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EXHIBIT 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (Agreement) is made and effective this 26th
Day of April 2000 by and between Infotopia, Inc. (Company) and Xxxxxx Xxxxx
(Executive).
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Executive for a term beginning on the
date of this Agreement and ending April 26, 2003 as its CEO or at a higher
responsible management position with the Company and the Executive hereby
accepts such employment in accordance with the terms of this Agreement.
Not withstanding the aforesaid, if this Agreement shall not have been terminated
in accordance with the provisions herein on or before April 26, 2003, the
remaining term of the Agreement shall be extended such that each and every
moment of time thereafter, the remaining term shall be one year unless (a) the
Agreement is terminated earlier in accordance with the provisions herein or (b)
on or after April 26, 2003, the Board of Directors or the Executive Committee of
the Company notifies the Executive in writing of its determination to have the
date of this Agreement expire one year from the date of such notification.
In the event of any conflict or ambiguity between the terms of this Agreement
and terms of employment applicable to regular employees, the terms of this
Agreement shall control.
2. DUTIES OF THE EXECUTIVE
The Executive shall devote substantial time, attention and energy to the affairs
of the Company and/or its subsidiaries during the term of this Agreement and
shall have such duties, responsibilities and authority as shall be the character
and dignity appropriate and consistent with the position and title of CEO or
such responsibility or authority as from time to time additionally authorized by
the Board of Directors. The Executive may engage in other activities, such as
activities including serving on the Board of Directors of other
corporations/organizations, and/or advising other corporations/organizations in
each case to the extent that such activities do not materially detract from or
limit the performance of the Executive's duties under this Agreement, or inhibit
in any material way the business of the Company and its subsidiaries. The
Executive will engage in no activity, paid or otherwise, for a competitor of the
Company so long as this Agreement is in effect. The Executive shall perform all
duties in a professional, ethical and businesslike manner.
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The Executive will not be required to render services hereunder outside of the
Raynham, Massachusetts area without his approval. Whether or not such approval
is given, The Executive shall be entitled to full compensation as provided for
in this Agreement. The Executive shall have the right to perform his duties out
of any of his personal residences, provided that such does not result in actions
injurious to the Company.
3. COMPENSATION
The Executive will be paid compensation during this Agreement as
follows:
A.) A base salary, commencing April 26, 2000 of not less than $175,000 per
year, (or such greater amounts as may be approved by the Board of
Directors or the executive committee in accordance with authority given
by the Board of Directors) payable in installments on a semi-monthly but
not less than a monthly schedule. The Executive's base salary may be
increased consistent with recommendations of the Executive Committee of
the Board. At least annually the Executive Committee shall review the
Executive's base salary for competitiveness and appropriateness in the
industry. In no event shall the Executive's base salary be less than
$175,000 on an annual basis.
B.) The Company agrees to pay a Quarterly Bonus of not less than $5,000 per
calendar quarter to the Executive. During the term of this Agreement
said bonus shall be paid in cash no later than the 1st day of each
calendar quarter, with the first payment due and payable to the
Executive on or before April 26, 2000 and continuing thereafter until
the 26th day of 2003. From time to time during the term of this
Agreement, the Executive may receive a greater quarterly bonus if
approved by the Executive Committee; however, the quarterly bonus shall
never be less than $5,000.
C.) In addition to the other payments referred to in this Agreement, the
Executive shall be entitled to receive and participate in an annual
incentive bonus plan. The amount of the Executive's participation and
the benefits paid under the incentive bonus plan shall be based upon
goals recommended by the Executive and approved by the Executive
Committee. The annual incentive bonus plan payments will be paid in cash
and the payment will be made not later than 30 days following the close
of the fiscal year for each year this Agreement is in effect.
D.) In addition to other payments referred to in this Agreement, the
Executive will be granted 1,000,000 shares of stock of the Company
annually on the anniversary date of this Agreement. The above shares
shall carry an anti-dilution provision and are not subject to any
reverse split. The shares shall vest and be delivered not later that May
1, 2001, May 1, 2002 and May 1, 2003. Prior to vesting, the Executive
shall be entitled to receive dividends on and vote the unvested shares.
Should this Agreement be terminated prior to April 26, 2003 such shares
shall be delivered and vested to the Executive as stated above. If the
Company or its assets are acquired by another entity all stock in the
agreement shall be considered due and vested.
