1
EXHIBIT 10.17
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment agreement (Agreement) is made and effective this 22nd
Day of December, 2000 by and between Infotopia Inc. (Company) and Xxxx X. Xxxxx
(Executive).
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Executive, for a term beginning on
January 2, 2001 and ending January 1, 2002 as its Vice President of Operations
or at a higher responsible management position with the Company and the
Executive hereby accepts such employment in accordance with the terms of this
Agreement.
Not withstanding the aforesaid, if this Agreement shall not have been terminated
in accordance with the provisions herein on or before December 22, 2001, the
remaining term of the Agreement shall be extended such that each and every
moment of time thereafter, the remaining term shall be one year unless (a) the
Agreement is terminated earlier in accordance with the provisions herein or (b)
on or after July 26, 2001, the Board of Directors or the Executive Committee of
the Company notifies the Executive in writing of its determination to have the
date of this Agreement expire one year from the date of such notification.
In the event of any conflict or ambiguity between the terms of this Agreement
and terms of employment applicable to regular employees, the terms of this
Agreement shall control.
2. DUTIES OF THE EXECUTIVE
MAJOR FUNCTIONS:
Assist the President in managing the day-to-day functions and activities of the
Corporation. Responsible for management and tracking the activities of out
source consultants and vendors. Assist in reviewing new products from inventors
and product development with established inventor relationships. Assist with
acquisitions of new products. Analyze reports from consultants, vendors, service
contractors, inventors, and general corporate functions. Manage the
corporate-wide tracking of all projects and to ensure schedules, budgets and
resources, and goals and tasks are completed. Advise and consult with corporate
executives and board of directors on corporate matters.
ESSENTIAL FUNCTIONS:
1. Work with corporate personnel to ensure administrative functions
- human resources, budgeting, accounting, contracts, and other
tasks are operating within guidelines.
2. Manage the day-to-day activities and tasks of out source
consulting firms and vendors. Ensure that reporting is submitted
on a timely basis, contracts are complied with, schedules are
met, resources and budgets are met, and goals and tasks are
achieved.
2
3. Assist consulting firms and vendors with new product
development, production, media placement, telemarketing and
fulfillment, supplemental distribution of products, and credit
card processing.
4. Assist in reviewing new products with inventors and through
acquisitions.
5. Assist with inventor relationships to ensure new products are
developed, produced, placed in media campaigns, and
re-introduced in a timely manner.
6. Assist with overseeing production schedules, budgets and
resources, and quality control.
7. Analyze reports from consultants, vendors, service contractors,
partners, and inventors; advise and consult with corporate
executives.
8. Manage the tracking of all projects to ensure all schedules,
budgets and resources, and goals and tasks are completed as
designed. Keep corporate executives and board of directors
advised of progress through timely reporting.
9. Assist with technology development, specifically the management
of the web address and the web store (XxxxxXxxxx.xxx).
10. Assist with relationships with other divisions within Infotopia,
Inc., and other corporate partners.
11. Advise and consult with corporate executives and board of
directors on corporate matters as necessary
On or before January 14th a schedule will be completed for the campaigns
that IFTP is currently airing will be submitted to IFTP.
3. COMPENSATION
The Executive will be paid compensation during this Agreement as follows:
A.) A base salary, commencing January 2, 2001 of not less than $75,000 per year,
(or such greater amounts as may be approved by the Board of Directors or the
executive committee in accordance with authority given by the Board of
Directors) payable in installments on a semi-monthly but not less than a
monthly schedule. The Executive's base salary may be increased consistent
with recommendations of the Executive Committee of the Board. At least
annually the Executive Committee shall review the Executive's base salary
for competitiveness and appropriateness in the industry. In no event shall
the Executive's base salary be less than $75,000 on an annual basis.
B.) The Company agrees to pay a Quarterly Bonus of not less than $2,500 per
calendar quarter to the Executive. During the term of this Agreement said
bonus shall be paid in cash no later than the 1st day of each calendar
quarter. The effective date of the quarterly bonus for this Agreement shall
be March 1, 2001, with the first payment due (prorated for 4th Quarter
Fiscal Year 2001) and payable to the Executive on or before April 1, 2001
and continuing thereafter until the first day of January 2002. From time to
time during the term of this Agreement, the Executive may receive a greater
quarterly bonus if approved by the Executive Committee; however, the
quarterly bonus shall never be less than $2,500.
