WRAP TECHNOLOGIES, INC. EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (this
“Agreement”)
is made and entered into on July 30, 2020, (the “Effective
Date”) by and between Wrap Technologies, Inc. (the
“Company”)
and Xxxx X. Xxxxxx (“Executive”).
The Company and Executive are hereinafter collectively referred to
as the “Parties,”
and individually referred to as a “Party”.
RECITALS
A. The
Company desires assurance of the association and services of
Executive in order to retain Executive’s experience, skills,
abilities, background and knowledge, and is willing to engage
Executive’s services on the terms and conditions set forth in
this Agreement.
B. Executive
desires to be in the employ of the Company, and is willing to
accept such employment on the terms and conditions set forth in
this Agreement.
AGREEMENT
In
consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable
consideration, the Parties, intending to be legally bound, agree as
follows:
1.
EMPLOYMENT.
1.1 Title.
Effective as of the Effective Date, Executive’s position
shall be Chief Executive Officer reporting to the Board of
Directors, subject to the terms and conditions set forth in this
Agreement.
1.2 Term.
The term of this Agreement shall begin on the Effective Date and
shall continue for a period of two years or until it is terminated
pursuant to Section 4 herein (the “Term”).
The Term shall automatically be entended for an additional year
unless either Party gives notice to the other Party of their intent
to terminate this Agreement on or before sixty (60) days prior to
the expiration of the end of the Term.
1.3 Duties.
Executive shall have the customary powers, responsibilities and
authorities of Chief Executive Officer of corporations of the size,
type and nature of the Company, as it exists from time to time.
Unless otherwise directed by the Board, the Chairman of the Board
of Directors shall be the liason between the Executive and the
Board on all matters relating to the Executive’s duties under
the terms of this Agreement.
1.4 Governing Agreement. The employment
relationship between the Parties shall be governed by this
Agreement. Upon
execution by both Parties, this Agreement is an offer of employment
that is contingent upon the completion of a background
investigation (including a credit check, criminal history check,
confirmation of prior employment, and confirmation of educational
background) satisfactory to the Company in its sole discretion and
the Executive providing legally required documentation of
eligibility to work in the United States
(“Background
Check”). Following the
successful completion of the Background Check this Agreement shall
be a binding agreement of the parties in accordance with its
terms; provided,
however,
that, the Company may waive the requirement to obtain or complete a
Background Check at any time. The Executive agrees to execute all
documentations and take all action required in connection with the
completion of the Background Check. The Executive acknowledges that
he is not an employee of the Company until the Employee has
received notification from the Company that the Background Check
has been completed to the satisfaction of the Company in its sole
discretion.
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2.
LOYALTY;
NONCOMPETITION; NONSOLICITATION.
2.1 Loyalty. During Executive’s
employment by the Company, Executive shall devote substantially all
of his business time to the performance of Executive’s duties
under this Agreement.
2.2 Agreement
not to Participate in Company’s Competitors. During
the Term, Executive agrees not to acquire, assume or participate
in, directly or indirectly, any position, investment or interest
known by Executive to be adverse or antagonistic to the Company,
its business, or prospects, financial or otherwise, or in any
company, person, or entity that is, directly or indirectly, in
competition with the business of the Company or any of its
Affiliates (as defined below). Ownership by Executive, in
professionally managed funds over which the Executive does not have
control or discretion in investment decisions, or as a passive
investment, of less than five percent (5%) of the outstanding
shares of capital stock of any corporation with one or more classes
of its capital stock listed on a national securities exchange or
publicly traded on a national securities exchange or in the
over-the-counter market shall not constitute a breach of this
Section. For purposes of this Agreement, “Affiliate,”
means, with respect to any specific entity, any other entity that,
directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such
specified entity.
2.3 Covenant
not to Compete. During the Term and for a period of three
(3) years thereafter (the “Restricted
Period”), Executive shall not engage in competition
with the Company and/or any of its Affiliates, either directly or
indirectly, in any manner or capacity, as adviser, principal,
agent, affiliate, promoter, partner, officer, director, employee,
stockholder, owner, co-owner, consultant, or member of any
association or otherwise (a “Competitive
Entity”), except with the prior written consent of the
Board.
2.4 Nonsolicitation.
During the Restricted Period, Executive shall not: (i) solicit or
induce, or attempt to solicit or induce, any employee of the
Company or its Affiliates to leave the employ of the Company or
such Affiliate; or (ii) solicit or attempt to solicit the business
of any client or customer of the Company or its Affiliates with
respect to products, services, or investments similar to those
provided or supplied by the Company or its Affiliates.
