EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the “Agreement”) is
entered into on January 27, 2011 (the “Effective Date”) by
and between XXXXX
X. XXXXXXXX, an individual resident of the State of Georgia (“Executive”), and
XXX
CONSULTING, INC., a Florida corporation (the “Company”). Each
of the Executive and the Company is at times referred to in this Agreement
individually as a “Party” and
collectively as the “Parties”.
WHEREAS, in connection with
the Stock Purchase Agreement, dated as of even date herewith (the “Purchase Agreement”),
by and among the Company, Web Merchants, Inc., a Delaware corporation (“WMI”), Xxxxxx
Xxxxxxxx, an individual resident of the State of New Jersey, and Dmitrii
Spetetchii, an individual resident of the Republic of Moldova, the Company
desires to provide for the terms and conditions of Executive’s continued
employment as President and Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of
the foregoing, and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereby agree as follows:
1. Employment. Executive
will serve as President and Chief Executive Officer of the Company for the
Employment Term specified in Section 2 below. Executive will report to the
Board of Directors of the Company (the “Board”), and
Executive will render such services, consistent with the foregoing role, as the
Board may from time to time direct (the “Duties”).
2. Term. The employment
of Executive pursuant to this Agreement shall commence on the Closing Date and
shall continue through the end of the calendar year (the “Employment Term”),
unless earlier terminated as provided in this Agreement. The Employment Term
shall automatically be extended for additional one-year (1) periods commencing
on January 1st of each year and continuing each year thereafter, unless earlier
terminated as provided in this Agreement, or either Executive or the Company
gives the other written notice, in accordance with Section 15(a) at least sixty
(60) days prior to the then scheduled expiration of the Employment Term, of
such Party’s intention not to extend the Employment Term.
3. Salary. As
compensation for the services rendered by Executive under this Agreement, the
Company shall pay to Executive an initial base salary equal to $150,000.00 per
year (the “Base
Salary”) for calendar year 2011, payable to Executive in accordance with
the Company’s customary payroll practices. The Base Salary shall be subject to
adjustment by the Board but may not be decreased unless it is part of a
documented strategic measure required by the Company to meet deteriorating
financial or economic conditions.
4. Bonus. In addition to
his Base Salary, Executive shall be entitled to participate in the Company’s
executive bonus program. Bonuses shall be paid in accordance with the guidelines
set forth under the bonus program adopted by the Board as such program may be
adopted in the future.
5. Executive
Benefits.
(a) Employee and Executive
Benefits. Executive will be entitled to receive all benefits provided to
senior executives, executives and employees of the Company generally, provided
that in respect to each such plan Executive is otherwise eligible and insurable
in accordance with the terms of such plans and applicable law.
(b) PTO. Executive shall
be entitled to Paid Time Off and holidays in accordance with the existing
policies of the Company, as the same may be amended from time to
time.
6. Severance
Benefits.
(a) Required Termination
Notice. Either the majority vote of the Board of Directors or Executive
may terminate this Agreement and Executive’s employment at any time, with or
without Business Reasons (as defined in Section 13(a) below), in its or his sole
discretion, upon sixty (60) days’ prior written notice of
termination.
(b) Involuntary
Termination. If, at any time during the term of this Agreement, other
than following a Change in Control to which Section 6(c) applies, a majority
vote of the Board of Directors terminates the employment of Executive without
Business Reasons or a Constructive Termination occurs, then Executive shall be
entitled to receive the following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with the Company’s
Paid Time Off policies then in effect) through the Termination Date plus
continued salary for a period of nine (9) months following the Termination
Date, payable in accordance with the Company’s regular payroll schedule as in
effect from time to time;
(ii) an
amount equal to the average of the bonuses paid to Executive during the two (2)
preceding fiscal years or, if no bonuses were paid during such period, an amount
equal to Executive’s then current annual target bonus for the fiscal year in
which the termination occurs, which shall be payable within thirty (30) days of
such termination of employment;
(iii) acceleration
of vesting of all outstanding stock options and other equity arrangements
(including, but not limited to, restricted stock, stock appreciation rights, and
other equity incentives) subject to vesting and held by Executive subject to
this provision; provided, however, that the acceleration shall not cover more
than two (2) years from the Termination Date (and in this regard, all such
options and other exercisable rights held by Executive shall remain exercisable
for ninety (90) days following the Termination Date, or through the original
expiration date of the stock options or other exercisable rights, if
earlier);
(iv) to
the extent COBRA shall be applicable to the Company, continuation of health
benefits for Executive, Executive’s spouse and any dependent children, at
Executive’s cost, for the period required by law after the Termination Date,
provided that the Executive makes the appropriate election and payments;
and
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(v) no
other compensation, severance or other benefits, except only that this provision
shall not limit any benefits otherwise available to Executive under Section 6(c)
in the case of a termination following a Change in Control.