E.) It is intended that the Executive have the opportunity to attain a
reasonable ownership position of not less than 5% of the outstanding
stock of the Company. The Executive
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is entitled to purchase not less than 5% of outstanding stock (The
outstanding stock was 15,000,000 shares at the closing of this
agreement). In furtherance of this goal and in addition to the payments
referred to in this Agreement, the Executive shall be entitled to
purchase the stock of the Company totaling no less than 3,000,000 shares
or up to 5% of all issued and outstanding shares over 3 years. The first
such award will be no less than 1,000,000 shares with an award date of
June 1, 2000 and each additional year shares shall be awarded each June
1st through the year 2002. The purchase price of said shares shall be
the lowest closing price of the IFTP stock during the last twelve
months. The foregoing shall become vested immediately. The Executive
shall have the right to purchase said shares by payment in cash or if
approved by the Board of Directors, the Executive may execute a
short-term note with the Company for payment of such stock. The exercise
period to purchase said stock shall be one-year from the date of each
increase in outstanding shares.
F.) The Executive may choose once each year of this Agreement to convert
one-third of his annual salary to stock, with the purchase price shall
be the lowest closing price of the IFTP stock during the last twelve
months. The Executive may purchase said shares in one lump sum at any
time within each 12-month period of the agreement.
G.) In addition to the other payments referred to in this Agreement, the
Company agrees to award to the Executive a signing bonus of 1,500,000
shares of stock (shares to be vested immediately). Said shares of stock
shall be awarded as soon as administratively practical following April
26, 2000 but not later than September 1, 2000.
H.) All shares included in this agreement shall carry piggyback registration
rights.
I.) The Company will provide or pay for the Executive to maintain a 2500
square foot home not to exceed $3,000.00 per month.
J.) If any payments due the Executive under this Agreement result in the
Executive's liability for an excise tax ("parachute tax") under Section
49 of the Internal Revenue Code of 1986, as amended (the "Code") the
Company will pay to the Executive, after deducting any Federal, State or
local income tax imposed, the "parachute tax" liability. Such payment
shall be made to the Executive no later than 30 days prior to the due
date of the "parachute tax."
4. BENEFITS
A.) Holidays: The Executive will be entitled to at least nine (9) paid
holidays each calendar year and twelve (12) personal days. The Company
will notify the Executive on or about the beginning of each calendar
year with respect to the holiday schedule for the coming year. Personal
holidays, if any, will be scheduled in advance subject to
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the requirements of the Company. Such holidays must be taken during the
calendar year and unused days shall not carry forward into the next
year.
B.) Vacation: The Executive shall be entitled to five (5) weeks or
thirty-five (35) paid vacation days per year effective as of the date of
the Agreement. Any unused vacation time will be carried to the following
year. Upon termination of this agreement all vacation time shall be paid
to the Executive.
The Company agrees to honor all previously earned and unused vacation
time by the Executive while with NBM, Inc.
C.) Sick Leave: The Executive shall be entitled to sick leave and emergency
leave according to the regular policies and procedures of the Company.
Additional sick leave or emergency leave over and above paid leave
provided by the Company, if any, shall be granted at the discretion of
the Executive Committee of the Board of Directors.
D.) Medical and Group Life Insurance: Company agrees to include Executive
and his family members in the group medical and hospital plan of the
Company and provide group life insurance at no charge to the Executive,
in the amount of $1,000,000 during the term of this Agreement. Executive
shall be responsible for any state or federal tax imposed upon these
benefits. If the Company does not provide Medical and Group Life
insurance the Executive may be reimbursed for his own coverage.
E.) The Company shall provide at its expense disability insurance for the
Executive for the term of this Agreement. If the Company does not
provide disability insurance the Executive may be reimbursed for his own
coverage.
F.) The Company shall provide at its expense Officer's and Director's
liability insurance covering the Executive for the term of this
Agreement. Such coverage shall be in the amount of not less than $5
million and shall be effective not later than September 1, 2000.
G.) Pension and Profit Sharing Plan: The Executive shall be eligible to
participate in any pension or profit sharing plan or other type plan
adopted by the Company for the benefit of its officers and/or regular
employees.
H.) In addition to any other compensation, the Executive will receive an
automobile of his choice not to exceed $800 per month or an allowance in
the amount of $800 per month to be paid to the Executive each month
during the term of this Agreement. The Executive may opt to lease a
company car and be reimbursed all expenses including lease cost,
insurance, maintenance, repair and gas pay in lieu of auto allowance.
