EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Executive Employment Agreement (this “Agreement”) is made as of the 17th day of
March, 2008 by and between InferX Corporation, a Delaware corporation (the
“Company”), and ▇▇▇▇▇▇▇ ▇▇▇▇▇, a natural person, residing in the State of
Colorado (“Executive”).
WHEREAS,
the Company wishes to employ Executive as its President and Chief Executive
Officer (“CEO”) and Executive wishes to accept such employment;
WHEREAS,
the Company and Executive wish to set forth the terms of Executive’s employment
and certain additional agreements between Executive and the
Company.
NOW,
THEREFORE, in consideration of the foregoing recitals and the representations,
covenants and terms contained herein, the parties hereto agree as
follows:
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1.
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Employment
Period
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The
Company will employ Executive, and Executive will serve the Company, under
the
terms of this Agreement commencing March 17, 2008 (the “Commencement Date”) for
a term of one (1) year unless earlier terminated under Section 4 hereof. The
period of time between the commencement and the termination of Executive’s
employment hereunder shall be referred to herein as the “Employment
Period.”
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2.
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Duties
and Status
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The
Company hereby engages Executive as its President and CEO on the terms and
conditions set forth in this Agreement including the terms and conditions of
the
Employee Proprietary Information, Inventions, and Non-Competition Agreement
attached hereto as Exhibit
A
and
incorporated herein (the “Non-Disclosure Agreement”). During the term of the
Employment Period, Executive shall report directly to the Board of Directors
of
the Company (the “Board”) and shall exercise such authority, perform such
executive functions and discharge such responsibilities as are reasonably
associated with Executive’s position, commensurate with the authority vested in
Executive pursuant to this Agreement and consistent with the governing documents
of the Company.
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3.
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Compensation
and Benefits
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(a)
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Salary.
During the Employment Period, the Company shall pay to Executive,
as
compensation for the performance of his duties and obligations under
this
Agreement, a base salary of $48,000 per annum, payable semi-monthly.
Such
base salary will increase to $120,000 per annum, payable semi-monthly
in
the month following a quarterly reporting period whereby the Company
reports EBITDA of $250,000 or more.
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(b)
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Bonus.
During the Employment Period, Executive shall be eligible for a bonus
to
be paid in cash, stock or both on terms that shall be mutually acceptable
to the Board and Executive.
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(c)
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Equity.
As partial consideration for entering into this Agreement and subject
to
Executive executing the agreements under the Company Company’s 2007 Stock
Incentive Plan (the “Plan”), the Company hereby grants Executive 150,000
options to purchase shares of the Company’s common stock at an exercise
price of $.50 per share that shall vest as follows: 50,000 options
upon the Company executing contracts that will generate $500,000
in gross
revenues over the term of the contracts; 50,000 options upon the
Company
executing contracts that will generate $1,000,000 in gross revenues
over
the term of the contracts and in contracts and 50,000 upon the Company
executing contracts that will generate $1,500,000 in gross revenues
over
the term of the contracts
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(d)
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Immediate
Vesting Provision.
Any options or other forms of equity granted now or in the future
by the
Company to Executive (“Equity”) shall vest immediately if Executive’s
employment is terminated for good reason (as described in Section
4
hereof) or due to a change of control, sale of a majority of the
common
stock or sale of substantially all of the assets of the
Company.
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(e)
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Other
Benefits.
During the Employment Period, Executive shall be entitled to participate
in all of the employee benefit plans, programs and arrangements of
the
Company in effect during the Employment Period which are generally
available to senior executives of the Company, subject to and on
a basis
consistent with the terms, conditions and overall administration
of such
plans, programs and arrangements. In addition, during the Employment
Period, Executive shall be entitled to fringe benefits and perquisites
comparable to those of other senior executives of the Company including,
but not limited to, standard holidays, twenty (20) days of vacation
pay
plus five (5) sick/personal days, to be used in accordance with the
Company’s vacation pay policy for senior
executives.
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(f)
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Business
Expenses.
During the Employment Period, the Company shall promptly reimburse
Executive for all appropriately documented, reasonable business expenses
incurred by Executive in the performance of his duties under this
Agreement, including telecommunications expenses and travel
expenses.
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4.
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Termination
of Employment
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(a)
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Termination
for Cause.
