EXHIBIT 10.2
ENGAGEMENT AGREEMENT
March 1, 2004
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In consideration of the premises and the mutual promises and covenants
contained herein and for other good and valuable consideration, TURBOWORX, INC.
(the "Company") and you agree as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 The Company will engage you, and you agree to be engaged by and
serve the Company, as an officer of the Company. You will have the title of
President and Chief Executive Officer, reporting to the Chairman of the Board of
Directors. As President and CEO, you will serve on the Board of Directors, and
you will be responsible for general and active management of the business of the
Company and for ensuring that all orders and resolutions of the Board of
Directors are carried into effect. You will also be expected to build and lead
an executive team that will: (1) Formulate and articulate the company's vision
and mission; (2) Formulate and execute major policies, programs and objectives
to promote and ensure the company's success and growth; (3) Formulate and
execute strategic and tactical operational plans for the company, with
particular emphasis on growing revenue and expanding into new markets; and (4)
Raise additional cash equity investment. In addition, you will perform such
other services as may be requested from time to time by the Board of Directors
of the Company. You will perform these duties in Shelton, Connecticut or such
other place as you and the Company shall mutually agree.
1.2 From the date hereof through the end of the Engagement Term (as
hereinafter defined), you will, to the best of your ability, devote your full
time and best efforts to the performance of your duties hereunder and to the
business and affairs of the Company subject to your involvement in activities
permitted by Section 5 hereof.
1.3 As a condition of your engagement by the Company, you agree to
become a formal employee of ADP TotalSource, Inc. a professional employee
organization with whom the Company has contracted to provide contract employees
and human resources services. ADP TotalSource will be your sole employer and
will assign you to work at TurboWorx subject the terms of this agreement.
TurboWorx will be responsible for all professional aspects of your service as
President and CEO, including without limitation direction of your activities
(including adherence to TurboWorx policies related to your job), evaluation of
your performance, and determination of compensation levels. ADP TotalSource will
be solely responsible for all other duties normally taken on by an employer,
including without limitation payment of salary,
provision of benefits coverages, and compliance with standard employment
policies and applicable Federal and state laws relating to employment and the
workplace. Notwithstanding your relationship with ADP TotalSource, all
references to "engagement" or "service" or similar or related terms herein shall
refer to your relationship with the Company.
2. TERM AND TERMINATION.
2.1 The term of your engagement with the Company (the "Engagement
Term") shall be one (1) year (the "Initial Term") commencing on March 1, 2004
plus any extensions thereof, provided that the Engagement Term shall
automatically terminate upon your death and may be terminated at any time as
provided in Section 2.2. At the close of the Initial Term, the Engagement Term
shall be automatically extended for a one (1) year period and thereafter shall
be automatically extended at the end of each one (1) year period for an
additional one (1) year period unless earlier terminated in accordance with the
terms hereof, and unless either you or the Company shall have given written
notice to the other of a desire that such automatic extension not occur, which
notice shall have been given no later than thirty days (30) days prior to the
end of the then current period. If either party gives such notice and absent
earlier termination in accordance with the terms hereof, the last day of your
engagement shall be the last day of the Engagement Term.
2.2 The Company shall have the right, on written notice to you
specifying the applicable subsection below, to terminate your engagement:
(a) immediately for Cause (as defined in Section 2.4), or
(b) subject to Section 2.6 hereof, in the event of your death
or disability which, in the reasonable opinion of the Board of
Directors, renders you unable or incompetent to carry out your
duties, responsibilities, and assignments with or without
reasonable accommodation for a period of one hundred and
twenty (120) consecutive days; or
(c) subject to Section 2.6 hereof, immediately without Cause.
