Exhibit 10.21
XA, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made between XA,
Inc., a Nevada corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇ ("Executive")
(collectively sometimes referred to as the "Parties" and individually sometimes
referred to as "Each Party"). Unless otherwise indicated, all references to
Sections are to Sections in this Agreement. This Agreement is effective as of
the "Effective Date" set forth in Section 14 below.
W I T N E S S E T H:
WHEREAS, the Parties previously entered into a thirty-six (36) month
Executive Employment Agreement with an effective date of August 1, 2004, which
Executive Employment Agreement is replaced and superseded by this Agreement in
all respects; provided however, that all 70,000 post 1:20 reverse split shares
of common stock granted to Executive pursuant to Section 3(b) of the prior
Executive Employment Agreement shall become immediately vested and not subject
to forfeiture as of the Effective Date of this Agreement;
WHEREAS, the Company desires to obtain the services of Executive, and
Executive desires to be employed by the Company upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the agreements herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as of the date hereof as follows:
1. Employment. The Company hereby agrees to employ Executive, and Executive
hereby agrees to serve the Company, as Chief Operating Officer and Treasurer of
the Company ("Employment"), and Director for a period of sixty (60) months
beginning on the Effective Date, August 1, 2006. This Agreement is
automatically renewable for successive one-year terms. Executive or the Company
shall provide the other with written notice of non-renewal at least thirty (30)
days, but not more than sixty (60) days, before the end of the period of
Employment.
2. Scope of Employment.
(a) During the Employment, Executive will serve as Chief Operating
Officer and Treasurer of the Company. In that connection, Executive will
(i) devote her full-time, attention, and energies to the business of the
Company and will diligently and to the best of her ability perform all
duties incident to her employment hereunder; (ii) use her best efforts to
promote the interests and goodwill of the Company; and (iii) perform such
other duties commensurate with her office as the Board of Directors of the
Company may from time-to-time assign to her.
(b) Section 2(a) shall not be construed as preventing Executive from
(i) serving on corporate, civic or charitable boards or committees, or (ii)
making investments in other businesses or enterprises; provided that in no
event shall any such service, business activity or investment require the
provision of substantial services by Executive to the operations or the
affairs of such businesses or enterprises such that the provision thereof
would interfere in any respect with the performance of Executive's duties
hereunder; and subject to Section 6.
3. Compensation and Benefits During Employment. During the Employment, the
Company shall provide compensation to Executive as follows.
(a) The Company shall pay Executive base compensation of $150,000. The
Company shall be responsible for withholding for all taxes to the Internal
Revenue Service as well as any and all other taxes payable in the United
States including taxes payable to any state or local jurisdiction.
(c) The Company shall reimburse Executive for business expenses
incurred by Executive in connection with the Employment in accordance with
the Company's then-current policies.
(d) Executive will be entitled to participate in any health insurance
or other employee benefit plan which the Company may adopt in the future.
(e) Executive will be entitled to thirty (30) days of paid time off
(PTO) per year. PTO days shall begin on the 1st of January for each
successive year. Unused PTO days shall expire on December 31 of each year
and shall not roll-over into the next year. Other than the use of PTO days
for illness or personal emergencies, PTO days must be pre-approved by
Company.
(f) Executive will be entitled to participate in any incentive program
or discretionary bonus program of the Company which may be implemented in
the future by the Board of Directors.
(g) Executive will be entitled to participate in any stock option plan
of the Company which may be approved in the future by the Board of
Directors.
(h) The Company hereby agrees to maintain a director and officers
insurance policy of at least $1,000,000 coverage in full force and effect
during Executive's period of Employment including renewals of this
Agreement.
(i) Executive shall receive 650,000 options to purchase shares of the
Company's common at an exercise price of $0.75 per share (the "Options"),
which options shall vest to Executive as provided in the Option Agreement
which evidences the Options and shall expire on the fifth anniversary of
their grant date August 2, 2006, or as otherwise provided in the Option
agreement. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares
of the Company's common stock are exchanged for securities, cash or other
property of any other corporation, firm, partnership, joint venture,
association, or business entity, the Company is otherwise acquired or there
is a change of control of the Company (receipt of more than 50% of the
outstanding shares of the Company, the Company otherwise being acquired, or
a change in control of the Company are collectively referred to as an
"Acquisition"), or in the event of liquidation of the Company, the Options
shall immediately vest.