I.) Expense Reimbursement: The Executive shall be entitled to reimbursement
for all reasonable expenses, including travel and entertainment incurred
by the Executive in
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the performance of his duties. The Executive will maintain records and
written receipts as required by Company policy and reasonably requested
by the Board of Directors to substantiate such expenses. Subject to the
terms of Section 2, the Executive may, at his sole discretion, work from
his residence or a location of his choice. The Company will reimburse
the Executive for reasonable home office use, including but not limited
to an appropriate computer/modem installation.
J.) Cell phone Reimbursement: The Executive shall be entitled to
reimbursement for cell phone service or the Company may at its expense
provide the Executive with such service.
K.) Financial and Tax Advice: During (a) the term of this Agreement (b) the
12 month period following the termination of this Agreement as a result
of Death and/or Disability, and (c) the three year period following the
voluntary termination by the Executive with good reason or the
involuntary termination by the Company without cause... the Company
shall provide the Executive (or, if Executive shall have died, his
estate) at the Company's expense, third party professional financial and
tax advisory services, primarily oriented to planning in light of the
Executive's entitlement to compensation and benefits and appropriate in
light of circumstances of Executive or his estate. Executive (or his
estate) may select the service professional of his choice.
5. TERMINATION
A. The Company shall have the right to terminate this Agreement under the
following circumstances:
i. Upon the death of the Executive.
ii. Upon notice to the Executive in the event of notice of illness
or other disability which has incapacitated him from performing
his duties for 12 consecutive months as determined in good faith
by the Board.
iii. For good cause upon notice from the Company. Termination by the
Company of the Executive for "good cause" as used in this Agreement
shall be limited to mean gross negligence, misappropriation or theft
of Company funds or conviction of state or federal offenses which
would prevent the Executive from performance of his duties.
With respect to any termination for good cause by the Company, the specifics of
the cause shall be communicated to the Executive in writing at least thirty (30)
days prior to the date on which the termination is proposed to take effect. The
Executive shall be given the opportunity to correct or respond to such cause.
B. If this Agreement is terminated pursuant to Section 4 (A - iii) above,
Executive's rights and the Company's obligations hereunder shall
forthright terminate except as expressly provided in this Agreement.
C. If this Agreement is terminated pursuant to Section 4 (A - i or ii)
hereof, Executive or his estate shall be entitled to receive 100% of the
Executives salary and incentives for
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the balance of the term of the Agreement, together with bonus and other
incentives as provided for in this Agreement.
6. TERMINATION BY EXECUTIVE
The Executive shall have the right to terminate this Agreement with thirty (30)
days written notice the Company given within sixty (60) days of the occurrence
of any of the following events:
A. The Executive is not elected or retained as CEO of the Company
B. The Company acts to materially reduce the Executive's position, title,
duties, authority or responsibilities.
C. The Company acts to reduce the compensation, bonus or incentives of the
Executive.
7. CONSEQUENCES OF BREACH BY THE COMPANY
A. If this Agreement is terminated pursuant to Section 5 hereof, or if the
Company shall terminate the Executive or the Executive's duties under
this Agreement in any way that is a breach by the Company, the following
shall apply:
i. The Executive shall receive a cash payment that is equal to the
present value of the Executive's base salary hereunder for the
remainder of the term, payable within 30 days of the date of such
termination.
ii. The Executive shall be entitled to bonus payments and benefits as
provided in Section 3 (it being understood, however, that all such
bonus payments, if made pursuant to this clause, shall be paid in
cash regardless of whether or not such payments exceed the cash
limit.
iii. All stock options and common stock and restricted stock granted by
the Company to the Executive under this Agreement shall accelerate
and become immediately vested and exercisable.
B. The parties believe that because of the limitations of Section 5 the
above payments do not constitute "Excess Parachute Payments" under
section 280G of the Internal Revenue Code of 1954, as amended (the
Code). Notwithstanding such belief, if any benefit is determined to be
an "Excess Parachute Payment" the Company shall pay the Executive an
additional amount (Tax Payment) such that (x) the excess of all Excess
Parachute Payments (including payment under this sentence) over the sum
of the excise tax thereon under section 4999 of the Code and under
applicable state law is equal to (y) the excess of all Excess Parachute
Payments (excluding payments under this sentence) over income tax
thereon under subtitle A of the Code and under applicable state law
provided that the Company shall not be obligated to make tax payment in
excess of the value of 6.6667 Compensation Years. For the purposes
hereof, the value of a Compensation Year, including stock options and
bonus entitlements, is defined as equal two (2) times the base salary
set forth in this Agreement.