(c) Change in Control. If
at any time during the term of this Agreement a “Change in Control”
occurs (as defined below), and the Company terminates the employment of
Executive without Business Reasons or a Constructive Termination occurs within
the three (3) months prior to or eighteen (18) months following the date of
the Change in Control, then Executive shall be entitled to receive the
following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with the Company’s
Paid Time Off policies then in effect) through the Termination Date plus an
amount equal to eighteen (18) months of Executive’s salary as then in
effect, payable immediately upon the Termination Date;
(ii) an
amount equal to the greater of the average of the bonuses paid to Executive
during the two (2) preceding fiscal years or Executive’s then current annual
target bonus for the fiscal year in which the termination occurs, which shall be
payable within thirty (30) days of such termination of employment;
(iii) acceleration
of vesting of all outstanding stock options and other equity arrangements
(including, but not limited to, restricted stock, stock appreciation rights, and
other equity incentives) subject to vesting and held by Executive subject to
this provision; provided, however, that the acceleration shall not cover more
than two (2) years from the Termination Date (and in this regard, all such
options and other exercisable rights held by Executive shall remain exercisable
for ninety (90) days following the Termination Date, or through the original
expiration date of the stock options or other exercisable rights, if
earlier);
(iv) to
the extent COBRA shall be applicable to the Company, continuation of health
benefits for Executive, Executive’s spouse and any dependent children, at
Executive’s cost, for a period of eighteen (18) months after the
Termination Date, subject to such extensions as may be available under federal
law; and
(v) no
other compensation, severance or other benefits.
(d) Limitation on Parachute
Payments. The Executive’s severance payments and other benefits to be
received in connection with a Change in Control under this Agreement or
otherwise (commonly referred to collectively as “parachute payments”) are capped
at no more than three (3) times his average annual compensation for the previous
five (5) years to the extent necessary for him not to incur excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), and for the
Company not to have its deduction limited under Section 280G of the Code.
In the event that the parachute payments to be received by the Executive need to
be reduced to comply with the foregoing limitation, the Company shall determine
which parachute payments shall be reduced and the extent of each reduction, each
in a manner that will not cause a violation of Section 409A of the
Code. If it is subsequently determined that the parachute payments
actually received by the Executive exceed the foregoing limitation, then the
Executive shall have an obligation to pay the Company upon demand an amount
equal to the excess.
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(e) Termination for
Disability. If, at any time during the term of this Agreement, other than
following a Change in Control to which Section 6(c) applies, Executive shall
become unable to perform his Duties as an employee as a result of incapacity,
which gives rise to termination of employment for Disability, then Executive
shall be entitled to receive the following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with the Company’s
Paid Time Off policies then in effect) through the Termination Date plus
continued salary for a period of eighteen (18) months following the
Termination Date, payable in accordance with the Company’s regular payroll
schedule as in effect from time to time;
(ii) an
amount equal to the annual target bonus for the fiscal year in which the
Termination Date occurs (plus any unpaid bonus from the prior fiscal year), to
be paid no later than two and a half months following the close of the fiscal
year in which the termination occurs;
(iii) acceleration
in full of vesting of all outstanding stock options held by Executive subject to
the provision, however, that the acceleration shall not cover more than two
(2) years from the Termination Date (and in this regard, all such options
and other exercisable rights held by Executive shall remain exercisable for one
(1) year following the Termination Date, or through the original expiration date
of the stock options or other exercisable rights, if earlier);
(iv) to
the extent COBRA shall be applicable to the Company, continuation of health
benefits for Executive, Executive’s spouse and any dependent children, at
Executive’s cost, for a period of eighteen (18) months after the
Termination Date, subject to such extensions as may be available for election
under federal law; and
(v) no
other compensation, severance or other benefits, except only that this provision
shall not limit any benefits otherwise available to Executive under Section 6(c)
in the case of a termination prior to or following a Change in
Control.
