Section 10(e), the Severance Payments shall be made on the Company’s regular payroll schedule in effect following your termination date, with such payments to begin on the first regular payroll date following the Effective Date of the Release. If the Severance Payments do not commence with the first regular payroll date following your termination date because the Effective Date of the Release is later than such first payroll date, the first Severance Payment you receive will be a “catch up” payment in the total amount of the Severance Payments you would have received through such payroll date if such payments had begun with the first payroll date after your termination date.
(b) Release Requirement. Notwithstanding the foregoing, to be eligible for the Severance Payments pursuant to Section 10(a) above, if applicable, you must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a termination agreement acceptable to the Company (the “Release and Waiver”) within the applicable deadline set forth therein, but in no event later than forty-five (45) days following your termination date, and permit the Release and Waiver to become effective and irrevocable in accordance with its terms (such latest permitted date, the “Effective Date” of the Release and Waiver). No Severance Payments will be paid hereunder prior to such Effective Date. You may be required by the termination agreement to provide reasonable transitional services as a condition of payment of Severance Payments.
(c) Definition of Cause. For the purposes of this Agreement, “Cause” shall have the meaning described in the Contribution Agreement, which is attached as Exhibit A.
(d) Other. You will not be eligible for any Severance Payments under any circumstances other than those described herein, including circumstances in which your employment is terminated by the Company for Cause, you terminate your employment for any reason at any time, or your employment terminates due to your death or disability. In addition, if you materially breach any continuing obligations to the Company or its Affiliates (including but not limited to any material breach of this Agreement or any material breach of the Proprietary Information Agreement) during the period of time that you are receiving any Severance Payments, you will forfeit your entitlement to any then unpaid Severance Payments, and the Company’s obligation to continue to pay or provide such Severance Payments will immediately terminate as of the date of your material breach.
(e) IRS Code Section 409A. All payments provided hereunder are intended to constitute separate payments for purposes of Treasury Regulation Section 1.409A-2(b)(2). If the Company determines that any benefits provided under this Agreement constitute “deferred compensation” under Section 409A of the Internal Revenue Code of 1986 as amended (“Section 409A”), such benefits will not commence in connection with your termination of employment unless such termination also qualifies as a “separation from service” with the Company within the meaning of
Xxxx Xxxxx
June 16, 2014
Page 5
Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) (“Separation from Service”). If the Company determines that any benefits provided under this Agreement constitute “deferred compensation” under Section 409A and you are a “specified employee” of the Company or any affiliate thereof (or any successor entity thereto) within the meaning of Section 409A(a)(2)(B)(i) of the Code on the date of your Separation from Service, then the payment of any such benefits shall be delayed until the earlier of: (i) the date that is six (6) months and one (1) day after the date of your Separation from Service, or (ii) the date of your death (such date, the “Delayed Payment Date”), and the Company (or the successor entity thereto, as applicable) shall (A) pay to you a lump sum amount equal to the sum of the benefit payments that otherwise would have been paid to you on or before the Delayed Payment Date, without any adjustment on account of such delay, and (B) continue the benefit payments in accordance with any applicable payment schedules set forth for the balance of the period specified herein. In addition to the above, to the extent required to comply with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for you to execute (and not revoke) the applicable Release and Waiver spans two calendar years, your Severance Payments shall commence to be paid in installments on the first regularly scheduled payroll date that occurs in the second calendar year.
11. Dispute Resolution. To ensure the rapid and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company both agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, your employment with the Company, or the termination of your employment with the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent permitted by law, by final, binding and confidential arbitration conducted in Larchmont, New York by JAMS, Inc. (“JAMS”) or its successors by a single arbitrator. Both you and the Company acknowledge that by agreeing to this arbitration procedure, you each waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.
Any such arbitration proceeding will be governed by JAMS’ then applicable rules and procedures for employment disputes, which can be found at xxxx://xxx.xxxxxxx.xxx/xxxxx-xxxxxxx/ and which will be provided to you upon request. In any such proceeding, the arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. You and the Company each shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Nothing in this Agreement is intended to prevent either the Company or you from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration pursuant to applicable law. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law, and shall pay the arbitrator’s fees and any other fees or costs unique to arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.