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8. CHANGE OF CONTROL
If, within twenty-four (24) months following a change of control the Executive
is terminated, the termination shall be deemed a "Change of Control
Termination." For the purpose of this paragraph... (a) the delivery of a notice
of termination by the Company... within 24 months of a Change of Control and (b)
a Constructive Discharge within 24 months following a Change of Control will
also be deemed a Change of Control Termination. In the event of a Change of
Control Termination, the Company will pay to the Executive a lump sum payment of
299% of the Executive's average annual base salary plus both quarterly and
annual incentive bonuses during the preceding 3 year period. In the event that a
Change of Control Termination occurs before the Executive completes three (3)
years of service, the lump sum payment will be valued at 299% of the Executive's
average annual base salary plus both quarterly and annual incentive bonuses
during all years of service. Additionally, any options and or restricted stock
granted to the Executive shall become fully vested as of the date of the Change
of Control Termination. Provided further, the Executive will receive a cash
payment equal to the value of any options anticipated to be granted... within
three (3) years following the Change of Control Termination.
If any portion of any payment or distribution by the Company, to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this section ... shall be subject to the
excise tax imposed by section 4999 of the (Internal Revenue) Code, or any
interest or penalties are incurred by the Executive with respect to such excise
tax... the Company shall pay to the Executive an additional payment (the
Gross-up Payment) in an amount such that after the payment of such Excise Tax,
including, without limitation, any income tax and excise tax imposed on the
Gross-up payment, the Executive retains an amount including the Gross-up Payment
equal to the total payment hereunder without regard to the Gross-up Payment.
"Change of Control" shall be deemed to have occurred if at any time or from time
to time after the date of this agreement:
i. Any "person" or "group" ... is or becomes the "beneficial owner" ...
directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding
securities... or,
ii. The stockholders of the Company approve a merger or consolidation with
any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company... continuing to
represent... more than 50% of the combined voting power of the voting
securities or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets...or
iii. The Company has a change in Board Majority unapproved by at least
three-fourths of the directors.
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9. REMEDIES
The Company recognizes that because of the Executive's special talents, stature,
and opportunities in the industry, and because of the creative nature of and
compensation practices of the industry and the material impact that individual
projects can have on a company's results of operations, in the event of
termination by the Company hereunder or in the event of termination by the
Executive before the end of the agreed term, the Company acknowledges and agrees
that the provisions of this Agreement regarding further payments of base salary,
bonuses and the exercisability of stock options constitute fair and reasonable
provisions for the consequences of such termination, do constitute a penalty and
such payments and benefits shall not be limited or reduced by amounts that the
Executive might earn or be able to earn from any other employment or ventures
during the remainder of the agreed term of this Agreement.
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10. NOTICES
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
be certified mail, postage pre-paid, or recognized overnight delivery service;
If to the Company:
Infotopia, Inc.
X.X. Xxx 000
Xxxxxxx, XX 00000
Attn.: Xxxxxx Xxxxx, CEO
If to the Executive:
Xx. Xxxxxx Xxxxx
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
11. FINAL AGREEMENT
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only by a further
writing that is duly executed by both parties.
12. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts.
13. HEADINGS
Headings in this Agreement are provided for convenience only and shall not be
used to construe meaning or intent.
14. BINDING AGREEMENT
This Agreement shall be binding upon and inure to the benefit of the Executive,
his heirs, distributees and assigns.
15. SEVERABILITY
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
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16. ARBITRATION
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgement upon the award rendered by the arbitrator or arbitrators may be
entered in any court having jurisdiction thereof. Any such Arbitration shall be
concluded in such place as shall be mutually agreed upon by the parties. Within
fifteen (15) days of the commencement of the arbitration, each party shall
select one person to act as arbitrator, and the two arbitrators shall select a
third arbitrator within ten (10) days of their appointment. Each party shall
bear its own costs and expenses and an equal share of the arbitrator's expenses
and administrative fees of arbitration.
16. PROTECTION OF THE COMPANY'S INTERESTS
During the term of this Agreement, the Executive shall not directly or
indirectly engage in competition with the Company. At no time shall the
Executive divulge, furnish, or make accessible to any person any information of
a confidential or proprietary nature obtained by him while in the employ of the
Company except as necessary in the performance of his duties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
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Xxxxxx Xxxxx
Executive's Signature and Acceptance
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Xxxxxx Xxxxxxx Xxxxx Xxxxxxxxx
President Secretary
Infotopia, Inc. Infotopia, Inc.
