Exhibit 10.1
RESTATED AND AMENDED EMPLOYMENT AGREEMENT
This Restated and Amended Employment Agreement (“Agreement”) datedApril 29, 2020 (the“Effective Date”), is by and between Verus International, Inc., a Delaware corporation (the “Company”), and Anshu Bhatnagar (the “Executive”). TheCompany and theExecutive are referred to each individually as a “Party” and collectively as the “Parties”.
WHEREAS,theExecutive is currently employed as the Company’s Chief Executive Officer and is expected to make major contributions to the short- and long-term profitability, growth and financial strength of theCompany;
WHEREAS,theCompany has determined that appropriate arrangements should be taken to encourage the continued attention and dedication of theExecutive to his assigned duties without distraction; and theCompany desires to employ and retain theExecutiveduring theEmployment Period (as defined herein);
WHEREAS,theExecutive wishes to be employed by theCompany during theEmployment Period (as defined herein) and desires to provide his services to theCompany in such capacities and subject to the terms and conditions hereof;
WHEREAS,theExecutiveand theCompanyhave previously entered into an Employment Agreement dated January 31, 2017 (the “Original Agreement”); and
WHEREAS,theParties desire to amend and restate theOriginal Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, and intending to be legally bound hereby, theCompany and theExecutive do hereby agree as follows:
AGREEMENT
1.Adoption of Recitals. TheCompany andExecutive hereto adopt the above recitals as being true and correct.
2.Employment.
(a) The term of employment with theCompany shall commence on theEffective Date and shall expire on December 31, 2030 (“Employment Period”), unless such term is extended in writing by theParties or is earlier terminated pursuant to the terms hereof. For the avoidance of doubt, if theEmployment Period is not extended, such non-renewal shall not be considered a Termination (as defined herein), and theExecutive shall not be entitled to any compensation as set forth in Section 6 hereof.
3.Position and Duties.
(a) During theEmployment Period, theExecutive shall serve as the Chief Executive Officer of theCompany. As Chief Executive Officer, theExecutive shall be responsible for establishing, alongside theCompany’s Chief Financial Officer (“CFO”) and board of directors (the “Board of Directors” or “Board”), the goals and strategies of theCompany and presiding over the entireCompany. TheExecutive shall oversee the budgets of theCompany and ensure that resources are properly allocated. The specific duties of theExecutive are:
i. Meet withBoard of Directors and other executives to determine if theCompany is operating in accordanceCompanypolicies and is achieving the goals set forth by theExecutive, theCFO and theBoard of Directors;
ii. Oversee budgets;
iii. Alongside theCFO and under the direction of theBoard of Directors, direct the organization’s financial goals, objectives, and budgets;
iv. Implement the organization’s guidelines on a day-to-day basis;
v. Hire, train, and terminate employees, according to proper human resources methodologies;
vi. Collaborate with theBoard of Directors to develop the policies and direction of the organization
vii. Develop and maintain relationships with other associations, industry, and government officials that are in the best interest of theCompany;
viii. Provide adequate and timely information to theBoard to enable it to effectively execute its oversight role;
ix. In his position as Chief Executive Officer of theCompany, theExecutive will report to the Chairman of theBoard of Directors or his designee. TheExecutive’s authority is subject to approval by theBoard.
x. TheExecutive agrees to serve theCompany faithfully, conscientiously and to the best of his ability, so as to promote the profit, benefit and advantage of theCompany and, if applicable, any subsidiaries or affiliates of theCompany. TheExecutive shall fulfill his duties of loyalty, fidelity and allegiance to act at all times in the best interests of theCompany and to not act in a manner which knowingly would injure the business, interests or reputation of theCompany. TheExecutive’s employment is subject to compliance with all theCompany’s policies, all as may be amended from time to time.
4.Obligations of the Company.
(a) In addition to the requirements set forth in thisAgreement, theCompany shall provideExecutive with the tools and utilities for an office, ifExecutive so requests, as well as supplies and other facilities and services suitable toExecutive’s position, and adequate for the performance of his duties.
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5.Compensation and Related Matters.