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by Executive in good faith and in the best interests of the Company
and thus shall not be deemed grounds for Termination for Cause.
4. Confidential Information.
(a) Executive acknowledges that the law provides the Company with
protection for its trade secrets and confidential information. Executive
will not disclose, directly or indirectly, any of the Company's
confidential business information or confidential technical information to
anyone without authorization from the Company's management. Executive will
not use any of the Company's confidential business information or
confidential technical information in any way, either during or after the
Employment with the Company, except as required in the course of the
Employment.
(b) Executive will strictly adhere to any obligations that may be owed
to former employers insofar as Executive's use or disclosure of their
confidential information is concerned.
(c) Information will not be deemed part of the confidential
information restricted by this Section 4 if Executive can show that: (i)
the information was in Executive's possession or within Executive's
knowledge before the Company disclosed it to Executive; (ii) the
information was or became generally known to those who could take economic
advantage of it; (iii) Executive obtained the information from a party
having the right to disclose it to Executive without violation of any
obligation to the Company, or (iv) Executive is required to disclose the
information pursuant to legal process (e.g., a subpoena), provided that
Executive notifies the Company immediately upon receiving or becoming aware
of the legal process in question. No combination of information will be
deemed to be within any of the four exceptions in the previous sentence,
however, whether or not the component parts of the combination are within
one or more exceptions, unless the combination itself and its economic
value and principles of operation are themselves within such an exception
or exceptions.
(d) All originals and all copies of any drawings, blueprints, manuals,
reports, computer programs or data, notebooks, notes, photographs, and all
other recorded, written, or printed matter relating to research,
manufacturing operations, or business of the Company made or received by
Executive during the Employment are the property of the Company. Upon
Termination of the Employment, whether or not for Cause, Executive will
immediately deliver to the Company all property of the Company which may
still be in Executive's possession. Executive will not remove or assist in
removing such property from the Company's premises under any circumstances,
either during the Employment or after Termination thereof, except as
authorized by the Company's management.
(e) For a period of one (1) year after the date of Termination of the
Employment, Executive will not, either directly or indirectly, hire or
employ or offer or participate in offering employment to any person who at
the time of such Termination or at any time during such one year period
following the time of such Termination was an employee of the Company
without the prior written consent of the Company.
5. Ownership of Intellectual Property.
(a) The Company will be the sole owner of any and all of Executive's
Inventions that are related to the Company's business, as defined in more
detail below.
(b) For purposes of this Agreement, "Inventions" means all inventions,
discoveries, and improvements (including, without limitation, any
information relating to manufacturing techniques, processes, formulas,
developments or experimental work, work in progress, or business trade
secrets), along with any and all other work product relating thereto.
(c) An Invention is "related to the Company's business"
("Company-Related Invention") if it is made, conceived, or reduced to
practice by Executive (in whole or in part, either alone or jointly with
others, whether or not during regular working hours), whether or not
potentially patentable or copyrightable in the U.S. or elsewhere, and it
either: (i) involves equipment, supplies, facilities, or trade secret
information of the Company; (ii) involves the time for which Executive was
or is to be compensated by the Company; (iii) relates to the business of
the Company or to its actual or demonstrably anticipated research and
development; or (iv) results, in whole or in part, from work performed by
Executive for the Company.
(d) Executive will promptly disclose to the Company, or its
nominee(s), without additional compensation, all Company-Related
Inventions.
(e) Executive will assist the Company, at the Company's expense, in
protecting any intellectual property rights that may be available anywhere
in the world for such Company-Related Inventions, including signing U.S. or
foreign patent applications, oaths or declarations relating to such patent
applications, and similar documents.