Employee Initials for Section 11: /s/ JFL
Xxxx Xxxxx
June 16, 2014
Page 6
12. General. This Agreement, along with Exhibit A and Exhibit B, forms the complete and exclusive statement of your agreement with the Company regarding the subject matter hereof. It supersedes and replaces any other agreements or promises made to you by anyone concerning your employment terms, whether oral or written (including but not limited to that certain offer letter agreement between you and ConvergeOne dated May 14, 2010). This Agreement may not be amended or modified except by a written modification signed by you and a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement. This Agreement is governed by the laws of the state of New York, without reference to conflicts of law principles. If any provision of this Agreement shall be held invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect the other provisions of this Agreement, and such provision will be reformed, construed and enforced so as to render it valid and enforceable consistent with the general intent of the parties insofar as possible under applicable law. With respect to the enforcement of this Agreement, no waiver of any right hereunder shall be effective unless it is in writing. Any ambiguity in this Agreement shall not be construed against either party as the drafter. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures.
To confirm your terms of employment, please sign and date this letter and sign and date the Proprietary Information Agreement attached as Exhibit B, and return the fully signed documents to me. Please let me know if you have any questions.
Sincerely,
| CONVERGEONE HOLDINGS CORP. | ||
| By: | /s/ Xxxx X. XxXxxxx, Xx. | |
| Xxxx X. XxXxxxx, Xx. | ||
| Chief Executive Officer | ||
| Reviewed, Understood, and Accepted: | ||||||
| /s/ Xxxx X. Xxxxx |
June 16, 2014 | |||||
| Xxxx Xxxxx | Date | |||||
| Exhibit A: Contribution Agreement | ||||||
| Exhibit B: Proprietary Information Agreement | ||||||
EXHIBIT A
CONTRIBUTION AGREEMENT
EXHIBIT B
PROPRIETARY INFORMATION AGREEMENT
PROPRIETARY INFORMATION, INVENTIONS,
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
In consideration of my employment or continued employment by CONVERGEONE HOLDINGS CORP., its parent, subsidiaries, affiliates, successors, predecessors, or assigns, as applicable, (collectively, the “Company”), the compensation paid to me now and during my employment with the Company, and the equity I will receive pursuant to that certain Contribution Agreement by and among myself and certain affiliates of the Company, I agree to the terms of this PROPRIETARY INFORMATION, INVENTIONS, NON-COMPETITION AND NON-SOLICITATION AGREEMENT (the “Agreement”).
B-1.
B-2.
B-3.
B-4.
B-5.
This Agreement shall be effective as of the first day of my employment with Company, even if signed by me at a later date.
| EMPLOYEE:
I HAVE READ, UNDERSTAND, AND ACCEPT THIS AGREEMENT AND HAVE BEEN GIVEN THE OPPORTUNITY TO REVIEW IT WITH INDEPENDENT LEGAL COUNSEL. |
CONVERGEONE HOLDINGS CORP.:
ACCEPTED AND AGREED: | |||||||
| /s/ Xxxx X. Xxxxx |
/s/ Xxxx X. XxXxxxx, Xx. | |||||||
| (Signature) | (Signature) | |||||||
| Print: | Xxxx Xxxxx | By: | Xxxx X. XxXxxxx, Xx. | |||||
| Title: | Pres NACR |
Title: | President and Chief Executive Officer | |||||
| Date: | June 16, 2014 |
Date: | June 16, 2014 | |||||
| Address: | Address: | |||||||
|
|
| |||||||
B-6.
ATTACHMENT 1
INVENTIONS
Prior Inventions Disclosure. The following is a complete list of all Prior Inventions (as provided in Subsection 2.2 of the attached Proprietary Information, Inventions, Non-Competition and Non-Solicitation Agreement, defined herein as the “Agreement”):
| ☒ | None | |
| ☐ | See immediately below: | |
| /s/ Xxxx X. Xxxxx
| ||
|
| ||
|
| ||
|
| ||
|
| ||
B1-1
