THIS EXECUTIVE EMPLOYMENT AGREEMENT (this Agreement) is made as of February 10, 2014 by and between Patent Properties, Inc., a Delaware corporation (the Company) and Jonathan A. Siegel, an individual residing at [Address on file] (Executive).
W I T N E S S E T H:
WHEREAS, the Company desires to enter into this Agreement with Executive to serve as the Chief Administrative Officer and General Counsel effective on February 14, 2014 or such earlier date as Company and Executive shall agree upon in writing (such date shall be the Effective Date); and
WHEREAS, the Executive understands and accepts the conditions of employment as set forth herein and desires to be employed by the Company in such capacity.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto, it is hereby agreed by the Company and the Executive as follows:
|1.||Employment, Duties and Acceptance.|
(a) Employment. In accordance with the terms of this Agreement, the Executive shall commence providing services to the Company as of Effective Date, the Company hereby agrees to employ the Executive for the Term (as defined below), and Executive agrees to be employed by the Company and to render services to the Company during the Term as the Chief Administrative Officer and General Counsel of the Company and to perform such duties commensurate with such office as he shall reasonably be directed by the Chief Executive Officer and the Board of Directors of the Company (the Board or Board of Directors) to perform. Executive shall be subject to the supervision of and report directly to the Chief Executive Officer.
(b) Performance of Duties. Executive agrees to devote his reasonable efforts and substantially his entire working business time, attention and energies to the performance of the business of the Company, and Executive shall not, directly or indirectly, alone or as a member of any partnership or other organization, or as an officer, consultant, director or employee of any other corporation, partnership or other organization, be actively engaged in or concerned with any other duties or pursuits which are contrary to the best interests of the Company. Executive is permitted to perform duties or pursuits that are focused on other business, charitable, educational, scientific, literary, community or family related matters including but not limited to those identified on Exhibit A attached hereto; provided, however, that such duties or pursuits may not conflict or substantially interfere with Executives duties and loyalties to the Company. Executive understands and agrees that he will be required to travel (at Companys expense) from time to time from the Companys current principal office in Stamford, Connecticut to other locations for business reasons.
(c) Representations and Warranties by Executive. As of the Effective Date, Executive represents and warrants to the Company that employment with the Company and performance of Executives duties and obligations under this Agreement will not violate any agreement to which Executive is or may be bound.
(d) Acceptance. Executive hereby accepts such employment and agrees to render the services described above and abide by the terms of this Agreement.
|2.||Term of Employment.|
Subject to the terms and conditions of this Agreement, Executives employment under this Agreement will be deemed to have commenced upon the Effective Date and shall continue until the earlier of the date on which his employment is terminated as set forth in Section 6 of this Agreement or the third anniversary of the Effective Date. The period of employment shall be referred to as the Term. Upon expiration of the Term, this Agreement shall automatically renew for additional one (1) year terms (each such renewal shall be a Term), unless either party provides ninety (90) days prior to expiration of the current Term written notice of termination.
|3.||Compensation and Benefits.|
(a) Base Salary. As compensation for services to be rendered under this Agreement, the Company agrees to pay Executive effective upon the Effective Date a base salary at an annual rate of no less than Three Hundred Fifty Thousand Dollars (USD $350,000) (Base Salary), to be paid in accordance with the Companys normal payroll practice. From time to time, the Companys Compensation Committee shall recommend, in its sole and absolute discretion, any appropriate increases to Executives Base Salary to the Board of Directors. Any such recommendation shall be subject to approval by the Board of Directors.
(b) Bonus. In addition to the Base Salary, beginning January 1, 2015, Executive will be eligible to earn annual performance bonus compensation with a target equal to 50% of Executives Base Salary, in accordance with the plan adopted by the Board of Directors. Each annual performance bonus will be paid no later than April 30 following the calendar year with respect to which the bonus is earned.
(c) Reimbursement of Expenses. The Company shall pay or reimburse Executive for all reasonable travel, entertainment and other business expenses, including Executives continuing legal education and bar association expenses, actually incurred or paid by him in the performance of services for the Company under this Agreement, upon presentation of expense statements or vouchers and such other supporting information as the Company may reasonably require of Executive in accordance with the travel and expense reimbursement policy of the Company. The Company shall reimburse the Executive within 30 days following the submission of an expense report and in no event shall such reimbursement be made later than March 15th following the year in which the expense was incurred.
(d) Employee Benefit Plans. The Executive shall be eligible to participate in the Companys medical, dental, and vision insurance plans, short-term disability, long-term disability, and group life/accidental death and disability insurance coverage, 401(k) plan or other employee retirement or other benefit plans, and any other welfare benefit or employee benefit plans in accordance with the respective plans terms as currently offered by the Company to its executives and employees (collectively, the Employee Benefit Plans). The Company reserves the right to revise the coverage and benefits at any time and/or require employee contributions relating to such coverage or plans, provided such change applies to all Company employees or similarly situated executives.
