EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into this 22nd day
of August, 2008, by and between Cornerworld Corporation (“Cornerworld or
Corporation”) and its subsidiaries and affiliates; (collectively be referred to
where appropriate as the “Company”) and Xxxxx Xxxx (“Employee”).
RECITALS
WHEREAS,
the Company wishes to employ Employee in
the position of CEO of Cornerworld Corporation and its subsidiaries and
affiliates and Employee wishes to be so employed;
WHEREAS,
this Agreement is being delivered pursuant to the board resolution on August 22,
2008 with unanimous consent of the board;
For good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties covenant and agree as follows:
AGREEMENT
1. Employment. Cornerworld
hereby agrees to employ Employee, and Employee hereby agrees to accept such
employment and agrees to perform the services specified herein upon the terms
and conditions set forth in this Agreement. The initial term of this
Agreement shall commence on September 1, 2008 through August 31, 2011 (the
“Initial Term”). Following the Initial Term, the Employee and the
Company may elect to continue this Agreement on such terms as the parties may
agree to.
a. Duties. Employee
shall be employed in the position of CEO of Cornerworld effective as of the date
of execution of this Agreement. Employee shall perform his
obligations hereunder diligently, faithfully and to the best of Employee’s
abilities. Employee shall comply in all material respects with all
policies and procedures applicable to employees of Cornerworld generally and to
Employee specifically.
b. Salary. Upon
commencement of employment, Employee’s annual base salary (“Base Salary”) shall
be $250,000. Employee shall be paid on a bi-monthly basis in
accordance with the Company’s normal payroll practices. The Base
Salary shall not decrease at any time during the Initial Term of this
Agreement. Thereafter, any adjustments to Employee’s annual Base
Salary shall be within the sole discretion of the Board of Directors of the
Corporation.
c. Bonus. In addition to
the payment of the Base Salary amounts referred to above, Employee will receive
additional bonus compensation in an amount as set forth below:
(i) Employee
shall be entitle to a bonus fee of .75% of all equity and debt capital raises
for the Corporation or any of its subsidiaries and a 1.25% fee on the total
transaction value on all Mergers and Acquisitions that the Corporation or any of
its subsidiaries completes. In the event that the seller is paid a
combination of cash and stock, employee will receive its payment in both cash
and stock reflecting the split on a pro-rata basis equal to the structure of the
target companies, whether effected in a single transaction or a series of
related transactions in which the voting power of a counterparty is combined
with or transferred to the Corporation. All such fees due to employee will be
payable out of proceeds at closing.
(ii) Employee
shall be entitled to a Warrant Upon the closing of an Equity or Debt Financing.
The Corporation will issue employee a warrant to purchase such number of shares
of common stock equal to 2% of
the
aggregate number of shares of common stock purchased in and/or issuable upon
conversion of convertible securities issued in an Equity Financing or
Convertible Debt. The warrant will be valid for Nine years post
closing and shall contain standard anti-dilution protection for structural
events such as stock splits or combinations and shall have a strike price equal
to (i) in the case of an Equity Financing, the same price per share paid by the
investors in the Equity Financing; or (2) in the case of a debt financing, the
average closing price for the Corporation’s common stock during the five
preceding trading days. The warrants may be exchanged without the payment of any
additional consideration for the Corporation’s stock based upon the values of
the warrant and the stock at the time of the exchange (i.e., net
issuance). The shares underlying the warrant shall entitle
their holder to one-time “piggyback” registration rights on any Cornerworld
Corporation registration.
(iii) Employee
shall be entitled to a Warrant Upon the closing of a Mergers and or Acquisition
Transaction by the Corporation. Upon the closing of a Transaction the
Corporation will issue to employee a warrant to purchase such number of shares
of common stock equal to 2% of the Transaction Value. The warrant
will be valid for nine years post closing and shall contain standard
anti-dilution protection for structural events such as stock splits or
combinations and shall have a strike price equal to the average closing price
for the Corporation’s common stock during the five days preceding the closing of
the Transaction. The warrants may be exchanged without the payment of any
additional consideration for the Corporation’s stock based upon the values of
the warrant and the stock at the time of the exchange (i.e., net
issuance). The shares underlying the warrant shall entitle
their holder to one-time “piggyback” registration rights on any Cornerworld
Corporation registration.
