EMPLOYEE AGREEMENT
Exhibit 10.3
This
Agreement (the “Agreement”) is made and entered into as
of December 2, 2019 by SharpSpring Technologies, Inc., a Delaware
corporation (the “Company”), including its parents,
affiliates, assignees, and successors, each of whom are expressly
authorized to enforce this Agreement, and who are referenced herein
as “the Company” and Xxxxxxx Xxxxx, referenced herein
as “you” or “your” or
“Employee”.
1.
CONSIDERATION. You
agree that this Agreement is entered into in consideration of the
mutual promises contained in this Agreement and other good and
valuable consideration, and in further consideration of your
present employment or association with the Company or your
continued employment or association with the Company. Your
employment or association with the Company is at-will and may be
terminated at any time at the election of either party. This
Agreement does not guarantee your employment by or association with
the Company for any definite period of time.
2.
REPRESENTATIONS AND
WARRANTIES. You represent and warrant to the Company that the
following statements are true and correct and shall remain true and
correct at all times during your employment or association with the
Company:
a.
All
statements and representations contained in your application for
employment or association are true and correct; and
b.
This
Agreement constitutes a legal, valid, and binding agreement and
obligation enforceable against you in accordance with its
terms.
3.
POSITION AND
DUTIES. The Company agrees to employ you to act as its Chief
Financial Officer effective as of December 2, 2019. You shall be
responsible for leading the Company’s finance and accounting
functions, including financial reporting and analysis, and other
duties as may be prescribed by the Company’s Chief Executive
Officer from time to time. You agree that you will serve the
Company faithfully and to the best of your ability during the term
of employment, under the direction of the Chief Executive Officer
of the Company.
4.
PLACE OF
EMPLOYMENT. You shall perform your duties under this Employee
Agreement at 0000 Xxxxxxxxxxx Xxxxxx Xxx, Xxxxxxxxxxx, XX, or the
Company’s then-current headquarters office.
5.
COMPENSATION OF
EMPLOYEE. For all services rendered, you shall initially receive
compensation as follows:
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Base
Salary: The Company agrees to pay you at a rate of $250,000 per
year, which may be increased from time to time by the Board’s
Compensation Committee, except pursuant to across-the-board salary
reductions affecting all other senior executives of the Employer,
may not be decreased. The Base Salary will be payable on a
semi-monthly basis, or on whatever basis SharpSpring may adopt in
the future, in accordance with the Company’s standard payroll
practices
a.
Bonus:
You will be eligible for participation in SharpSpring’s
executive bonus plan with a bonus opportunity of $70,000. The
payout related to your bonus opportunity will initially be based on
the Company achieving specified revenue and EBITDA performance
targets as set by the Board of Directors, and may be modified from
time to time by the Board of Directors in their sole discretion.
The executive bonus is currently paid quarterly, but may be paid
annually in the future at the election of the board.
b.
Reimbursement
of Moving Cost: In addition to your ongoing compensation, after
commencing your employment and relocating to the Gainesville, FL
area, SharpSpring will reimburse you for up to a cumulative total
of $50,000 of direct moving costs and up to six (6) months of
temporary housing costs, in association with your relocation to the
Gainesville, FL area. Reimbursed moving costs shall be refunded to
the Company on a pro-rata basis if you choose to leave the Company
during your first year of employment, other than if you choose to
leave for Good Reason. Such moving costs shall not include
real-estate brokerage fees. Any reimbursements shall follow our
standard expense reimbursement process, which requires valid
receipts for any expenses incurred and approval of expenses by a
supervisor. Reimbursements are subject to all tax withholdings and
deductions, as required by law. Any required withholdings and
deductions are your responsibility, and not reimbursable by the
Company. For purposes hereof, “Good Reason” shall be
defined per Section 8, b. below.
c.
Equity: Subject to approval by the Company’s
Board of Directors, you will be granted Restricted Stock Units
(“RSUs”), with the total quantity determined by the
fair value of 100,000 stock options as of your commencement date
with expected RSU count of approximately 50,000. (Fair value is
determined using the Black-Scholes model, which adheres to ASC 718.