(f) Voluntary Termination or
Involuntary Termination for Business Reasons. If (A) Executive
voluntarily terminates his employment (other than in the case of a Constructive
Termination), or (B) Executive is terminated involuntarily for Business
Reasons, then in any such event Executive or his beneficiaries shall be entitled
to receive the following: (i) salary and the cash value of any accrued Paid
Time Off (consistent with the Company’s Paid Time Off policies then in effect)
through the Termination Date only, (ii) the right to exercise, for ninety
(90) days following the Termination Date, or through the original
expiration date of the stock options, if earlier, all stock options held by
Executive, but only to the extent vested as of the Termination Date,
(iii) to the extent COBRA shall be applicable to the Company, continuation
of health benefits for Executive, Executive’s spouse and any dependent children,
at Executive’s cost, as applicable under law, provided Executive makes the
appropriate election and payments, and (iv) no other compensation,
severance, or other benefits.
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(g) Termination Upon
Death. If Executive’s employment is terminated because of his death, then
Executive’s estate shall be entitled to receive the following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with the Company’s
Paid Time Off policies then in effect) through the Termination
Date;
(ii) an
amount equal to the annual target bonus for the fiscal year in which the
Termination Date occurs (plus any unpaid bonus from the prior fiscal year), to
be paid within two and a half months of the close of the fiscal year in which
the death occurred;
(iii) except
in the case of any such termination following a Change in Control to which
Section 6(c) applies, acceleration in full of vesting of all outstanding stock
options and other equity arrangements (including but not limited to restricted
stock, stock appreciation rights, or other equity incentives) subject to vesting
and held by Executive subject to the provision, however, that the acceleration
shall not cover more than one (1)year from the Termination Date (and in this
regard, all such options and other exercisable rights held by Executive shall
remain exercisable for one year following the Termination Date, or through the
original expiration date of the stock options or other exercisable rights, if
earlier);
(iv) to
the extent COBRA shall be applicable to the Company, continuation of health
benefits for Executive’s spouse and any dependent children, at their cost, for a
period of eighteen (18) months after the Termination Date, or such longer period
as may be applicable under law provided such covered beneficiaries make the
appropriate elections and payments;
(v) any
benefits payable to Executive or his representatives upon death under insurance
or other programs maintained by the Company for the benefit of the Executive;
and
(vi) no
further benefits or other compensation, except only that this provision shall
not limit any benefits otherwise available to Executive under Section 6(c) in
the case of a termination following a Change in Control.
(g) Exclusivity. The
provisions of this Section 6 are intended to be and are exclusive and in
lieu of any other rights or remedies to which Executive or the Company may
otherwise be entitled, either at law, tort or contract, in equity, or under this
Agreement, in the event of any termination of Executive’s employment. Executive
shall be entitled to no benefits, compensation or other payments or rights upon
termination of employment other than those benefits expressly set forth in
paragraph (b), (c), (d), (e), (f) or (g) of this Section 6, whichever
shall be applicable and those benefits required to be provided by
law.
(h) Termination. The word
“termination” and any variant thereof with respect to the Executive’s employment
shall mean a “separation from service” within the meaning provided by
Section 409A. Payments provided for under this Section 6 are
contingent upon a termination satisfying this definition.
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7. Set-Off. If
Executive has any outstanding liquidated obligations to the Company at the time
this Agreement terminates for any reason (other than a claim for damages unless
and until that claim has been confirmed by entry of a final order or judgment of
a court of competent jurisdiction), Executive acknowledges that the Company is
authorized to deduct any liquidated amounts owed to the Company from his final
paycheck and/or from any amounts that would otherwise be due to Executive under
this Agreement, to the extent permitted under Code Section 409A.
8. Books and
Records. Executive agrees that all files, documents, records,
customer lists, books and other materials which come into his use or possession
during the term of this Agreement which are in any way related to the Company’s
business shall at all times remain the property of the Company, and that upon
request by the Company or upon the termination of this Agreement for any reason,
Executive shall immediately surrender to the Company all such property and
copies thereof.
