SERVICES AGREEMENT
Exhibit
99.1
This
Services Agreement (“Agreement”) is entered into by
and between XELR8 Holdings, Inc., a Nevada corporation (the “Company”) and Xxxxxx X. Xxxxxx
(“Executive”), this 24th
day of June, 2009.
Recitals:
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A.
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Executive
is currently a member of the Company’s Board of Directors, and provides
executive management and related services for public companies
(“Services”);
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B.
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Executive
and the Company desire to enter into this Agreement whereby Executive will
provide Services to the Company, in the capacity as President and Interim
Chief Executive Officer; and
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C.
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This
Agreement is entered into in order to define the terms and conditions of
Executive’s engagement with the
Company.
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Agreements:
Now,
Therefore, in consideration of the mutual covenants and promises
contained in, and the mutual benefits to be derived from this Agreement, and for
other good and valuable consideration, the Company and Executive agree as
follows:
1. Independent
Contractor.
The
Company hereby retains Executive, and Executive hereby accepts such retainer, on
the terms and conditions of this Agreement. It is understood and
agreed that Executive is an independent contractor and not an employee of the
Company.
2. Term of the
Services.
This
Agreement shall be effective as of June 22, 2009 (the “Effective Date”) and
continue pursuant to the terms hereof until the earlier to occur of the hiring
by the Company of a permanent President and Chief Executive Officer, or December
31, 2009 (the “Initial
Term”), unless sooner terminated pursuant to the terms
hereof. Upon expiration of the Initial Term, this Agreement
shall be extended by mutual consent of the parties for additional thirty day
periods. Upon expiration of the Initial Term, as the same may be
extended by mutual consent of the parties, Executive shall not be required to
perform any responsibilities or duties to the Company and the Company will
remain obligated to Executive for all compensation and other benefits set forth
herein and in any written modifications hereto.
3. Duties.
(a) General Duties.
Executive shall fill the role and perform the functions of President and Interim
Chief Executive Officer of the Company, and shall have such duties,
responsibilities and obligations as are established by the Bylaws of the Company
or are generally required of persons employed in similar positions. This shall
include full executive powers of these positions over all operating and
financial officers, the authority to hire and fire officers and employees, and
to authorize expenditures of money for corporate purposes, subject to the right
of the Board of Directors to impose reasonable restrictions and
requirements.
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(b) Performance. It
is currently contemplated that Executive shall perform the responsibilities
hereunder, including the Services, from his office in San Diego, California, as
well as at the Company’s corporate offices in Denver, Colorado, and that
Executive will be physically present at the Corporate offices no more than ten
business days per month during the Initial Term. To the best of his
ability and experience, the Executive will at all times loyally and
conscientiously perform all duties, and discharge all responsibilities and
obligations, required of and from him pursuant to the express and implicit terms
hereof. Consistent with the terms and conditions set forth in this
Agreement, the Executive shall devote substantial time, energy, skill and
attention as is required to the business of the Company, and the Company shall
be entitled to all of the benefits and profits arising from or incident to all
such work, services, and advice of Executive rendered to the
Company.
(c) Outside Activities.
The parties agree and acknowledge that Executive has other businesses and
professional responsibilities, and nothing in this Agreement shall prohibit
Executive from directing, managing or otherwise attending to his businesses
contemporaneously with the provision of Services hereunder, whether at the
corporate offices of the Company, or otherwise.
(d) Additional
Services. Executive may be asked from time to time by the
Company to provide other services, including legal services, which Executive can
provide using other of his employees in addition to the
Executive. Compensation to Executive for such additional services
shall be approved by the Chairman of the Board of Directors of the Company,
provided such expenditures are provided for in the Company’s operating budget
approved by the Company’s Board of Directors.
4. Compensation and
Benefits.
(a) Fee. The Company
shall pay to Executive a monthly retainer of $5,000, payable in cash (“Cash Portion”), and an
option to acquire 125,000 shares of the Company’s Common Stock at an exercise
price of $.24 per share (“Option”). The
Option shall be issued on or before fifteen days from the date
hereof. The Option shall vest 100% upon expiration of the Initial
Term. Executive’s fees payable hereunder shall not prohibit or
otherwise effect Executive’s entitlement to fees, incentive or other
compensation due him as a result his service on the Company’s Board of
Directors.
