IOTA COMMUNICATIONS, INC. EMPLOYMENT AGREEMENT
Exhibit 10.4
THIS EMPLOYMENT AGREEMENT (this
“Agreement”) is
made and entered into on this 9th day of December 2019, (the
“Effective
Date”) by and between Iota Communications, Inc., a
Delaware corporation (“Company”), and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (“Executive”).
WHEREAS, the Company desires to
secure for itself the services of Executive, and Executive wishes
to furnish such services to the Company, pursuant to the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of
the premises and of the mutual promises and covenants contained
herein, Company and Executive, intending to be legally bound,
hereby agree as follows:
1.
Employment.
(a) Term.
This Agreement shall be effective as of the Effective Date and
continue until the two-year anniversary thereof, unless sooner
terminated by either party as hereinafter provided. In addition,
this Agreement shall automatically renew for periods of one (1)
year unless either party gives written notice to the other party at
least ninety (90) days prior to the end of the Term (as defined
below) or at least ninety (90) days prior to the end of any one (1)
year renewal period that the Agreement shall not be further
extended. The period commencing on the Effective Date and ending on
the date on which the term of Executive’s employment under
this Agreement terminates is referred to herein as the
“Term.”
(b) Duties.
During the Term, Executive shall be employed by the Company as the
Chief Financial Officer with the duties, responsibilities and
authority commensurate therewith. Executive shall report to the
Chief Executive Officer of the Company (the “CEO”) and shall perform all duties
and accept all responsibilities incident to such position as may be
reasonably assigned to him by the CEO.
(c) Best
Efforts. During the Term, Executive shall devote his best
efforts and full time and attention to promote the business and
affairs of the Company, and may not, without the prior written
consent of the CEO, operate, participate in the management,
operations or control of, or act as an employee, officer,
consultant, agent or representative of, any type of business or
service (other than as an employee of the Company). It shall not be
deemed a violation of the foregoing for Executive to (i) act or
serve as a director, trustee or committee member of any civic or
charitable organization; (ii) manage his personal, financial and
legal affairs; or (iii) serve as a director of an organization that
is not a civic or charitable organization with the prior consent of
the CEO which consent shall not be unreasonably withheld, in all
cases so long as such activities (described in clauses (i), (ii)
and (iii)) are permitted under the Company’s code of conduct
and employment policies and do not materially interfere with or
conflict with his obligations to the Company hereunder, including,
without limitation, obligations pursuant to Section 6
below.
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2.
Compensation.
(a)
Base Salary. During
the Term, the Company shall pay Executive a base salary
(“Base
Salary”) at the annual rate of $210,000, less payroll
deductions and all required withholdings, payable in regular
periodic payments in accordance with the Company’s normal
payroll practices. The Base
Salary shall be prorated for any partial year of employment on the
basis of a 365-day year. Executive’s Base Salary shall be
subject to review, and at the approval of the CEO, subject to
increase (but not decrease) during the Term, based upon the
performance of Executive and the Company, as determined by CEO, in
accordance with the Company’s normal compensation and
performance review policies for senior executives
generally.
(b)
Bonus. In addition
to Executive’s Base Salary, Executive shall be eligible to
receive an annual bonus for each fiscal year during the Term (the
“Bonus”) in
accordance with the terms of the Company’s Annual Incentive
Plan, as amended from time to time. The Bonus will be awarded in
the sole discretion of the Company’s Board of Directors (the
“Board”), based
upon the Board’s determination as to the Executive’s
attainment of certain individual and corporate performance goals
and targets and the business condition of the Company. The target
amount of Executive’s annual Bonus shall be 50% of Base
Salary, with 25% in cash and 25% in common stock. The bonus
formulas, performance milestones and other elements of
Executive’s bonus opportunities shall be established by the
Board, in its sole discretion, and communicated in writing
(including email) to Executive from time to time. The Bonus amount
may be more or less than the target amount, as determined by the
Board in its sole discretion. Executive’s Bonus shall be paid
in annual installments, with the first payment to be paid at the
end of the fiscal year (May 31, 2020).
(c)
Equity
Award.
(i) Subject
to the terms of the Company’s 2017 Equity Incentive Plan, as
amended from time to time (the “2017 Equity
Plan”) and the approval of the Board, the Company will
grant Executive a stock option to purchase 2 million (2,000,000)
shares of Common Stock with an exercise price equal as follows: 50%
at $0.40, 25% at $0.80 and 25% at $1.20. (the “Option
Award”). The Option Award will be granted as soon as
practicable following the Effective Date and will be subject to a
3-year vesting period, with eight and one-third percent (8.33%) of
the Option Award vesting in a series of twelve (12) successive
equal quarterly installments, provided that Executive is employed
by the Company on each such vesting date. The Option Award will be
governed by the Plan and other documents issued in connection with
the grant.
(ii) In
addition, during the Term, Executive shall be eligible to
participate in any long-term equity incentive programs established
by the Company for its senior level executives generally, including
the 2017 Equity Plan (or successor plan), at levels determined by
the Board in its sole discretion, commensurate with
Executive’s position.
(d) Vacation.
During the Term, Executive shall be entitled to vacation, holiday
and sick leave at levels generally commensurate with those provided
to other senior executives of the
Company, in accordance with the
Company’s vacation, holiday and other pay-for-time-not worked
policies; provided, however, that Executive shall be entitled to
not less than twenty (20) days of paid vacation each calendar year,
prorated from any period of employment of less than twelve (12)
months in a calendar year. Such paid time off may be carried over
from year to year to the extent permitted in accordance with
standard Company policy and shall be paid to the extent accrued
(and to the extent not used) as of Executive’s termination of
employment.
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(e) Employee
Benefits. Executive shall, in accordance with Company policy
and the terms of the applicable plan documents, be eligible to
participate in benefits under any benefit plan or arrangement that
may be in effect from time to time and made available to similarly
situated Company Executives. The Company reserves the right in its
sole discretion to modify, add or eliminate benefits at any time.