9. Restrictive
Covenants. Executive acknowledges that the restrictions
contained in this Section 9 are reasonable and necessary to protect the
legitimate business interests of the Company, and will not impair or infringe
upon his right to work or earn a living after his employment with the Company
ends.
(a) Trade Secrets and
Confidential Information. Executive represents and warrants
that: (i) he is not subject to any agreement that would prevent him
from performing his Duties for the Company or otherwise complying with this
Agreement, and (ii) he is not subject to or in breach of any non-disclosure
agreement, including any agreement concerning trade secrets or confidential
information owned by any other party, that would adversely affect the
performance of his Duties for the Company or otherwise adversely affect his
compliance with this Agreement.
Executive
agrees that he will not: (i) use, disclose, or reverse engineer the
Trade Secrets or the Confidential Information, except as authorized by the
Company; (ii) during Executive’s employment with the Company, use, disclose, or
reverse engineer (A) any confidential information or trade secrets of any former
employer or third party, or (B) any works of authorship developed in whole or in
part by Executive during any former employment or for any other party, unless
authorized in writing by the former employer or third party; or (iii) upon
Executive’s resignation or termination (A) retain Trade Secrets or Confidential
Information, including any copies existing in any form (including electronic
form), which are in his possession or control, or (B) destroy, delete, or alter
the Trade Secrets or Confidential Information without the Company’s
consent.
The
obligations under this Section 9(a) shall remain in effect (i) with regard to
the Trade Secrets, for as long as the information constitutes a trade secret
under applicable law, and (ii) with regard to the Confidential Information, for
a period of five (5) years from the Termination Date.
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After
termination of Executive’s employment, nothing in this Agreement will prohibit
Executive from using his general skills, knowledge and experience developed in
positions with the Company or other employers, provided that Executive does not
use Trade Secrets or Confidential Information of the Company or its customers or
suppliers or retain any tangible copies of such Trade Secrets or Confidential
Information or disclose such Trade Secrets or Confidential
Information.
(b) Non-Solicitation of
Customers. During the Restricted Period, Executive will not
solicit any Customer of the Company for the purpose of providing any goods or
services competitive with the goods or services offered by the
Company. The restrictions in this Section 9(b) apply only to the
Customers with whom Executive had Contact.
(c) Non-Solicitation of
Employees. During the Restricted Period, Executive will not,
directly or indirectly, solicit, recruit or induce any Employee (other than
clerical staff such as secretaries or receptionists) to (i) terminate his or her
employment relationship with the Company, or (ii) work for any other person or
entity engaged in a business that offers goods or services directly competitive
with those goods or services offered by the Company (a “Competing Business”),
provided that general solicitation of employees in printed or other general
media that do not target the employees of the Company specifically and general
recruiting by a company Executive is later employed by or associated with that
does not use any of his knowledge shall not constitute a violation of this
provision.
(d) Noncompete
Covenants. During the Restricted Period, Executive shall not,
on his behalf, or on behalf of any Competing Business, perform for the benefit
of any Competing Business (i) any of the Duties, or (ii) any activities which
are substantially similar to those Duties. Notwithstanding the
foregoing, this Section 9(d) shall not apply in the event of a termination of
employment governed by Section 6(b) or 6(c) of this
Agreement. Nothing in this Agreement shall be construed to prohibit
Executive from performing activities which he did not perform for
Company.
10. Work
Product. Executive’s Duties may include inventing in areas
directly or indirectly related to the business of the Company or to a line of
business of the Company or to a line of business that the Company may reasonably
be interested in pursuing. All Work Product shall constitute work
made for hire. If (a) any of the Work Product may not be considered
work made for hire, or (b) ownership of all right, title, and interest to the
legal rights in and to the Work Product will not vest exclusively in the
Company, then, without further consideration, Executive assigns all preexisting
Work Product to the Company and agrees to assign, and automatically assign, all
future Work Product to the Company.