2.5 Acknowledgements.
Executive acknowledges and agrees that his services to the Company
pursuant to this Agreement are unique and extraordinary and that in
the course of performing such services Executive shall have access
to and knowledge of significant confidential, proprietary, and
trade secret information belonging to the Company. Executive agrees
that the covenant not to compete and the nonsolicitation
obligations imposed by this Section 2 are reasonable in duration,
geographic area, and scope and are necessary to protect the
Company’s legitimate business interests in its goodwill, its
confidential, proprietary, and trade secret information, and its
investment in the unique and extraordinary services to be provided
by Executive pursuant to this Agreement. If, at the time of
enforcement of this Section 2, a court holds that the covenant not
to compete and/or the nonsolicitation obligations described herein
are unreasonable or unenforceable under the circumstances then
existing, then the Parties agree that the maximum duration, scope,
and/or geographic area legally permissible under such circumstances
will be substituted for the duration, scope and/or area stated
herein.
3.
COMPENSATION
OF THE EXECUTIVE.
3.1 Base
Salary. The Company shall pay Executive a base salary (the
“Base
Salary”) at the annualized rate of Four Hundred
Thousand Dollars ($400,000), less payroll deductions and all
required withholdings, payable in regular periodic payments in
accordance with the Company’s normal payroll practices. The
Base Salary shall be prorated for any partial year of employment on
the basis of a 365-day fiscal year. The Company may increase, but
not decrease (except in connection with a Company-wide decrease in
executive compensation), Executive’s Base Salary from time to
time, and if so increased, “Base Salary” shall include
such increases for purposes of this Agreement.
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3.2 Bonus.
At the sole discretion of the Board or the compensation committee
of the Board (the “Compensation
Committee”), following each calendar year of
employment, Executive shall be eligible to receive an additional
cash bonus of up to 100% of Executive’s Base Salary (the
“Annual
Milestone Bonus”), which Annual Milestone Bonus shall
be based (in whole or in part) on Executive’s attainment of
certain personal, financial and/or business milestones (the
“Milestones”)
to be established annually prior to March 30 of the applicable
calendar year by the Board or the Compensation Committee. The
determination of whether Executive has met the Milestones, and if
so, the bonus amount (if any) that will be paid, shall be
determined by the Board or the Compensation Committee in its sole
and absolute discretion. Any Annual Milestone Bonuse shall be
deemed to have been earned on December 31 of each calendar year,
and shall be paid in cash in a single lump-sum payment or in
installments, as determined by the Board or the Compensation
Committee. Notwithstanding the foregoing, any payment of an Annual
Milestone Bonus shall be payable only if Executive is employed as
of the bonus payment date.
3.3 Stock
Options. Promptly following the date of execution of this
Agreement, Executive shall be granted an option to purchase 350,000
shares of Company’s common stock, par value $0.0001 per share
(“Common
Stock”) (the “Option”)
pursuant to the Company’s 2017 Stock Incentive Plan (the
“Plan”).
The Option shall have a per share exercise price equal to the Fair
Market Value of a share of Company Common Stock on the date of
grant of such Option, and shall expire on the ten (10) year
anniversary of the date of grant. To the extent permitted by under
Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”),
the Option granted hereunder shall be intended to be an
“incentive stock option.” The Option shall vest as
follows so long as the Executive is serving as Chief Executive
Officer at such time: (i) 1/4 on the first annual anniversary of
the Effective Date, (ii) the remaining ¾ shall vest ratably
monthly over a thirty-six (36) month period. In the event of any
conflict between this Agreement and the terms of the Plan, the
terms of this Agreement shall control. In the event
Executive’s employment is terminated under the provisions of
Sections 4.5.3 or 4.5.4 hereof, all vested Options will remain
exercisable for a period of six (6) months following termination;
provided, however, that
those Options that are exercised after 90 days following
termination of employment shall no longer be eligible for treatment
as Incentive Stock Options. In the event any withholding or similar
tax liability is imposed on Company in connection with or with
respect to any exercise of the Option or the disposition by
Executive of the Common Stock acquired upon exercise of the Option,
Executive agrees to pay to Company an amount sufficient to provide
for such tax liability.
3.4 Expense
Reimbursements.
3.5.1 The
Company will reimburse Executive for all reasonable business
expenses Executive incurs in conducting his duties hereunder,
pursuant to the Company’s usual expense reimbursement
policies, but in no event later than ninety (90) days after the end
of the calendar month following the month in which such expenses
were incurred by Executive; provided that Executive supplies the
appropriate substantiation for such expenses no later than the end
of the calendar month following the month in which such expenses
were incurred by Executive.