All benefits shall be subject to the terms and conditions of the
applicable plan documents, which may be amended or terminated at
any time.
(f) Expense
Reimbursement. During the Term, the Company shall reimburse
Executive, in accordance with the policies and practices of the
Company in effect from time to time, for all reasonable and
necessary business expenses and other disbursements incurred by him
for or on behalf of the Company in connection with the performance
of his duties hereunder upon presentation by Executive to the
Company of appropriate documentation thereof.
3.
Termination of
Employment.
(a) Death
or Disability. Executive’s employment hereunder shall
terminate upon Executive’s death or involuntary termination
of employment by the Company on account of his Disability (as
defined below), subject to the requirements of applicable law. If
Executive’s employment terminates due to death or involuntary
termination by the Company on account of Executive’s
Disability, no payments shall be due under this Agreement, except
that Executive (or in the event of Executive’s death,
Executive’s executor, legal representative, administrator or
designated beneficiary, as applicable), shall be entitled to
receive any amounts earned, accrued and owing but not yet paid
under Section 2 above and any benefits accrued and due under any
applicable benefit plans and programs of the Company. For purposes
of this Agreement, the term “Disability”
shall mean such physical or mental illness or incapacity of
Executive as shall (i) prevent him from substantially performing
his customary services and duties to the Company, and (ii) continue
for periods aggregating more than sixty (60) days in any six
(6)-month period. The Company shall determine whether there is a
Disability after consultation with a qualified, independent
physician. Executive shall cooperate with the Company, including
making himself reasonably available for examination by physicians
at the Company’s request, to determine whether or not he has
incurred a Disability. Executive’s failure (other than a
failure caused by the Disability) to cooperate with the Company in
a determination of Disability shall be treated as Executive’s
voluntary resignation from the Company without Good
Reason.
(b) Termination
for Cause. The Company may terminate Executive’s
employment hereunder at any time for Cause (as defined below) upon
written notice to Executive (as described below), in which event
all payments under this Agreement shall cease, except for any
amounts earned, accrued and owing, but not yet paid under Section 2
above and any benefits accrued and due under any applicable benefit
plans and programs of the Company.
(c) Voluntary
Resignation. Executive may voluntarily terminate his
employment without Good Reason (as defined below) upon sixty (60)
days advance written notice to the Company. In such event, after
the effective date of such termination, no payments shall be due
under this Agreement, except that Executive shall be entitled to
any amounts earned, accrued and owing, but not yet paid under
Section 2 above and any benefits accrued and due under any
applicable benefit plans and programs of the Company.
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(d) Termination
without Cause; Resignation for Good Reason. Except as
provided in Section 4 below, if Executive’s employment is
terminated by the Company (or the surviving company following a
Change in Control (as defined in Section 3(h)(iii) below)) without
Cause or by Executive for Good Reason, either before or after a
Change in Control, the provisions of this Section 3(d) shall apply.
The Company may terminate Executive’s employment with the
Company at any time without Cause upon not less than sixty (60)
days’ prior written notice to Executive. The Company may, in
its sole and absolute discretion, pay Executive his Base Salary in
lieu of any unexpired period of notice and terminate his employment
immediately. Except as provided in Section 4 below, upon
termination of Executive ‘s employment by the Company without
Cause or by Executive for Good Reason, either before or after a
Change in Control, Executive will be entitled to receive Severance
Pay.
(e) Termination
without Cause or Resignation for Good Reason Within Sixty Days
Before or Twelve Months Following a Change in Control.
Notwithstanding anything to the contrary herein, if there is both a
Change in Control and Executive’s employment is terminated
without Cause or by Executive for Good Reason within sixty (60)
days before or within twelve (12) months following such Change in
Control (a “CIC
Termination”), Executive shall be entitled to (i) the
payments set forth under subsection 3(f)(i), (ii) the payment
described in subsection 3(f)(ii) on the same terms and conditions
described in subsection 3(f)(ii), (iii) the payments set forth
under subsection 3(f)(iii), and (iv) in lieu of the benefit
described in subsection 3(f)(iv), notwithstanding any provision to
the contrary in the 2017 Equity Plan (or a successor plan) or any
applicable agreement (including this Agreement), all outstanding
equity grants held by Executive immediately prior to the CIC
Termination which vest based upon Executive’s continued
service over time shall accelerate, become fully vested and/or
exercisable, as the case may be, as of the date of the CIC
Termination and all outstanding equity grants held by Executive
immediately prior to the CIC Termination which vest based upon
attainment of performance criteria shall remain subject to the
terms and conditions of the agreement evidencing such performance
based award. Notwithstanding the foregoing in this Section 3(e), no
amounts under this Section 3(e) will be paid or benefits under this
Section 3(e) will be provided, in each case, upon a CIC Termination
unless Executive executes and does not revoke a Release and
continues to comply with the covenants set forth in Section 6 below
and the provisions of any confidentiality, non-competition,
non-solicitation or invention assignment agreement with the Company
to which Executive is subject.
(f)
Post-Termination
Compensation and Benefits.
(i) Severance
Pay. Upon the occurrence of a qualifying event and subject
to the terms of this Agreement, the Company will pay to Executive
severance as follows: the rate of Executive’s annual Base
Salary in effect at the time of termination will be divided by
twelve (12) (the “Monthly Severance
Amount”). The Company will pay Executive the Monthly
Severance Amount each month for the six (6) month period following
the Termination Date, less applicable tax withholding, in
approximately equal installments beginning within the thirty
(30)-day period following the date of Executive’s termination
of employment and continuing on each payroll date thereafter, in
accordance with the Company’s regular payroll practices. The
first severance payment will include any missed payments during
such thirty (30)-day period.
