EMPLOYMENT AGREEMENT - XXXX XXXXXXX
AGREEMENT made as of May 11, 2005 (the "Effective Date") by and
between THE XXXXXXXX COACH, INC., a Delaware corporation with offices at
00000 0xx Xxxxxx X, Xxxxxxxxx, XX 00000 (the "Corporation"), and XXXX
XXXXXXX, residing at 000 Xxxxx Xxxx, Xxxxxxx, XX 00000 ("Merkent").
WHEREAS, the Corporation wishes to employ Merkent as President and
Chief Executive Officer, and to provide Merkent with assurance of
compensation and terms of employment which will competitively motivate
Merkent, and Merkent desires to be so employed.
NOW, THEREFORE, it is agreed:
1. Title; Capacities.
(a) The Corporation hereby employs Merkent as President, which
shall be the chief executive office of the Corporation. In such capacity,
Merkent shall be responsible for supervising the implementation of the
plans and policies adopted from time-to-time by the Corporation's Board of
Directors. Merkent shall be subject to the supervision of the
Corporation's Board of Directors.
(b) Merkent agrees that he will devote substantially all of his
business time, labor, skill, attention and best ability to the performance
of his duties under this Agreement. The Corporation acknowledges,
however, that Merkent intends to maintain his primary residence in the
State of New York or an adjacent state, and agrees that Merkent will
allocate his time between his primary residence and the Corporation's
offices in Minnesota as needed to accommodate both the interests of the
Corporation and Merkent's personal interests. Merkent agrees to abide by
such reasonable rules, regulations, personnel practices and policies of
the Corporation, and any changes therein, which may be adopted from time
to time by the Corporation and delivered in writing to Merkent.
2. Compensation.
(a) Salary. The Corporation will pay Merkent a salary at the
rate of One Hundred Thousand Dollars ($100,000) per annum. The Corporation
shall pay Merkent his salary on the same bi-weekly schedule as the
Corporation utilizes for its managerial personnel. The Corporation shall
pay only one-half of the salary to Merkent and shall accrue the other half
until the Corporation has reported to the public net income for two
consecutive fiscal quarters, at which time the accrued salary will be paid
to Merkent in six bi-weekly installments.
(b) Stock Option. Upon the execution of this agreement, the
Corporation will issue to Merkent an option pursuant to the 2005 Executive
Equity Plan. The option shall be for two million (2,000,000) shares of
the Corporation's common stock at an exercise price of Twenty Cents ($.20)
per share, and shall be in the form annexed hereto as Appendix A.
(c) Benefits. Merkent shall be entitled to receive such health,
medical, disability and life insurance benefits as are made available to
executive employees of the Corporation.
(d) Reimbursement of Business Expenses. Merkent shall be entitled
to reimbursement of all reasonable business expenses actually incurred by
Merkent in the discharge of Merkent's duties hereunder, including expenses
for entertainment, travel, employee training and similar items, if Merkent
submits the related invoice or other sufficient documentation within
thirty (30) days of his receipt of the documentation. All travel expenses
incurred by Merkent on trips between his primary residence and the
Corporation's offices shall be reimbursable.
3. Term.
(a) The "Term" of this Agreement and of Merkent's employment
hereunder shall commence on the Effective Date and shall terminate on May
31, 2007, unless earlier terminated pursuant to Sec. 3(b) hereunder.
(b) Prior to May 31, 2006, Merkent's employment hereunder
may be terminated as follows:
(i) by Merkent, at will;
(ii) by the Corporation for Cause;
(iii) by the Corporation, upon the death or disability of
Merkent. "Disability" shall mean Merkent's inability to perform Merkent's
normal employment functions due to any medically determinable physical or
mental disability, which can last or has lasted three months or is
expected to result in death.
(c) As used herein, the term "Cause" shall mean only the
following: (i) conviction during the Term of a crime involving moral
turpitude, (ii) material, willful or gross misconduct by Merkent in the
performance of his duties hereunder, or (iii) the failure by Merkent to
perform or observe any substantial lawful obligation of such employment
that is not remedied within fifteen (15) days after the receipt of written
notice thereof from the Board of Directors (provided such neglect or
failure is unrelated to disability).