(f) To the extent that any Company-Related Invention is eligible under
applicable law to be deemed a "work made for hire," or otherwise to be
owned automatically by the Company, it will be deemed as such, without
additional compensation to Executive. In some jurisdictions, Executive may
have a right, title, or interest ("Right," including without limitation all
right, title, and interest arising under patent law, copyright law,
trade-secret law, or otherwise, anywhere in the world, including the right
to ▇▇▇ for present or past infringement) in certain Company-Related
Inventions that cannot be automatically owned by the Company. In that case,
if applicable law permits Executive to assign Executive's Right(s) in
future Company-Related Inventions at this time, then Executive hereby
assigns any and all such Right(s) to the Company, without additional
compensation to Executive; if not, then Executive agrees to assign any and
all such Right(s) in any such future Company-Related Inventions to the
Company or its nominee(s) upon request, without additional compensation to
Executive.
6. Non-competition. As a condition to, and in consideration of, the
Company's entering into this Agreement, and giving Executive access to certain
confidential and proprietary information, which Executive recognizes is valuable
to the Company and, therefore, its protection and maintenance constitutes a
legitimate interest to be protected by the provisions of this Section 6 as
applied to Executive and other employees similarly situated to Executive, and
for ten dollars ($10) and other good and valuable consideration, the receipt and
sufficiency of which Executive hereby acknowledges, Executive acknowledges and
hereby agrees as follows:
(a) that Executive is and will be engaged in the business of the
Company;
(b) that Executive has occupied a position of trust and confidence
with the Company prior to the Effective Date, and that during such period
and the period of Executive's Employment under this Agreement, Executive
has, and will, become familiar with the Company's trade secrets and with
other proprietary and confidential information concerning the Company;
(c) that the obligations of this Agreement are directly related to the
Employment and are necessary to protect the Company's legitimate business
interests; and that the Company's need for the covenants set forth in this
Agreement is based on the following: (i) the substantial time, money and
effort expended and to be expended by the Company in developing technical
designs, computer program source codes, marketing plans and similar
confidential information; (ii) the fact that Executive will be personally
entrusted with the Company's confidential and proprietary information;
(iii) the fact that, after having access to the Company's technology and
other confidential information, Executive could become a competitor of the
Company; and (iv) the highly competitive nature of the Company's industry,
including the premium that competitors of the Company place on acquiring
proprietary and competitive information; and
(d) that for a period commencing on the Effective Date and ending nine
(9) months following Termination as provided in Section 11, Executive will
not, directly or indirectly, serve as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or
representative capacity, own, operate, manage, control, engage in, invest
in or participate in any manner in, act as consultant or advisor to, render
services for (alone or in association with any person, firm, corporation or
entity), or otherwise assist any person or entity that directly or
indirectly engages or proposes to engage in (i) the same, or a
substantially similar, type of business as that in which the Company
engages; or (ii) the business of distribution or sale of (A) products and
services distributed, sold or license by the Company at the time of
termination; or (B) products and services proposed at the time of
Termination to be distributed, sold or licensed by the Company, anywhere in
North America (the "Territory"); provided, however
(e) that nothing contained herein shall be construed to prevent
Executive from investing in the stock or securities of any competing
corporation listed on any recognized national securities exchange or traded
in the over the counter market in the United States, but only if (i) such
investment is of a totally passive nature and does not involve Executive
devoting time to the management or operations of such corporation and
Executive is not otherwise involved in the business of such corporation;
and if (ii) Executive and her associates (as such term is defined in
Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as
in effect on the Effective Date), collectively, do not own, directly or
indirectly, more than an aggregate of two percent (2%) of the outstanding
stock or securities of such corporation.
7. Legal Fees and Expenses. In the event of a lawsuit, arbitration, or
other dispute-resolution proceeding between the Company and Executive arising
out of or relating to this Agreement, the prevailing party, in the proceeding as
a whole and/or in any interim or ancillary proceedings (e.g., opposed motions,
including without limitation motions for preliminary or temporary injunctive
relief) will be entitled to recover its reasonable attorneys' fees and expenses
unless the court or other forum determines that such a recovery would not serve
the interests of justice.