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(ii) Final
Year Bonus. The Company will
pay to Executive a pro rata Annual Bonus for the year in which the
termination of employment occurs, which shall be determined based
on Executive’s actual Annual Bonus earned for the year in
which termination of employment occurs (if any), based on actual
performance, multiplied by a fraction, the numerator of which is
the number of days in which Executive was employed by
Company during the year in which the termination of employment
occurs, and the denominator of which is three hundred sixty-five
(365). The pro rata Annual Bonus described in this subsection
3(f)(ii) will be paid at the same time and under the same terms and
conditions and on the same schedule as bonuses are paid to other
executives of the Company, subject to Section 5(b)
below.
(iii) COBRA
Reimbursement. For the six (6) month period following
Executive’s termination of employment, provided that
Executive timely elects COBRA, the Company will reimburse Executive
for the monthly COBRA cost of continued medical and dental coverage
for Executive and, where applicable, his spouse and dependents, at
the level in effect as of the date of Executive’s termination
of employment, less the employee portion of the applicable premiums
that Executive would have paid had he remained employed during the
such six (6) month period (the COBRA continuation coverage period
shall run concurrently with the six (6) month period that Executive
is provided with medical and dental coverage under subsection
3(f)(i)). These reimbursements will commence within the thirty
(30)-day period following the date of Executive’s termination
of employment and will be paid on the first payroll date of each
month, provided that Executive demonstrates proof of payment of the
applicable premiums prior to the applicable reimbursement payment
date. Notwithstanding the foregoing, the Company’s
reimbursement of the monthly COBRA premiums in accordance with this
subsection 3(f)(iii) shall cease immediately upon the earlier of:
(A) the end of the six (6) month period following Executive’s
termination of employment, or (B) the date that Executive is
eligible for comparable coverage with a subsequent employer.
Notwithstanding the foregoing, the Company reserves the right to
restructure the foregoing COBRA premium reimbursement arrangement
in any manner necessary or appropriate to avoid fines, penalties or
negative tax consequences to the Company or Executive (including,
without limitation, to avoid any penalty imposed for violation of
the nondiscrimination requirements under the Patient Protection and
Affordable Care Act or the guidance issued thereunder), as
determined by the Company in its sole and absolute
discretion.
(iv) Equity
Vesting. Notwithstanding any provision to the contrary in
the 2017 Equity Plan (or a successor plan) or any applicable
agreement (including this Agreement), all outstanding equity grants
held by Executive immediately prior to Executive’s
termination date which vest based upon Executive’s continued
service over time that would have become vested during the twelve
(12) month period following Executive’s termination date had
Executive remained employed during such twelve (12) month period
shall accelerate, become fully vested and/or exercisable, as the
case may be, as of Executive’s termination date. All
outstanding equity grants held by Executive immediately prior to
Executive’s termination date which vest based upon attainment
of performance criteria shall remain subject to the terms and
conditions of the agreement evidencing such performance based
award.
(v) Accrued
Compensation and Benefits. Executive shall also be entitled
to any amounts earned, accrued and owing but not yet paid under
Section 2 above and any benefits accrued and due under any
applicable benefit plans and programs of the Company without regard
to whether Executive does not execute or revokes the
Release.
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(g) Pre-Condition
for Post-Termination Compensation and Benefits. The Company will not be required to pay the
Severance Pay, Final Year Bonus or COBRA Reimbursement unless: (i)
within thirty (30) days following termination, Executive executes,
delivers to the Company, and does not revoke, a written release
agreement (“Release
Agreement”) in a form
satisfactory to the Company, releasing the Company, each parent,
subsidiary, affiliate of the Company, and any of their
respective past or present officers, directors, mangers, employees
or agents from all liability with respect to all matters arising
out of Executive’s employment by the Company, or the
termination thereof (other than claims for any entitlements under
the terms of this Agreement or under any plans or programs of the
Company under which Executive has accrued and is due a benefit) and
(ii) Executive continues to comply with the provisions of this
Agreement. Notwithstanding any provision of this Agreement to the
contrary, in no event shall the timing of Executive’s
execution of the Release, directly or indirectly, result in
Executive designating the calendar year of payment, and if a
payment that is subject to execution of the Release could be made
in more than one taxable year, payment shall be made in the later
taxable year.
(h)
Definitions.
(i) For
purposes of this Agreement, the term “Cause” shall
mean: (i) Executive’s conviction of a felony; (ii) conviction
of a misdemeanor in connection with the performance of
Executive’s obligations to the Company or which adversely
affects Executive’s ability to perform obligations to the
Company; (ii) Executive’s willful disloyalty, deliberate
dishonesty or breach of fiduciary duty related to Executive’s
employment by the Company; (ii) a material breach by Executive of
the terms of this Agreement; (iv) the commission by Executive of
any fraud or embezzlement against the Company; (v)
Executive’s unreasonable refusal to follow a lawful directive
of a superior; or (vi) Executive’s substantial violation of
the policies contained in the
Company’s Employee
Handbook.
(ii) For
purposes of this Agreement, “Good Reason”
shall mean (i) a material adverse change by the Company in
Executive’s duties, authority or responsibilities as Chief
Financial Officer which is accompanied by a material reduction in
Executive’s base salary, bonus potential, and option grant
potential; (ii) a failure by the Company to pay any amount due and
owing hereunder; (iii) a material breach of this Agreement by the
Company which has not been cured within ten (10) business days
after written notice thereof by Executive. Notwithstanding any
provision of this definition of Good Reason to the contrary,
Executive shall not have Good Reason for termination unless
Executive gives written notice of termination for Good Reason
within thirty (30) days after the event giving rise to Good Reason
occurs, the Company does not correct the action or failure to act
that constitutes the grounds for Good Reason, as set forth in
Executive’s notice of termination, within thirty (30) days
after the date on which Executive gives written notice of
termination, and Executive terminates employment within sixty (60)
days after the event that constitutes Good Reason. If
Executive’s resignation occurs after such time, the
resignation shall be treated as a voluntary resignation other than
for Good Reason and Executive will not be entitled to severance
benefits under this Agreement.