3.5.2 Executive
shall be reimbursed for all reasonable moving expenses incurred in
connection with the relocation of his residence from Texas to the
the Company’s corporate headquarters in Arizona; provided,
however, such amount shall not exceed $50,000. In addition to the
foregoing, Executive shall be reimbursed for up to ninety (90)
days’ temporary accomodations while travelling to the
Company’s headquarters in Arizona during the relocation of
Executive and his family. The Company shall reimburse Executive
for the Federal income tax payable by Executive as a result of the
reimbursement of relocation expenses set forth in this Section
3.5.2, in an amount equal to the then-current maximum marginal
Federal income tax rate payable by Executive resulting from such
vesting.
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3.5 Changes
to Compensation. As described above, Executive’s
compensation will be reviewed at least on an annual basis and the
Base Salary may be increased, but not decreased (except in
connection with a Company-wide decrease in executive compensation),
from time to time in the Company’s sole
discretion.
3.6 Employment
Taxes. All of Executive’s compensation shall be
subject to customary withholding taxes and any other employment
taxes as are commonly required to be collected or withheld by the
Company.
3.7 Benefits.
The Executive shall, in accordance with Company policy and the
applicable plan documents, be eligible to participate in benefits
under any benefit plan or arrangement, including health, dental,
vision, disability and life insurance programs, that may be in
effect from time to time and made available to the Company’s
senior management employees, subject to the terms and conditions of
those benefit plans.
3.8 Holidays
and Vacation. Executive shall be entitled to an
indeterminate amount of personal time off in the sole discretion of
the Company as operational conditions permit. This entitlement is
based on the mutual trust between Executive and Company, allowing
Executive the opportunity to work or take time off as deemed
appropriate, as long the responsibilities and duties of Executive
to the Company under the terms of this Agreement are respected.
Executive will not accrue vacation benefits under the terms of this
Agreement. In addition, Executive shall be entitled to all paid
Company holidays in accordance with Company policy.
4.
TERMINATION.
4.1 Termination
by the Company. Executive’s employment with the
Company is at will and may be terminated by the Company at any time
and for any reason, or for no reason, including, but not limited
to, under the following reasons:
4.1.1 Termination
by the Company for Cause. The Company may terminate
Executive’s employment under this Agreement for
“Cause” by delivery of written notice to Executive. Any
notice of termination given pursuant to this Section 4.1.1 shall
effect termination as of the date of the notice, or as of such
other date as specified in the notice.
4.1.2 Termination
by the Company without Cause. The Company may terminate
Executive’s employment under this Agreement without Cause at
any time and for any reason, or for no reason. Such termination
shall be effective on the date Executive is so informed, or as
otherwise specified by the Company.
4.2 Termination
by Resignation of Executive. Executive’s employment
with the Company is at will and may be terminated by Executive at
any time and for any reason, or for no reason, including via a
resignation for Good Reason in accordance with the procedures set
forth in Section 4.6.3 below.
4.3 Termination
for Death or Complete Disability. Executive’s
employment with the Company shall automatically terminate effective
upon the date of Executive’s death or Complete Disability (as
defined below).
4.4 Termination
by Mutual Agreement of the Parties. Executive’s
employment with the Company may be terminated at any time upon a
mutual agreement in writing of the Parties. Any such termination of
employment shall have the consequences specified in such
agreement.
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4.5 Compensation
Upon Termination.
4.5.1 Death
or Complete Disability. If, during the Term of this
Agreement, Executive’s employment shall be terminated by
death or Complete Disability, the Company shall pay to Executive,
his estate, or his heirs, as applicable, (i) any Base Salary owed
to Executive through the date of termination; (ii) expenses
reimbursement amounts owed to Executive; (iii) all unpaid amounts
of any Annual Milestone Bonus(es) Executive earned prior to the
termination date; (iv) a cash lump sum in respect to accrued and
unused vacation benefits earned through the date of termination at
the rate in effect at the time of termination; (v) any payments and
benefits to which Executive (or his estate) is entitled pursuant to
the terms of any employee benefit or compensation plan or program
in which he participates (or participated); and (vi) any amount to
which Executive is entitled pursuant to any other written
agreements between the Company or any of its affiliates and
Executive (the amounts in (i) through (vi) above being the
“Termination
Amounts”). The Company shall pay Executive: (A) the
amounts contained in items (i) through (iv) within ten (10) days
following such termination; (B) any payments associated with (v) in
accordance to the terms of such plans or programs; and (C) any such
amounts in (vi) in accordance with the terms of such agreements,
with the Termination Amounts being subject to the standard
deductions and withholdings (as applicable). The Base Salary
payments will be subject to standard payroll deductions and
withholdings.