(b) Indemnification; D&O
Insurance. The Company shall indemnify Executive to the fullest extent of
that which is available under Chapter 78 of the Nevada Revised Statutes, and
shall provide director’s and officer’s insurance with such coverages, in such
amounts and from such insurers as constitutes good practices by comparable
companies in the same business as the Company. Such insurance shall provide
defense and coverage obligations for any claim arising out of Executive’ or
Executive’s acts or omissions committed during the Initial Term or any
subsequent term hereof, regardless of when such claims are
asserted.
(c) Incentive
Bonus. Upon expiration of the Initial Term, Executive shall be
issued an additional option to purchase $30,000 shares of the Company’s Common
Stock (“Bonus Option”),
calculated by dividing $30,000 by the closing price of the Company’s Common
Stock as reported on the OTC Bulletin Board on the date of
grant. The Bonus Option shall vest immediately.
(d) Travel and Business Expense
Reimbursement. The Company shall promptly reimburse Executive for all of
Executive’s reasonable travel and business expenses; provided, however,
Executive’s entitlement to reimbursement for food and entertainment expenses
shall be limited to $35.00 per day, unless Executive is entertaining other
employees, members of the Company’s Board of Directors, distributors or
prospective employees or distributors of the Company. Expenses
not reimbursed within 30 days of the date of submittal to the Company shall bear
interest at the rate of twelve percent (12%) per annum.
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5. Proprietary
Information.
(a) Obligation. The
Executive shall not disclose, publish, disseminate, reproduce, summarize,
distribute, make available or use any Proprietary Information, except in
pursuance of Executive’ duties, responsibilities and obligations under this
Agreement and for the benefit of the Company.
(b) Definition. As used
in this Agreement, “Proprietary Information”
means information that is (i) designated as “confidential,” “proprietary” or
both by the Company or should have been known to be “confidential” or
“proprietary” to the Company from the nature of the information or the
circumstances of its disclosure, and (ii) has economic value or affords
commercial advantage to the Company because it is not generally known or readily
ascertainable by proper means by other persons. By way of illustration,
Proprietary Information includes but is not limited to information relating to
the Company’s products, services, business operations, business plans and
financial affairs, distributors and customers; any application, utility,
algorithm, formula, pattern, compilation, program, device, method, technique,
process, idea, concept, know-how, flow chart, drawing, standard, specification,
or invention; and any tangible embodiment of Proprietary Information that may be
provided to or generated by Executive or the Executive.
(c) Return upon
Termination. Upon the termination of this Agreement for any reason, and
at any time prior thereto upon request by the Company, Executive shall return to
the Company all tangible embodiments of any Proprietary Information in its or
the Executive’s possession, including but not limited to, originals, copies,
reproductions, notes, memoranda, abstracts, and summaries.
(d) Ownership. Any
Proprietary Information developed or conceived by the Executive during the term
of this Agreement shall be and remain the sole property of the Company.
Executive agrees promptly to communicate and disclose all such Proprietary
Information to the Company and to execute and deliver to the Company any
instruments deemed necessary by the Company to perfect the Company’s rights in
such Proprietary Information.
6. Termination of
Services.
(a) Additional
Definitions. For purposes of this Agreement, the following terms shall
have the meanings assigned below:
(i) “Cause”
means (A) conviction of a crime involving moral turpitude, or (B) a
determination by the Board of Directors of the Company in good faith that
Executive [1] has failed to substantially perform the duties as set forth
herein, [2] has engaged in grossly negligent, dishonest or unethical activity,
or [3] has breached a fiduciary duty or a covenant hereunder, including without
limitation the unauthorized disclosure of Company trade secrets or confidential
information, resulting in material loss or damage to the Company.
(ii) “Change
in Control of the Company” means a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), if the Company
were subject to such reporting requirements; provided that, without limitation,
such a change in control shall be deemed to have occurred if any “person” (as
such term is used in paragraph 13(d) and 14(d) of the Exchange Act) who on the
date hereof is not a director or officer of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company’s then outstanding
securities.