(e) Vacation. The Executive shall be entitled to four (4) weeks paid vacation per year to be accrued in accordance with the Companys policies and procedures.
|4.||Equity Incentives; Taxes.|
(a) Equity Incentives. Pursuant to the 2006 Long-Term Incentive Plan, as amended (the Incentive Plan), on the Effective Date, Company shall Award (as defined in the Incentive Plan), and hereby does Award, to the Executive 425,000 stock options. No later than the one-year anniversary of the Effective Date, the Company shall further award to the Executive no less than 75,000 additional stock options. From time to time, the Companys Compensation Committee shall recommend, in its sole and absolute discretion, any additional future Awards to the Board of Directors. Any such future recommendation shall be subject to approval by the Board of Directors.
(b) Taxes. Notwithstanding any other provision of this Agreement to the contrary, if payments made pursuant to Section 4(a) are considered parachute payments under Section 280G of the Code, then such parachute payments plus any other payments made by the Company to Executive which are considered parachute payments (the Parachute Payments) shall be limited to the greatest amount which may be paid to the Executive under Section 280G of the Code without causing any loss of deduction of the Company under such section, but only if, by reason of such reduction, the net after tax benefit to Executive shall exceed the net after tax benefit if such reduction were not made. Net after tax benefit for purposes of this Agreement shall mean the sum of (i) the total amounts payable to Executive under Section 4(a), plus (ii) all other payments and benefits which Executive receives or then is entitled to receive from the Company that would constitute a parachute payment within the meaning of Section 280G of the Code, less (iii) the amount of federal and state income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to Executive (based upon the rate in effect for such year as set forth in the Code at the time of termination of Executives employment), less (iv) the amount of excise taxes imposed with respect to the payments and benefits described in (i) and (ii) above by Section 4999 of the Code.
In the event of any controversy with the Internal Revenue Service (or other taxing authority) with regard to the Parachute Payments and taxes thereon, Executive shall permit the Company to control issues related to the Parachute Payments (at Companys expense), provided that such issues do not potentially materially adversely affect Executive, but Executive shall
control any other issues. In the event the issues are interrelated, Executive and the Company shall in good faith cooperate so as not to jeopardize resolution of either issue, but if the parties cannot agree, Executive shall make the final determination with regard to the issues. In the event of any conference with any taxing authority as to the Parachute Payment or associated income taxes, Executive shall permit the representative of the Company to accompany Executive, and Executive and Executives representative shall reasonably cooperate with the Company and its representative. The Company shall be responsible for all accounting, consulting and legal fees. The Company and Executive shall promptly deliver to each other copies of any written communications, and summaries of any verbal communications, with any taxing authority regarding the Parachute Payments.
|5.||Confidentiality; Intellectual Property.|
Executive acknowledges that the Company is engaged in a continuous program of research, development and production in connection with its business, present and future, and hereby agrees to be subject to the terms and conditions of the Companys form of non-competition and confidentiality agreement, a copy of which is attached hereto as Exhibit B.
|6.||Termination of Employment.|
(a) Termination by the Company for Cause.
The Company may terminate this Agreement for Cause upon written notice to Executive if Executive acts, or fails to act, in a manner that provides Cause for termination.
(1) For purposes of this Agreement, the term Cause means: a termination of Executive by the Company on account of Executives (i) gross negligence or willful misconduct in the performance of his duties; (ii) act of dishonesty or embezzlement; (iii) evidenced, unauthorized use or disclosure of confidential information or trade secrets that results in a demonstrable damage to the Company; (iv) common law fraud or other fraud; (v) conviction or indictment of a felony or misdemeanor involving moral turpitude; (vi) material violation of the Companys written policies and procedures; (vii) material breach of the terms of employment (e.g., this Agreement) or any other agreement between the Company and the Executive that results in a demonstrable damage to the Company; or (viii) willful and continued failure to perform his duties as reasonably determined by the Companys Chief Executive Officer and/or the Board of Directors.
Provided, however, that Cause shall not exist with respect to clauses (vi), (vii) or (viii) unless the Company has given written notice to Executive within thirty (30) days of the initial existence of the Cause event or condition(s) giving specific details regarding the event or condition; and unless the Executive has had at least thirty (30) days to cure such Cause event or condition after the delivery of such written notice and has failed to cure such event or condition within such thirty (30) day cure period.
(2) All determinations of Cause under this Section 6(a) shall be reasonably made by the Board of Directors.
(b) Termination by the Company Without Cause. The Company may terminate this Agreement without Cause upon no less than fourteen (14) days written notice to the Executive.