3
C.) In addition to the other payments referred to in this Agreement, the
Executive shall be entitled to receive and participate in an annual
incentive bonus plan. The amount of the Executive's participation and the
benefits paid under the incentive bonus plan shall be based upon goals
recommended by the Executive and approved by the Executive Committee. The
annual incentive bonus plan payments will be paid in cash and the payment
will be made not later than 30 days following the close of the fiscal year
for each year this Agreement is in effect.
D.) In addition to other payments referred to in this Agreement, the Executive
will be granted 500,000 shares of stock of the Company upon execution of
this Agreement and 500,000 additional shares each four months for each of
the succeeding years of the initial term of the agreement. Such shares will
be made available at 75% of the initial price of each offering. The initial
shares shall vest upon execution and be delivered not later than April 1,
2001. The additional shares shall vest and at the end of each quarter. Prior
to vesting, the Executive shall be entitled to receive dividends on and vote
the unvested shares. Should this Agreement be terminated prior to January 1,
2002 such shares shall be delivered and vested to the Executive as stated
above. If the Company, or its assets is acquired by another entity all stock
in the agreement shall be consider due and vested.
E.) The Executive may choose once each year of this Agreement to convert
one-third of his annual salary to stock or stock options, the purchase price
shall be the lower of the average price of the IFTP stock during the last
twelve months or the current market price as of the date the Executive
chooses to exercise such option.
F.) If any payments due the Executive under this Agreement result in the
Executive's liability for an excise tax ("parachute tax") under Section 49
of the Internal Revenue Code of 1986, as amended (the "Code") the Company
will pay to the Executive, after deducting any Federal, State or local
income tax imposed, the "parachute tax" liability. Such payment shall be
made to the Executive no later than 30 days prior to the due date of the
"parachute tax."
G.) All shares included in this agreement shall carry piggyback registration
rights.
4. BENEFITS
A.) Holidays: The Executive will be entitled to at least nine (9) paid holidays
each calendar year and twelve (12) personal days. The Company will notify
the Executive on or about the beginning of each calendar year with respect
to the holiday schedule for the coming year. Personal holidays, if any, will
be scheduled in advance subject to the requirements of the Company. Such
holidays must be taken during the calendar year and unused days shall not
carry forward into the next year.
B.) Vacation: The Executive shall be entitled to four (4) weeks or thirty-five
(35) paid vacation days per year effective as of the date of the Agreement.
4
C.) Sick Leave: The Executive shall be entitled to sick leave and emergency
leave according to the regular policies and procedures of the Company.
Additional sick leave or emergency leave over and above paid leave
provided by the Company, if any, shall be granted at the discretion of
the Executive Committee of the Board of Directors.
D.) The Company shall provide at its' expense Officer's and Director's liability
insurance covering the Executive for the term of this Agreement. Such
coverage shall be in the amount of not less than $5 million and shall be
effective not later than April 1, 2002.
E.) The Company shall provide medical and life insurance during the term of this
Agreement. The Executive shall be responsible for any state or federal taxes
imposed upon these benefits. If the Company does not provide medical and
life insurance, the Executive may be reimbursed for his own coverage.
F.) Pension and Profit Sharing Plan: The Executive shall be eligible to
participate in any pension or profit sharing plan or other type plan
adopted by the Company for the benefit of its officers and/or regular
employees.
G.) In addition to any other compensation, an automobile allowance in the amount
of $475 per month to be paid to the Executive each month during the term
of this Agreement.
H.) Expense Reimbursement: The Executive shall be entitled to reimbursement for
all reasonable expenses, including travel and entertainment incurred by the
Executive in the performance of his duties. The Executive will maintain
records and written receipts as required by Company policy and reasonably
requested by the Board of Directors to substantiate such expenses. Subject
to the terms of Section 2, the Executive may, at his sole discretion, work
from his residence or a location of his choice. The Company will reimburse
the Executive for reasonable home office use, including but not limited to
an appropriate computer/modem installation.
I.) Cell phone: Executive shall be entitled to reimbursement for cell phone and
nation wide pager service or the Company may at its expense provide the
Executive with such service.