8. Successors.
(a) This Agreement shall inure to the benefit of and be binding upon
(i) the Company and its successors and assigns; (ii) Executive and
Executive's heirs and legal representatives, except that Executive's duties
and responsibilities under this Agreement are of a personal nature and will
not be assignable or delegable in whole or in part; and (iii) Executive
Parties as provided in Section 10.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, Acquisition or otherwise) to
all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, "the Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
9. Arbitration.
(a) Except as set forth in paragraph (b) of this Section 9 or to the
extent prohibited by applicable law, any dispute, controversy or claim
arising out of or relating to this Agreement will be submitted to binding
arbitration before a single arbitrator in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association in effect on the date of the demand for arbitration. The
arbitration shall take place before a single arbitrator, who will
preferably but not necessarily be a lawyer. Unless otherwise agreed by the
parties, the arbitration shall take place in the city in which Executive's
principal office space is located at the time of the dispute or was located
at the time of Termination of the Employment (if applicable). The
arbitrator is hereby directed to take all reasonable measures not
inconsistent with the interests of justice to expedite, and minimize the
cost of, the arbitration proceedings.
(b) To protect inventions, trade secrets, or other confidential
information of Section 4, and/or to enforce the non-competition provisions
of Section 6, the Company may seek temporary, preliminary, and/or permanent
injunctive relief in a court of competent jurisdiction, in each case,
without waiving its right to arbitration.
(c) At the request of either party, the arbitrator may take any
interim measures s/she deems necessary with respect to the subject matter
of the dispute, including measures for the preservation of confidentiality
set forth in this Agreement.
(d) Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction.
10. Indemnification.
(a) The Company agrees to indemnify and hold harmless Executive, her
nominees and/or assigns (a reference in this Section 10 to Executive also
includes a reference to Executive's nominees and/or assigns) against any
and all losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements (incurred in any and all
actions, suits, proceedings and investigations in respect thereof and any
and all legal and other costs, expenses and disbursements in giving
testimony or furnishing documents in response to a subpoena or otherwise),
including without limitation, the costs, expenses and disbursements, as and
when incurred, of investigating, preparing or defending any such action,
suit, proceeding or investigation that is in any way related to the
Executive's employment with the Company (whether or not in connection with
any action in which the Executive is a party). Such indemnification does
not apply to acts performed by Executive, which are criminal in nature or a
violation of law. The Company also agrees that Executive shall not have any
liability (whether direct or indirect, in contract or tort, or otherwise)
to the Company, for, or in connection with, the engagement of the Executive
under the Agreement, except to the extent that any such liability resulted
primarily and directly from Executive's gross negligence and willful
misconduct.
(b) These indemnification provisions shall be in addition to any
liability which the Company may otherwise have to Executive or the persons
indemnified below in this sentence and shall extend to the following: the
Executive, her affiliated entities, partners, employees, legal counsel,
agents, and controlling persons (within the meaning of the federal
securities laws), and the officers, directors, employees, legal counsel,
agents, and controlling persons of any of them (collectively, the "the
Executive Parties").
(c) If any action, suit, proceeding or investigation is commenced, as
to which any of the Executive parties propose indemnification under the
Agreement, they shall notify the Company with reasonable promptness;
provided however, that any failure to so notify the Company shall not
relieve the Company from its obligations hereunder. The Executive Parties
shall have the right to retain counsel of their own choice (which shall be
reasonably acceptable by the Company) to represent them, and the Company
shall pay fees, expenses and disbursements of such counsel; and such
counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Company and any counsel designated by
the Company. The Company shall be liable for any settlement of any claim
against the Executive Parties made with the Company's written consent,
which consent shall not be unreasonably withheld. The Company shall not,
without the prior written consent of the party seeking indemnification,
which shall not be reasonably withheld, settle or compromise any claim, or
permit a default or consent to the entry of any judgment in respect
thereof, unless such settlement, compromise or consent includes, as an
unconditional term thereof, the giving by the claimant to the party seeking
indemnification of an unconditional release from all liability in respect
of such claim.
(d) The indemnification provided by this Section 10 shall not be
deemed exclusive of, or to preclude, any other rights to which those
seeking indemnification may at any time be entitled under the Company's
Articles of Incorporation, Bylaws, any law, agreement or vote of
shareholders or disinterested Directors, or otherwise, or under any policy
or policies of insurance purchased and maintained by the Company on behalf
of Executive, both as to action in her Employment and as to action in any
other capacity.
(e) Neither Termination nor completion of the Employment shall effect
these indemnification provisions which shall then remain operative and in
full force and effect.