The
Company will have the right to obtain and hold in its own name copyrights,
patents, design registrations, proprietary database rights, trademarks, rights
of publicity, and any other protection available in the Work
Product. At the Company’s request, Executive agrees to perform,
during or after his employment with the Company, (provided that after his
employment the Company shall pay Executive reasonable compensation and expenses
for) any acts to transfer, perfect and defend the Company’s ownership of the
Work Product, including, but not limited to: (i) executing all
documents (including a formal assignment to the Company) necessary for filing an
application or registration for protection of the Work Product (an
“Application”), (ii) explaining the nature of the Work Product to persons
designated by the Company, (iii) reviewing Applications and other related
papers, or (iv) providing any other assistance reasonably required for the
orderly prosecution of Applications.
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Upon
request of the Company, Executive agrees to provide the Company with a written
description of any Work Product in which he is involved (individually or jointly
with others) and the circumstances surrounding the creation of such Work
Product.
11. Licenses. To
the extent applicable, if at all, Executive grants to the Company an
irrevocable, nonexclusive, worldwide, royalty-free, perpetual license
to: (i) make, use, sell, copy, perform, display, distribute, or
otherwise utilize copies of the Licensed Materials, (ii) prepare, use and
distribute derivative works based upon the Licensed Materials, and (iii)
authorize others to do the same. Executive shall notify the Company
in writing of any Licensed Materials he delivers to the Company.
12. Use of Likeness and
Release. Executive consents to the Company’s use of his image,
likeness, voice or other characteristics in the Company’s products or services
during his employment and thereafter for one (1) year as to works created during
his employment, provided that no new works created after the end of his
employment shall include his image, likeness, voice or other characteristics in
the Company’s products or services. Executive releases the Company
from any claims which he has or may have for invasion of privacy, right of
publicity, defamation, copyright infringement, or any other causes of action
arising out of the use, distribution, adaptation, reproduction, broadcast, or
exhibition of such characteristics.
13. Definition of Terms.
The following terms referred to in this Agreement shall have the following
meanings:
(a) “Business Reasons”
means (i) gross negligence, willful misconduct or other willful malfeasance
by Executive in the performance of his Duties, (ii) Executive’s conviction of a
felony, or any other criminal offense involving moral turpitude, (iii)
Executive’s material breach of this Agreement, including, without limitation,
any repeated breach of Section 14 hereof or of any provision of any
confidentiality, non-disclosure or non-competition agreements between the
Company and Executive, provided that, in the case of any such breach, the Board
provides written notice of breach to the Executive, specifically identifying the
manner in which the Board believes that Executive has materially breached this
Agreement, and Executive shall have the opportunity to cure such breach to the
reasonable satisfaction of the Board within thirty (30) days following the
delivery of such notice. For purpose of this Section 13(a), no act or failure to
act by Executive shall be considered “willful” unless done or omitted to be done
by Executive in bad faith or without reasonable belief that Executive’s action
or omission was in the best interests of the Company or its affiliates. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by Executive in good
faith and in the best interests of the Company. The Board must notify Executive
of any event constituting Business Reasons within ninety (90) days
following the Board’s actual knowledge of its existence (which period shall be
extended during the period of any reasonable investigation conducted in good
faith by or on behalf of the Board) or such event shall not constitute Business
Reasons under this Agreement.
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(b) “Disability” shall
have the same meaning as set forth in the long-term disability plan maintained
by the Company, or if none, shall mean that Executive has been unable to perform
his Duties as an employee as the result of his incapacity due to physical or
mental illness, and such inability, at least twenty-six (26) weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to Executive or
Executive’s legal representative (such Agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may only be
effected after at least sixty (60) days written notice by the Company of
its intention to terminate Executive’s employment. In the event that Executive
resumes the performance of substantially all of his Duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(c) “Termination Date”
shall mean (i) if this Agreement is terminated on account of death, the
date of death; (ii) if this Agreement is terminated for Disability, the
date specified in Section 13(b); (iii) if this Agreement is terminated
by the Company, the date which is indicated in a notice of termination is given
to Executive by the Company in accordance with Sections 6(a) and 15(a);
(iv) if the Agreement is terminated by Executive, the date which is
indicated in a notice of termination given to the Company by Executive in
accordance with Sections 6(a) and 15(a); or (v) if this Agreement expires
by its terms, then the last day of the term of this Agreement.
(d) “Constructive
Termination” shall be deemed to occur if (A) (1) Executive’s
position changes as a result of an action by the Company such that (w) Executive
shall no longer be President and Chief Executive Officer of the Company,
(x) Executive shall have duties and responsibilities demonstrably less than
those typically associated with a President and Chief Executive Officer of a
publicly traded corporation, or (y) Executive shall no longer report
directly to the Company’s Board, or (2) Executive is required to relocate
his place of employment, other than a relocation within fifty (50) miles of
Executive’s current residence in Georgia or the Company’s current Atlanta,
Georgia headquarters, (3) there is a reduction in Executive’s base salary
or target bonus other than any such reduction consistent with a general
reduction of pay across the executive staff as a group, as a documented economic
or strategic measure due to poor financial performance by the Company,
(4) there occurs any other material breach of this Agreement by the Company
(other than a reduction of Executive’s base salary or target bonus which is not
described in the immediately preceding clause), or (5) after a written
demand for substantial performance is delivered to the Board by Executive which
specifically identifies the manner in which Executive believes that the Company
has materially breached this Agreement, and the Company has failed to cure such
breach to the reasonable satisfaction of Executive within thirty (30) days
following the delivery of such notice, and (B) within the ninety-day (90)
period immediately following an action described in clauses (A)(1) through (4),
Executive elects to terminate his employment voluntarily.
(e)
A “Change in Control”
shall be deemed to have occurred if:
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(i) any
“Person,” as such term is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other
than (i) the Company, (ii) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or (iii) any
company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
becomes the “Beneficial Owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 51% or more of the combined voting power
of the Company’s then-outstanding securities;
(ii) the
stockholders of the Company approve any transaction or series of transactions
under which the Company is merged into or consolidated with any other company,
other than a merger or consolidation (A) which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66 2/3% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, and (B) after
which no Person holds 20% or more of the combined voting power of the
then-outstanding securities of the Company or such surviving
entity;
(iii) 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;
(iv) the
Board adopts a resolution to the effect that, for purposes of this Agreement, a
Change in Control has occurred, provided that such Change in Control meets the
definition of a change in control set forth under Code Section 409A;
or
(v)
a majority of the Board is replaced in a twelve-month
(12) period by directors whose appointment or election was not endorsed by a
majority of the Board before their appointment or election.
(f) "Company" means, as
appropriate based on the context, either XXX Consulting, Inc., or XXX
Consulting, Inc. and each of its subsidiaries, affiliates and all related
companies, including, but not limited to, WMI.
(g) "Confidential
Information" means information of the Company, to the extent not
considered a Trade Secret under applicable law, that (i) relates to the business
of the Company, (ii) possesses an element of value to the Company, (iii) is not
generally known to the Company's competitors, and (iv) would damage the Company
if disclosed. Confidential Information includes, but is not limited
to, (i) future business plans, (ii) the composition, description, schematic or
design of products, future products or equipment of the Company, (iii)
communication systems, audio systems, system designs and related documentation,
(iv) advertising or marketing plans, (v) information regarding independent
contractors, employees, clients and customers of the Company, and (vi)
information concerning the Company's financial structure and methods and
procedures of operation. Confidential Information shall not include
any information that (i) is or becomes generally available to the public other
than as a result of an unauthorized disclosure, or (ii) has been independently
developed and disclosed by others without violating this Agreement or the legal
rights of any party.
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(h) "Contact" means any
interaction between Executive and a Customer which (i) takes place in an effort
to establish, maintain, and/or further a business relationship on behalf of the
Company, and (ii) occurs during the last year of Executive’s employment with the
Company (or during his employment if employed less than a year).
(i) "Customer" means any
person or entity to whom the Company has sold its products or services, or
solicited to sell its products or services.
(j) "Employee" means any
person who (i) is employed by the Company at the time Executive’s employment
with the Company ends, (ii) was employed by the Company during the last year of
Executive’s employment with the Company (or during his employment if employed
less than a year), or (iii) is employed by the Company during the Restricted
Period.
(k) "Licensed Materials"
means any materials that Executive utilizes for the benefit of the Company, or
delivers to the Company or the Company's customers, which (i) do not constitute
Work Product, (ii) are created by Executive or of which he is otherwise in
lawful possession, and (iii) Executive
may lawfully utilize for the benefit of, or distribute to, the Company or the
Company's customers.