J.) Financial and Tax Advice: During (a) the term of this Agreement (b) the 12
month period following the termination of this Agreement as a result of
Death and/or Disability, and (c) the three year period following the
voluntary termination by the Executive with good reason or the involuntary
termination by the Company without cause... the Company shall provide the
Executive (or, if Executive shall have died, his estate) at the Company's
expense, third party professional financial and tax advisory services,
primarily oriented to planning in light of the Executive's entitlement to
compensation and benefits and appropriate in light of circumstances of
Executive or his estate. Executive (or his estate) may select the service
professional of his choice.
5
5. TERMINATION
A. The Company shall have the right to terminate this Agreement under the
following circumstances:
i. Upon the death of the Executive.
ii. Upon notice to the Executive in the event of notice of illness or
other disability which has incapacitated him from performing his
duties for 12 consecutive months as determined in good faith by the
Board.
iii. For good cause upon notice from the Company. Termination by the
Company of the Executive for "good cause" as used in this Agreement
shall be limited to mean gross negligence, misappropriation or theft
of Company funds or conviction of state or federal offenses, which
would prevent the Executive from performance of his duties.
iv. Anytime during the first ninety days of the agreement, at the sole
discretion of the Board of Directors. If termination happens during
this ninety days only vested on signing will be considered due and
earned.
v. In the event of bankruptcy or insolvency the Company may terminate
this agreement with no additional liabilities other than that due on
the date of termination. No future wages or benefits will be owed.
With respect to any termination for good cause by the Company, the specifics of
the cause shall be communicated to the Executive in writing at least thirty (30)
days prior to the date on which the termination is proposed to take effect. The
Executive shall be given the opportunity to correct or respond to such cause.
B. If this Agreement is terminated pursuant to Section 5 (A - iii) above,
Executive's rights and the Company's obligations hereunder shall forthright
terminate except as expressly provided in this Agreement.
C. If this Agreement is terminated pursuant to Section 5 (A - i or ii) hereof,
Executive or his estate shall be entitled to receive 100% of the Executives
salary and incentives for the balance of the term of the Agreement, together
with bonus and other incentives as provided for in this Agreement.
6. TERMINATION BY EXECUTIVE
The Executive shall have the right to terminate this Agreement with thirty (30)
days written notice to the Company given within sixty (60) days of the
occurrence of any of the following events:
A. The Company acts to materially reduce the Executive's position, title,
duties, authority or responsibilities.
B. The Company acts to reduce the compensation, bonus or incentives of the
Executive.
7. CONSEQUENCES OF BREACH BY THE COMPANY
A. If this Agreement is terminated pursuant to Section 5 hereof, or if the
Company shall terminate the Executive or the Executive's duties under this
Agreement in any way that is a breach by the Company, the following shall
apply:
6
i. The Executive shall receive a cash payment that is equal to the present
value of the Executive's base salary hereunder for the remainder of the
term, payable within 30 days of the date of such termination.
ii. The Executive shall be entitled to bonus payments and benefits as provided
in Section 3 (it being understood, however, that all such bonus payments,
if made pursuant to this clause, shall be paid in cash regardless of
whether or not such payments exceed the cash limit.
iii. All stock options and common stock and restricted stock granted by the
Company to the Executive under this Agreement shall accelerate and become
immediately vested and exercisable.
B. The parties believe that because of the limitations of Section 5 the above
payments do not constitute "Excess Parachute Payments" under section 280G of
the Internal Revenue Code of 1954, as amended (the Code). Notwithstanding
such belief, if any benefit is determined to be an "Excess Parachute
Payment" the Company shall pay the Executive an additional amount (Tax
Payment) such that (x) the excess of all Excess Parachute Payments
(including payment under this sentence) over the sum of the excise tax
thereon under section 4999 of the Code and under applicable state law is
equal to (y) the excess of all Excess Parachute Payments (excluding payments
under this sentence) over income tax thereon under subtitle A of the Code
and under applicable state law provided that the Company shall not be
obligated to make tax payment in excess of the value of 6.6667 Compensation
Years. For the purposes hereof, the value of a Compensation Year, including
stock options and bonus entitlements, is defined as equal two (2) times the
base salary set forth in this Agreement.