11. Termination
This Agreement and the employment relationship created hereby will
terminate (i) upon the disability or death of Executive under Section 11
(a) or 11(b); (ii) with cause under Section 11 (c); (iii) for good reason
under Section 11 (d); or (iv) without cause under Section 11(e).
(a) Disability. Company shall have the right to terminate
the employment of Executive under this Agreement for
disability in the event Executive suffers an injury,
illness, or incapacity of such character as to substantially
disable her from performing her duties without reasonable
accommodation by Executive hereunder for a period of more
than thirty (30) consecutive days upon Company giving at
least thirty (30) days written notice of termination.
(b) Death. This agreement will terminate on the Death of
the Executive.
(c) With Cause. Company may terminate this Agreement at any
time because of, (i) the conviction of Executive of an act
or acts constituting a felony or other crime involving moral
turpitude, dishonesty or theft or fraud; or (ii) Executive's
gross negligence in the performance of her duties hereunder.
(d) Good Reason. The Executive may terminate her employment
for "Good Reason" by giving Company ten (10) days written
notice if:
(i) she is assigned, without her express written
consent, any duties materially inconsistent with her
positions, duties, responsibilities, or status with
Company as of the date hereof, or a change in her
reporting responsibilities or titles as in effect as of
the date hereof;
(ii) her compensation is reduced; or
(iii) Company does not pay any material amount of
compensation due hereunder and then fails either to pay
such amount within the ten (10) day notice period
required for termination hereunder or to contest in
good faith such notice. Further, if such contest is not
resolved within thirty (30) days, Company shall submit
such dispute to arbitration under Section 9.
(e) Without Cause. Company may terminate this Agreement
without cause.
12. Obligations of Company Upon Termination.
(a) In the event of the termination of Executive's employment pursuant
to Section 11 (a), (b) or (c), Executive will be entitled only to the
compensation earned by her hereunder as of the date of such termination
(plus life insurance or disability benefits).
(b) In the event of the termination of Executive's employment pursuant
to Section 11 (d) or (e), Executive will be entitled to receive as
severance pay, an amount equal to $250,000 in addition to all payments of
salary earned through the date of termination in one lump sum. In addition
to the severance pay, the Options shall immediately vest following the
termination of the Executive's employment pursuant to Section 11 (d) or
(e).
13. Other Provisions.
(a) All notices and statements with respect to this Agreement must be
in writing. Notices to the Company shall be delivered to the Chairman of
the Board or any vice president of the Company. Notices to Executive may be
delivered to Executive in person or sent to Executive's then-current
mailing address as indicated in the Company's records.
(b) This Agreement sets forth the entire agreement of the parties
concerning the subjects covered herein; there are no promises,
understandings, representations, or warranties of any kind concerning those
subjects except as expressly set forth in this Agreement.
(c) Any modification of this Agreement must be in writing and signed
by all parties; any attempt to modify this Agreement, orally or in writing,
not executed by all parties will be void.
(d) If any provision of this Agreement, or its application to anyone
or under any circumstances, is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability will not affect
any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and
will not invalidate or render unenforceable such provision or application
in any other jurisdiction.
(e) This Agreement will be governed and interpreted under the laws of
the United States of America and the laws of the State of Illinois as
applied to contracts made and carried out in Illinois by residents of
Illinois.
(f) No failure on the part of any party to enforce any provisions of
this Agreement will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or
limit the provisions of this Agreement.
(h) This Agreement may be executed in several counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts. A copy of this Agreement signed by one party and faxed
to another party shall be deemed to have been executed and delivered by the
signing party as though an original. A photocopy of this Agreement shall be
effective as an original for all purposes.
[Remainder of page left intentionally blank. Signature page follows.]
14. Summary of Terms of Employment
Effective Date August 1, 2006
Term & Commitment Sixty Months, full-time, renewable
Office / Position Chief Operating Officer and Treasurer
of the Company
Salary $150,000 per year
This Agreement contains provisions requiring binding arbitration of
disputes. By signing this Agreement, Executive acknowledges that she (i) has
read and understood the entire Agreement; (ii) has received a copy of it (iii)
has had the opportunity to ask questions and consult counsel or other advisors
about its terms; and (iv) agrees to be bound by it.
Executed to be effective as of the Effective Date.
XA, INC. EXECUTIVE:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer