Employment Agreement
Exhibit 10.6
THIS IS AN AGREEMENT, effective as of January 1, 2015 by and between M Line Holdings, Inc. (“M Line”) (the “Company”) and Xxxx Xxxxxx (the “Executive”). As used herein, the term “Agreement” shall mean this Employment Agreement and all schedules and exhibits thereto (as supplemented and amended from time to time).
The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, upon the terms and conditions hereinafter set forth.
During the Term, Executive shall serve as a Director and Chief Financial Officer (“CFO”) or a position agreed to by the Company’s Board of Directors (“Board”). In such capacity, Executive will perform such duties on behalf of the Company consistent with his position as CFO and as may be assigned to him from time to time by the Company’s Board.
Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company
The term of the Executive’s employment under this Agreement will commence on January 1, 2015 will continue for a period of three (3) years unless earlier terminated pursuant to Section 6 of this Agreement (“Term”).
During the Term, the Executive will devote his full time and best efforts to the performance of his duties under this Agreement. Executive shall at all times endeavor to act in good faith and in a manner consistent with the best interests of the Company. Without limiting the foregoing, the Executive agrees not to accept or perform full or part-time employment or consulting services, or other “free xxxxx” activities, for any other business or non-profit entity, unless otherwise agreed to in writing by the Board. Furthermore, the Executive may only serve on the board of directors or other board of a for-profit and/or charitable corporation during the term of his employment with the Company if such service is specifically approved in writing by the Board and so long as such position does not violate any other provisions of this Agreement or interfere with the Executive’s ability to perform his job duties hereunder. A list of the organization(s) of which Executive serves as a director, a description of each such organization’s activities, and the time commitment required by Executive in the service of each such organization(s).
4.1 For services rendered by Executive as COO of the Company, the Company shall pay Executive a base salary of $8,100 bi-weekly, which annualizes to $210,600. This salary will be paid 75% in cash and 25% in shares of the Company at the then market value less 30% discount from market value.
Executive shall be entitled to a quarterly bonus due within three weeks of the end of each quarter. This bonus is based on the gross profit of the business and is payable as follows:
First $2,000,000 gross profit, 0% commission
Thereafter 2% commission
The quarterly bonus is paid on revenues of the M Line Holdings group of companies and will be reviewed every six months to reflect any acquisitions.
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(a) Termination Following A Change of Control. If, within twelve (12) months following a Change of Control, the Company terminates Executive other than for Cause or Executive voluntarily terminates as a result of a Constructive Termination, then, provided Executive also executes and a general release in a form determined by the Company at the time of termination:
(i) Executive will be entitled to receive a severance payment equal to nine (9) months of Employee’s base salary as in effect as of the date of such termination, less applicable withholding, payable in a lump sum within thirty (30) days of the termination;
(ii) The vesting of shares subject to all stock options granted by the Company to Executive prior to the Change of Control which, assuming Executive’s continued employment with the Company, would have become vested and exercisable within eighteen (18) months following the date of termination or Constructive Termination shall accelerate and become vested and exercisable as of the date of termination; and
(iii) if (1) Executive constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended, and (2) Employee elects continuation coverage pursuant to Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA, reimbursement for health care coverage under COBRA, until the earlier of (x) the date Employee is no longer eligible to receive continuation coverage pursuant to COBRA, (y) six (6) months following such termination, or (z) for such shorter period until Employee obtains new employment offering health insurance coverage.
(b) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Executive’s termination of employment: (i) the Company shall pay Executive any unpaid base salary due for periods prior to the date of termination; (ii) the Company shall pay Executive all of Executive’s accrued and unused PTO through the date of (not deferred) termination; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the date of termination. These payments shall be made promptly upon termination and within the period of time mandated by law.
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4.7. Limitation on Payments. In the event that the benefits provided for in this Agreement or otherwise payable to Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.
Unless the Company and Executive otherwise agree in writing, any determination required under this Section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.
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5.1 Non-Disclosure.
(a) The Executive agrees that all information and know-how, whether or not in writing, of a proprietary, secret or confidential nature concerning the Company’s business or financial affairs (collectively, “Proprietary Information”) learned by him during the Employment Period or at any time prior to the Employment Period by virtue of Executive’s prior relationship with the Company, is and will be the exclusive property of the Company. By way of illustration, but not limitation, Proprietary Information includes creative ideas and concepts; contemplated or planned business ventures, projects, developments, media or marketing plans, research data, financial data, personnel data, computer programs, and client, customer and supplier lists, whether or not copyrightable, trademarkable or licensable. As applied to any actual past or present client of the Company, Proprietary Information shall include all of the foregoing. With respect to any potential client of the Company, Proprietary Information shall be limited to such of the foregoing as may be received by the Company or developed by or for the Company in connection with any actual or proposed solicitation of business from such potential client, whether initiated by the Company, the potential client or otherwise. At all times during and after the Employment Period, Executive will not, directly or indirectly, disclose any Proprietary Information to others outside the Company or, directly or indirectly, use the Proprietary Information for any unauthorized purposes or for his own benefit or the benefit of a third party without written approval by the Board, either during or after his employment, except: (i) as required in the course of performing her duties hereunder; (ii) if such Proprietary Information has become public knowledge without the fault of the Executive; or (iii) as authorized or required to be released by a court of competent jurisdiction or governmental agency.