(d) Termination of Merkent's employment, when permitted
hereunder, may be effectuated by delivery of written notice to Merkent,
stating the grounds for termination. Such notice shall be effective upon
receipt.
(e) At any time during the Term of the Agreement, the Board of
Directors may remove Merkent from his position as President if it
determines that such removal is in the best interests of the Corporation.
Upon such removal, Merkent may assume another role in the Corporation if
Merkent and the Corporation so agree, or he may have no further
responsibilities to the Corporation. A removal from office pursuant to
this Section 3(e) shall not be deemed to be a termination of this
agreement, and Merkent shall remain employed under the terms of this
Agreement until the Agreement terminates pursuant to either Section 3(a)
or Section 3(b).
4. Covenant of Non-Competition. In consideration of the
undertakings by the Corporation herein, Merkent covenants for the benefit
of the Corporation and the shareholders thereof as follows:
(a) The "Restricted Period" for purposes of this Covenant shall
commence on the Effective Date of this Agreement and shall continue for a
period ending on the date which is one year after the date on which
Merkent ceases to be employed by the Corporation.
(b) During the Restricted Period Merkent shall not, directly or
indirectly, as an employee, consultant or principal, through equity
ownership or otherwise, for himself or for any other person, engage in, or
assist any other person to engage in, any Competitive Activities. For
purposes hereof, "Competitive Activities" shall mean the following:
(i) Directly or indirectly soliciting, diverting, taking away
or attempting to solicit, divert, or take away any business
opportunities which became available to the Corporation or any of
its subsidiaries or affiliated entities during the Term of this
Agreement;
(ii) Engaging in business with any person or entity with
which the Corporation was engaged in business during the six months
preceding Merkent's business engagement;
(iii) Engaging in the business of designing, manufacturing
and/or marketing recreational vehicles or vehicles designed for the
specific functions performed by vehicles marketed or manufactured by
the Corporation; or
(iv) Hiring, offering to hire, enticing away or in any
manner persuading or attempting to persuade any person affiliated
(as employee or as independent contractor) with the Corporation or
any affiliate or subsidiary of the Corporation to discontinue his
relationship with such company, or to become employed by any other
entity.
5. Assignment. The Corporation and Merkent acknowledge that the
relationship established hereby is unique and personal and that neither
the Corporation nor Merkent may assign or delegate any of their respective
rights and/or obligations hereunder without the prior written consent of
the other party except as follows:
In the event of a future disposition of (or including) the
properties and business of the Corporation, substantially as an entirety,
by merger, consolidation, sale of assets, or otherwise, then the
Corporation shall be obligated to assign this Agreement and all of its
rights and obligations hereunder to the acquiring or surviving
corporation, and such acquiring or surviving corporation shall assume in
writing all of the obligations of the Corporation hereunder; provided,
however, that the Corporation (in the event and so long as it remains in
business as an independent going enterprise) shall remain liable for the
performance of its obligations hereunder in the event of an unjustified
failure of the acquiring corporation to perform its obligations under this
Agreement.
6. Indemnification. The Corporation shall indemnify Merkent to the
fullest extent authorized by the General Corporation Law of the State of
Delaware against claims or liability arising from his service on behalf of
the Corporation.
7. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Minnesota, except
as to matters of corporate governance which shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE XXXXXXXX COACH, INC.
By: /s Xxxxxxx Xxxxxxx
--------------------------
Xxxxxxx Xxxxxxx, Secretary
/s/ Xxxx Xxxxxxx
----------------
XXXX XXXXXXX
THE XXXXXXXX COACH, INC.