4.5.2 Termination
For Cause or Resignation without Good Reason. If, during the
Term of this Agreement, Executive’s employment is terminated
by the Company for Cause, or Executive resigns his employment
hereunder without Good Reason, the Company shall pay Executive the
Termination Amounts, less standard deductions and withholdings. The
Company shall thereafter have no further obligations to Executive
under this Agreement, except as otherwise provided by
law.
4.5.3 Termination
Without Cause or Resignation for Good Reason Not in Connection with
a Change of Control. If the Company terminates
Executive’s employment without Cause, or if Executive resigns
for Good Reason, at any time other than upon the occurrence of, or
within thirty (30) days prior to, or six (6) months following, the
effective date of a Change of Control (as defined below), the
Company shall pay Executive the Termination Amounts, less standard
deductions and withholdings. In addition, subject to Executive
furnishing to the Company an executed waiver and release of claims
in the form attached hereto as Exhibit A (the “Release”), and
allowing the Release to become effective in accordance with its
terms, Executive shall be entitled to: (1) severance in the form of
continuation of his salary (at the Base Salary rate in effect at
the time of termination, but prior to any reduction triggering Good
Reason) for the greater of a period of twelve (12) months following
the termination date or the remaining term, which amount shall be
paid in twelve (12) equal monthly installments; provided, however, such remaining
severance payments payable to Executive as a result of his
termination of employement shall be reduced by any compensation
paid to Executive by a third party employer, provided such third
party employer is not, directly or indirectly, in competition with
the business of the Company; and, provided further, that
Executive’s entitlement to the benefits set forth in clause
(1) above shall be limited to twelve (12) months of his Base Salary
in the event such termination of Employment under the terms of this
Section 4.5.3 occurs on or prior to one hundred eighty (180) days
from the Effective Date. In the event that Executive finds
alternative full- or part-time employment with an entity that is,
directly or indirectly, in competition with the business of the
Company, any remaining severance payments shall terminate and be of
no further force and effect; (2) payment of Executive’s
premiums to cover COBRA for a period of twelve (12) months
following the termination date; and (3) a prorated annual bonus
equal to the target Annual Milestone Bonus, if any, for the year of
termination multiplied by a fraction, the numerator of which shall
be the number of full and partial months Executive worked for the
Company and the denominator of which shall be 12, and (4) immediate
accelerated vesting of any unvested outstanding stock option(s).
These payments under (1), (2), (3) and (4) above will be subject to
standard payroll deductions and withholdings and will be made on
the Company’s regular payroll cycle, provided, however, that any payments
otherwise scheduled to be made prior to the effective date of the
Release shall accrue and be paid in the first payroll period that
follows such effective date.
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4.5.4 Termination
Without Cause or Resignation for Good Reason in Connection with a
Change of Control. If the Company terminates
Executive’s employment without Cause, or if Executive resigns
for Good Reason, upon the occurrence of, or within thirty(30) days
prior to, or within six (6) months following, the effective date of
a Change of Control, the Company shall pay Executive the
Termination Amounts, less standard deductions and withholdings. In
addition, subject to Executive furnishing to the Company an
executed Release within the time period specified therein, and
allowing the Release to become effective in accordance with its
terms, then Executive shall be entitled to: (1) severance equal to
the greater of twelve (12) months of his Base Salary (at the Base
Salary rate in effect at the time of termination, but prior to any
reduction triggering Good Reason) or the remaining Term, which
amount shall be paid in twelve (12) equal monthly
installments; provided, however, that
Executive’s entitlement to the benefits set forth in clause
(1) above shall be limited to twelve (12) months of his Base Salary
in the event such termination of Employment under the terms of this
Section 4.5.4 occurs on or prior to one hundred eighty (180) days
from the Effective Date; provided
further, in the event Executive finds alternative full-time
employment during such twelve (12) month period following the date
of termination of Executive’s employment with an entity that
is not, directly or indirectly, in competition with the business of
the Company, such remaining severance payments shall be reduced by
any compensation paid to Executive by such entity, and, in the
event that Executive finds alternative full- or part-time
employment with an entity that is, directly or indirectly, in
competition with the business of the Company, any remaining
severance payments shall terminate and be of no further force and
effect; (2) payment of Executive’s premiums to cover COBRA
for a period of twelve (12) months following the termination date;
(3) a prorated annual bonus equal to the target Annual Milestone
Bonus, if any, for the year of termination multiplied by a
fraction, the numerator of which shall be the number of full and
partial months Executive worked for the Company and the denominator
of which shall be 12, and (4) immediate accelerated vesting of any
unvested outstanding stock option(s). These payments under (1),
(2), and (3) above, will be subject to standard payroll deductions
and withholdings and will be made on the Company’s regular
payroll cycle, provided,
however, that any payments otherwise scheduled to be made
prior to the effective date of the Release shall accrue and be paid
in the first payroll period that follows such effective
date.