(iii) For
purposes of this Agreement, the term “Change in
Control” shall have the same meaning ascribed to such
term under the 2017 Equity Plan, as in effect on the date hereof
and as it may be amended from time to time, or if the 2017 Equity
Plan is no longer in effect, a successor plan thereto.
(i) Resignation
of All Other Positions. Upon termination of the
Executive’s employment hereunder for any reason, the
Executive agrees to resign, effective on the Termination Date from
all positions that the Executive holds as an officer or member of
the board of directors (or a committee thereof) of the Company or
any of its affiliates.
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4.
Application of Section
280G. In the event that it shall be determined that any
payment or distribution in the nature of compensation (within the
meaning of section 280G(b)(2) of the Internal Revenue Code of 1986,
as amended (the “Code”)) to or
for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (a “Payment”),
would constitute an “excess parachute payment” within
the meaning of section 280G of the Code, the aggregate present
value of the Payments under the Agreement shall be reduced (but not
below zero) to the Reduced Amount (defined below), provided that
the reduction shall be made only if the Accounting Firm (described
below) determines that the reduction will provide Executive with a
greater net after-tax benefit than would no reduction. The
“Reduced
Amount” shall be an amount expressed in present value
which maximizes the aggregate present value of Payments under this
Agreement without causing any Payment under this Agreement to be
subject to the Excise Tax (defined below), determined in accordance
with section 280G(d)(4) of the Code. The term “Excise Tax”
means the excise tax imposed under section 4999 of the Code,
together with any interest or penalties imposed with respect to
such excise tax. Payments under this Agreement shall be reduced on
a nondiscretionary basis in such a way as to minimize the reduction
in the economic value deliverable to Executive. Where more than one
payment has the same value for this purpose and they are payable at
different times they will be reduced on a pro rata basis. Only
amounts payable under this Agreement shall be reduced pursuant to
this Section 4. All determinations to be made under this Section 4
shall be made by an independent certified public accounting firm
selected by the Company immediately prior to the Change in Control
(the “Accounting
Firm”), which shall provide its determinations and any
supporting calculations both to the Company and Executive within
ten (10) days of the Change in Control. Any such determination by
the Accounting Firm shall be binding upon the Company and
Executive. All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in this Section 4 shall
be borne solely by the Company.
5.
Section
409A.
(a) Compliance
with Section 409A. This Agreement is intended to comply with
section 409A of the Code and its corresponding regulations, or an
exemption, and payments may only be made under this Agreement upon
an event and in a manner permitted by section 409A, to the extent
applicable. Severance benefits under the Agreement are intended to
be exempt from section 409A of the Code under the “short-term
deferral” exception, to the maximum extent applicable, and
then under the “separation pay” exception, to the
maximum extent applicable. For purposes of section 409A of the
Code, all payments to be made upon a termination of employment
under this Agreement may only be made upon a “separation from
service” within the meaning of such term under section 409A
of the Code, each payment made under this Agreement shall be
treated as a separate payment and the right to a series of
installment payments under this Agreement is to be treated as a
right to a series of separate payments. In no event shall
Executive, directly or indirectly, designate the calendar year of
payment. All reimbursements and in-kind benefits provided under
this Agreement shall be made or provided in accordance with the
requirements of section 409A of the Code, including, where
applicable, the requirement that (i) any reimbursement is for
expenses incurred during Executive’s lifetime (or during a
shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for reimbursement, or in-kind benefits
provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year
following the year in which the expense is incurred, and (iv) the
right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.
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(b) Payment
Delay. Notwithstanding any provision in this Agreement to
the contrary, if at the time of Executive’s separation from
service with the Company, the Company has securities which are
publicly traded on an established securities market and Executive
is a “specified employee” (as defined in section 409A
of the Code) and it is necessary to postpone the commencement of
any severance payments otherwise payable pursuant to this Agreement
as a result of such separation from service to prevent any
accelerated or additional tax under section 409A of the Code, then
the Company will postpone the commencement of the payment of any
such payments hereunder (without any reduction in such payments
ultimately paid or provided to Executive) that are not otherwise
exempt from section 409A of the Code, until the first payroll date
that occurs after the date that is six (6) months following
Executive’s separation from service with the Company. If any
payments are postponed due to such requirements, such postponed
amounts will be paid in a lump sum to Executive on the first
payroll date that occurs after the date that is six (6) months
following Executive’s separation from service with the
Company. If Executive dies during the postponement period prior to
the payment of the postponed amount, the amounts withheld on
account of section 409A of the Code shall be paid to the personal
representative of Executive’s estate within sixty (60) days
after the date of Executive’s death.
6.
Restrictive Covenants and
Representations.
(a) Confidential
and Proprietary Information. Contemporaneously with this
Agreement, Executive executed the Company’ s standard
Proprietary Information and Invention Assignment Agreement,
attached hereto as Exhibit
A (the “Proprietary Information and
Invention Assignment Agreement”), all of the terms of
which are hereby incorporated into this Agreement by reference.
Executive hereby agrees that, during the Term and thereafter,
Executive shall hold in strict confidence any proprietary or
Confidential Information (as defined below) related to the Company
and its parents, subsidiaries and affiliates, except that he may
disclose such information pursuant to law, court order, regulation
or similar order or in accordance with Sections 6(g) and (h) below.
For purposes of this Agreement, the term “Confidential
Information” shall mean all information of the Company
or any of its parents, subsidiaries and affiliates (in whatever
form) which is not generally known to the public, including without
limitation any inventions, processes, methods of distribution,
customer lists, trade secrets, information regarding plans for
research, development, new products, marketing and selling,
business plans, budgets, unpublished financial statements,
licenses, prices, costs, suppliers and customers and information
regarding the skills and compensation of Company employees.