(iv) "Transaction
Value" means the total value of all consideration (including cash, securities or
other property) paid or received, directly or indirectly, in a Transaction plus
the amount of any debt (including capitalized leases) and any other liabilities
assumed in a Transaction, and amounts payable in connection with a Transaction
in respect of employment or consulting agreements with the principals of the
target company, to the extent not related to the provision of ongoing employment
or consulting services. If the Transaction takes the form of a
recapitalization, "Transaction Value" will also include the value of all shares
of the acquired company retained by the Corporation. If any portion
of Transaction Value is payable in the form of securities, the value of such
securities, for purposes of calculating our transaction fee, will be determined
based on the terms of the Transaction agreement and may at Corporation’s
election be paid in the form of such securities received by
Corporation. Fees on amounts paid into escrow will be payable upon
the release of such funds from escrow. Fees relating to contingent
payments other than escrowed amounts will be paid to Xxxx contemporaneously with
Company’s actual receipt of such funds.
(v) In
addition to the payment of the Base Salary amounts referred to above, Employee
will receive additional bonus compensation in an amount equal to 5% of
Cornerworld’s EBITDA per year unless a greater annual amount is approved by the
Board of Directors. Such bonus amounts shall be calculated as of
April 30 of each year, commencing with April 30, 2009 (each a “Calculation
Date”), and paid to Employee as follows: 50% of the bonus amount
shall be paid promptly following the Calculation Date, 25% of the bonus amount
shall be paid 6 months following the Calculation Date, and 25% of the bonus
amount shall be paid 12 months following the Calculation Date, in each case with
all applicable deductions made. The payment of each earned bonus amount shall be
made at the time of and in connection with the first payroll payment made by the
Company following each respective April 30 due date. Employee does
not have to be employed by Cornerworld on the payment date to be entitled to
receive the bonus amount set forth above; once a payment is earned it must be
paid in accordance with the payment terms. Provided however if
employee’s employment is terminated by the Company prior to such date for any
reason or the Company removes Employee from the position of CEO, Employee shall
be entitled to receive the bonus amount payable at such time as if he were
employed by Cornerworld in the position of CEO at the time of
payment.
(vi) In
addition to any other fees due pursuant to this agreement; in the Event of a
change of control or the sale of over 51% of the company’s stock (calculated by
the greater of non-diluted or fully-diluted ownership), Employee shall be paid a
one time bonus fee of the greater of five percent (5%) of the post money
valuation of the company or Two Million Dollars ($2,000,000). The fee
shall be due and payable at the time of the sale. The company may not
terminate the employee or effectuate a sale, transfer, hypothecate, spin off or
other method available in order to avoid paying this bonus fee.
(vii) For
purposes of this Agreement, EBITDA shall mean earnings before interest, taxes,
depreciation and amortization and excluding any extraordinary expenses not
incurred in the ordinary course of Cornerworld’s business and which are not part
of Cornerworld’s historical operations (e.g., excluding all transaction fees and
similar fees and expenses or extraordinary fees not in the course of normal
operations.).
(viii) The terms
of Employee’s bonus eligibility and measurement for the bonus set forth above
shall not change during the Initial Term without express agreement of both
parties stated in writing. Thereafter, any adjustments to Employee’s
bonus entitlement, including Employee’s eligibility for any bonus payments
and/or programs and/or the measurement criteria for any bonus is within the sole
discretion of the Corporation.
d. Benefits. Employee
shall be entitled to employee benefits and other perquisites consistent with the
Company’s policies in place from time to time that are generally available to
the employees of the Company.
e. Reimbursement of
Expenses. The Company shall pay or reimburse Employee for all
reasonable travel, entertainment and other business expenses actually incurred
or paid by Employee in the performance of his duties hereunder upon presentation
of expense statements and/or such other supporting information as the Company
may reasonably require of Employee and in accordance with and subject to the
Company’s general procedures and policies.
f. At-Will. Employee’s
employment with Cornerworld exists only at the will of both the Company and
Employee. Either the Company or Employee may terminate the employment
relationship at any time for any reason, with or without cause, by the giving of
verbal or written notice of termination. Nothing in this
agreement shall be construed to alter Employee’s at-will status in any way, to
specify any term of employment or to otherwise interfere with the at-will nature
of Employee’s employment with the Company.
2. Termination.
a. For
purposes of this Agreement, "Cause" means (i) commission by Employee of any act
or omission that would constitute a felony that involves Company property, or
any crime of moral turpitude under Federal law or the law of the state or
foreign law in which such action occurred; (ii) fraud, embezzlement, theft,
disclosure of trade secrets or Confidential Information; (iii) reporting to work
or working under the influence of alcohol, an illegal drug, an intoxicant or a
controlled substance which renders Employee incapable of performing his material
duties to the satisfaction of the Company, or (iv) violation by Employee of the
confidentiality provisions of the Agreement.
b. For
purposes of this Agreement, “Termination Date” is the date as of which the
Employee incurs a termination of employment with the Company. Any
notice of termination of the Employee’s employment given by the Employee or the
Company pursuant to the provisions of this Agreement shall specify the
Termination Date.
3. Obligations of Company on
Termination. Notwithstanding anything in this Agreement to the
contrary, the Company's obligations on termination of Employee's employment
shall be as described in this Section 3.
a. Obligations of the Company in the
Case of Termination by the Company Without Cause, Death or
Disability. In the event that the Company terminates
Employee's employment other than for Cause, the Company shall provide Employee
with the following:
(i) Amount
of Severance Payment. Subject to the provisions of this Section 3, in
addition to any Base Salary and unreimbursed expenses accrued but unpaid as of
the Termination Date (which shall be paid in accordance with the customary
payroll practices of the Company), the Company shall pay Employee (the
"Severance Payment") the following:
(A) payment
of the full amount of base salary for the days remaining of the contract for the
full three (3) year period of the contract; paid in full within ten (10) days of
the date of termination;
(B) any
bonus amount that would otherwise have been payable to Employee, payable on the
next date on which a bonus amount would have otherwise been payable to Employee
following the Termination Date, prorated through the Termination
Date;
(C) any
vacation pay accrued but unpaid as of the Termination Date, payable in a single
lump sum payment on the Termination Date; and
(D) the lump
sum payment of One Million Dollars ($1,000,000) paid in full within ten (10)
days of the date of termination;
b. Obligations of the Company in case of
Termination for Cause or Voluntary Resignation by
Employee. Upon termination of Employee's employment for Cause
or Employee’s voluntary resignation, the Company shall have no payment or other
obligations hereunder to Employee, except for the payment of any Base Salary,
accrued but unpaid bonus amounts, benefits or unreimbursed expenses accrued but
unpaid as of the date of such termination.
4. Protection
of Trade Secrets and Confidential Information.
a. Confidential
Information. Employee understands and acknowledges that, by
virtue of Employee’s position, Employee will acquire and/or will have access to
knowledge of various confidential, trade secret and/or proprietary information
of the Company and/or its clients (all of which is hereinafter referred to as
“Confidential Information”). By way of illustration only, and not
limitation, Confidential Information includes information regarding: (1)
marketing, advertising, public relations and/or promotional strategies,
programs, plans and methods; (2) pricing policies, methods and concepts, product
and services strategies, training programs, and methods of operation and other
business methods; (3) mailing lists and lists of and information relating to
current, former and prospective clients and accounts of the Company; (4) terms
of service contracts between the Company and its clients, accounts, vendors
and/or suppliers; (5) business plans, expansion plans, management policies and
other business policies and strategies; (6) business and sales forecasts, market
analyses, costs, sales and revenue reports, budgets, other financial data which
relates to the management and operation of the Company and its products and
services, and other analyses not publicly disclosed; (7) competitors; (8)
internally developed computer programs and software and specialized computer
programs and source code; (9) internal procedures, programs, reports and forms
of the Company; and (10) other confidential, trade secret and/or proprietary
information that allows the Company to compete successfully.
b. Employee’s Use and Disclosure of
Confidential Information. Except in connection with and in
furtherance of Employee’s work on the Company’s behalf, Employee shall not,
without the Company’s prior written consent, at any time, directly or
indirectly, use, disclose or otherwise communicate any Confidential Information
to any person or entity.
c. Records Containing Confidential
Information. All documents or other records (in whatever
medium recorded) containing Confidential Information (“Confidential Documents”)
prepared by or provided to Employee are and shall remain the sole property of
Cornerworld and/or the Company. Except with the Company’s prior
written consent, Employee shall not copy or use any Confidential Document for
any purpose not directly relating to Employee’s work on the Company’s behalf, or
use, disclose or sell any Confidential Document to any person or entity other
than the Company. Upon the termination of Employee’s employment
relationship or association with the Company or upon the Company’s request,
Employee shall immediately deliver to the Company or its designee (and shall not
keep in Employee’s possession or deliver to anyone else) all Confidential
Documents and all other property belonging to the Company. This
paragraph shall not bar Employee from complying with any subpoena or court
order, provided that Employee shall at the earliest practicable date provide a
copy of the subpoena or court order to the Company’s General
Counsel.
d. Ownership of Proprietary
Property. To the greatest extent possible, any Work Product
shall be deemed to be “work made for hire” (as defined in the Copyright Act, 17
U.S.C.A. § 101 et seq., as amended) and owned exclusively by the
Company. Employee hereby unconditionally and irrevocably transfers
and assigns to the Company all rights, title and interest Employee currently has
or in the future may have, by operation of law or
otherwise,
in or to any Work Product, including, without limitation, all patents,
copyrights, trademarks, service marks and other intellectual property
rights. Employee agrees to execute and deliver to the Company any
transfers, assignments, documents or other instruments which the Company may
deem necessary or appropriate to vest complete title and ownership of any Work
Product, and all rights therein, exclusively in the Company.
e. Additional Acknowledgments of
Employee. Employee acknowledges that a breach of any of the
covenants contained in this Section 5 will cause irreparable damage to the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such breach will be inadequate. Accordingly,
Employee agrees that if Employee breaches or threatens to breach any covenant
contained in this Section 4, in addition to any other remedy that
may be available at law or in equity, the Company shall be entitled to specific
performance and injunctive relief.
5. Survival. Employee’s
obligations under this Agreement shall survive the termination of Employee’s
employment relationship or association with the Company and shall thereafter be
enforceable whether or not such termination is later claimed or found to be
wrongful or to constitute or result in a breach of any contract or any other
duty owed or claimed to be owed by the Company to Employee.
6. Notices. Employee
also agrees and acknowledges that the Company has the right to independently
contact any potential or actual future employer of Employee to notify such
employer of Employee’s obligations under Section 4 of this Agreement and notify
such actual or potential employer of the Company’s understanding of the
requirements of this Agreement and what steps, if any, the Company intends to
take to insure compliance with or enforcement of this Agreement.
7. Prior
Disclosure. Employee represents and warrants that he has not
used or disclosed any confidential information, trade secret, copyright or any
other intellectual property he may have obtained from Company prior to signing
this Agreement, in any way inconsistent with the provisions of this
Agreement.
8. Confidential Information of Prior
Employers. Employee will not disclose or use during the period
of his employment with the Company, any proprietary or confidential information,
trade secret, copyright or any other intellectual property belonging to a
previous employer or other third party which Employee may have acquired because
of employment with an employer other than the Company or acquired from any other
third party, whether such information is in Employee’s memory or embodied in a
writing or other physical form.
9. Severability. Whenever
possible, each provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
10. Complete Agreement. This
Agreement constitutes the entire agreement among the parties and supersedes all
other prior agreements and understandings, both written and oral, with respect
to the subject matter hereof.
11. Counterparts. This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement and each of which shall be deemed an
original.
12. Successors and Assigns; Assignment.
Employee
expressly consents that Cornerworld may assign the rights and benefits given to
it in this Agreement and this Agreement shall survive any sale of assets,
merger, consolidation, or other change in corporate structure.
13. Choice of Law; Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
without giving effect to any choice of law or conflict of law provision or rule
that would cause the application of the laws of any jurisdiction other than the
State of Texas. The parties agree that all actions and
proceedings relating to this Agreement shall be litigated in Dallas County,
Texas.
14. Amendment and Waiver. This
Agreement may not be changed or amended except in writing signed by the
parties. The waiver by any party of any breach of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach of
such provision or the breach of any other provision contained in this
Agreement.
15. Headings. The headings
contained in this Agreement are inserted for convenience only. They
do not constitute a part of this Agreement and in no way define, limit or
describe the intent of this Agreement or any provisions hereof.
16. Construction. This Agreement
shall not be construed against any party by reason of the fact that the party
may be responsible for the drafting of this Agreement or any provision
hereof.
17. Knowledge of Rights and
Duties. Employee has carefully reviewed and completely read
all of the provisions of this Agreement and understands and has been advised
that he/she may consult with counsel of his choice for any explanation of his
rights, duties, obligations and responsibilities under this Agreement, should
Employee so desire. Employee acknowledges that he/she enters into
this Agreement of his own free will.
IN
WITNESS WHEREOF, Employee and Cornerworld have executed this Agreement as of the
day and year first above written.
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/s/
Xxxxx X. Xxxx
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Xxxxx
Xxxx – Chairman
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August
22, 2008
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Date
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EMPLOYEE:
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/s/
Xxxxx X. Xxxx
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Xxxxx
Xxxx – Chairman
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August
22, 2008
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Date
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