Award Agreement - Nonqualified Stock Option
Grantee: Xxxx Xxxxxxx
Date: May 11, 2005
Total Shares: 2,000,000
Exercise Price: $.20 per share
The Xxxxxxxx Coach, Inc., a Delaware corporation (the "Company"),
pursuant to its 2005 Executive Equity Plan (the "Plan"), grants to the
Grantee identified above a nonqualified stock option to purchase the
number of shares stated above of the Common Stock, $.00001 par value, of
the Company (the "Shares") on the terms and conditions set forth herein
and in the Plan (the "Option"). All terms of the Plan not specifically
set forth herein are incorporated herein by reference, and the Grantee
should review the Plan to ascertain all the terms and conditions of this
Option.
1. Vesting, Duration and Expiration of the Option
The right to purchase 1,000,000 shares upon exercise of this Option
shall vest on each of the following dates: May 1, 2006 and May 1, 2007
(the "Vesting Dates"); provided, however, that no rights will vest on a
Vesting Date unless that Vesting Date occurs during the Term of the
Employment Agreement between the Grantee and the Company.
The "Exercise Period" for the Option shall commence on each Vesting
Date with respect to rights which vest on that Vesting Date. The Exercise
Period shall expire on the second anniversary of the Vesting Date as to
the number of shares that vested on that Vesting Date (the "Expiration
Date").
2. Exercise of Options.
This Option may be exercised, during the Exercise Period, with
respect to all or, from time to time, with respect to any portion of the
Shares then subject to such exercise, by the delivery to the Secretary of
the Company at its principal office of a written notice of exercise. The
notice shall specify the number of Shares for which the Option is being
exercised (which number, if less than all of the Shares then subject to
exercise, shall be 50 or a multiple thereof) and shall be accompanied by
payment in full of the Exercise Price for such Shares. No certificate for
Shares shall be delivered upon exercise of any Option until all laws,
rules and regulations which the Board of Directors may deem applicable
have been complied with. If a registration statement under the Securities
Act of 1933 is not then in effect with respect to the Shares issuable upon
such exercise, it shall be a condition precedent that the person
exercising the Option give to the Company a written representation and
undertaking, satisfactory in form and substance to the Board of Directors,
that he is acquiring the shares for his own account for investment and not
with a view to the distribution thereof.
The person exercising an Option shall not be considered a record
holder of the Shares so purchased for any purpose until the date on which
he is actually recorded as the holder on such stock records of the
Company.
3. Anti-Dilution Provisions.
If there is any stock dividend, stock split, or combination of
shares of Common Stock of the Company, the number and amount of Shares
then subject to Option shall be proportionately and appropriately
adjusted. No change shall be made in the aggregate purchase price to be
paid for all Shares subject to this Option, but the aggregate purchase
price shall be allocated among all Shares subject to this Option after
giving effect to the adjustment.
If there is any other change in the Common Stock of the Company,
including recapitalization, reorganization, sale or exchange of assets,
exchange of shares, offering of subscription rights, or a merger or
consolidation in which the Company is the surviving corporation, an
adjustment, if any, shall be made in the Shares then subject to this
Option as the Board of Directors may deem equitable. Failure of the Board
of Directors to provide for an adjustment pursuant to this subparagraph
prior to the effective date of any Company action referred to herein shall
be conclusive evidence that no adjustment is required in consequence of
such action.
4. Investment Representation and Legend of Certificates.
By accepting this Option, the Grantee agrees that, until such time
as a registration statement under the Securities Act of 1933 becomes
effective with respect to the Option and/or the Shares, he is taking this
Option and will take the Shares underlying this Option, for investment and
not for resale or distribution. The Company shall have the right to place
upon the face or back of any stock certificate or certificates evidencing
shares issuable upon the exercise of this Option such legend as the Board
of Directors may prescribe for the purpose of preventing disposition of
such Shares in violation of the Securities Act of 1933, as now or
hereafter provided.
5. Non-Transferability.
This Option shall not be transferable by the Grantee. The Option
shall be exercisable only during the lifetime of the Grantee and only by
the Grantee.
THE XXXXXXXX COACH, INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxx
Title: Secretary