(l)
"Restricted Period"
means the time period during Executive’s employment with the Company, and for
two (2) years after the Termination Date.
(m) "Trade Secrets" means
information of the Company, and its licensors, suppliers, clients and customers,
without regard to form, including, but not limited to, technical or nontechnical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing, a process, financial data, financial plans, product plans,
or a list of actual or potential customers or suppliers which is not commonly
known by or available to the public and which information (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
(n) "Work Product" means
(i) any data, databases, materials, documentation, computer programs, inventions
(whether or not patentable), designs, and/or works of authorship, including, but
not limited to, discoveries, ideas, concepts, properties, formulas,
compositions, methods, programs, procedures, systems, techniques, products,
improvements, innovations, writings, pictures, audio, video, images of Executive
(subject to Section 12 of this Agreement), and artistic works, and (ii) any
subject matter protected under patent, copyright, proprietary database,
trademark, trade secret, rights of publicity, confidential information, or other
property rights, including all worldwide rights therein, that is or was
conceived, created or developed in whole or in part by Executive while employed
by the Company and that either (A) is created within the scope of Executive’s
employment, (B) is based on, results from, or is suggested by any work performed
within the scope of Executive’s employment and is directly or indirectly related
to the business of the Company or a line of business that the Company may
reasonably be interested in pursuing, (C) has been or will be paid for by the
Company, or (D) was created or improved in whole or in part by using the
Company's time, resources, data, facilities, or equipment.
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14. No Conflicts.
Executive agrees that during the Employment Term he will not enter into, in his
individual capacity, any agreement, arrangement or understanding, whether
written or oral, with any supplier, contractor, distributor, wholesaler, sales
representative, representative group or customer, relating to the business of
the Company or any of its subsidiaries, without the express written consent of
the Company.
15. Miscellaneous
Provisions.
(a) Notice. All
communications contemplated by this Agreement shall be in writing, shall be
effective when given, and in any event shall be deemed to have been duly given
(i) when delivered, if personally delivered, (ii) three
(3) business days after deposit in the U.S. mail, if mailed by U.S.
registered or certified mail, return receipt requested, or (iii) one
(1) business day after the business day of deposit with Federal Express or
similar overnight courier, if so delivered, freight prepaid. In the case of
Executive, notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Corporate Secretary.
(b) Notice of
Termination. Any termination by the Company or Executive shall be
communicated by a notice of termination to the other party hereto given in
accordance with paragraph (a) hereof. Such notice shall indicate the
specific termination provision in this Agreement relied upon.
(c)
Successors.
(i) Company’s
Successors. Any successor to the Company (whether direct or indirect and whether
by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall be entitled to
assume the rights and shall be obligated to assume the obligations of the
Company under this Agreement and shall agree to perform the Company’s
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” shall
include any successor to the Company’s business and/or assets which executes and
delivers the assumption agreement described in this Section 15(c)(i) or which
becomes bound by the terms of this Agreement by operation of law.
(ii) Executive’s
Successors. The terms of this Agreement and all rights of Executive hereunder
shall inure to the benefit of, and be enforceable by, Executive’s personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
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(iii) No
Other Assignment of Benefits. Except as provided in this Section 15(c), the
rights of any person to payments or benefits under this Agreement shall not be
made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor’s process, and any action in violation
of this subsection (iii) shall be void.
(d) Waiver. No provision
of this Agreement shall be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and signed by
Executive and by an authorized officer of the Company (other than Executive). No
waiver by either Party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other Party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.
(e) Entire Agreement.
This Agreement shall supersede any and all prior agreements, representations or
understandings (whether oral or written and whether express or implied) between
the parties with respect to the subject matter hereof.
(f) Severability. The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) Arbitration and Governing
Law. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by binding arbitration in Atlanta,
Georgia, in accordance with the rules of the American Arbitration Association
then in effect (the “AAA
Rules”). Any arbitration will be conducted by a single
arbitrator selected according to the AAA Rules. Judgment may be entered on the
arbitrator’s award in any court having competent jurisdiction. No party shall be
entitled to seek or be awarded punitive damages. Nothing in this Section 15(g)
shall be construed to prohibit the Company from seeking injunctive relief from a
court of competent jurisdiction pursuant to Section 15(h), below. All
attorneys’ fees and costs shall be allocated or apportioned as agreed by the
parties or, in the absence of an agreement, in such manner as the arbitrator or
court shall determine to be appropriate to reflect the final decision of the
deciding body as compared to the initial positions in arbitration of each party.