TheExecutive shall receive five forms of compensation, described in this Section 5, to include: cash-based base salary; stock-based base salary; annual cash-based bonus; annual grants of restricted common stock; and the opportunity to participate in any of theCompany’s equity option plans, if applicable. In addition, theExecutive is entitled to receive fringe benefits as described in this Section 5.
(a)Cash Based Base Salary. During theEmployment Period, theCompany shall pay to theExecutive an annual cash based base salary (“Base Salary”) of Three Hundred Fifty Thousand Dollars (US $350,000) payable by theCompany in accordance with theCompany’s payroll schedules throughout theEmployment Period, subject to the provisions of Section 6 hereof and subject to any applicable tax and payroll deductions;provided, however, that, in the sole discretion of theCompany’sBoard of Directors, theExecutive may receive an increase inBase Salary based on factors such as the market and theExecutive’s job performance. TheBase Salarymay only be decreased through a written modification of thisAgreementexecuted and signed by theParties. All payments toExecutive hereunder shall be made in accordance with theCompany’s customary practices and procedures, all of which shall be in conformity with applicable federal, state and local laws and regulations.
(b)Stock Based Base Salary. Executive shall be entitled to receive Stock Based Salary in shares of no par common stock of theCompany (the “Common Stock”).
(c)Annual Cash Based Bonus.
(i) At the sole discretion of the Board, the Board may award theExecutive a bonus (“Annual Cash Based Bonus”) that reflects and rewards the contributions of theExecutive to theCompany’s business and success.
(ii) Based upon theExecutive’s performance toward the achievement of agreed upon performance criteria, theBoard may, in its sole discretion, awardExecutive a bonus in an amount up to one hundred percent (100%) of the thenBase Salary (“Annual Cash Based Bonus”). TheExecutive’s bonus target for hisAnnual Cash Based Bonus is anticipated to be established by theBoard of Directors, in consultation withExecutive, and reviewed quarterly. TheAnnual Cash Based Bonus may be paid at such time and in such amounts as determined by theBoard of Directors; provided, that the actual bonus target for any year shall be determined by theBoard in its sole discretion and shall be comparable with the bonus targets established for peer executive officers of theCompany. TheBoard and theExecutive of theCompany may mutually amend the terms of theAnnual Cash Based Bonus.Annual Cash Based Bonuses shall not deemed earned and accrued until approved by theCompany’sBoard of Directors.
(iii) Except as set forth in thisAgreement,Annual Cash Based Bonuses that are not earned and accrued are deemed waived if theExecutive’s employment is terminated for any reason prior to theBoard awarding the Annual Cash Basis Bonus.
(d)Annual Grants of Restricted Common Stock. TheCompany may, in its sole discretion, award theExecutivea stock-based bonus (“Stock Bonus”) that reflects and rewards the contributions of theExecutiveto theCompany’s business and success.
(e)Common Stock Purchase Warrants.Upon the unanimous approval of this Agreement by theBoard of Directors, Executiveshall be issued Warrants to purchase 471,883,795 Common Shares at an exercise price of $0.006 per share to bring Executive’s ownership to 20% Company’s issued and outstanding Common Stock on a fully diluted basis, consistent with the intentions of former management and this Board of Directors.
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(f)Equity Option Plan(s). Executive shall have the opportunity to participate in theCompany’s equity incentive option plans, at theBoard’s discretion, should theCompany adopt any such plans.
(g)Other Benefits.During theEmployment Period, theExecutive shall be entitled to participate in such employee benefit plans, programs or arrangements implemented by theCompany and available to executive officers of theCompany including, but not limited to, medical, dental, short term disability, long term disability, and life insurance (collectively the “Plans”). TheCompany shall have the right, from time to time and in its sole discretion, to modify and amend thePlans.
(h)Fringe Benefits.
(i)Vacation. Executive shall be entitled to four (4) weeks (20 business days) of vacation time each year with full pay. The time for such vacation shall be requested byExecutive, subject to theCompany’s reasonable approval. IfExecutive is unable for any reason to take the total amount of authorized vacation during any year, he may accrue the time. TheCompany will cash-out out the unused vacation leave at the end of each calendar year and payExecutive the value of the unused vacation leave by March 10 of the following calendar year. Each vacation day will be calculated at 1/365 ofExecutive’sBase Salary. The accrued, unused and not-cashed out portion of vacation leave will be paid within thirty (30) days following termination ofExecutive’s employment.