2.3 You shall have the right, on written notice to the Company, to
terminate your engagement if you "resign for just cause," which shall mean a
resignation of your engagement as a direct result of (a) a material breach by
the Company of its obligations to you under this Agreement, provided that, if
such breach is capable of remedy, a written notice within sixty (60) days of
such breach and opportunity to cure such breach shall be afforded the Company
and, in such event, just cause shall exist if the Company shall fail to cure
such breach within a reasonable period of time not to exceed thirty (30) days
after receipt of such notice; or (b) a significant modification by the Board of
Directors of your duties or authority (except in connection with a termination
pursuant to Section 2.2(a) or Section 2.2(b)). You shall also have the right, on
not less than thirty (30) days prior written notice to the Company, to terminate
your engagement without just cause; provided that such termination shall
constitute a forfeiture of any severance benefits otherwise due to you
hereunder.
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2.4 The term "Cause" shall mean: (a) your continued failure to
substantially perform your duties hereunder (other than any such failure
resulting from your incapacity due to physical or mental illness) or any such
actual or anticipated failure; (b) your willful engagement in misconduct which
is materially injurious to the Company's business or reputation, monetarily or
otherwise; (c) your violation of any material provision of this Agreement; or
(d) your conviction of an act of fraud, embezzlement or another crime involving
moral turpitude, in any such case either (x) involving the Company or (y) not
involving the Company but which, in the opinion of a majority of the Board of
Directors (other than you, if you are a Director), is materially injurious to
the Company's business or reputation. You shall not be deemed to have been
terminated for Cause unless (1) prior written notice has been delivered to you
setting forth the reasons for the Company's intention to terminate for Cause,
and (2) a period of twenty (20) days has elapsed since delivery of such notice
during which you were afforded an opportunity to cure to the reasonable
satisfaction of a majority of the Board of Directors (other than you), if
capable of remedy, the reasons for the Company's intention to terminate for
Cause.
2.5 If you are terminated for Cause or your engagement is terminated
due to death or disability pursuant to Section 2.2(b) or you resign for other
than just cause, neither the Company nor any affiliate of the Company shall have
any further obligation to you or your personal representatives under this
Agreement, except for salary and bonus earned hereunder and unpaid at the date
of termination, any other payments due under applicable law, and reimbursements
of permitted business expenses in accordance with Company policy. On or before
the date of termination of your engagement, you shall return to the Company all
records and other personal property of the Company in your possession or
control, including all confidential, proprietary or trade secret information of
the Company and its subsidiaries and affiliates.
2.6 If the Company terminates your engagement without Cause under
Section 2.2(c) or you resign for just cause under Section 2.3 hereof, the
Company shall pay to you an amount equal to the aggregate amount paid to you in
Base Salary (as hereinafter defined) during the three (3) months prior to such
termination, less applicable taxes and withholding (the "Severance Payment"), in
the manner and subject to the terms and conditions as hereinafter provided, and
the Company shall arrange to provide to you during such period medical, dental,
life and disability insurance benefits on the same basis as they would have been
provided to you had your engagement not been terminated (collectively, the
"Severance Benefits"). The Severance Payment shall be payable in installments on
such date or dates on which Base Salary would have been paid to you had your
engagement not been terminated.
Notwithstanding anything herein to the contrary, the Company, in its
sole discretion, may require that as a condition of eligibility for payment of
the Severance Payment and Severance Benefits as described in this Section 2.6,
you shall have signed a release in the form specified by the Company and such
release shall be effective in accordance with its terms. Your failure or refusal
to sign such a release or the revocation by you of such a release, to the extent
permitted by its terms, shall disqualify you from receiving the Severance
Payment and Severance Benefits hereunder, and you shall instead receive such
other severance benefits, if any, as the Company shall determine in its sole
discretion. If you file a lawsuit, charge, complaint or other claim asserting
any claim or demand within the scope of any such release, the Company, whether
or not such claim is valid, shall retain all rights and benefits of the release
and, in addition, shall be
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entitled to cancel any and all future obligations of the release and recoup the
value of all severance payments and benefits paid hereunder, together with the
Company's costs.