(b) The Executive agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, notebooks, program listings, or other written, photographic, or other tangible material, whether created by the Executive or by or with others to which Executive has access by virtue of his employment by the Company or which he creates or comes into his custody or possession during the Employment Period, is the exclusive property of the Company, to be used by the Executive only in the performance of his duties for the Company.
(c) The Executive agrees that his obligation not to disclose or use information, know-how and records of the types set forth in paragraphs (a) and (b) above also extends to such types of information, know-how, records and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Executive in the course of the Company’s business.
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5.2 Ownership of Developments.
(a) The Executive will make full and prompt disclosure to the Company of all inventions, improvements, ideas, concepts, approaches, discoveries, methods, developments, software and works of authorship, whether or not copyrightable, trademarkable, patentable or licensable, which are created, made, conceived or reduced to practice by the Executive or under his direction or jointly with others during his employment by the Company, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Developments”). All Developments are considered “works made for hire” to the extent permitted under the copyright laws of the United States.
(b) The Executive agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his right, title and interest in and to all Developments and all related patents, patent applications, copyrights, copyright applications, goodwill, and any works described above that are not considered “works made for hire” under the copyright laws of the United States. This Section 7.2(b) shall not apply to Developments which: (i) do not relate to the present or planned business, or research and development, of the Company; (ii) and which are not made and conceived by the Executive (xx) during the course of his job duties for the Company, (yy) on the Company’s or its affiliates’ premises, or (zz) using the Company’s tools, devices, equipment, financial resources, Proprietary Information or any other Company property or resources.
(c) The Executive agrees to cooperate fully with the Company both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and trademarks (both in the United States and foreign countries) relating to Developments. The Executive further agrees to promptly disclose all Developments to the Company, and, upon request, promptly take all reasonable actions and execute and deliver, without further consideration, such assignments and other good and sufficient instruments of transfer and conveyance, and all other such documents as, in the opinion of the Company, shall be effective to vest in the Company full title thereto, or to secure for the Company the full benefit thereof, including, without limitation, the execution of all documents and the doing of all acts necessary and proper to file, obtain, maintain and enforce patent applications, patents copyrights and all other available forms of protection in the United States and all other countries of the world. To protect the Company in case Executive fails to do so, Executive hereby irrevocably appoints the President of the Company as my attorney-in-fact, empowered solely to execute in my name and deliver such documents.
5.3 Non-Solicitation.
(a) Executive acknowledges that, prior to and during the course of his employment with the Company, Executive has been and will be exposed to, provided with, given access to the Company’s Proprietary Information and has had and will have contacts with the Company’s customers, potential customers, vendors and distribution network. Executive also acknowledges that the Company invests substantial time, money and other resources in hiring, educating and training employees and developing in its employees skills and knowledge specific to the Company and its business. As a result, Executive agrees to the restrictions set forth in this Section 7.3 for a period of six months only following termination or if the Executive leaves for any reason and acknowledges that such restrictions are tailored, reasonable and necessary to protect the legitimate business interests, including Proprietary Information, goodwill and employee relationships, of the Company.
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(b) During the term and for a period of six months after the Executive’s employment with the Company is terminated, for any reason, by the Company or the Executive, the Executive will not, without the Board’s prior written approval, directly or indirectly, on behalf of himself or any other person or entity, in any geographic location in which the Company conducts business:
(i) recruit, solicit or induce, or attempt to induce, or assist any individual or entity to recruit, solicit or induce, or attempt to induce, any employee or consultant of the Company to terminate his or her employment or consulting relationship with or otherwise cease or diminish his or her relationship with the Company or otherwise interfere with the relationship between any employee or consultant of the Company and the Company; or
(ii) solicit, divert or take away, or attempt to divert or to take away, or assist any individual or entity to solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company. For purposes of this Section 7.3, a prospective client, customer or account is any individual or entity whose business is solicited by the Company, proposed to be solicited by the Company or who approaches the Company with respect to possibly becoming a client, customer, or account at any time during the Employment Period.
(a) If any restriction set forth in this entire Section 5 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic areas to which it may be enforceable.
(b) The restrictions contained in this Section 5 are necessary for the protection of the business and goodwill of the Company and are considered by the Executive to be reasonable for this purpose. The Executive agrees that any breach of this Section 5 will cause the Company substantial and irreparable harm for which monetary damages are not adequate and, therefore, in the event of any such breach, in addition to such other remedies which may be available, the Executive agrees to the award of specific performance and grant of injunctive relief to the Company requiring compliance with the provisions of Section 5 and the Company shall not be required to post a bond or provide any other security in connection with such award or grant of injunctive relief.
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| If to the Company: | M Line Holdings, Inc. |
| 0000 X Xxxxxxxxxxxx Xxxxxx | |
| Xxxxxxx, XX 00000 | |
| If to the Executive: | To the address set forth below the signature of the Executive |
or to such other address as is specified in a notice complying with this Section 8. Any such notice is deemed given on the date delivered by hand or three days after the date of mailing.
11. Choice of Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California without regard to its conflicts of laws principles.
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| Xxxx Xxxxxx | M Line Holdings, inc. | |
| /s/ Xxxx Xxxxxx | /s/ Xxxxx X. Xxxxxx | |
| Date: January 1, 2015. | By: Xxxxx Xxxxxx | |
| Address: | Its: CEO | |
| 00 Xxxxxx Xxxxx | Date: January 1, 0000 | |
| Xxxxxxx Xxxxx, XX 00000 |
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