(ii)Sick Time. Executive shall be entitled to ten (10) days per year as sick leave and/or personal leave with full pay.
(iii)Long-Term Compensation.TheExecutive shall be eligible to receive additional awards of stock options to purchase shares of theCompany’sCommon Stock and other stock awards in the sole discretion of and subject to such terms as established by theCompany’sBoard, and otherwise in accordance with the provisions of the applicable stock incentive plan(s) of theCompany.
(iv)Vehicle Allowance: You will receive a monthly car allowance in the gross amount of $1,800 per month.
(v)Recovery of Incentive Compensation. Notwithstanding anything herein to the contrary, theExecutive agrees that incentive compensation payable to theExecutive under this Agreement or otherwise shall be subject to any clawback policy adopted or implemented by theCompany with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and such regulations as are promulgated thereunder from time to time, or with respect to any other applicable law, regulation orCompany policy.
(vi)Benefits are not in Lieu of Base Salary. Nothing paid to theExecutive under any of thePlans or fringe benefit arrangements shall be deemed to be in lieu ofBase Salary payable to theExecutive hereunder.
(i)Reimbursement of Business Expenses. TheCompany shall pay or reimburseExecutive for all reasonable, ordinary and necessary business and travel expenses that may be incurred by him directly and solely for the benefit of theCompanyin connection with the rendition of the services contemplated hereby.Executive shall submit to theCompany such invoices, receipts or other evidences or expenses asCompany may require.
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6.Termination.
(a)Termination upon Death. TheExecutive’s employment hereunder shall terminate upon the death of theExecutive;provided, however, that for purposes of thisAgreement the Date of Termination (as defined herein) based upon the death of theExecutive shall be deemed to have occurred on the last day of the month in which the death of theExecutive shall have occurred.
(b)Termination upon Disability. If theExecutive is unable to perform the essential functions of his position, with or without reasonable accommodation, for an aggregate period in excess of 360 days (which need not be consecutive) during the previous twenty four (24) months, due to a physical or mental illness, disability or condition, theCompany may terminate theExecutive’s employment hereunder at the end of any calendar month by giving written Notice of Termination (as defined herein) to theExecutive stating the Date of Termination. Any questions as to the existence, extent or potentiality of illness or incapacity of theExecutive upon which theCompany and theExecutive cannot agree shall be determined by a qualified independent physician selected by theExecutive. The determination of such physician certified in writing to theCompany and to theExecutive shall be final and conclusive for all purposes of thisAgreement. Nothing in this Subsection 6(b) of thisAgreement shall be construed to waive theExecutive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101et seq. This Subsection 6(b) of thisAgreement is intended to be interpreted and applied consistent with any laws, statutes, regulations and ordinances prohibiting discrimination, harassment and/or retaliation on the basis of a disability or request or use of a medical leave.
(c)Termination by Company for Cause. At any time during theEmployment Period, theCompany may terminate theExecutive’s employment hereunder for Cause if, at a meeting of theBoard called and held for such purpose, theBoard unanimously determines in good faith that there is Cause (as defined below) to terminate the employment of theExecutive, and theCompany gives written Notice of Termination toExecutive. The Date of Termination shall be specified in the Notice of Termination. For purposes of thisAgreement, “Cause” shall mean: (i) conduct by theExecutive constituting a material act of willful gross misconduct in connection with the performance of his duties, including, without limitation, misappropriation of funds or property of theCompany or any of its subsidiaries or affiliates other than the occasional, customary; (ii) continued, willful and deliberate non-performance by theExecutive of his duties hereunder (other than by reason of theExecutive’s physical or mental illness, incapacity or disability) which has continued for more than ninety (90) days following written notice of such non-performance from theBoard or authorized executive; (iii) a breach by theExecutive of any of the provisions contained in Section 9 of thisAgreement; (iv) a violation by theExecutive of theCompany’s employment policies which violation has continued following written notice of such violation from theBoard or (v) willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by theCompany to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation. For purposes of clauses (i), (ii) or (v) hereof, no act, or failure to act, on theExecutive’s part shall be deemed “willful” unless done, or omitted to be done, by theExecutive without reasonable belief that theExecutive’s act or failure to act, was in the best interest of theCompany and its subsidiaries and affiliates.
(d)Termination Without Cause. TheCompany may not terminate thisAgreement without Cause.
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(e)Termination by the Executive other than for Good Reason. TheExecutive may terminate thisAgreementby delivering a Notice of Termination to theCompany. The Date of Termination shall be specified in the Notice of Termination;provided however, that the Date of Termination shall not be earlier than thirty (30) calendar days after delivery of the Notice of Termination.
(f)Termination by the Executive for Good Reason. TheExecutive may terminate thisAgreement with Good Reason (hereinafter defined) by delivering a Notice of Termination to theCompany complying with the Good Reason Process (hereinafter defined) and specifying the Date of Termination. For purposes of thisAgreement, “Good Reason” shall mean that theExecutive has complied with the Good Reason Process (as defined below) following the occurrence of any of the following events: (i) a material diminution in theExecutive’s responsibilities, authority or duties; (ii) a material diminution in theExecutive’sBase Salary; (iii) a material change in the geographic location at which theExecutive provides services to theCompany; or (iv) the material breach of thisAgreement by theCompany. “Good Reason Process” shall mean that (i) theExecutive reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) theExecutive notifies theCompany in writing of the occurrence of the Good Reason condition within ninety (90) days of the occurrence of such condition; (iii) theExecutivecooperates in good faith with theCompany’s efforts, for a period not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) theExecutive terminates his employment within one hundred twenty (120) days after the end of theCure Period. If theCompany cures the Good Reason condition during theCure Period, Good Reason shall be deemed not to have occurred.
(g)Mutual Agreement Termination. If theCompany’sBoard of Directors determines to terminate thisAgreement pursuant to the terms hereof, eachParty hereby agrees to the Mutual Agreement Termination as described in Section 6(h)(iii) below. This Mutual Agreement Termination shall not constitute an admission of any wrong doing or improper behavior on the part of theCompany or theExecutive.
(h)Obligations Upon Termination.
(i)Termination by theCompany for Cause or by theExecutive for other than Good Reason. IfExecutive’s employment is terminated pursuant to Subsections 6(c) or 6(e), theCompany shall pay or provide to theExecutive (or to his authorized representative or estate) any earned but unpaidBase Salary, accrued but unpaidAnnual Cash Based Bonus, earned but unpaid incentive compensation, unpaid business expense reimbursements, accrued but unused vacation, accrued but unused sick leave and any vested benefits theExecutive may have under anyPlans (collectively, the “Accrued Benefits”) within thirty (30) days of theExecutive’s termination. Any outstanding stock option or other stock awards held byExecutive as of the Date of Termination shall be subject to the terms of the applicable award agreements.
(ii)Termination by theCompany for Death, Disability or Without Cause or by the Executive with Good Reason. If theExecutive’s employment is terminated by theCompany due to Death as provided for in Subsection 6(a), a disability as provided for in Subsection 6(b), theExecutive terminates his employment for Good Reason as provided for in Subsection 6(f), or theCompanyterminates theExecutive’s employment without Cause, then theCompany shall continue to pay theExecutivehisBase Salary and theExecutive shall be eligible to participate in thePlans for sixty (60) months following the date ofExecutive’s termination, pay any pro-rata share of hisAnnual Cash Based Bonus that would have or could have been earned prior to the Date of Termination and pay theExecutive his otherAccrued Benefits. To the extent theCompany is unable to provide coverage to theExecutive under any of thePlans,Executiveshall acquire private coverage for such benefits andCompany shall reimburseExecutive for the cost of purchasing such benefits throughout the balance of theEmployment Period. Any outstanding stock option or other stock awards held byExecutive as of the Date of Termination shall be subject to the terms of the applicable award agreements. Notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, all stock options and other stock-based awards held by theExecutive shall immediately accelerate and become fully exercisable or non-forfeitable as of the Date of Termination.
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(iii)Mutual Agreement Termination. If theCompany’sBoard of Directors and theExecutive determine to terminate the employment pursuant to Section 6(g) hereof, then this pre-negotiated offer will stand as the terms for the termination of thisAgreement.Executive will be entitled to hisBase Salary paid to him in cash over twenty-four (24) months andExecutive will also be entitled to any bonus compensation due to him through the Date of Termination.Executivealso agrees to comply with Section 6(iv) hereof.
(iv) If theExecutive signs a general release of claims in a form and manner satisfactory to theCompany (the “Release”) within twenty one (21) days of the Date of Termination,Executive shall receive the following additional compensation:
(A)Executive shall be paid, in addition to theBase Salary an additional twenty four (24) months of his thenBase Salary (“Severance Amount”). TheSeverance Amount shall be paid in a lump sum payment on a date that is coincident with or immediately follows the sixtieth (60th) day after the Date of Termination. Solely for purposes of Section 409A of the Internal RevenueCode of 1986, as amended (the “Code”), theSeverance Amount is considered a separate payment. Notwithstanding the foregoing, if theExecutive breaches any of the provisions contained in Section 9 hereof relating to restrictive covenants, payment of theSeverance Amount shall immediately cease; and
(B) If theExecutive elects to receive COBRA benefits, theCompany will pay the premium required for such coverage for theExecutive for a period of twelve (12) months from the Date of Termination; however, should theExecutive become enrolled in health benefits by a subsequent employer prior to twelve (12) months following the Date of Termination, theExecutivemust notify theCompany and theCompany’s obligation to pay COBRA co-payments shall thereupon cease. Notwithstanding anything to the contrary in thisAgreement, if theCompany determines in its sole discretion that it cannot provide the COBRA premiums without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or incurring an excise or penalty tax, theCompany will in lieu thereof provide to theExecutive a taxable monthly payment in an amount equal to the monthly COBRA premium that theExecutive would be required to pay to continue his group health coverage in effect on the Date of Termination, which payments will be made regardless of whether theExecutive elects COBRA coverage and will commence in the month following the month in theCompany determines that it cannot provide the COBRA premiums and will end on the earlier of (i) the date theExecutive becomes covered by another health plan, or (ii) twelve (12) months following the Date of Termination.
(i)Notice of Termination. A “Notice of Termination” to effectuate a termination pursuant Section 6 hereof shall be made in accordance with the Notice provision of Section 21. For purposes of thisAgreement, a Notice of Termination shall mean a notice, in writing, which shall indicate the specific termination provision of thisAgreement relied upon as the basis for the Termination and the Date of Termination. The Date of Termination shall not be earlier than the date such Notice of Termination is delivered (as defined above);provided however, that theCompany, at its option, may elect to have theExecutive not report to work after the date of the written notice.
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(j)Date of Termination. “Date of Termination” means the date on which thisAgreement shall terminate in accordance with the provisions of this Section 6.
7.Change in Control Payment.The provisions of this Section 7 set forth certain terms of an agreement reached between theExecutive and theCompany regarding theExecutive’s rights and obligations upon the occurrence of a Change in Control (as defined herein) of theCompany. These provisions are intended to assure and encourage in advance theExecutive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event. These provisions shall apply in lieu of, and expressly supersede, the provisions of thisAgreement, regarding severance pay and benefits upon a termination of employment, if such termination of employment occurs within one (1) year after the occurrence of the first event constituting a Change in Control, provided that such first event occurs during theEmployment Period.
(a)Change in Control.
(i) If within one (1) year after a Change in Control, theExecutive’s employment is terminated by theCompany due to death as provided for in Subsection 6(a), a disability as provided for in Subsection 6(b) or without Cause as provided for in Subsection 6(d), or theExecutive terminates his employment for Good Reason as provided for in Subsection 6(f), then, subject to the signing of theRelease by theExecutive within twenty one (21) days of the Date of Termination, theCompany shall pay theExecutive a lump sum in cash in an amount equal five years of theExecutive’sBase Salary (or theExecutive’s annualBase Salary in effect immediately prior to the Change in Control, if higher) on the sixtieth (60th) day following the Date of Termination;
(ii) Notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, all stock options and other stock-based awards held by theExecutive shall immediately accelerate and become fully exercisable or non-forfeitable as of the Date of Termination; and
(iii) If theExecutive elects to receive COBRA benefits, theCompany will pay the premium required for such coverage for theExecutive for a period of twenty four (24) months from the Date of Termination; however, should theExecutive become enrolled in health benefits by a subsequent employer prior to twenty four (24) months following the Date of Termination, theExecutive must notify theCompany and theCompany’s obligation to pay COBRA co-payments shall thereupon cease. Notwithstanding anything to the contrary in thisAgreement, if theCompany determines in its sole discretion that it cannot provide the COBRA premiums without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or incurring an excise or penalty tax, theCompany will in lieu thereof provide to theExecutive a taxable monthly payment in an amount equal to the monthly COBRA premium that theExecutive would be required to pay to continue his group health coverage in effect on the Date of Termination, which payments will be made regardless of whether theExecutive elects COBRA coverage and will commence in the month following the month in theCompany determines that it cannot provide the COBRA premiums and will end on the earlier of (i) the date theExecutive becomes covered by another health plan, or (ii) twenty four (24) months following the Date of Termination.
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(b)Definitions. For purposes of this Section 8, the following terms shall have the following meanings:
(i)“Change in Control”shall mean any of the following:
(A) any “person,” as such term is used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”) (other than theCompany, any of its subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of theCompany or any of its subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under theExchange Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under theExchange Act), directly or indirectly, of securities of theCompany representing fifty percent (50%) or more of the combined voting power of theCompany’s then outstanding securities having the right to vote in an election of theBoard(“Voting Securities”) (in such case other than as a result of an acquisition of securities directly from theCompany); or
(B) the date a majority of the members of theBoard is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of theBoard before the date of the appointment or election; or
(C) the consummation of (A) any consolidation or merger of theCompany where the stockholders of theCompany, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under theExchange Act), directly or indirectly, shares representing in the aggregate more than fifty percent (50%) of the voting shares of theCompany issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or (B) any sale or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of theCompany.
(ii) Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by theCompany which, by reducing the number of shares ofVoting Securities outstanding, increases the proportionate number ofVoting Securities beneficially owned by any person to fifty percent (50%) or more of the combined voting power of all of the then outstandingVoting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares ofVoting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from theCompany) and immediately thereafter beneficially owns fifty percent (50%) or more of the combined voting power of all of the then outstandingVoting Securities, then a Change in Control shall be deemed to have occurred for purposes of the foregoing clause (i).
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8.Section 409A.
(a) Anything in thisAgreement to the contrary notwithstanding, if at the time of theExecutive’s separation from service within the meaning of Section 409A of theCode, theCompany determines that theExecutive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of theCode, then to the extent any payment or benefit that theExecutive becomes entitled to under thisAgreement would be considered deferred compensation subject to the twenty percent (20%) additional tax imposed pursuant to Section 409A(a) of theCode as a result of the application of Section 409A(a)(2)(B)(i) of theCode, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six (6) months and one day after theExecutive’s separation from service, or (B) theExecutive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six (6) month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.
(b) TheParties intend that thisAgreement will be administered in accordance with Section 409A of theCode. To the extent that any provision of thisAgreement is ambiguous as to its compliance with Section 409A of theCode, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of theCode. ThePartiesagree that thisAgreement may be amended, as reasonably requested by eitherParty, and as may be necessary to fully comply with Section 409A of theCode and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to eitherParty.
(c) A termination of employment shall not be deemed to have occurred unless it is also a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h).
(d) TheCompany makes no representation or warranty and shall have no liability to theExecutive or any other person if any provisions of thisAgreement are determined to constitute deferred compensation subject to Section 409A of theCodebut do not satisfy an exemption from, or the conditions of, such Section.
9.Confidential Information and Cooperation.
(a)Confidential Information. As used in thisAgreement,“Confidential Information” means information belonging to theCompany which is of value to theCompany in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to theCompany. Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of theCompany. Confidential Information includes information developed by theExecutive in the course of theExecutive’s employment by theCompany, as well as other information to which theExecutive may have access in connection with theExecutive’s employment. Confidential Information also includes the confidential information of others with which theCompany has a business relationship. Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of theExecutive’s duties under Section 8(b).
(b)Confidentiality. TheExecutive understands and agrees that theExecutive’s employment creates a relationship of confidence and trust between theExecutive and theCompany with respect to all Confidential Information. At all times, during theExecutive’s employment with theCompany, theExecutive will keep in confidence and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the written consent of theCompany, except as may be necessary in the ordinary course of performing theExecutive’s duties to theCompany.
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(c)Documents, Records, etc. All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to theExecutive by theCompany or are produced by theExecutive in connection with theExecutive’s employment will be and remain the sole property of theCompany. TheExecutive will return to theCompany all such materials and property as and when requested by theCompany. In any event, theExecutive will return all such materials and property immediately upon termination of theExecutive’s employment for any reason. TheExecutive will not retain with theExecutive any such material or property or any copies thereof after such termination.
(d)Intentionally Omitted.
(e)Litigation and Regulatory Cooperation. During and after theExecutive’s employment, theExecutiveshall cooperate fully with theCompany in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of theCompany which relate to events or occurrences that transpired while theExecutive was employed by theCompany. TheExecutive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of theCompany at mutually convenient times. During and after theExecutive’s employment, theExecutive also shall cooperate fully with theCompany in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while theExecutive was employed by theCompany. TheCompany shall reimburse theExecutivefor any reasonable out-of-pocket expenses incurred in connection with theExecutive’s performance of obligations pursuant to this Subsection 9(e).
(f)Injunction. TheExecutive agrees that it would be difficult to measure any damages caused to theCompanywhich might result from any breach by theExecutive of the covenants set forth in this Subsection 9(f), and that in any event money damages would be an inadequate remedy for any such breach. Accordingly, subject to Section 10 of thisAgreement, theExecutive agrees that if theExecutive breaches, or proposes to breach, any portion of thisAgreement, theCompany shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to theCompany.
10.Indemnification and D&O Insurance. TheCompany and its subsidiaries’ and affiliates’ Certificate or Articles of Incorporation or Bylaws, including, if applicable, any directors and officer’s insurance policies, shall indemnify, hold harmless, and defend theExecutive against any and all claims. Such right shall include the right to be paid by theCompany expenses, including attorney’s fees, judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, by reason of the fact thatExecutive is or was a director, officer, employee or agent of theCompany or any Subsidiary, whether asserted or claimed prior to, at or after the date of termination of employment, to the fullest extent permitted under applicable law and on a basis no less favorable than in existence under theCompany’s Bylaws and Certificate of Incorporation in effect as of theEffective Date. During theEmployment Period and thereafter,Company shall provideExecutivecoverage under a policy of directors’ and officers’ liability insurance that provides you with coverage on the same basis as is provided for theCompany’s continuing officers and directors from time to time. This duty to indemnify shall survive the termination, expiration or cancellation of thisAgreement.
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11.Arbitration of Disputes. Any controversy or claim arising out of or relating to thisAgreement or the breach thereof or otherwise arising out of theExecutive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by theParties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Bethesda, Maryland in accordance with the Employment Dispute Resolution Rules of theAAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than theExecutiveor theCompany may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 11 shall be specifically enforceable. Notwithstanding the foregoing, this Section 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 11.
12.Consent to Jurisdiction.To the extent that any court action is permitted consistent with or to enforce Section 11 of thisAgreement, theParties hereby consents to personal jurisdiction and exclusive venue in the United States District Court for Maryland, if such Court can exercise jurisdiction. In the event the foregoing Court lacks jurisdiction, theExecutive consents to personal jurisdiction and exclusive venue in the Circuit Court in and for Montgomery County, Maryland. Accordingly, with respect to any such court action, theExecutive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.
13.Specific Performance. It is agreed that the rights granted to theParties hereunder are of a special and unique kind and character and that, if there is a breach by anyParty of any material provision of thisAgreement, the otherParty would not have any adequate remedy at law. It is expressly agreed, therefore, that the rights of thePartieshereunder may be enforced by an action for specific performance and other equitable relief without theParties posting a bond, or, if a bond is required, theParties agree that the lowest bond permitted shall be adequate.
14.Entire Agreement. ThisAgreement contains the entire understanding of theParties and no agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by eitherParty, which are not set forth expressly in thisAgreement. ThisAgreement supersedes all negotiations, preliminary agreements, and all prior and contemporaneous discussions and understandings of theParties and/or their affiliates. TheExecutive acknowledges that he has not relied on any prior or contemporaneous discussions or understandings in entering into thisAgreement. ThisAgreement also supersedes and voids any employment agreements betweenExecutive andCompany.
15.Withholding. All payments made by theCompany to theExecutive under thisAgreement shall be net of any tax or other amounts required to be withheld by theCompany under applicable law.
16.Assigns. ThisAgreement is not assignable by theCompany orExecutive.
17.Successor to the Executive. ThisAgreement shall inure to the benefit of and be enforceable by theExecutive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of theExecutive’s death after his termination of employment but prior to the completion by theCompany of all payments due him under thisAgreement, theCompany shall continue such payments to theExecutive’s beneficiary designated in writing to theCompany prior to his death (or to his estate, if theExecutive fails to make such designation).
18.Successor to Company. TheCompany shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of theCompany expressly to assume and agree to perform thisAgreement to the same extent that theCompany would be required to perform it if no succession had taken place. Failure of theCompany to obtain an assumption of thisAgreement at or prior to the effectiveness of any succession shall be a material breach of thisAgreement.
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19.Enforceability. If any portion or provision of thisAgreement (including, without limitation, any portion or provision of any section of thisAgreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of thisAgreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of thisAgreement shall be valid and enforceable to the fullest extent permitted by law.
20.Waiver/Amendment. No waiver of any provision hereof shall be effective unless made in writing and signed by the waivingParty. The failure of anyParty to require the performance of any term or obligation of thisAgreement, or the waiver by anyParty of any breach of thisAgreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. No provision of thisAgreement may be modified, waived or discharged unless such waiver, modification or discharge is approved by theBoard and agreed to in writing signed byExecutive and such officer as may be specifically authorized by theBoard.
21.Survival. The provisions of thisAgreement shall not survive the termination of theExecutive’s employment hereunder, except that the provisions of (i) Section 6 hereto relating to post-termination payment obligations; (ii) Section 9 hereto relating to the restrictive covenants; and (iii) Sections 11 and 12 relating to arbitration and jurisdiction and venue shall remain binding upon theParties.
22.Notices. Any notices, requests, demands and other communications provided for by thisAgreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to theExecutive at the last address theExecutive has filed in writing with theCompany or, in the case of theCompany, at its main offices, attention of theBoard.
23.Governing Law. This is a Maryland contract and shall be construed under and be governed in all respects by the laws of the State of Maryland, without giving effect to the conflict of laws principles of such State.
24.Gender Neutral. Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.
25.Neutral Construction.NoParty may rely on any drafts of thisAgreement in any interpretation of theAgreement. EachParty to thisAgreement has reviewed thisAgreement and has participated in its drafting and, accordingly, noParty shall attempt to invoke the normal rule of construction to the effect that ambiguities are to be resolved against the draftingParty in any interpretation of thisAgreement.
26.Headings and Captions. The titles and captions of paragraphs, sections, subparagraphs and subsections contained in thisAgreement are provided for convenience of reference only, and shall not be considered terms or conditions of thisAgreement.
27.Further Assurances. Each of theParties hereto shall execute and deliver any and all additional papers, documents and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of theParties hereto.
28.Right to Review and Seek Counsel. TheExecutive acknowledges that he has had the opportunity to seek independent counsel and tax advice in connection with the execution of thisAgreement, and theExecutive represents and warrants to theCompany (a) that he has sought such independent counsel and advice as he has deemed appropriate in connection with the execution hereof and the transactions contemplated hereby, and (b) that he has not relied on any representation of theCompanyas to tax matters, or as to the consequences of the execution hereof.
29.Counterparts. ThisAgreement may be executed in one or more separate counterparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall, together, constitute and shall be one and the same instrument. ThisAgreement, and the counterparts thereto, may be executed by theParties using their respective signatures transmitted via facsimile machines or via electronic mail.
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IN WITNESS WHEREOF, theParties have executed thisAgreement effective on the date and year first above written.
COMPANY: | ||
Verus International, Inc. | ||
By: | /s/Chris Cutchens | |
Chris Cutchens, Chief Financial Officer | ||
EXECUTIVE: | ||
/s/Anshu Bhatnagar | ||
Anshu Bhatnagar |
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