2.7 In the event of the termination of your engagement by the Company
within one (1) year following a "change in control" of the Company (including if
you "resign for just cause" as defined in Section 2.3 during such one (1) year
period), you will be entitled to any bonuses for the then current fiscal year
under any bonus plans then in effect as if fully earned. Benefits payable under
this Section 2.7 upon a change in control may subject you to an excise tax as
"excess parachute payments" under Section 280G of the Internal Revenue Code of
1986, as amended. The Company will reimburse you for all excise taxes paid, but
the reimbursement will constitute an excess parachute payment and will be
subject to further excise tax. Such further excise tax will trigger further
reimbursement by the Company. For purposes of this Section 2.7, a "change in
control" of the Company shall include (i) a sale of all or substantially all of
the assets or business of the Company; (ii) a sale or other transfer by the
shareholders of the Company to a single entity or person (or to a group of
entities or persons acting in concert), in one or a series of related
transactions, of more than fifty percent (50%) of the outstanding shares of the
capital stock of the Company entitled to vote for the election of directors,
(including securities convertible into such voting shares of the Company); or
(iii) a merger or consolidation of the Company into or with any other entity or
entities if, as a result thereof, more than fifty percent (50%) of the voting
shares of the entity surviving such merger or consolidation is held by persons
or entities which are not shareholders of the Company immediately prior to such
event.
3. COMPENSATION.
3.1 BASE SALARY. The Company shall arrange for you to receive for the
services to be rendered hereunder a Base Salary ("Base Salary") at an annual
rate of One hundred seventy-five thousand dollars ($175,000), subject to
customary withholding for federal, state and local taxes as may be required by
ADP TotalSource. Such Base Salary shall be payable periodically in conformity
with the prevailing practice of ADP TotalSource or the Company as such practice
shall be established or modified from time to time. Such Base Salary shall be
subject to increase from time to time to take into account appropriate cost of
living adjustments and general compensation increases based on performance.
3.2 BONUS. The Company shall also pay you an annual bonus of up to
twenty-five thousand ($25,000) per year based on targets to be determined by the
Board of Directors. In its sole discretion, the Company may arrange for you to
receive other bonus or incentive compensation based on such factors as the
Company deems appropriate.
3.3 EQUITY. From time to time, and subject to approval of the Board of
Directors and to the terms of the Company's 2000 Stock Option Plan or such other
stock plan as may then be in effect, the Company will grant you stock options
for shares of the Company's common stock.
(a) Your initial option grant shall be for that number of shares that
equals the result of multiplying 0.05 (the "Fraction") times the total
number of outstanding securities of the Company as of December 31,
2003, calculated on a Fully Diluted Basis. Seventeen forty-eighths
(17/48) of your initial option grant (approximately 35.417%) shall vest
as of February 29, 2004. Thereafter, one-forty-eighth (1/48) of the
grant (approximately
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2.083% of the options) shall vest on the final day of each subsequent
month of your engagement so that all options in your initial grant
shall have vested by September 30, 2006. (Should your engagement be
terminated for any reason before all options have vested, any unvested
options would be forfeited.)
(b) As of June 30, 2004, and as of the end of each subsequent calendar
quarter, the Company shall grant you options for a number of shares
that equals the result of multiplying the Fraction times the total
number of outstanding securities of the Company as of the end of such
quarter, calculated on a Fully Diluted Basis, reduced by the total
number of options already granted to you under the terms of this
Agreement. The options granted under this Subsection 3.3(b) shall vest
evenly (1/48 of the options on the final day of each month) over the
48-month period following the date of the grant. (Should your
engagement be terminated for any reason before all options have vested,
any unvested options would be forfeited.)
(c) Notwithstanding the other terms of this Paragraph 3.3, in the event
of the termination of your engagement by the Company within one (1)
year following a "change in control" of the Company as defined in
Section 2.7 (including if you "resign for just cause" as defined in
Section 2.3 during such one (1) year period), all granted but unvested
options shall immediately become fully vested, and, in addition, the
Company shall grant you fully vested options for a number of shares
that equals the result of multiplying the Fraction times the total
number of outstanding securities of the Company as of the date of
termination, calculated on a Fully Diluted Basis, reduced by the total
number of options already granted to you under the terms of this
Agreement.