8. CHANGE OF CONTROL
If, within twenty-four (24) months following a change of control, the Executive
is terminated, the termination shall be deemed a "Change of Control
Termination." For the purpose of this paragraph... (a) The delivery of a notice
of termination by the Company... within 24 months of a Change of Control and (b)
a Constructive Discharge within 24 months following a Change of Control will
also be deemed a Change of Control Termination. In the event of a Change of
Control Termination, the Company will pay to the Executive a lump sum payment of
299% of the Executive's average annual base salary plus both quarterly and
annual incentive bonuses during the preceding 1 year period. In the event that a
Change of Control Termination occurs before the Executive completes one (1)
years of service, the lump sum payment will be valued at 299% of the Executive's
average annual base salary plus both quarterly and annual incentive bonuses
during all years of service. Additionally, any options and or restricted stock
granted to the Executive shall become fully vested as of the date of the Change
of Control Termination. Provided further, the Executive will receive a cash
payment equal to the value of any options anticipated to be granted... within
(1) year following the Change of Control Termination.
7
If any portion of any payment or distribution by the Company, to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this section ... shall be subject to the
excise tax imposed by section 4999 of the (Internal Revenue) Code, or any
interest or penalties are incurred by the Executive with respect to such excise
tax... the Company shall pay to the Executive an additional payment (the
Gross-up Payment) in an amount such that after the payment of such Excise Tax,
including, without limitation, any income tax and excise tax imposed on the
Gross-up payment, the Executive retains an amount including the Gross-up Payment
equal to the total payment hereunder without regard to the Gross-up Payment.
"Change of Control" shall be deemed to have occurred if at any time or from time
to time after the date of this agreement:
i. Any "person" or "group" ... is or becomes the "beneficial owner" ...
directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding
securities... or,
ii. The stockholders of the Company approve a merger or consolidation with
any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company... continuing to
represent... more than 50% of the combined voting power of the voting
securities or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets...or
iii. The Company has a change in Board Majority unapproved by at least
three-fourths of the directors.
9. REMEDIES
The Company recognizes that because of the Executive's special talents, stature,
and opportunities in the industry, and because of the creative nature of and
compensation practices of the industry and the material impact that individual
projects can have on a company's results of operations, in the event of
termination by the Company hereunder or in the event of termination by the
Executive before the end of the agreed term, the Company acknowledges and agrees
that the provisions of this Agreement regarding further payments of base salary,
bonuses and the exercisability of stock options constitute fair and reasonable
provisions for the consequences of such termination, do constitute a penalty and
such payments and benefits shall not be limited or reduced by amounts that the
Executive might earn or be able to earn from any other employment or ventures
during the remainder of the agreed term of this Agreement.
8
10. NOTICES
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
be certified mail, postage pre-paid, or recognized overnight delivery service;
If to the Company:
Infotopia, Inc
000 Xxxxxxx Xxxx
Xxxxxxx, Xx 00000
Attn.: Xxxxxx Xxxxx, CEO
If to the Executive:
Xxxx X. Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
11. FINAL AGREEMENT
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. Only a further writing that is duly executed by
both parties may modify this Agreement.
12. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts.
13. HEADINGS
Headings in this Agreement are provided for convenience only and shall not be
used to construe meaning or intent.
14. BINDING AGREEMENT
This Agreement shall be binding upon and inure to the benefit of the Executive,
his heirs, distributees and assigns.
15. SEVERABILITY
If a court of competent jurisdiction to be invalid or unenforceable, then this
Agreement, holds any term of this Agreement including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
9
16. ARBITRATION
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgement upon the award rendered by the arbitrator or arbitrators may be
entered in any court having jurisdiction thereof. Any such Arbitration shall be
concluded in such place as shall be mutually agreed upon by the parties. Within
fifteen (15) days of the commencement of the arbitration, each party shall
select one person to act as arbitrator, and the two arbitrators shall select a
third arbitrator within ten (10) days of their appointment. Each party shall
bear its own costs and expenses and an equal share of the arbitrator's expenses
and administrative fees of arbitration.
17. PROTECTION OF THE COMPANY'S INTERESTS
During the term of this Agreement, the Executive shall not directly or
indirectly engage in competition with the Company. At no time shall the
Executive divulge, furnish, or make accessible to any person any information of
a confidential or proprietary nature obtained by him while in the employ of the
Company except as necessary in the performance of his duties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
----------------------------------
Xxxx X. Xxxxx
Executive's Signature and Acceptance
----------------------------------
Xxxxxx X. Xxxxx
Chairman and CEO, Infotopia, Inc