4.6 Definitions.
For purposes of this Agreement, the following terms shall have the
following meanings:
4.6.1 Complete
Disability. “Complete
Disability” means that Executive is determined to be
permanently disabled pursuant to the Company’s long-term
disability plan and is receiving disability benefits under such
plan.
4.6.2 Cause.
“Cause”
for the Company to terminate Executive’s employment hereunder
shall mean the occurrence of any of the following events, as
determined by the Company and/or the Board in its and/or their sole
and absolute discretion:
(i) The willful
failure, disregard or refusal by Executive to perform his material
duties or obligations under this Agreement or to follow lawful
directions received by Executive from the Board, provided, however, that, any such
termination of Executive shall only be deemed for Cause pursuant to
this definition if: (i) the Company gives the Executive written
notice of the condition(s) alleged to constitute Cause, which
notice shall describe such condition(s); and (ii) the Executive
fails to remedy such condition(s) within thirty (30) days following
receipt of the written notice, provided, further, that written notice
shall not be required to be given hereunder in the event the
failure, disregard or refusal by Executive is willful, in the
reasonable determination of the Board;
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(ii) Any
grossly negligent act by Executive having the effect of materially
injuring (whether financially or otherwise) the business or
reputation of the Company or any willful act by Executive intended
to cause such material injury, except any acts (A) made by
Executive in connection with the enforcement of his rights, whether
under this Agreement, any other agreement between the Company or
any affiliate and Executive, or pursuant to applicable law (e.g.
disparagement, etc.), or (B) which are required by law or pursuant
to a subpoena or demand by a governmental or regulatory
body.
(iii) Executive’s
indictment of any felony involving moral turpitude (including entry
of a nolo contendere
plea);
(iv) The
determination, after a reasonable and good-faith independent
investigation, that the Executive engaged in discrimination
prohibited by law (including, without limitation, age, sex or race
discrimination);
(v) Executive’s
misappropriation or embezzlement of the property of the Company or
its Affiliates (whether or not a misdemeanor or felony);
or
(vi) Material
breach by Executive of this Agreement; provided, however, that, any such
termination of Executive shall only be deemed for Cause pursuant to
this definition if: (i) the Company gives the Executive written
notice of the condition(s) alleged to constitute Cause, which
notice shall describe such condition(s); and (ii) the Executive
fails to remedy such condition(s) (if curable) within thirty (30)
days following receipt of the written notice.
For
purposes of this definition, the Parties agree that any material
breach of Sections 2 or 5 of this Agreement shall be deemed a
material breach that is not capable of cure by
Executive.
4.6.3 Good
Reason. For purposes of this Agreement, and subject to the
caveat at the end of this Section 4.6.3, “Good Reason”
for Executive to terminate his employment hereunder shall mean the
occurrence of any of the following events without Executive’s
prior written consent:
(i) any reduction by
the Company of Executive’s Base Salary as initially set forth
herein or as the same may be increased from time to time,
provided, however, that if
such reduction occurs in connection with a Company-wide decrease in
executive compensation, such reduction shall not constitute Good
Reason for Executive to terminate his employment;
(ii) a
material breach by the Company (or any of its affiliates) of this
Agreement or any other written agreement between the Company or any
of its affiliates and Executive; or
(iii) a
material adverse change in Executive’s duties, titles,
authority, responsibilities or reporting relationships, with such
determination being made with reference to the greatest extent of
Executive’s duties, titles, authority, responsibilities or
reporting relationships, etc. as increased (but not decreased) from
time to time;
(iv) any
failure of the Company or any affiliate to pay Executive any amount
owed to Executive under this Agreement or any other written
agreement plan or program between the Company, any affiliates and
Executive;
(v) any reduction in
Executive’s bonus eligibility; or
(vi) the
assignment to Executive of duties materially inconsistent with his
position with the Company.
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Provided, however,
that, any such termination by the Executive shall only be deemed
for Good Reason pursuant to this definition if: (1) the
Executive gives the Company written notice of his intent to
terminate for Good Reason; which notice shall describe such
condition(s); (2) the Company fails to remedy such condition(s)
within thirty (30) days following receipt of the written notice the
“Cure
Period”); and (3) Executive voluntarily terminates his
employment within thirty (30) days following the end of the Cure
Period.