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(iii) “Determination
Date” means (A) if this Agreement is terminated by Executive or by reason of a
Change in Control of the Company, the date specified in the Notice of
Termination, (B) if this Agreement is terminated for Cause by reason of
conviction of a crime involving moral turpitude, the date on which a Notice of
Termination is given, or (C) if this Agreement is terminated for Cause for a
reason other than specified in (B), thirty (30) days after Notice of Termination
is given, provided that Executive shall not have cured the reason for such Cause
during such thirty (30) day period.
(iv) “Good
Reason” means a failure by the Company to comply with any material provision of
this Agreement which has not been cured within ten (10) days after notice of
such noncompliance has been given by Executive to the Company.
(v) “Notice
of Termination” means a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under the
provision so indicated. Any termination of this Agreement by the Company or by
Executive (other than termination pursuant to subsection 6(b) hereof) shall be
communicated by written Notice of Termination to the other party
hereto.
(b) Termination By The Company
For Cause. This Agreement may be terminated without breach of this
Agreement for Cause, upon written Notice of Termination from the Company to
Executive and Executive’ failure to cure such Cause as provided in Section
6(a)(iii)(C) hereof. If this Agreement is terminated for Cause, the Company
shall pay Executive all compensation accrued through the Determination Date, and
the Company shall have no further obligation to Executive under this Agreement
for other compensation or benefits accrued but unpaid prior to the Determination
Date.
(c) Termination On Change of
Control of the Company. This Agreement may be terminated without breach
of this Agreement at any time following a Change in Control of the Company at
the election of Executive. If the Agreement is terminated pursuant to this
Section 6(c), Executive shall be entitled to receive the compensation, benefits
and reimbursement earned or accrued by Executive under the terms of this
Agreement prior to the Determination Date, including the Bonus Option. In
addition, Executive shall receive as a severance payment the balance of
Executive’ compensation through the end of the Initial Term and the Option shall
become fully vested. This Agreement may not be terminated by the
Company following a Change in Control of the Company without it being a breach
of this Agreement.
(d) Termination by
Executive. Executive may terminate this Agreement for Good Reason in the
event of the Company’s material breach of this Agreement, in the event of the
death of the Executive or if the health of the Executive should become impaired
to an extent that makes continued performance of Executive duties hereunder
hazardous to his physical or mental health or his life.
If
Executive shall terminate this Agreement because of the death or health of the
Executive, Executive shall be entitled to receive the compensation, benefits and
reimbursement earned or accrued by Executive under the terms of this Agreement
prior to the Determination Date, including the Bonus Option, and the Option
shall become fully vested;
If
Executive shall terminate this Agreement because of the Company’s material
breach of this Agreement, Executive shall be entitled to receive all
payments, including the Bonus Option, shall be due and payable to
Executive.
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7. Miscellaneous.
(a) Severability. If any
provision of this Agreement is found to be unenforceable by a court of competent
jurisdiction, the remaining provisions shall nevertheless remain in full force
and effect.
(b) Notices. Any notice
required or permitted hereunder to be given by either party shall be in writing
and shall be delivered personally or sent by certified or registered mail,
postage prepaid, or by private courier, or by facsimile or telegram to the party
to the address the party may designate from time to time. A notice delivered
personally shall be effective upon receipt. A notice sent by facsimile or
telegram shall be effective 24 hours after the dispatch thereof. A notice
delivered by mail or by private courier shall be effective on the 3rd day after
the day of mailing.
(c) Attorney’s Fees. In
the event of any action at law or equity to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees and court costs in addition to any other relief to which such party may be
entitled.
(d) Governing Law. This
Agreement shall be interpreted, construed, governed and enforced according to
the laws of the State of Colorado. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain in full force and effect.
(e) Successors and
Assigns. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company.
(f) Entire Agreement.
This Agreement constitutes the entire agreement between the parties with respect
to the services described herein. This Agreement can be amended or modified only
in a writing signed by Executive and an authorized representative of the
Company.
(g) Signature by Facsimile and
Counterpart. This Agreement may be executed in counterpart, and facsimile
signatures are acceptable and binding on the parties hereto.
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IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and signed as of
the day and year first above written.
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“Company”
XELR8
Holdings, Inc., a Nevada corporation
/s/ Xxxxxxx X.
Xxxxxxxxx
Xxxxxxx X.
Xxxxxxxxx
Chairman of the Board of
Directors
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“Executive”
XXXXXX
X. XXXXXX
/s/
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
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