EXHIBIT 10.19
Xxxxxxx.Xxx Inc.
Director Agreement
This letter agreement (this "Agreement") will confirm our agreement with
respect to your services to Xxxxxxx.xxx, Inc. (the "Company") under the terms
and conditions that follow:
1. Position and Duties.
(a) As a director of the Company, you are expected to maintain loyalty to
the Company and to not take any action that would directly or indirectly promote
any competitor or impair the Company's interests. Subject to the foregoing, you
may engage in other business or charitable activities to the extent that they do
not interfere or create a conflict with your fiduciary obligations to the
Company.
(b) Specifically, but not exclusively, your duties and responsibilities
will include the following: (i) to participate in all meetings of the Board and
stockholders; (ii) to serve on such committees of the Board as required by the
Company(iii) to provide strategic guidance and advice to the senior management
of the Company with respect to the management of the operations of the Company;
(iv) and to provide support and guidance to the senior management of the Company
in their efforts You will report directly to the Chairman of the Board.
2. Compensation; Time Commitment.
For all services that you perform for the Company and its affiliates as a
Director, the Company will provide you as compensation (i) Four Thousand Dollars
($4,000) per year, plus a fee of One Thousand Dollars ($1,000) per Board meeting
or Committee meeting (if held at a date and time separate from the Board
meeting) where you are physically present. Fees are payable quarterly in arrears
(this cash compensation plus any other compensation provided for herein shall be
referred to as the "Compensation").
3. Stock Options.
The Company will issue you stock options for 345,000 shares of company stock
with a strike price of $0 .15. These options will vest 28,750 each quarter for
the next three years commencing commencing three months from the date hereof and
are exercisable for three years after vesting. If the company has a Change of
Control (as defined below), all remaining Options will automatically vest on the
effective date of the Change.
"Change of Control" shall mean the occurrence of any of the
following events:
(i) The acquisition, other than from the Company (which term for
purposes of this Subsection (i) includes any successor corporation),
or any subsidiary thereof by any person or group (as such terms are
used for the purposes of Sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
0000 Xxx) of securities with voting power equal to fifty percent
(50%) or more of the combined voting power of the Company's then
outstanding voting securities;
- 1 -
(ii) Approval by the Company's stockholders of (a) a merger or
consolidation of the Company with or into another corporation if the
stockholders of the Company, immediately before such merger or
consolidation do not, immediately after such merger or
consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting
securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their
ownership of the combined voting power of the voting securities of
the Company outstanding immediately before such merger or
consolidation or (b) dissolution of the Company or an agreement for
the sale or other disposition of all or substantially all of the
assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities
is acquired by (i) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by the Company
or any of its subsidiaries or (ii) any corporation which,
immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of the Company in the same proportion
as their ownership of stock in the Company immediately prior to such
acquisition.
For purposes of the foregoing definition, the Company's stockholders
are deemed to be the indirect owners of any assets, including stock
interests, held by the Company or any subsidiary thereof.
4. Term; Termination; Effect of Termination. Unless earlier terminated
pursuant to this Paragraph 4, your position as Director of the Company shall
expire at the Annual Meeting of Stockholders of the Company held in 2006, unless
you are elected by the shareholders as a director for another term (such period
shall be referred to herein as the "Term" of this Agreement").
a. The Board may remove you from your position as Director any time upon
an affirmative vote of the majority of the members of the Board. The
shareholders of the Company may vote to remove you at any time upon an
affirmative vote of the holders of the issued and outstanding shares of the
Company.
b. You may resign from your position as Director at any time to the
Company; however, we would hope that you provide us with reasonable notice prior
thereto.
5. In the event your service as Director is terminated or you resign from
the Board or are removed from the Board, then the Company shall have no further
obligation to you other than for compensation earned through the date of such
resignation . Notwithstanding anything in this Agreement to the contrary, any
shares of Common Stock which have vested prior to such termination shall remain
exercisable for a period of one (1) year from such date.
- 2 -
6. Indemnification; Legal Fees. During the term of your service and
thereafter, the Company shall indemnify you to the full extent permitted by law
and the by-laws of the Company for all expenses, costs, liabilities and legal
fees which you may incur in the discharge of your duties hereunder . In
addition, the Company shall pay any reasonable legal fees which you may incur
related to the negotiation and consummation of this Agreement, such payments to
be made directly to your counsel in accordance with the Company's normal
accounting practices upon receipt of a detailed copy of the xxxx for services
rendered from your counsel.
Notwithstanding the foregoing, you shall not be entitled to any
indemnification with respect to any claim arising directly or indirectly
if (i) your acts were committed in bad faith or were the result of active
and deliberate dishonesty, (ii) you gained any financial profit or other
advantage to which you were not legally entitled; (iii) you made profits
from the purchase or sale of securities of the Company within the meaning
of Section 16 of the Securities Exchange Act of 1934 or similar provisions
of any state; or (iv) payment by the Company under this Agreement is not
permitted by applicable law.
7. No Employment. Execution of this Agreement in no way creates, norshall
this Agreement be interpreted as creating, an employment, agency, partnership or
joint venture between you and the Company.
8. Assignment. Neither you nor the Company may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other; provided, however, that the Company may
assign its rights and obligations under this Agreement without your consent to
any person with whom the Company shall hereafter affect a reorganization,
consolidation or merger or to whom the Company transfers all or substantially
all of its properties or assets. This Agreement shall insure to the benefit of
and be binding upon you and the Company and each of your respective successors,
executors, administrators, heirs and permitted assigns.
9. Waiver. Except as otherwise expressly provided in this Agreement, no
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of either party to require performance
of any term or obligation of this Agreement, or the waiver by either party of
any breach of this Agreement, shall not prevent any subsequent enforcement of
such term or obligation or be deemed a waiver of any subsequent breach.
10. Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
- 3 -
11. Notices. Except as otherwise expressly provided herein, any notices,
requests, demands and other communications provided for by this Agreement shall
be in writing and shall be effective when delivered in person or deposited in
the United States mail, postage prepaid, registered or certified, and addressed
to you at your last known address on the books of the Company or, in the case of
the Company, at its main office, attention of the President & Chief Executive
Officer, with a copy to the Company's Secretary.
12. Captions. The captions and headings in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
13. Entire Agreement. This Agreement sets forth the entire agreement and
understanding between you and the Company and supersedes all prior
communications, agreements and understandings, written and oral, with respect to
the terms and conditions of your position as a member of the Board of Directors.
This Agreement may not be amended or modified, except by an agreement in writing
signed by you and the President & Chief Executive Officer or other specifically
authorized representative of the Company.
14. Governing Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of New Jersey, without regard to the
conflict of laws principles thereof. To the extent applicable, the federal laws
of the United States and the corporate laws of the State of Utah (or whatever
state the Company is incorporated in and subject to) shall govern your rights
and duties as a director of the Company.
15. No Conflicting Agreements. You hereby represent to the Company that
neither your execution and delivery of this Agreement nor your acceptance of the
position of Director for the Company nor your performance under this Agreement
and the law will conflict with or result in a breach of any of the terms,
conditions or provisions of any agreement to which you are a party or are bound
or any order, injunction, judgment or decrees of any court or governmental
authority or any arbitration award applicable to you.
16. Compliance with Agreement. The Company's obligations under this
Agreement and its obligation to deliver stock under the terms of the stock
options granted pursuant to the terms of this Agreement are conditioned on your
compliance with the terms and conditions of this Agreement.
- 4 -
If the foregoing is acceptable to you, please sign the enclosed copy of this
letter in the space provided below and return it to me, whereupon this letter
and such copy will constitute a binding agreement between you and the Company on
the basis set forth above as of the date first above written.
Sincerely yours,
Xxxxxxx.xxx, Inc.
By:
/s/ Xxxxxx Xxxxxxx
-----------------------
Xxxxxx Xxxxxxx
Chief Financial Officer
Accepted and Agreed: /s/ Xxxxxx X. Xxxxxxx Date: July 29, 2005
---------------------
- 5 -
