Exhibit 10.1
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (this "Agreement") is made as of September 1, 2006, by
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and between Trinity Learning Corporation, a Utah corporation (the "Company"),
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and Xxxxxx X. Xxxxx, an individual (the "Executive"). Certain definitions are
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set forth in Section 4 of this Agreement.
In consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:
1. Employment.
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(A) Position and Duties. The Company agrees to employ Executive and
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Executive accepts such employment for the period beginning as of the date hereof
and ending upon termination pursuant to Section 1(c) hereof (the "Employment
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Period"). Executive shall serve as President and Chief Executive Officer of the
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Company and shall have all of the duties, powers and responsibilities
customarily delegated and assigned therewith, subject to the management and
control of the Company's Board of Directors (the "Board").
(B) Compensation.
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(i) Salary. During the Employment Period, the Company will pay Executive a
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base salary (the "Annual Base Salary") of $250,000 per annum (payable
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semi-monthly) or such other amount as the Company and Executive may agree to
from time to time. Executive's Annual Base Salary for any partial year will be
prorated based upon the number of days elapsed in such year.
(ii) Bonus. Executive shall be eligible to receive cash bonuses as provided
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in the Bonus Plan ("Bonus Plan") attached hereto in Exhibit "A" and incorporated
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herein by this reference. Set bonus to be paid upon company achieving
profitability. The Bonus Plan is in lieu of any other bonus plans available to
Company executives or employees.
(iii) Benefits. During the Employment Period, Executive will be entitled to
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such disability insurance, health insurance, and other similar benefits as are
commensurate for similarly situated employees as determined from time to time by
the Board.
(iv) Options to Purchase Shares. Executive shall be awarded options ("Executive
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Options") to purchase shares of the Company's common stock as provided in
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Exhibit "B" and incorporated herein by this reference. The Executive Options
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shall be governed by a stock option agreement to be executed by the parties and
in accordance with the Company's 2002 Stock Plan, as amended (the "Stock Option
Plan").
(C) Term and Termination. The Employment Period will commence on the
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execution date hereof and continue until December 31, 2009 (the "Term") unless
earlier terminated pursuant to the first to occur of (i) Executive's
resignation, death or Disability (as defined in Section 4, below), or (ii)
termination by the Company with or without Cause (as defined in Section 4,
below). The Term may be extended upon the written agreement of the Company and
Executive.
(D) Severance.
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(i) Termination Without Cause, or for Death or Disability. If Executive's
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employment is terminated by the Company without Cause, or for death or
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Disability prior to the end of the Term, then the Company shall pay Executive
each month a payment, equal to his monthly salary (based on his Annual Base
Salary), for a twelve (12) month period with the first payment beginning one
month after the date of termination of employment (the "Severance Payments").
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The Company shall also allow Executive to continue participating in all of the
Company's medical, disability and life insurance plans on the same basis as he
was participating prior to termination (e.g., if his participation was at the
Company's sole expense prior to termination, it will be at the Company's sole
expense during the severance period), but only to the extent permitted by the
Company's insurance carriers at a cost not materially in excess of the Company's
cost for such insurance immediately prior to the date of termination. In
addition, Executive shall be eligible for payment of any bonuses as provided in
the Bonus Plan and be entitled to exercise his Executive Options in accordance
with Exhibit "B" and the Stock Option Plan. Any Advisory Agreement between the
Company and Executive shall remain in effect in accordance with its terms.
(ii) Resignation. If Executive's employment is terminated due to
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Executive's resignation, then Executive shall be entitled to receive his Annual
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Base Salary plus any accrued leave through the date of termination. All of
Executive's rights to Annual Base Salary and benefits hereunder which accrue or
become payable after the date of such termination of the Employment Period shall
cease upon such termination. In addition, Executive shall be eligible for
payment of any bonuses (earned prior to termination) as provided in the Bonus
Plan and be entitled to exercise his Executive Options in accordance with
Exhibit "B" and the Stock Option Plan. Any Advisory Agreement between the
Company and Executive shall remain in effect in accordance with its terms.
(iii) Termination With Cause. If Executive's employment is terminated by
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the Company with Cause, then Executive shall be entitled to receive his Annual
Base Salary through the date of termination. All of Executive's rights to
receive any other compensation or benefits from the Company shall cease on the
date of termination, including but not limited to any payments under the Bonus
Plan or the exercise of Executive Options or other options granted under the
Stock Option Plan.
2. Confidential Information. Executive acknowledges that the confidential
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or proprietary information, observations and data of the Company obtained by him
during the course of his performance under this Agreement concerning the
business and affairs of the
Company and its Affiliates are the property of the Company, including
information concerning acquisition opportunities in or reasonably related to the
Company's business or industry of which Executive becomes aware during the
Employment Period. Therefore, Executive agrees that he will not disclose to any
unauthorized person outside the ordinary course of business or use for his own
account any of such information, observations or data without the Board's
written consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Executive agrees to deliver to the
Company at the termination of the Employment Period, or at any other time the
Company may reasonably request in writing, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) relating to the business of the
Company and its Affiliates (including, without limitation, all acquisition
prospects, lists and contact information) which he may then possess or have
under his control.
3. Noncompetition and Nonsolicitation.
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(A) Noncompetition. Executive acknowledges that in the course of his
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employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special and unique value to the Company. Therefore,
Executive agrees that, during the Employment Period and for six months after the
payment by the Company of any Severance Payments (the "Noncompete Period"), he
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shall not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any manner engage in any business that provides
products or services similar or identical to those provided by the Company or
any of its Affiliates at the time of such termination.