Notwithstanding the foregoing, it is understood that, at all times,
Executive is free to use information which is generally known in
the trade or industry, which is not gained as a result of a breach
of this Agreement, and which is acquired as a result of
Executive’s own skill, knowledge, know-how and experience.
Executive agrees that, upon the termination of this Agreement, he
shall not take, without the prior written consent of the Company or
in accordance with Sections 6(g) and (h) below, any document (in
whatever form) of the Company or its parents, subsidiaries or
affiliates, which is of a confidential nature relating to the
Company or its parents, subsidiaries or affiliates, or, without
limitation, relating to its or their methods of distribution, or
any description of any formulas or secret processes and will return
any such information (in whatever form) then in his
possession.
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(b) Non-Competition.
Executive acknowledges that during his employment with the Company,
Executive will become familiar with trade secrets and other
Confidential Information concerning the Company, its subsidiaries
and their respective predecessors, and that Executive’s
services will be of special, unique and extraordinary value to the
Company. Accordingly, Executive hereby agrees that, subject to the
requirements of applicable law, at any time during the Term, and
for a period of six (6) months after Executive’s date of
termination of employment for any reason (the “Restriction
Period”), Executive will
not, directly or indirectly, whether for compensation or not, own,
manage, control, participate in, consult with, render services for,
or in any manner engage in any business involving or related to
(directly or indirectly) products or services that are competitive
with products and services that were or were being designed,
conceived, marketed, sold, distributed and/or developed by the
Company during Executive’s employment by the Company or at
the time of termination of Executive’s employment by the
Company. This restriction applies within any geographical area in
which, as of the date of Executive’s termination of
employment, the Company or its subsidiaries engage in business or
demonstrably plan to engage in business (the
“Business”).
It will not be considered a violation of this Section 6(b) for
Executive to be a passive owner of not more than 1% of the
outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the
business of such corporation. In addition, the restrictions
contained in this section 6(b) shall not prevent Executive from
accepting employment following termination of employment with the
Company with a large diversified organization with separate and
distinct divisions that do not compete, directly or indirectly,
with the Business, as long as prior to accepting such employment,
the Company receives separate written assurances from the
prospective employer and from Executive, satisfactory to the
Company, to the effect that Executive will not render any services,
directly or indirectly, to any division or business unit that
competes, directly or indirectly, with the Business. During the
restrictive period set forth in the section, Executive will inform
any new employer, prior to accepting employment, of the existence
of this Agreement and provide such employer with a copy of this
Agreement.
(c) Non-Solicitation.
Executive hereby agrees that during the Term and the Restriction
Period, Executive will not, directly or indirectly, whether for
compensation or not, on his own behalf or through another entity:
(i) solicit, induce or attempt to induce any employee of the
Company or its subsidiaries to leave the employ of the Company or
its subsidiaries, or in any way interfere with the relationship
between the Company or its subsidiaries and any employee thereof or
otherwise hire, retain, engage, employ or receive the services of
an individual who was an employee of the Company or its
subsidiaries at any time during such Restriction Period, except any
such individual whose employment was terminated by the Company more
than six (6) months prior to Executive’s separation from the
Company; (ii) solicit, induce or attempt to induce any person, firm
or company who was a client, customer, supplier, agent or
distributor of the Company or its affiliates or subsidiaries during
the one-year period immediately preceding the Termination Date to
decrease or cease doing business with the Company or its
subsidiaries; or (iii) have any dealings with any person, firm or
company who was a client, customer, supplier, agent or distributor
of the Company or its affiliates or subsidiaries during the
one-year period immediately preceding the Termination Date with
whom Executive shall have been engaged or involved by virtue of his
duties during the one-year period immediately preceding the
Termination Date where such dealing may lead to such person or
entity to cease doing business with the Company on substantially
the same terms as previously (or at all).
(d) Judicial
Modification of Restrictions. If the period of time or area
specified in Sections 6(b) or 6(c) should be adjudged unreasonable
in any court proceeding, then the period of time shall be reduced
by such number of months or the area shall be reduced by the
elimination of such portion thereof as deemed unreasonable, so that
this covenant may be enforced during such period of time and in
such area as is adjudged to be reasonable.
9
(e) Return
of Property. Upon termination of Executive’s
employment with the Company for any reason whatsoever, voluntarily
or involuntarily (and in all events within five (5) days of
Executive’s date of termination), and at any earlier time the
Company requests, Executive will deliver to the person designated by the Company
all originals and copies of all documents and property of the
Company in Executive’s possession, under Executive’s
control or to which Executive may have access, including but not
limited to, any office, computing or communications equipment
(e.g., laptop computer, facsimile machine, printer, cellular phone,
etc.) that he has had or has been using, and any business or
business-related files that he has had in his possession, except as
otherwise permitted in accordance with Sections 6(g) and (h) below.
Executive will not reproduce or appropriate for Executive’s
own use, or for the use of others, any property, Confidential
Information or Company inventions, and shall remove from any
personal computing or communications equipment all information
relating to the Company, except as otherwise permitted in
accordance with Sections 6(g) and (h) below.
(f) Non-Disparagement.
Executive agrees that Executive will not disparage the Company, its
subsidiaries and parents, and their respective Executives,
directors, investors, employees, and agents, and its and their
respective successors and assigns, heirs, executors, and
administrators, or make any public statement reflecting negatively
on the Company, its subsidiaries and parents, and their respective
officers, directors, investors, employees, and agents, and its and
their respective successors and assigns, heirs, executors, and
administrators, to third parties, including, but not limited to,
any matters relating to the operation or management of the Company,
irrespective of the truthfulness or falsity of such statement,
except as may otherwise be required by applicable law or compelled
by process of law, except as otherwise permitted in accordance with
Sections 6(g) and (h) below. The Company shall instruct the members
of the Board and members of executive management not make any
disparaging or negative remarks, either oral or in writing,
regarding Executive.
(g) Cooperation.