(c) Termination by Executive for Good Reason. Executive may terminate this Agreement upon written notice to the Company for any or no reason or for Good Reason. For purposes of this Agreement Good Reason shall mean there is (i) a material and permanent diminution in Executives duties, or responsibilities, (ii) a material reduction in Executives Base Salary then in effect, (iii) a relocation of Executives office for the Company more than fifty (50) miles from the current location of the Executives office for the Company (unless Executive agrees to such relocation), or (vi) any breach by the Company of any material provision of this Agreement, subject to the Executive providing notice to the Company within ninety (90) days after the initial occurrence of the condition or event described above and the Company fails to cure or remedy any such condition or event within the thirty (30) day period following its receipt of the notice, and Executive thereafter elects to terminate his employment voluntarily within thirty (30) days after the expiration of the period for correcting such condition or event.
(d) Termination Due to Death or Disability. This Agreement shall immediately terminate upon the occurrence of any of the following:
(1) Executives death; or
(2) Executives Disability (as such term is defined in the Companys Long-Term Disability Plan) provided, however, that notwithstanding Executives Disability, the Company shall continue to pay Executive his Base Salary through the date on which Disability is finally determined.
(e) Effective Date of Termination. If this Agreement is terminated by Executive, then the termination will be effective fourteen (14) days after the date of delivery of written notice of termination. If this Agreement is terminated by the Company with or without Cause, then termination will be effective as of the later of (i) date of notice of termination, (ii) expiration of any notice and cure period or (iii) as otherwise may be specified by the Company provided that such date shall not be less than fourteen (14) after Executives receipt of notice of termination.
(f) Effect of a Termination for Cause or by Executive Without Good Reason. If this Agreement is terminated by the Company for Cause or by Executive without Good Reason, then Executive shall be entitled to receive only his accrued and unpaid Base Salary and accrued vacation pay through the effective date of termination. In the event that the Company terminates this Agreement for Cause, then all outstanding unvested equity incentive awards, regardless of form, shall be cancelled and immediately forfeited, and for the avoidance of doubt, Executive shall not be entitled to any Severance Benefits (as hereafter defined).
(g) Effect of a Termination Without Cause; Termination for Good Reason; Severance. If this Agreement is terminated by the Company without Cause or by Executive for Good Reason, then Executive shall be entitled to receive twelve (12) months continuation of Executives Base Salary (regardless of Executives length of employment with the Company) and vested equity incentive awards (the Severance Benefits), which shall be payable over such twelve month period provided that Executive executes (and allows to become effective) a release of employment related claims in a form substantially similar to Exhibit C, attached hereto. Notwithstanding anything to the contrary, if, within ninety (90) days of termination, Executive becomes employed by any Walker Digital entity, then the salary continuation portion of the Severance Benefits shall be reduced by the amount of salary and bonus paid to Executive by such Walker Digital entity during the twelve (12) months following termination from the Company.
(h) Deemed Resignation. Upon any termination of Executives employment hereunder for any reason, with or without Cause, whether by the Company or by Executive, the Executive shall be deemed to have resigned from all positions as an officer, director and employee of the Company or any subsidiaries or other Affiliates thereof.
(i) Company Action Required. The Company may only terminate Executives employment, other than with respect to the termination of this Agreement at the end of the Term, by providing written notice to Executive.
If when the Executives employment terminates, the Executive is a specified employee, as defined in Code Section 409A(a)(2)(B)(i), then despite any provision of this Employment Agreement or other plan or agreement to the contrary, the Executive will not be entitled to the payments until the earliest of: (a) the date that is at least six months after the Executives separation from service (within the meaning of Code· Section 409A) for reasons other than the Executives death, (b) the date of the Executives death, or (c) any earlier date that does not result in additional tax or interest to the Executive under Code Section 409A. As promptly as possible after the end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a single lump sum with any remaining payments to commence in accordance with the terms of this Agreement or other applicable plan or agreement.
All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when sent by private overnight courier service, delivered personally, or shall be deemed given four (4) business days after mailing by registered or certified mail, postage prepaid (return receipt requested and received), as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith):
If to the Company:
Patent Properties, Inc.
2 High Ridge Park
Stamford, CT 06905
Attention: Chief Executive Officer
If to Executive:
Jonathan A. Siegel
[Address on file]
All payments of Base Salary, Performance Bonus, equity incentive awards and other compensation required to be made by the Company to Executive under this Agreement shall be subject to withholding taxes, employment taxes, and other payroll deductions in accordance with the policy of the Company and applicable law.
|10.||Successors and Assigns.|
(a) The parties acknowledge that the Agreement is personal between the Company and the Executive, and with the Executives prior written consent, shall be binding upon and shall inure to the benefit Companys successors and assigns. With such consent of Executive, the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. The term successors and assigns as used herein shall mean a corporation or other entity acquiring all or substantially all of the assets and business of the Company (including the rights and obligations arising under this Agreement) whether by operation of law or otherwise.
(b) This Agreement and all rights under this Agreement are personal to Executive and shall not be assignable other than by will or the laws of intestacy. All of Executives rights under this Agreement shall inure to the benefit of his heirs, personal representatives, designees or other legal representatives, as the case may be.
(a) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Connecticut without regard to principles of conflict of laws.
(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.
(c) Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure or delay of a party at any time or times to require performance of any provision hereof shall in no manne