4.6.4 Change
of Control. For purposes of this Agreement, “Change of
Control” shall mean the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the
following events (excluding in any case transactions in which the
Company or its successors issues securities to investors primarily
for capital raising purposes):
(i) the acquisition by
a third party (or more than one party acting as a group) of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger,
consolidation or similar transaction;
(ii) a
merger, consolidation or similar transaction following which the
stockholders of the Company immediately prior thereto do not own at
least fifty percent (50%) of the combined outstanding voting power
of the surviving entity (or that entity’s parent) in such
merger, consolidation or similar transaction; or
(iii) the
sale, or other disposition of all or substantially all of the
assets of the Company.
4.7 Survival
of Certain Sections. The terms and conditions set forth in
this Agreement shall survive the termination hereof; provided, however, Sections 14 and 15
shall terminate and be of no further force and effect upon such
termination.
5. Nondisclosure
and Nonuse of Confidential Information.
5.1 Definition
and Access. Executive acknowledges that performance of
Executive’s duties under this Agreement necessarily involves
access to and familiarity with highly sensitive, confidential, and
proprietary information of the Company which includes, without
limitation, information about the Company’s products, product
strategies, product development and production processes, customers
and prospective customers, the buying patterns and needs of
customers and prospective customers, vendors and suppliers,
pricing, quoting, costing systems, billing and collection
procedures, proprietary software and the source code thereof,
financial and accounting data, data processing and communications,
technical data, marketing concepts and strategies, business plans,
mergers and acquisitions, research and development of new or
improved products and services, and general know-how regarding the
business of the Company and its products (collectively referred to
herein as “Confidential
Information”).
5.2 Trade
Secrets. The Company considers much of its Confidential
Information to constitute trade secrets of the Company (“Trade
Secrets”) which have independent value, provide the
Company with a competitive advantage over its competitors who do
not know the Trade Secrets, and are protected from unauthorized
disclosure under applicable law. However, whether or not the
Confidential Information constitutes Trade Secrets, Executive
acknowledges and agrees that the Confidential Information is
protected from unauthorized disclosure or use due to
Executive’s covenants under this Agreement and
Executive’s fiduciary duties as an employee of
Company.
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5.3 Protections
and Obligations. Executive acknowledges that the
Confidential Information is a valuable, special, and unique asset
of the Company such that the unauthorized disclosure or use by
unauthorized persons would cause irreparable damage to the business
of the Company. In recognition of the foregoing, Executive
acknowledges and agrees that the Confidential Information is, and
shall at all times remain, the sole and exclusive property of the
Company. Executive further agrees that both during and after
the term of this Agreement, Executive shall not disclose to anyone
or use for any purpose any Confidential Information of the Company,
except as expressly authorized by the Company. Executive
further agrees that, upon termination of this Agreement, Executive
will promptly return to the Company all documents, computer disks
and files, and records of any kind, in any medium, which contain
any Confidential Information, including any and all copies
thereof.
6.
ASSIGNMENT AND BINDING EFFECT.
This
Agreement shall be binding upon and inure to the benefit of
Executive and Executive’s heirs, executors, personal
representatives, assigns, administrators and legal representatives.
Because of the unique and personal nature of Executive’s
duties under this Agreement, neither this Agreement nor any rights
or obligations under this Agreement shall be assignable by
Executive. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors, assigns and legal
representatives. Any such successor of the Company will be deemed
substituted for the Company under the terms of this Agreement for
all purposes. For this purpose, “successor” means any
person, firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or
indirectly acquires all or substantially all of the assets or
business of the Company.
7.
NOTICES.
All
notices or demands of any kind required or permitted to be given by
the Company or Executive under this Agreement shall be given in
writing and shall be personally delivered (and receipted for) or
faxed during normal business hours or mailed by certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If
to the Company:
0000 X.
0xx
Xxxxxx
Xxxxx,
Xxxxxxx 00000
Attn:
Chief Financial Officer
If
to Executive:
Xxxx X.
Xxxxxx
0000
Xxxx Xxxxx
Xxxxxx,
Xxxxx 00000
xxxxxxxxxxx@xxxxx.xxx
Any
such written notice shall be deemed given on the earlier of the
date on which such notice is personally delivered or three (3) days
after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to
the other Party in the manner specified in this Section
7.
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8.
CHOICE OF LAW.
This
Agreement shall be construed and interpreted in accordance with the
internal laws of the State of Arizona, without regard to its
conflict of laws principles. Each Party agrees that any action by
either Party to enforce the terms of this Agreement may be brought
by the other Party in an appropriate state or federal court in
Arizona and waives all objections based upon lack of jurisdiction
or improper or inconvenient venue of any such court.
9.
INTEGRATION.
This
Agreement, including Exhibit
A, contains the
complete, final and exclusive agreement of the Parties relating to
the terms and conditions of Executive’s employment and the
termination of Executive’s employment, and supersedes all
prior and contemporaneous oral and written employment agreements or
arrangements between the Parties.
10.
AMENDMENT.
This
Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.
11.
WAIVER.
No
term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the
Party against whom the wavier is claimed, and any waiver or any
such term, covenant, condition or breach shall not be deemed to be
a waiver of any preceding or succeeding breach of the same or any
other term, covenant, condition or breach.
12.
SEVERABILITY.
The
finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this
Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal. Such court shall have the
authority to modify or replace the invalid or unenforceable term or
provision with a valid and enforceable term or provision, which
most accurately represents the Parties’ intention with
respect to the invalid or unenforceable term, or
provision.
13.
INTERPRETATION; CONSTRUCTION.
The
headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel
representing the Company, but the Executive has been encouraged to
consult with, and has consulted with, Executive’s own
independent counsel and tax advisors with respect to the terms of
this Agreement. The Parties acknowledge that each Party and its
counsel has reviewed and revised, or had an opportunity to review
and revise, this Agreement, and any rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement.
14.
REPRESENTATIONS AND
WARRANTIES.
Executive
represents and warrants that Executive is not restricted or
prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this
Agreement, and that Executive’s execution and performance of
this Agreement will not violate or breach any other agreements
between the Executive and any other person or entity.
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15.
COUNTERPARTS.
This
Agreement may be executed in two counterparts, each of which shall
be deemed an original, all of which together shall contribute one
and the same instrument. Signatures to this Agreement transmitted
by fax, by email in “portable document format”
(“.pdf”) or by any other electronic means intended to
preserve the original graphic and pictorial appearance of this
Agreement shall have the same effect as physical delivery of the
paper document bearing original signature.
16.
INDEMNIFICATION.
The
Company shall defend and indemnify Executive in his capacity as
Executive Chief Executive Officer of the Company, and with respect
to all services performed by Executive for the Company and as an
employee, to the fullest extent permitted under Delaware law. The
Company shall also maintain a policy for indemnifying its officers
and directors, including but not limited to the Executive, for all
actions permitted under Nevada law taken in good faith pursuit of
their duties for the Company, including but not limited to
maintaining an appropriate level of Directors and Officers
Liability coverage and maintaining the inclusion of such provisions
in the Company’s by-laws or articles of incorporation, as
applicable and customary. The rights to indemnification shall
survive any termination of this Agreement.
17.
TRADE SECRETS OF OTHERS.
It is
the understanding of both the Company and Executive that Executive
shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others,
including Executive’s former employers, nor shall the Company
and/or its Affiliates seek to elicit from Executive any such
information. Consistent with the foregoing, Executive shall not
provide to the Company and/or its Affiliates, and the Company
and/or its Affiliates shall not request, any documents or copies of
documents containing such information.
18.
ADVERTISING WAIVER.
Executive agrees to
permit the Company, and persons or other organizations authorized
by the Company, to use, publish and distribute advertising or sales
promotional literature concerning the products and/or services of
the Company, in which Executive’s name and/or pictures of
Executive taken in the course of Executive’s provision of
services to the Company appear. Executive hereby waives and
releases any claim or right Executive may otherwise have arising
out of such use, publication or distribution.
[SIGNATURE PAGE
FOLLOWS]
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IN WITNESS WHEREOF, the Parties
have executed this Agreement as of the date first above
written.
By:
______________________________________
Name:
Xxxx Xxxxx
Its:
Executive Chairman
Dated:
July 30, 2020
EXECUTIVE:
__________________________________________
Xxxx X.
Xxxxxx
Dated:
July 30, 2020
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EXHIBIT
A
RELEASE
AND WAIVER OF CLAIMS
TO
BE SIGNED ON OR FOLLOWING THE SEPARATION DATE ONLY
In
consideration of the payments and other benefits set forth in the
Employment Agreement effective as of July 30, 2020, to which this
form is attached, I, Xxxx X. Xxxxxx, hereby furnish WRAP TECHNOLOGIES, INC. (the
“Company”),
with the following release and waiver (“Release and
Waiver”). Payments to be made in consideration of this
Release and Waiver shall commence on the "Release Payment
Date" which shall mean the effective date of this release,
provided however, that if
the period below for review of this Release spans beyond December
31 of a given year, then the Release Payment Date shall be the
later of (i) the first payroll date in such subsequent calendar
year or (ii) the first payroll date that follows the Release
Payment Date.
In
exchange for the consideration provided to me by the Employment
Agreement that I am not otherwise entitled to receive, I hereby
generally and completely release the Company and its current and
former directors, officers, employees, stockholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, affiliates, and assigns (collectively, the
“Released
Parties”) from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring
prior to or on the date that I sign this Agreement (collectively,
the “Released
Claims”). Except as provided below, the Released
Claims include, but are not limited to: (a) all claims arising out
of or in any way related to my employment with the Company, or the
termination of that employment; (b) all claims related to my
compensation or benefits from the Company including salary,
bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other
ownership interests in the Company; (c) all claims for breach of
contract, wrongful termination, and breach of the implied covenant
of good faith and fair dealing; (d) all tort claims, including
claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (e) all federal, state, and local
statutory claims, including claims for discrimination, harassment,
retaliation, misclassification, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the
federal Age Discrimination in Employment Act of 1967 (as amended)
(the “ADEA”), the
fair employment practices statutes of the state or states in which
I have provided services to the Company and/or any other federal,
state or local law, regulation or other requirement.
Notwithstanding the foregoing, the following are not included in
the Released Claims (the “Excluded
Claims”):
(a) any
rights or claims under the Employment Agreement or any other
written agreement between the Company and me, including any stock
option award agreement or plan, (b) any rights or claims that may
arise as a result of events occurring after the date this Release
and Waiver is executed or which otherwise cannot lawfully be
waived, (c) any rights to representation and/or indemnification I
may have as a current or former officer , director, or employee of
the Company or its subsidiaries or affiliated companies, including
but not limited to any rights or claims for representation and/or
indemnification I may have pursuant to the Employment Agreement,
any written indemnification agreement with the Company to which I
am a party or beneficiary, the charter, bylaws, or operating
agreements of the Company, or under any applicable law or Company
policy, including but not limited to Directors and Officers
Liability Insurance policies, employment practice liability
insurance policies, other insurance policies, and/or Company
policies; (d) any claims for benefits under any directors’
and officers’ liability policy maintained by the Company or
its subsidiaries or affiliated companies in accordance with the
terms of such policy, (e) any rights or claims under any employee
benefit or compensation plan or program in which I participate or
participated (or was eligible to participate), (f) any rights or
claims to unemployment compensation, (g) reimbursement for business
expenses which are consistent with the Company’s
reimbursement policy, and (h) my rights under COBRA. I hereby
represent and warrant that, other than the Excluded Claims, I am
not aware of any claims I have or might have against any of the
Released Parties that are not included in the Released
Claims.
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Notwithstanding
any other provision of this Agreement, the release of claims
against individual employees, stockholders, agents and attorneys is
limited to claims arising out of or in any way related to my
employment with Company.
I
expressly waive and relinquish any and all rights and benefits
under any applicable law or statute providing, in substance, that a
general release does not extend to claims which a party does not
know or suspect to exist in his or his favor at the time of
executing the release, which if known by him or his would have
materially affected the terms of such release.
I
acknowledge that, among other rights, I am waiving and releasing
any rights I may have under ADEA, that this Release and Waiver is
knowing and voluntary, and that the consideration given for this
Release and Waiver is in addition to anything of value to which I
was already entitled as an executive of the Company. If I am 40
years of age or older upon execution of this Release and Waiver, I
further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the release and
waiver granted herein does not relate to claims under the ADEA
which may arise after this Release and Waiver is executed; (b) I
should consult with an attorney prior to executing this Release and
Waiver; and (c) I have twenty-one (21) days from the date of
termination of my employment with the Company in which to consider
this Release and Waiver (although I may choose voluntarily to
execute this Release and Waiver earlier); (d) I have seven (7) days
following the execution of this Release and Waiver to revoke my
consent to this Release and Waiver; and (e) this Release and Waiver
shall not be effective until the seven (7) day revocation period
has expired without my having previously revoked this Release and
Waiver.
I
acknowledge that I must not use or disclose any confidential or
proprietary information of the Company and I must immediately
return all Company property and documents (including all
embodiments of proprietary information) and all copies thereof in
my possession or control except I may retain documents relating to
my compensation and/or benefits.
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This
Release and Waiver constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with
regard to the subject matter hereof. I am not relying on any
promise or representation by the Company that is not expressly
stated herein. This Release and Waiver may only be modified by a
writing signed by both me and a duly authorized officer of the
Company.
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Date:_____________________
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By: __________________________
Xxxx X.
Xxxxxx
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By:___________________________
Name:
Xxxx Xxxxx
Its:
Executive Chairman
Dated:_____________________
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