The Company may terminate Executive’s employment hereunder for Cause
(defined below). For purposes of this Agreement and subject to Executive’s
opportunity to cure as provided in Section 4(c) hereof, the Company
shall
have Cause to terminate Executive’s employment hereunder if such
termination shall be the result of:
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(i)
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a
material breach
of fiduciary duty or material breach
of the terms of this Agreement or any other agreement between Executive
and the Company (including without limitation any agreements regarding
confidentiality, inventions assignment and
non-competition);
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(ii)
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the
commission by Executive of any act of embezzlement, fraud, larceny
or
theft on or from the Company;
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(iii)
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substantial
and continuing neglect or inattention by Executive of the duties
of his
employment or the willful misconduct or gross negligence of Executive
in
connection with the performance of such duties which remains uncured
for a
period of fifteen (15) days following receipt of written notice from
the
Board specifying the nature of such
breach;
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(iv)
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the
commission and indictment by Executive of any crime involving moral
turpitude or a felony; and
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(v)
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Executive’s
performance or omission of any act which, in the judgment of the
Board, if
known to the customers, clients, stockholders or any regulators of
the
Company, would have a material and adverse impact on the business
of the
Company.
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(b)
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Termination
for Good Reason.
Executive shall have the right at any time to terminate his employment
with the Company upon not less than thirty (30) days prior written
notice
of termination for Good Reason (defined below). For purposes of this
Agreement and subject to the Company’s opportunity to cure as provided in
Section 4(c) hereof, Executive shall have Good Reason to terminate
his
employment hereunder if such termination shall be the result
of:
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| (i) |
the
Company’s material breach of this Agreement;
or
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(ii)
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A
requirement by the Company that Executive perform any act or refrain
from
performing any act that would be in violation of any applicable
law;
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(iii)
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The
Company is acquired by another entity.
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(c)
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Notice
and Opportunity to Cure.
Notwithstanding the foregoing, it shall be a condition precedent
to the
Company’s right to terminate Executive’s employment for Cause and
Executive’s right to terminate for Good Reason that (i) the party seeking
termination shall first have given the other party written notice
stating
with specificity the reason for the termination (“breach”) and (ii) if
such breach is susceptible of cure or remedy, a period of fifteen
(15)
days from and after the giving of such notice shall have elapsed
without
the breaching party having effectively cured or remedied such breach
during such 15-day period, unless such breach cannot be cured or
remedied
within fifteen (15) days, in which case the period for remedy or
cure
shall be extended for a reasonable time (not to exceed an additional
thirty (30) days) provided the breaching party has made and continues
to
make a diligent effort to effect such remedy or
cure.
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(d)
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Voluntary
Termination.
Executive, at his election, may terminate his employment upon not
less
than sixty (60) days prior written notice of termination other than
for
Good Reason.
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(e)
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Termination
Upon Death or Permanent and Total Disability.
The Employment Period shall be terminated by the death of Executive.
The
Employment Period may be terminated by the Board of Directors of
the
Company if Executive shall be rendered incapable of performing his
duties
to the Company by reason of any medically determined physical or
mental
impairment that can be reasonably expected to result in death or
that can
be reasonably be expected to last for a period of either (i) six
(6) or
more consecutive months from the first date of Executive’s absence due to
the disability or (ii) nine (9) months during any twelve-month period
(a
“Permanent and Total Disability”). If the Employment Period is terminated
by reason of a Permanent and Total Disability of Executive, the Company
shall give thirty (30) days’ advance written notice to that effect to
Executive.
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(f)
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Termination
at the Election of the Company. At
the election of the Company, otherwise than for Cause as set forth
in
Section 4(a) above, upon not less than sixty (60) days prior written
notice of termination.
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(g)
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Termination
for Business Failure.
Anything contained herein to the contrary notwithstanding, in the
event
the Company’s business is discontinued because continuation is rendered
impracticable by substantial financial losses, lack of funding, legal
decisions, administrative rulings, declaration of war, dissolution,
national or local economic depression or crisis or any reasons beyond
the
control of the Company, then this Agreement shall terminate as of
the day
the Company determines to cease operation with the same force and
effect
as if such day of the month were originally set as the termination
date
hereof. In the event this Agreement is terminated pursuant to this
Section
4(g), the Executive will not be entitled to severance
pay.
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5.
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Consequences
of Termination
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(a)
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By
Executive for Good Reason or the Company Without Cause.
In the event of a termination of Executive’s employment during the
Employment Period by Executive for Good Reason pursuant to Section
4(b) or
the Company without Cause pursuant to Section 4(f) the Company shall
pay
Executive (or his estate) and provide him with the following, provided
that Executive enter into a release of claims agreement agreeable
to the
Company and Executive:
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(i)
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Cash
Payment.
A
cash payment, payable over a six (6) month period after Executive’s
termination of employment, equal to the sum of the
following:
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(A)
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Salary.
The equivalent of six (6) months (the “Severance Period”) of Executive’s
then-current base salary; plus
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(B)
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Earned
but Unpaid Amounts.
Any previously earned but unpaid salary through Executive’s final date of
employment with the Company, and any previously earned but unpaid
bonus
amounts prior to the date of Executive’s termination of
employment.
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(C)
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Equity.
All Options vested at time of termination shall be retained by Executive
and all Options that are not vested shall be accelerated and be deemed
vested for purposes of this Section
5.
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(ii)
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Other
Benefits.
The Company shall provide continued coverage for the Severance Period
under all health, life, disability and similar employee benefit plans
and
programs of the Company on the same basis as Executive was entitled
to
participate immediately prior to such termination, provided that
Executive’s continued participation is possible under the general terms
and provisions of such plans and programs. In the event that Executive’s
participation in any such plan or program is barred, the Company
shall use
its commercially reasonable efforts to provide Executive with benefits
substantially similar (including all tax effects) to those which
Executive
would otherwise have been entitled to receive under such plans and
programs from which his continued participation is barred. In the
event
that Executive is covered under substitute benefit plans of another
employer prior to the expiration of the Severance Period, the Company
will
no longer be obligated to continue the coverages provided for in
this
Section 5(a)(ii).
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(b)
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Other
Termination of Employment.
In the event that Executive’s employment with the Company is terminated
during the Employment Period by the Company for Cause (as provided
for in
Section 4(a) hereof) or by Executive other than for Good Reason (as
provided for in Section 4(b) hereof), the Company shall pay or grant
Executive any earned but unpaid salary, bonus, and Options through
Executive’s final date of employment with the Company, and the Company
shall have no further obligations to
Executive.
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(c)
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Withholding
of Taxes.
All payments required to be made by the Company to Executive under
this
Agreement shall be subject only to the withholding of such amounts,
if
any, relating to tax, excise tax and other payroll deductions as
may be
required by law or regulation.
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(d)
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No
Other Obligations.
The benefits payable to Executive under this Agreement are not in
lieu of
any benefits payable under any employee benefit plan, program or
arrangement of the Company, except as specifically provided herein,
and
Executive will receive such benefits or payments, if any, as he may
be
entitled to receive pursuant to the terms of such plans, programs
and
arrangements. Except for the obligations of the Company provided
by the
foregoing and this Section 5, the Company shall have no further
obligations to Executive upon his termination of
employment.
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(e)
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Mitigation
or Offset.
Executive shall be required to mitigate the damages provided by this
Section 5 by seeking substitute employment or otherwise and there
shall be
an offset of the payments or benefits set forth in this Section
5.
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6.
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Governing
Law
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This
Agreement and the rights and obligations of the parties hereto shall be
construed in accordance with the laws of the Commonwealth of Virginia, without
giving effect to the principles of conflict of laws.
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7.
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Indemnity
and Insurance
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The
Company shall indemnify and save harmless Executive for any liability incurred
by reason of any act or omission performed by Executive while acting in good
faith on behalf of the Company and within the scope of the authority of
Executive pursuant to this Agreement and to the fullest extent provided under
the Bylaws, the Articles of Incorporation and the Stock Corporation Act of
Virginia, except that Executive must have in good faith believed that such
action was in, or not opposed to, the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that such conduct was unlawful.
The
Company shall provide that Executive is covered by any Directors and Officers
insurance that the Company provides to other senior executives and/or board
members.
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8.
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Cooperation
with the Company After Termination of
Employment
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Following
termination of Executive’s employment for any reason, Executive shall fully
cooperate with the Company in all matters relating to the winding up of
Executive’s pending work on behalf of the Company including, but not limited to,
any litigation in which the Company is involved, and the orderly transfer of
any
such pending work to other employees of the Company as may be designated by
the
Company. Following any notice of termination of employment by either the Company
or Executive, the Company shall be entitled to such full time or part time
services of Executive as the Company may reasonably require during all or any
part of the sixty (60)-day period following any notice of termination, provided
that Executive shall be compensated for such services at the same rate as in
effect immediately before the notice of termination.
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9.
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Notice
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All
notices, requests and other communications pursuant to this Agreement shall
be
sent by overnight mail of by fax with proof of transmission to the following
addresses:
If
to
Executive:
▇▇▇▇▇▇▇
▇▇▇▇▇
P.
O. ▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
-7-
If
to the
Company:
InferX
Corporation
Attn:
▇▇▇▇▇ Parliament, Chief Financial Officer and Corporate Secretary
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Email ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
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10.
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Waiver
of Breach
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Any
waiver of any breach of this Agreement shall not be construed to be a continuing
waiver or consent to any subsequent breach on the part of either Executive
or of
the Company.
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11.
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Non-Assignment
/ Successors
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Neither
party hereto may assign his/her or its rights or delegate his/hers or its duties
under this Agreement without the prior written consent of the other party;
provided, however, that (i) this Agreement shall inure to the benefit of and
be
binding upon the successors and assigns of the Company upon any sale or all
or
substantially all of the Company’s assets, or upon any merger, consolidation or
reorganization of the Company with or into any other corporation, all as though
such successors and assigns of the Company and their respective successors
and
assigns were the Company; and (ii) this Agreement shall inure to the benefit
of
and be binding upon the heirs, assigns or designees of Executive to the extent
of any payments due to them hereunder. As used in this Agreement, the term
“Company” shall be deemed to refer to any such successor or assign of the
Company referred to in the preceding sentence.
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12.
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Severability
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To
the
extent any provision of this Agreement or portion thereof shall be invalid
or
unenforceable, it shall be considered deleted there from and the remainder
of
such provision and of this Agreement shall be unaffected and shall continue
in
full force and effect.
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13.
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Counterparts
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This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together will constitute one and
the
same instrument.
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14.
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Arbitration
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Executive
and the Company shall submit to mandatory and exclusive binding arbitration,
any
controversy or claim arising out of, or relating to, this Agreement or any
breach hereof where the amount in dispute is greater than or equal to $50,000,
provided,
however,
that
the parties retain their right to, and shall not be prohibited, limited or
in
any other way restricted from, seeking or obtaining equitable relief from a
court having jurisdiction over the parties. In the event the amount of any
controversy or claim arising out of, or relating to, this Agreement, or any
breach hereof, is less than $50,000, the parties hereby agree to submit such
claim to mediation. Such arbitration shall be governed by the Federal
Arbitration Act and conducted through the American Arbitration Association
(“AAA”) in the District of Columbia, before a single neutral arbitrator, in
accordance with the National Rules for the Resolution of Employment Disputes
of
the American Arbitration Association in effect at that time. The parties may
conduct only essential discovery prior to the hearing, as defined by the AAA
arbitrator. The arbitrator shall issue a written decision which contains the
essential findings and conclusions on which the decision is based. Mediation
shall be governed by, and conducted through, the AAA. Judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
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15.
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Entire
Agreement
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This
Agreement and all schedules and other attachments hereto constitute the entire
agreement by the Company and Executive with respect to the subject matter hereof
and, except as specifically provided herein, supersedes any and all prior
agreements or understandings between Executive and the Company with respect
to
the subject matter hereof, whether written or oral. This Agreement may be
amended or modified only by a written instrument executed by Executive and
the
Company.
Signature
page follows
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
above
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INFERX
CORPORATION
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/s/
▇▇▇▇▇
Parliament
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By:
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▇▇▇▇▇
Parliament
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Its:
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Chief
Financial Officer and Corporate Secretary
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EXECUTIVE
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/s/
▇▇▇▇▇▇▇
▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇
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-10-
Exhibit
A
Employee
Proprietary Information, Inventions, and Non-Competition
Agreement
-11-