During the Term and thereafter, Executive shall cooperate with the
Company and its parents, subsidiaries and affiliates, upon the
Company’s reasonable request, with respect to any internal
investigation or administrative, regulatory or judicial proceeding
involving matters within the scope of Executive’s duties and
responsibilities to the Company during the Term (including, without
limitation, Executive being available to the Company upon
reasonable notice for interviews and factual investigations,
appearing at the Company’s reasonable request to give
testimony without requiring service of a subpoena or other legal
process, and turning over to the Company all relevant Company
documents which are or may come into Executive’s possession
during the Term); provided, however, that any such request
by the Company shall not be unduly burdensome or interfere with
Executive’s personal schedule or ability to engage in gainful
employment. In the event the Company requires Executive’s
cooperation in accordance with this Section 6(f), the Company shall
reimburse Executive for reasonable out-of-pocket expenses
(including travel, lodging and meals and reasonable
attorneys’ fees) incurred by Executive in connection with
such cooperation, subject to reasonable documentation.
(h) Reports
to Government Entities. Nothing in this Agreement or the
Proprietary Information and Invention Assignment Agreement,
restricts or prohibits Executive from initiating communications
directly with, responding to any inquiries from, providing
testimony before, providing Confidential Information to, reporting
possible violations of law or regulation to, or from filing a claim
or assisting with an investigation directly with a self-regulatory
authority or a government agency or entity, including the U.S.
Equal Employment Opportunity Commission, the Department of Labor,
the National Labor Relations Board, the Department of Justice, the
Securities and Exchange Commission, the Congress, and any agency
Inspector General (collectively, the “Regulators”),
or from making other disclosures that are protected under the
whistleblower provisions of state or federal law or regulation.
However, to the maximum extent permitted by law,
10
Executive is waiving his right to
receive any individual monetary relief from the Company or any
others covered by the Release of Claims resulting from such claims
or conduct, regardless of whether Executive or another party has
filed them, and in the event Executive obtains such monetary relief
the Company will be entitled to an offset for the payments made
pursuant to this Agreement. This Agreement does not limit
Executive’s right to receive an award from any Regulator that
provides awards for providing information relating to a potential
violation of law. Executive does not need the prior authorization
of the Company to engage in conduct protected by this paragraph,
and Executive does not need to notify the Company that Executive
has engaged in such conduct.
Please take notice that federal law
provides criminal and civil immunity to federal and state claims
for trade secret misappropriation to individuals who disclose a
trade secret to their attorney, a court, or a government official
in certain, confidential circumstances that are set forth at 18
U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the
reporting or investigation of a suspected violation of the law, or
in connection with a lawsuit for retaliation for reporting a
suspected violation of the law.
(i)
Executive
Representations.
(i) Executive
represents and warrants to the Company that there are no
restrictions, agreements or understandings whatsoever to which
Executive is a party which would prevent or make unlawful
Executive’s execution of this Agreement or Executive’s
employment hereunder, which is or would be inconsistent or in
conflict with this Agreement or Executive’s employment
hereunder, or would prevent, limit or impair in any way the
performance by Executive of the obligations hereunder. In addition,
Executive has disclosed to the Company all restraints,
confidentiality commitments, and other employment restrictions that
he has with any other employer, person or entity. Executive
covenants that in connection with his provision of services to the
Company, Executive shall not breach any obligation (legal,
statutory, contractual or otherwise) to any former employer or
other person, including, but not limited to, obligations relating
to confidentiality and proprietary rights.
(ii) Upon
and after Executive’s termination or cessation of employment
with the Company and until such time as no obligations of Executive
to the Company hereunder exist, Executive shall (A) provide a
complete copy of this Agreement to any person, entity or
association engaged in a competing business with whom or which
Executive proposes to be employed, affiliated, engaged, associated
or to establish any business or remunerative relationship prior to
the commencement of any such relationship and (B) shall notify the
Company of the name and address of any such person, entity or
association prior to the commencement of such
relationship.
7.
Legal and Equitable
Remedies. Because Executive’s services are personal
and unique and Executive has had and will continue to have access
to and has become and will continue to become acquainted with the
proprietary information of the Company, and because any breach by
Executive of any of the restrictive covenants contained in Section
6 would result in irreparable injury and damage for which money
damages would not provide an adequate remedy, the Company shall
have the right to enforce Section 6 and any of its provisions by
injunction, specific performance or other equitable relief, without
bond and without prejudice to any other rights and remedies that
the Company may have for a breach, or threatened breach, of the
restrictive covenants set forth in Section 6. Executive agrees that
in any action in which the Company seeks injunction, specific
performance or other equitable relief, Executive will not assert or
contend that any of the provisions of Section 6 are unreasonable or
otherwise unenforceable. Executive irrevocably and unconditionally
(a) agrees that any legal proceeding arising out of this paragraph
may be brought in the United States
District Court for the District of Pennsylvania, or if such court
does not have jurisdiction or will not accept jurisdiction, in any
court of general jurisdiction in Lehigh County, Pennsylvania, (b)
consents to the non-exclusive jurisdiction of such court in any
such proceeding, and (c) waives any objection to the laying of
venue of any such proceeding in any such court. Executive also
irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers.
11
8.
Survivability. The respective
rights and obligations of the parties under this Agreement shall
survive any termination of Executive’s employment to the
extent necessary to the intended preservation of such rights and
obligations.
9.
Assignment. All of the terms
and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and
responsibilities of Executive under this Agreement are of a
personal nature and shall not be assignable or delegable in whole
or in part by Executive. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the
business or assets of the Company, within fifteen (15) days of such
succession, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place and
Executive acknowledges that in such event the obligations of
Executive hereunder, including but not limited to those under
Section 6, will continue to apply in favor of the
successor.
10.
Entire Agreement;
Amendment, Waiver. This Agreement, together with the
Proprietary Information and Invention Assignment Agreement by and
between Executive and the Company, sets forth the entire
understanding between the parties hereto with respect to the
subject matter hereof and cannot be changed, modified, extended or
terminated except upon written amendment approved by the CEO and
executed on the Company’s behalf by a duly authorized officer
(other than Executive) and by Executive. This Agreement supersedes
the provisions any other agreement between Executive and the
Company that relate to any matter that is also the subject of this
Agreement.
11.
Remedies Cumulative; No
Waiver. No remedy conferred upon a party by this Agreement
is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any
other remedy given under this Agreement or now or hereafter
existing at law or in equity. No delay or omission by a party in
exercising any right, remedy or power under this Agreement or
existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by
such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole
discretion.
12.
Beneficiaries/References.
Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries
to receive any compensation or benefit payable under this Agreement
following Executive’s death by giving the Employer written
notice thereof In the event of Executive’s death or a
judicial determination of Executive’s incompetence, reference
in this Agreement to Executive shall be deemed, where appropriate,
to refer to Executive’s beneficiary, estate or other legal
representative.
13.
Withholding. All
payments under this Agreement shall be made subject to applicable
tax withholding, and the Company shall withhold from any payments
under this Agreement all federal, state and local taxes as the
Company is required to withhold pursuant to any law or governmental
rule or regulation. Executive shall
bear all expense of, and be solely responsible for, all federal,
state and local taxes due with respect to any payment received
under this Agreement.
12
14.
Indemnification.
The Company agrees to indemnify and hold Executive harmless to the
fullest extent permitted by the laws of the State of Delaware and
under the bylaws of the Company, both as in effect at the time of
the subject act or omission. In connection therewith, Executive
shall be entitled to the protection of any insurance policies which
the Company elects to maintain generally for the benefit of the
Company’s directors and officers, against all costs, charges
and expenses whatsoever incurred or sustained by Executive in
connection with any action, suit or proceeding to which Executive
may be made a party by reason of his being or having been a
director, officer or employee of the Company, and which Company
shall maintain with a minimum coverage limit of $3 million. This
provision shall survive any termination of Executive’s
employment hereunder.
15.
Notices. Any notice
or communication required or permitted under the terms of this
Agreement shall be in writing and shall be delivered personally, or
sent by registered or certified mail, return receipt requested,
postage prepaid, or sent by nationally recognized overnight
carrier, postage prepaid, or sent by facsimile transmission to the
Company at the Company’s principal office and facsimile
number or to Executive at the address and facsimile number, if any,
appearing on the books and records of the Company. Such notice or
communication shall be deemed given (a) when delivered if
personally delivered; (b) five (5) mailing days after having been
placed in the mail, if delivered by registered or certified mail;
(c) the business day after having been placed with a nationally
recognized overnight carrier, if delivered by nationally recognized
overnight carrier, and (d) the business day after transmittal when
transmitted with electronic confirmation of receipt, if transmitted
by facsimile. Any party may change the address or facsimile number
to which notices or communications are to be sent to it by giving
notice of such change in the manner herein provided for giving
notice. Until changed by notice, the following shall be the address
and facsimile number to which notices shall be sent:
If to
the Company, to:
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attn:
Chief Executive Officer
If to Executive, to the most recent
address on file with the Company or to such other names or
addresses as the Company or Executive, as the case may be, shall
designate by notice to each other person entitled to receive
notices in the manner specified in this Section 15.
13
16.
Governing Law;
Venue. The terms of this Agreement and the resolution of any
disputes as to the meaning, effect, performance or validity of this
Agreement or arising out of, related to, or in any way connected
with, this Agreement, Executive’s employment with the Company
or any other relationship between Executive and the Company (the
“Disputes”)
will be governed by Pennsylvania law, without regard to conflict of
law principles. Executive and the Company submit to the exclusive
personal jurisdiction of the federal and state courts located in
Philadelphia, Pennsylvania in connection with any Dispute or any
claim related to any Dispute.
17.
Counterparts. This
Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
18.
Headings; Gender.
The headings of sections and subsections herein are included solely
for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this
Agreement.
19.
Severability. If
any provision of this Agreement or application thereof to anyone or
under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in
any other jurisdiction. If any provision is held void, invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other
circumstances.
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the day and year first above
written.
By:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
EXECUTIVE:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
14
Exhibit
A
PROPRIETARY
INFORMATION AND
INVENTION
ASSIGNMENT AGREEMENT
As an employee of Iota
Communications, Inc. (the “Company”), I
acknowledge that the Company operates in a competitive environment
and that it enhances its opportunities to succeed by establishing
policies designed to identify and secure the Company’s
Intellectual Property and Proprietary Information. This Agreement
is designed to make clear that:
i) I will maintain the
confidentiality of the Company’s Proprietary Information and
use such Proprietary Information for the exclusive benefit of the
Company;
ii) Inventions that I
create will be owned by the Company; and
iii) My activities
separate from the Company will not conflict with the
Company’s development of its proprietary rights.
In consideration of my employment
and/or the continuation of my employment by the Company, I hereby
agree as follows:
1.
Provisions Related to
Trade Secrets
(a) I acknowledge that the Company
possesses and will continue to develop and acquire valuable
Proprietary Information (as defined below), including information
that I may develop or discover as a result of my employment with
the Company.
(b) As used in this Agreement,
“Proprietary
Information” means any information (including any
compilation, device, method, technique or process) that derives
independent economic value, actual or potential, from not being
generally known to the public or other persons who can obtain
economic value from its disclosure or use, and includes information
of the Company, its customers, suppliers, joint ventures,
licensors, licensees, distributors and other persons and entities
with whom the Company does business. Such information includes, but
is not limited to: inventions processes, methods of distribution,
customer lists, trade secrets, information regarding plans for
research, development, new products, marketing and selling,
business plans, budgets, unpublished financial statements,
licenses, prices, costs, suppliers and customers and information
regarding the skills and compensation of Company
employees.