The RSUs will be subject to the terms and conditions of
the Company’s 2019 Equity
Incentive Plan, as may be amended, and the Restricted Stock Unit
Agreement that you will sign in connection with receiving the RSUs.
The RSUs shall vest over four (4) years, with 25% of the RSUs
vesting on the one-year anniversary of the date of the grant and
the remaining 75% of the RSUs vesting on a monthly basis
thereafter. You will be considered for future stock and or option
grants to the extent that the Board of Directors considers those
for other Company executives.
d.
Withholdings:
All amounts due from the Company to the Employee hereunder shall be
paid to the Employee net of all taxes and other amounts which the
Company is required to withhold by law.
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6.
REIMBURSEMENT FOR
BUSINESS EXPENSES. Subject to the approval of the Company, the
Company shall promptly pay or reimburse You for all reasonable
business expenses incurred in performing Your duties and
obligations under this Employee Agreement, but only if You properly
account for expenses in accordance with the Company’s
policies.
7.
PAID TIME OFF AND
BENEFITS. You shall be entitled to the same benefits, paid time off
and Company holidays offered by the Company to its senior
management. Nothing
in this Employee Agreement shall prohibit the Company from
modifying or terminating any of its employee benefit plans in a
manner that does not discriminate between Employee and other
Company senior management.
8.
TERMINATION
OF EMPLOYMENT. Employee’s employment hereunder shall
automatically terminate upon (i) his death; (ii) Employee
voluntarily leaving the employ of the Company; (iii) at the
Company’s sole discretion, for any reason, with or without
cause.
a.
PAYMENT ON TERMINATION.
In the event that Employee’s
employment under this agreement is terminated for any reason,
Company shall promptly pay Employee any amounts due to Employee
under this agreement, including any salary accrued through the date
of termination, and reimbursement for business related expenses
during the period of Employee’s employment, providing that
such expenses are submitted in accordance with Company policies. In
the event that you leave the Company’s employment for Good
Reason or if the Company terminates your employment without Cause,
you shall be entitled to receive severance in an amount equal to
one day of base salary for every completed work day of employment
with the Company, up to a maximum of six (6) months of base salary
and the Company will pay for or reimburse all of your premiums
for continuing your health care coverage and the coverage of your
dependents who are covered at the time of your termination or
resignation, under the applicable provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA) for the 12 month
severance period. Such severance shall be paid semi-monthly
according to the Company’s normal payroll process, and shall
terminate immediately if you become gainfully employed during the
severance period.
b.
FOR PURPOSES HEREOF,
“GOOD REASON”.
means (i) a reduction in your Annual Base Salary of more than
five (5) percent, other than pursuant to an across-the-board
reduction in accordance with Section 5, (ii) a material
diminution in your duties or responsibilities inconsistent with
your position, (iii) a change in your principal office to a
location more than fifty (50) miles from Gainesville, Florida,
provided such location is also more than fifty (50) miles from your
principal residence as of the date of relocation, or (iv) the
failure of Employer to obtain the assumption (by operation of law,
the continuation of the corporate existence of the Company,
SharpSpring or otherwise) of this Agreement or substitution of a
substantially similar agreement by any successors in a Change of
Control, in each case without your prior written
consent; provided that
you must deliver written notice of your resignation to the Company
within 30 days of your actual knowledge of any such event, the
Company must be provided at least 30 days during which it may
remedy the condition and you must terminate your employment within
six (6) months of the initial occurrence of Good Reason in order
for such resignation to be with Good Reason for any purpose
hereunder.
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c.
FOR
PURPOSES HEREOF, “CAUSE” means
(i) the conviction or plea of guilty or no contest for or
indictment on a felony or a crime involving moral turpitude or the
commission of any other act or omission involving misappropriation,
embezzlement or fraud, which involves a material matter with
respect to the Company or any Subsidiary or any of their customers
or suppliers; (ii) substantial and repeated failure to perform
duties of the office you hold as reasonably directed by the CEO or
Board after notice from the CEO or Board and a reasonable
opportunity to respond to such notice; (iii) gross negligence
or willful misconduct with respect to the Company or any Subsidiary
that is or could reasonably be expected to be harmful to the
Company or any Subsidiary in any material respect after notice from
the CEO or Board and a reasonable opportunity to respond to such
notice.
d.
FOR THE PURPOSE HEREOF,
“CHANGE IN CONTROL”. to the extent you have not already vested in any
Long-term Incentive Awards due to the Change in Control,
(A) in the case of unvested awards subject
to time-based vesting, you will immediately vest in,
options shall become exercisable, or cash or shares will be settled
or distributed, representing 100% of any Unvested Awards
(B) in the case of Unvested Awards subject to
performance-based vesting, you will vest in, and options shall
become exercisable, or cash or shares will be settled or
distributed, as provided in the applicable Long-term Incentive
Award agreement (“Change in Control
Vesting”). With respect
to (A) and (B) above, if acquirer notifies you in writing that your
services in the same role, title, and total compensation is
required for up to six months following announced change in control
then vesting will still occur but with a lockup period no longer
than six months from date of notice by acquirer. For purposes of
this Agreement, a “Change of Control” shall mean the
occurrence of any of the following events: (i) an acquisition of
the Company by another entity by means of any transaction or series
of related transactions (including, without limitation, any
reorganization, merger or consolidation but excluding any merger
effected exclusively for the purpose of changing the domicile of
the Company), or (ii) a sale of all or substantially all of the
assets of the Company (collectively, a Merger), so long as in
either case the Company’s stockholders of record immediately
prior to such Merger will, immediately after such Merger, hold less
than fifty percent (50%) of the voting power of the surviving or
acquiring entity.
9.
BEST EFFORTS AND
OUTSIDE ACTIVITIES. You shall devote all of the necessary business
time, attention, and energies, as well as your best talents and
abilities to the business of the Company in accordance with the
Company’s instructions and directions. You may engage to a
limited extent in other business activities unrelated to the
Company so long as such activities do not create a conflict of
interest or otherwise interfere with the performance of your duties
and the terms and conditions of this Employee
Agreement.
10.
MAINTENANCE
OF LIABILITY INSURANCE. So long as You shall serve as an executive
officer of the Company pursuant to this Employee Agreement, the
Company shall obtain and maintain in full force and effect a policy
of director and officer liability insurance of at least $5,000,000
from an established and reputable insurer. In all policies of such
insurance, Employee shall be named as an insured in such manner as
to provide Employee the same rights and benefits as are accorded to
the most favorably insured of the Company’s officers or
directors.
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11.
INDEMNIFICATION. In addition to the insurance
coverage described above and the indemnification protection set
forth in Article IX of the Company’s Bylaws, the Company
shall indemnify Employee to the fullest extent permitted by
applicable law if he is made, or threatened to be made, a party to
an action or proceeding, whether civil, criminal, administrative or
investigative (each a “Proceeding”), by reason of the
fact that Employee is or was an officer, director, or employee of
the Company or any of its affiliates, against all
“Expenses” (as defined below) resulting from or related
to such Proceeding, or any appeal thereof. Any such indemnification
pursuant to this section shall continue as to Employee even if
Employee has ceased to be an executive, officer, director or
employee of the Company and/or any of its affiliates, and shall
inure to the benefit of Employee’s heirs, executors and
administrators. Expenses incurred by Employee in connection with
any indemnification-eligible Proceeding shall be paid by the
Company in advance upon request of Employee that the Company pay
such Expenses, (a) after receipt by the Company of a written
request from Employee for such advance, together with documentation
reasonably acceptable to the Board, and (b) subject to an
undertaking by Employee to pay back any advanced amounts for which
it is later determined that Employee was not entitled to
indemnification as described herein. Employee shall be entitled to
select his own counsel in connection with any
indemnification-eligible Proceeding. Notwithstanding the foregoing
provisions of this section to the contrary, the Company shall have
no obligation to indemnify Employee or advance Expenses to Employee
(i) in connection with any claim or proceeding between Employee and
the Company (unless approved by the Board), or (ii) if
Employee’s actions or omissions giving rise to his status as
a party to a Proceeding involve intentional or willful misconduct
or malfeasance on the part of Employee in connection with the
performance of his job. For purposes of this section, the term
“Expenses” means any damages, losses, judgments,
liabilities, fines, penalties, excise taxes, settlements, costs,
reasonable attorneys’ fees, accountants’ fees, expert
fees, and disbursements and costs of attorneys, experts and
accountants.
12.
RECORDS
OWNERSHIP. You acknowledge, understand, and agree that all files,
records and documents, whether in hard copy, electronic or any
other form, generated or received by the Company or its employees,
or concerning the Company or its business, belong to and constitute
the property of Company and that Company is the records owner of
all such files, records and documents. Therefore, upon your
separation from employment, all such files, records and documents
shall remain on the premises and in the possession of Company, and
you shall promptly return any and all such files, records and
documents to Company that you may then have, or at any time
thereafter you discover in your possession. You shall not retain
any copies of such files, records and documents.
13.
INTANGIBLE PROPERTY
OWNERSHIP. You hereby irrevocably assign and transfer, and agree to
assign and transfer, to the Company all of your rights, title and
interest in and to any and all inventions and works you create or
modify (including, but not limited to software or other works,
designs, or the like) for or on behalf of the Company. You hereby
acknowledge and agree that such works are within the scope of your
employment or association, and that all intellectual property
rights, including copyright, inventions, designs, and trade
secrets, whether patentable or not, are the exclusive and sole
worldwide property of the Company. Copyrighted works developed or
created by you and owned by the Company include the right to copy,
license, market, manufacture, publish, distribute, create
derivative works from the works created, xxxx as copyrighted by the
Company, and to authorize others to do some or all of the foregoing
as needed or desired by the Company to carry out its business
purpose.
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You
will not at any time during or after your employment or association
with the Company have or claim any right, title or interest in any
trade name, trademark, patent, copyright, work for hire, or other
similar rights belonging to or used by the Company. You shall not
have or claim any right, title or interest in any material or
matter of any sort prepared for or used in connection with the
business or promotion of the Company, whatever your involvement
with such matters may have been, and whether procured, produced,
prepared or published in whole or in part by you. You further
release and hereby assign all rights in any and all intellectual
property to the Company, and shall, at the request of the Company,
give evidence and testimony and execute any and all agreements or
other documents as needed to effect or memorialize any such
transfer of rights without encumbrance, and for the Company to
carry out its business purpose. You hereby irrevocably appoint the
Company as your attorney-in-fact (with a power couple with an
interest) to execute any and all documents which may be necessary
or appropriate in the security of such rights, including but not
limited to, any copyright in your work.
You
certify that all works pursuant to this Agreement are original
works and are not the property of others, and that any liability
from or caused by you in this regard is your sole responsibility.
You shall hold harmless and indemnify the Company from and against
any and all claims, actions, losses, costs, or other liabilities
based on or arising out of claimed infringement by the works of any
copyright or other intellectual property rights of any third party,
and you agree to cooperate in the defense of the Company against
any and all claims, actions, losses, costs, or other liabilities
based on or arising out of claimed infringement or any other action
by the works of any copyright or other intellectual property rights
of any third party at your expense.
You
have attached hereto, as Exhibit A, a list detailing all
inventions, original works of authorship, developments,
improvements, and trade secrets which you made prior to the
commencement of this Agreement (collectively referred to as
“Prior Inventions”), which belong solely to you or
belong to you jointly with another, and which are not assigned to
the Company hereunder or, if no such list is attach, you represent
that there no such Prior Inventions.
14.
TRADE SECRETS AND
CONFIDENTIAL INFORMATION. You agree to keep confidential and not
disclose to others any Trade Secrets or Confidential and
Proprietary Information, during the term of this Agreement and all
times thereafter, except as required by law or as consented in
writing by the Company’s President.
You
agree that the Trade Secrets and Confidential and Proprietary
Information described herein are valuable information.
6
Trade
Secrets and Confidential and Proprietary Information includes all
forms of information whether in oral, written, graphic, magnetic or
electronic form without limitation. Trade Secrets and Confidential
and Proprietary Information means, without limitation, the
Company’s client and prospective client names, addresses,
relationships, terms and information; suppliers’ names,
addresses, terms and information; financial information; business
and/or marketing plans; methods of operation; internal structure;
financial information and practices; products and services;
inventions; systems; devices; methods; ideas, procedures; client
lists and files; fee schedules; test data; descriptions; drawings;
techniques; algorithms; programs; designs; formula; software;
business management and methods; planning methods; sales and
marketing methods; valuable confidential business and professional
information; proprietary computer software; management information;
and all know-how, trade secrets, confidential information and any
other information developed by and belonging to the Company which
gives the Company a competitive advantage over others.
If you
shall leave, separate or terminate from the Company, you will
neither take nor retain any file, record, document, Trade Secrets
or Confidential and Proprietary Information, whether a
reproduction, duplication, copy or original, of any kind or nature
developed by, compiled by or belonging to the Company.
15.
NO PRIOR COVENANT
NOT TO COMPETE. You warrant and represent that except for this
Agreement and except as otherwise disclosed in writing to the
Company, (a) you are not presently subject to any contract or
understanding that restricts in any manner your ability to provide
services to the Company; (b) you have performed all duties and
obligations that you may have under any contract or agreement with
a former employer (or other party) including but not limited to the
return of all confidential information; and (c) you are currently
not in possession of any confidential materials or property
belonging to any former employer (or other party). Further, you
agree to defend, indemnify, and hold the Company harmless from and
against any demands, claims, obligations, causes of action,
diminution in the value of the Company, damages, liabilities,
costs, expenses, interest, and fees, which the Company may incur
due to (a) any conflict between your employment with Company and
any prior employment or association, duty contract, agreement,
order or restrictive covenant, or (b) any misrepresentation by you
as to any facts which are the subject matter of any conflict or
violation of any prior contract, agreement, order or restrictive
covenant on your part.
16.
COVENANT NOT TO
COMPETE. You acknowledge that you are familiar with restrictive
covenants of this nature, the covenant is a material inducement to
this Agreement and your employment, the Company will suffer
irreparable injury if you violate this restrictive covenant, and
the covenant is fair and reasonable to protect the Company’s
trade secrets, confidential and proprietary information,
relationships with prospective and existing clients, goodwill,
and/or other legitimate business interests. You further agree that
your work with the Company has provided and will provide you
extraordinary and specialized training, knowledge and information
over the Company’s techniques, methods, products and systems;
the Company’s valuable confidential proprietary and business
information which you would not otherwise acquire; and access to
its substantial relationships with present and prospective clients
and substantial goodwill associated with its name.
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The
covenant is intended to protect the Company’s legitimate
business interests which include but are not limited to the
extraordinary and specialized training of its employees; valuable
confidential and proprietary business and professional information;
substantial relationships with prospective and existing clients;
client good will associated with the Company’s ongoing
professional and business practice and trade name in the fields of
business and financial software and related professional activities
throughout North America and globally.
Accordingly, you
agree that prior to your separation or termination from the Company
and for the later of one (1) year after your separation or
termination (with or without cause) or from the date of entry by a
court of competent jurisdiction enforcing these covenants,
whichever is later (referenced herein as “the restricted
period): You shall not engage, directly or indirectly, as
principal, agent, advisor, stockholder, consultant, partner,
independent contractor, or employee or in any other manner in any
business or activity which is in competition with the Company or
which may propose to go into competition with the Company. And,
during the restricted period, you shall not directly or indirectly
induce or attempt to induce (a) clients of the Company to do
business with any competitor of the Company, and/or (b) any of the
officers, agents, employees, or associates of the Company to leave
the employment or association of the Company.
Some of
the businesses which are in competition with the Company or which
may propose to go into competition with the Company, and which are
specifically prohibited include but are not limited to:
HubSpot, Marketo, Xxxxxxxxxx.xxx, Act-On, Eloqua and Responsys
(both part of Oracle), Constant Contact, iContact, MailChimp,
Infusionsoft, J2 Global (Campaigner), and Feathr. This list of
businesses is not intended to be an exclusive list.
Nothing
herein shall prohibit you from purchasing or owning less than five
percent (5%) of the publicly traded securities of any corporation,
provided that such ownership represents a passive investment and
that you are not a controlling person of, or a member of a group
that controls, such corporation.
17.
REMEDIES FOR BREACH
OF RESTRICTIVE COVENANTS. The Company is entitled to obtain
equitable relief, including specific performance by means of
injunctions, as well as monetary damages and any other available
remedies. In the event a court of competent jurisdiction determines
these restrictive covenants are not enforceable as written herein,
the court will reform or modify the restrictive covenants(s) to
make it (them) reasonable and enforceable, and the court will
enforce the restrictive covenants(s) as so reformed or modified.
Assignees and successors of the Company are expressly authorized to
enforce these restrictive covenants. The restrictive covenants of
this Agreement shall not be interpreted to employ any rule of
contract construction that requires construing a restrictive
covenant narrowly, against the restraint, or against the drafter of
this Agreement.
Further, you
understand that any and all obligations of the Company to pay any
compensation to you for any reason shall cease and terminate upon
your breach of any of the obligations in this Employee
Agreement.
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18.
NOTIFICATION OF
INTERESTED PARTIES. You agree that the Company may notify anyone
employing or engaging you to perform services or evidencing an
intention to employ you now or in the future as to the existence
and provisions of this Agreement. You shall, during the restricted
period, (1) inform anyone employing or engaging you or evidencing
an intent to employ or engage you, of the existence of the
restrictive covenants in this Agreement and (2) notify the Company
of the name, address, and telephone number of anyone who employs or
engages you to perform services.
19.
MEDIATION. If a
dispute arises out of or related to the interpretation or
enforcement of this Agreement, you agree to try to settle the
dispute in good faith through mediation upon the Company’s
request, before litigation or at any time during
litigation.
20.
WAIVERS. The
Company’s waiver of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach.
22.
INDEPENDENT
RESTRICTIVE COVENANTS AND SEVERABILITY. The provisions of this
Agreement are independent of and separate from each other and from
any other agreements. The breach, invalidity or unenforceability of
any provision or part of any provision in this Agreement or any
other agreements shall not in any way effect the validity or
enforceability of any other provision or part of provision of this
Agreement. The existence of any claim or cause of action by you
against the Company shall not constitute a defense to the
enforcement of these provisions.
23.
ENTIRE AGREEMENT.
This Agreement comprises the entire agreement and understanding by
the parties regarding the topics contained herein; no
representations, promises, agreements, or understandings, written
or oral, relating hereto but not contained herein, shall be of any
force or effect. This Agreement may be amended only in writing and
by mutual agreement of the parties.
24.
ATTORNEYS’
FEES AND COSTS. If any litigation proceedings are bought arising
out of or related to the terms of this Agreement, the successful
prevailing party will be entitled to reimbursement for all
reasonable costs, including reasonable attorneys’
fees.
25.
ACKNOWLEDGEMENT.
Employee acknowledges that he has had the benefit of independent
professional counsel with respect to this Agreement and that the
Employee is not relying upon the Company, the Company’s
attorneys or any person on behalf of or retained by the Company for
any advice or counsel with respect to this Agreement.
26.
NUMBER OF PAGES.
This Agreement, including the signatures and excluding Exhibits, is
comprised of ten (10) pages.
|
/s/ Xxxxxxx
Xxxxx
|
11/20/2019
|
|
|
Employee: Xxxxxxx
Xxxxx
|
Date
|
|
|
|
|
|
|
/s/ Xxxx
Xxxxxxx
|
11/21/2019
|
|
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Xxxx Xxxxxxx, CEO and
President
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Date
|
|
for
SharpSpring Technologies, Inc.
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Exhibit A
NONE
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