This Agreement shall be construed in accordance with and governed by the laws of
the State of Georgia, without regard to its principles of conflicts of law, as
they apply to contracts entered into and wholly to be performed within such
State by residents thereof.
(h) Injunctive
Relief. Executive hereby agrees that if he breaches Sections
8, 9, 10 or 11 of this Agreement: (i) the Company will suffer
irreparable harm; (ii) it would be difficult to determine damages, and monetary
damages alone would be an inadequate remedy for the injuries suffered by the
Company, and (iii) if the Company seeks injunctive relief to enforce this
Agreement, Executive will waive and will not (a) assert any defense that the
Company has an adequate remedy at law with respect to the breach, or (b) require
that the Company submit proof of the economic value of any Trade Secret or
Confidential Information. Nothing contained in this Agreement shall
limit the Company’s right to any other remedies at law or in
equity.
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(i) Employment Taxes. All
payments made pursuant to this Agreement will be subject to withholding of
applicable taxes.
(j) Indemnification. In
the event Executive is made, or threatened to be made, a party to any legal
action or proceeding, whether civil or criminal, by reason of the fact that
Executive is or was a director or officer of the Company or serves or served any
other entity of which the Company owns 50% or more of the equity in any
capacity, Executive shall be indemnified by the Company, and the Company shall
pay Executive’s related expenses when and as incurred, all to the full extent
permitted by law, pursuant to Executive’s existing indemnification agreement
with the Company, if any, in the form made available to all other officers and
directors, or, if it provides greater protection to Executive, to the maximum
extent allowed under the law of the State of the Company’s
incorporation.
(k) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same
instrument.
(l) Six-Month Waiting
Period. Notwithstanding anything to the contrary, to the extent that any
payments under this Agreement are subject to a six-month (6) waiting period
under Code Section 409A, any such payments that would be payable before the
expiration of six months following the Executive’s separation from service but
for the operation of this sentence shall be made during the seventh (7th) month
following the Executive’s separation from service.
(m) Reimbursement of
Expenses. Reimbursements under this Agreement shall only be made for
expenses incurred during the term of this Agreement. Any reimbursements made
under this Agreement shall be made by the end of the fiscal year following the
fiscal year in which the expense was incurred, and the amount of the
reimbursable expenses or in-kind benefits provided in one fiscal year shall not
increase or decrease the amount of reimbursable expenses or in-kind benefits
provided in a subsequent fiscal year. In order to receive reimbursements under
this Agreement, the Executive shall provide any required supporting
documentation by a date reasonably specified by the Company in accordance with
the deadlines set forth in this section.
(n) Section 409A of the
Code. It is intended that the payments and benefits provided for by this
Agreement comply with the requirements of Section 409A, and this Agreement
shall be administered and interpreted in a manner consistent with such
intention.
(o) Survival. Those
Sections of this Agreement which, by their express wording or inherent nature,
are applicable to circumstances arising after the Termination Date, shall
survive the expiration or earlier termination of this Agreement, including,
without limitation, Section 6 (Severance Benefits), Section 7 (Set-Off), Section
8 (Books and Records), Section 9 (Restrictive Covenants), Section 10 (Work
Product), Section 11 (Licenses), Section 12 (Use of Likeness and Release),
Section 13 (Definitions), and Section 15 (Miscellaneous
Provisions).
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16. Affirmation. Executive
acknowledges that he has carefully read this Agreement, he knows and understands
its terms and conditions, and he has had the opportunity to ask the Company any
questions he may have had prior to signing this Agreement.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of
the Company by its duly authorized officer, as of the Effective
Date.
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XXX
Consulting, Inc.
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By:
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/s/ Xxxxxx
X. Xxxxx
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Xxxxxx
X. Xxxxx
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|
Chief
Financial Officer
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Executive
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/s/ Xxxxx
X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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[Signature
Page 1 of 1 to Employment Agreement]