(c) I will not disclose or use at
any time, either during or after my employment with the Company,
any Proprietary Information except for the exclusive benefit of the
Company as required by my duties for the Company, as the Company
expressly may consent to in writing or in accordance with Sections
1(d) and (e) below. Except as specifically authorized under
Sections 1(d) and (e) below, I will cooperate with the Company to
implement reasonable measures to maintain the secrecy of, and will
use my best efforts to prevent the
unauthorized disclosure, use or reproduction of, all Proprietary
Information.
15
(d) I understand that nothing in
this Agreement restricts or prohibits me from initiating
communications directly with, responding to any inquiries from,
providing testimony before, providing confidential information to,
reporting possible violations of law or regulation to, or from
filing a claim or assisting with an investigation directly with a
self-regulatory authority or a government agency or entity,
including the U.S. Equal Employment Opportunity Commission, the
Department of Labor, the National Labor Relations Board, the
Department of Justice, the Securities and Exchange Commission, the
Congress, and any agency Inspector General (collectively, the
“Regulators”),
or from making other disclosures that are protected under the
whistleblower provisions of state or federal law or regulation.
However, to the maximum extent permitted by law, I am waiving my
right to receive any individual monetary relief from the Company or
any others covered by the Release of Claims resulting from such
claims or conduct, regardless of whether I or another party has
filed them, and in the event I obtain such monetary relief the
Company will be entitled to an offset for the payments made
pursuant to this Agreement. This Agreement does not limit my right
to receive an award from any Regulator that provides awards for
providing information relating to a potential violation of law. I
do not need the prior authorization of the Company to engage in
conduct protected by this paragraph, and Executive does not need to
notify the Company that I have engaged in such
conduct.
Please take notice that federal law
provides criminal and civil immunity to federal and state claims
for trade secret misappropriation to individuals who disclose a
trade secret to their attorney, a court, or a government official
in certain, confidential circumstances that are set forth at 18
U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the
reporting or investigation of a suspected violation of the law, or
in connection with a lawsuit for retaliation for reporting a
suspected violation of the law.
(e) Upon leaving employment with the
Company for any reason, I immediately will deliver to the Company
any property, records, documents and other tangible materials
(including all copies) in my possession or under my control,
including data incorporated in word processing, computer and other
data storage media, containing or disclosing Proprietary
Information, except as otherwise permitted in accordance with
Section 1(d) above.
2.
Ownership of
Inventions
(a) I agree to communicate to the
Company as promptly and fully as practicable all Inventions (as
defined below) conceived or reduced to practice by me (alone or
jointly by others) at any time during my employment with the
Company. I hereby assign to the Company and/or its nominees all my
right, title and interest in such Inventions, and all my right,
title and interest in any patents, copyrights, patent applications
or copyright applications based thereon. I will give the Company
and/or its nominees (at no expense to me) any assistance it
reasonably requires to perfect, protect and use its rights to all
such Inventions anywhere in the world.
16
(b) As used in this Agreement, the
term “Inventions”
includes, but is not limited to, all discoveries, improvements,
processes, developments, designs, know-how, data, computer programs
and formulae, whether patentable or unpatentable or protectable by
copyright or other intellectual property law.
(c) Any provision in this Agreement
requiring me to assign my rights in any Invention does not apply to
an Invention for which no equipment, supplies, facility or trade
secret information of the Company was used, and which was developed
entirely on my own time, and which:
(i) does not relate directly to the
Company’s business or to the Company’s anticipated
research or development, or
(ii) does not result from any work
performed by me for the Company.
(d) I hereby designate and appoint
the Company and each of its duly authorized officers as my agent
and attorney-in-fact to act for and in my behalf to execute and
file any document, and to do all other lawfully permitted acts to
further the prosecution, issuance and enforcement of patents,
copyrights and other proprietary rights with the same force and
effect as if executed and delivered by me.
3.
Conflicts With Other
Activities
I understand that my employment with
the Company and my compliance with this Agreement do not and will
not breach any agreement to keep in confidence any information
acquired by me prior to or outside of my employment with the
Company. I have not brought and will not bring with me to the
Company for use in the performance of my duties at the Company any
materials, documents or information of a former employer or any
third party that are not generally available to the public unless I
have obtained express written authorization from the owner for
their possession and use by or for the Company. I have not entered
into and will not enter into any agreement, either oral or written,
in conflict with this Agreement.
4.
Miscellaneous
(a) My obligations under this
Agreement may not be modified or terminated, in whole or in any
part, except in a writing signed by the Company. Any waiver by the
Company of a breach of any provision of this Agreement will not
operate or be construed as a waiver of any subsequent
breach.
(b) Each provision of this Agreement
will be treated as a separate and independent clause, and the
unenforceability of any one provision will in no way impair the
enforceability of any other provision. If any provision is held to
be unenforceable, such provision will be construed by the
appropriate judicial body by limiting or reducing it to the minimum
extent necessary to make it legally enforceable.
(c) My obligations under this
Agreement will survive the termination of my employment, regardless
of the manner of such termination. This Agreement will inure to the
benefit of and will be binding upon the successors and assigns of
the Company.
17
(d) I understand that the provisions
of this Agreement are a material condition to my employment and/or
continued employment with the Company. I also understand that this
Agreement is not an employment contract, and nothing in this
Agreement creates any right to my continuous employment by the
Company, or to my employment for any particular term.
(e) Any breach of this Agreement
likely will cause irreparable harm to the Company for which money
damages could not reasonably or adequately compensate the Company.
Accordingly, I agree that the Company will be entitled to
injunctive relief to enforce this Agreement, in addition to damages
and other available remedies.
SIGNING THIS
AGREEMENT CREATES IMPORTANT OBLIGATIONS OF TRUST AND AFFECTS THE
EMPLOYEE’S RIGHTS TO INVENTIONS THE EMPLOYEE MAY MAKE DURING
HIS EMPLOYMENT.
Dated: December 9,
2019
Employee Signature:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
ACCEPTED AND AGREED TO:
By:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
18