3.4 BUSINESS EXPENSES. You shall be entitled to be reimbursed for all
reasonable expenses incurred in connection with the performance of your duties
hereunder provided that you shall, as a condition of reimbursement, submit
verification of the nature and amount of such expenses in accordance with the
reimbursement policy from time to time adopted by the Company.
4. OTHER BENEFITS.
4.1 VACATION. You shall be entitled to vacation in accordance with the
vacation policy of the Company, as the same may be in effect from time to time,
without loss of compensation or other benefits to which you are entitled under
this Agreement, to be taken at such times as you may reasonably select.
Initially, you shall be entitled to fifteen (15) days of vacation per year.
4.2 OTHER BENEFIT PROGRAMS. The Company will provide to you all other
benefits generally available to those serving in equivalent positions, as the
same may be in effect from time to time.
5. OTHER ACTIVITIES DURING YOUR ENGAGEMENT WITH THE COMPANY.
5.1 Except with the prior written consent of the Company's Board of
Directors, you will not during the term of this Agreement undertake or engage in
any other employment or occupation except as permitted by Section 5.3. This
provision shall not be deemed to preclude
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your co-employment relationship with ADP TotalSource, your membership in
professional societies, reasonable service on the board or similar governing
body of any not-for-profit organization, lecturing or the acceptance of honorary
positions, that are in any case incidental to your service for the Company,
which are not adverse or antagonistic to or competitive with the Company or its
subsidiaries or affiliates, their business or prospects, financial or otherwise
and are consistent with your obligations regarding the confidential, proprietary
and trade secret information of the Company and its subsidiaries and affiliates
pursuant to the Proprietary Information and Inventions Agreement between you and
the Company.
5.2 Except as permitted by Section 5.3, you will not assume or
participate in, directly or indirectly, whether as an officer, director,
stockholder, partner, proprietor, associate, representative or otherwise, any
position or interest adverse or antagonistic to the Company or its subsidiaries
or affiliates, their business or prospects, financial or otherwise, or take any
action towards any of the foregoing.
5.3 During the term of this Agreement, except on behalf of the Company
or its subsidiaries or its affiliates, you will not, directly or indirectly,
whether as an officer, director, stockholder, partner, proprietor, associate,
representative or otherwise, become or be interested in any other person,
corporation, firm, partnership or other entity whatsoever which directly
competes with the Company or its subsidiaries or affiliates, in any part of the
world, in any line of business engaged in (or planned to be engaged in) by the
Company or its subsidiaries or affiliates (or any successor to their
businesses). With respect to any company or partnership which does directly
compete with the Company or its subsidiaries or affiliates, this Section 5.3
shall not prohibit you from owning (i) as a passive investor only, an aggregate
of not more than one percent (1%) of the total stock or equity interests of such
company or partnership if the same are publicly traded, or (ii) stock or equity
interests of such company or partnership through mutual funds or other similar
investment vehicles over which you retain no investment discretion.
6. POST-ENGAGEMENT ACTIVITIES.
6.1 You understand and acknowledge that the provisions of this Section
6 are necessary to protect the legitimate business interests of the Company and
are fair and reasonable for numerous reasons, including your receipt of the
specific consideration expressed in Section 3 of this Agreement. In addition, as
a result of your position with the Company, you have had, and will continue to
have, access to significant confidential, proprietary or trade secret
information of the Company, so that, if you were employed by a competitor of the
Company, there would be a substantial risk to the Company of your use of its
confidential, proprietary or trade secret information. Based on the foregoing,
for a period of twelve (12) months after the termination of your engagement by
the Company, absent the Company's prior written approval (with concurrence by
the Board of Directors of the Company), you will not directly or indirectly:
(a) render any services to, or engage in any activities for,
any other person, firm, corporation or business organization with
respect to any product, process, technology or service, in existence or
under development which substantially resembles or competes with a
product, process, or service of the Company in existence or under
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development upon which you worked or exercised supervisory
responsibility at any time during your engagement by the Company;
(b) solicit any person engaged by the Company to break their
engagement with the Company or offer or cause to be offered employment
to any person who was engaged by the Company at any time during the six
(6) months prior to the termination of your engagement by the Company;
(c) entice, induce or encourage any person engaged by the
Company to engage in any activity which, were it done by you, would
violate any provision of this Section 6; or
(d) otherwise attempt to interfere with or disrupt the
business or activities of the Company or its subsidiaries or
affiliates.
You agree that if you act in violation of this Section 6, the number of days
that you are in violation will be added to the time period specified in this
Section 6.
6.2 Regardless of the foregoing, the provisions of this Section 6 shall
not apply to you (i) in the event that the Company breaches any material term or
provision hereof and has not cured such breach within 60 days after receiving
written notice of the breach, (ii) the Company terminates you for any reason
(other than Cause), or (iii) you "resign for just cause" (as described in
Section 2.3 hereof).
7. REMEDIES. Your duties under Section 6, if any, shall survive
termination of your engagement by the Company. You acknowledge and agree that
any breach by you of any of the provisions of Section 6.1 of this Agreement will
result in irreparable and continuing damage to the Company and that a remedy at
law for any breach or threatened breach by you of the provisions of Section 6.1
would be inadequate, and you therefore agree that the Company shall be entitled
to temporary, preliminary and permanent injunctive relief in case of any such
breach or threatened breach. The prevailing party in an action under this
Agreement shall be entitled to recover its costs and expenses, including
attorneys' fees. Nothing in this Agreement shall be construed to prohibit the
Company from pursuing any other remedy available to it at law or in equity, the
parties having agreed that all remedies are cumulative.
8. MISCELLANEOUS.
8.1 ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by reorganization, merger or consolidation and any
assignee of all or substantially all of its business and properties or the
business or properties of the Company or any subsidiary or division thereof,
but, except as to any such successor or assignee of the Company, neither this
Agreement nor any rights or benefits hereunder may be assigned by the Company or
you.
8.2 INTERPRETATION. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this
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Agreement. If moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, the parties expressly agree that a
court may rewrite and modify such provisions so as to be enforceable to the
fullest extent compatible with the applicable law as it shall then appear.
8.3 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to the Company: TurboWorx, Inc.
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Attention: CEO
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8.4 WAIVERS. If either party shall waive any breach of any provision of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
8.5 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning hereof.
8.6 APPLICABLE LAW. This Agreement shall be governed by and construed
(both as to validity and performance) and enforced in accordance with the laws
of the State of Connecticut applicable to agreements made and to be performed
wholly within such jurisdiction. The Company and you hereby agree that the
courts of the State of Connecticut located in the County of New Haven and the
United States District Court for the District of Connecticut each shall have
personal jurisdiction and proper venue with respect to any dispute between the
Company and you.
8.7 COMPLETE AGREEMENT; AMENDMENTS; PRIOR AGREEMENTS. The foregoing,
together with the Proprietary Information and Inventions Agreement (the
"Inventions Agreement") between you and the Company, is the entire agreement of
the parties with respect to the subject matter hereof and may not be amended,
supplemented, canceled or discharged except by written instrument executed by
both parties hereto. In the event of a conflict between the provisions of this
Agreement and the Inventions Agreement, the provisions of this Agreement shall
control.
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8.8 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which when so executed and delivered shall constitute a complete and original
instrument but all of which together shall constitute one and the same
agreement, and it shall not be necessary when making proof of this Agreement or
any counterpart thereof to account for any other counterpart.
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If you are in agreement with the foregoing, please so indicate by
signing and returning the enclosed copy of this letter.
TURBOWORX, INC.
By: _____________________
Name:
Title:
ACCEPTED AND AGREED:
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