(B) Nonsolicitation. During the term of the Employment Period and the
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Noncompete Period, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of the Company or any of its
Affiliates to leave the employ of the Company or any of its Affiliates, or in
any way interfere with the relationship between the Company or any of its
Affiliates and any such employee thereof, (ii) hire or engage, or offer to hire
or engage, any employee of the Company or any of its Affiliates, or (iii) induce
or attempt to induce any customer, supplier, licensee or other business relation
of the Company or any of its Affiliates to cease doing business with the Company
or such Affiliate, or in any way interfere with the relationship between any
such customer, supplier, licensee or business relation and the Company or any of
its Affiliates.
(C) Enforcement. If, at the time of enforcement of Section 2 or 3 of this
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Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
duration, scope or geographical area reasonable under such circumstances shall
be substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Executive's services are
unique and because Executive has access to confidential information, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security).
4. Definitions.
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"Affiliate" of any particular person or entity means any other person or entity
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controlling, controlled by or under common control with such particular person
or entity. For purposes of this Agreement, Affiliates of the Company include,
without limitation, all subsidiaries of the Company and any companies that it
shall hereafter acquire.
"Cause" means (i) the conviction of a felony or a crime involving moral
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turpitude or the commission of any act constituting intentional dishonesty or
fraud with respect to the Company or any of its Affiliates or any of their
customers or suppliers, (ii) intentional conduct tending to bring the Company or
any of its Affiliates into substantial public disgrace or disrepute, (iii)
substantial and repeated material failure to perform duties of the office held
by Executive as reasonably directed by the Board, and such failure is not cured
within 30 days after Executive receives written notice thereof from the Board,
(iv) recklessness or willful misconduct with respect to the Company or any of
its Affiliates, or (v) any material breach of Section 2 or 3 of this Agreement.
"Disability" means the inability, due to illness, accident, injury, physical or
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mental incapacity or other disability, of Executive to carry out effectively his
duties and obligations to the Company or to participate effectively and actively
in the management of the Company for a period of at least 90 days (whether or
not consecutive) during any 180-day period, as determined in the reasonable
judgment of the Board after receipt of competent medical advice.
"Person" means an individual, a partnership, a limited liability company, a
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corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
5. Notices. All notices and other communications given or made pursuant
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hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered if delivered personally or by telecopy or seven (7)
days after being mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice, except that notices of
changes of address shall be effective upon receipt):
If to the Company:
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Trinity Learning Corporation
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Board of Directors
Telephone: 000 000 0000
Facsimile: 000 000 0000
If to Executive:
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Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
6. General Provisions.
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(A) 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 invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(B) Complete Agreement. This Agreement, the exhibits attached hereto, those
documents expressly referred to herein and other documents executed by the
Company and Executive of even date herewith embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(C) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(D) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, and their respective successors and assigns; provided
that the rights and obligations of Executive under this Agreement shall not be
assignable.
(E) Choice of Law. All questions concerning the construction, validity and
interpretation of this Agreement and any exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Texas, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas. Any
suit or action brought by the Company or by Executive shall be brought in the
State of Texas.
(F) Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages and
costs (including attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(G) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company and Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
on the date first written above.
TRINITY LEARNING CORPORATION
XXXXXX X. XXXXX
By: Xxxxxxx Xxxx
Its: Vice Chairman Employee:
EXHIBIT "A"
BONUS PLAN
BONUS A: Positive cash flow - $50,000. Earned when monthly cash receipts exceed
operating expenses, not including any reduction in past due vendor balances, for
any three consecutive months. Payable when company achieves cash flow positive
for a three month period, calculation shall include the payment of this bonus.
BONUS B: Financing - $50,000. Earned upon the completion of any financing
transaction which yields the Company the availability of a minimum of $5M in new
capital in excess of any reduction or replacement of the current obligation to
Palisades. This is not limited by any draw-down restrictions.
BONUS C: Revenue growth - One percent (1%) of all profitable revenues received
in excess of $7,500,000 in any given quarter. Earned at the end of each
calendar quarter where revenues exceed $7,500,000. Payable when company reaches
operating profitability and cash flow positive (for a three month period),
including payment of this bonus.
EXHIBIT "B"
EXECUTIVE OPTIONS
A grant of options, at market price on the day of grant, equal to 3% of the
total fully-diluted equity outstanding on the grant date. Grant should be
approved and take effect as soon as reasonably practicable of the closing of the
anticipated Laurus financing transaction.
Fully-diluted includes shares outstanding, restricted shares, convertible
preferred shares, total warrants outstanding, and total stock options
outstanding including all granted options (regardless of vesting) and the entire
un-granted option pool (including any increase authorized by the board post
closing of any financing transactions completed within the fourth quarter of
calendar 2006. (For example, under the proposed Laurus transaction there are
166,976,670 total shares outstanding fully-diluted. If the Company were to add
to this a new option pool increase of 42Million or about 20% of the new total,
to accommodate new grants to all employees, the new total would then total
208,976,670. 3% of that would be 6,269,300 options.
Options to vest as follows: 1/3 to vest immediately, and with 1/36 of the
balance to vest each month over a 36 month period. There would be 100% vesting
of all unvested options on any change of control. In the event that Executive's
employment is terminated pursuant to Section 4(d)(i), then Executive shall be
entitled to an acceleration of vesting of 1/2 of the remaining unvested options
