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EXHIBIT 10.01 EMPLOYMENT AGREEMENT
This Agreement, dated as of December
1, 2006, is between Legacy Systems, Inc., a California corporation
("Employer"), and Robert R Matthews
("Employee"). Employer and Employee agree to the
following terms and conditions of employment.
1. Period of Employment.
(a) Basic Term. Employer shall employ
Employee to render services to Employer in the position and with
the duties and responsibilities described in Section 2 and except
as set forth in Paragraph 19 for the period (the "Period of
Employment") commencing December 1, 2006 and ending upon the
earlier of (i) December 1, 2009 (the "Term Date"), as, and to the
extent, extended under Section 1(b); or (ii) the date upon which
the Period of Employment is terminated in accordance with Section
4.
(b) Renewal. Subject to Section 4, Employee's
employment will be renewed automatically for an additional one (1)
year period (without any action by either party) on the Term Date
and on each anniversary thereof, unless one party gives to the
other written notice sixty (60) days in advance of the beginning of
any one-year renewal period that the Period of Employment is to be
terminated. Either party may elect not to renew this
Agreement, with or without cause, in which case Section 4 and 5
will apply along with Employer’s obligations under Section
3. Nothing stated in this Agreement or represented
orally or in writing to either party shall create an obligation to
renew this Agreement.
2. Position and Responsibilities.
(a) Position. Employee accepts employment with Employer
as Chief Executive Officer (CEO) and President. Employee
shall perform all services appropriate to such position, as well as
such other services as may be assigned by Employer’s Board of
Directors, and Employee has full responsibility for the overall
operation of Employer, subject to the direction of Employer's Board
of Directors. Employee shall have such additional
duties, responsibilities, and powers, subject to the review and
approval of the Board and shall carry out such policies and
directives and performs such acts and administrative functions and
duties as may be prescribed from time to time by the Board
including the following: (i) selecting, training, assigning,
evaluating, and managing subordinate personnel; (ii) performing
related responsibilities as required or directed by the Board.
Employee shall perform the services and manage the
operations of Employer to the very best of his ability and in
compliance with the policies and procedures set forth by the Board
of Directors for the term of Employee's
employment. Subject to Section 2(b), Employee
shall devote his best efforts and full-time attention to the
performance of his duties. Employee shall be
expected to travel in reasonable amounts if necessary or advisable
in order to meet the obligations of his position.
(b) Other Activity. Except as provided in
this Section 2(b) or upon the prior written consent of Employer,
Employee (during the Period of Employment) shall not (i) accept any
other employment; or (ii) engage, directly or indirectly, in any
other business except as described below, commercial, or
professional activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with Employer, that might
create a conflict of interest with Employer, or that otherwise
might interfere with the business of Employer, or any
Affiliate. An "Affiliate" shall mean any person or
entity that directly or indirectly controls, is controlled by, or
is under common control with Employer. Employee may sit
on Employer’s Board and any two Board of Directors of
companies who are not in competition with Employer, spend such time
as is customary for sitting on such boards, and devote such time as
a director as is reasonably required to meet his fiduciary duties.
Employee may sit on additional Boards only with the written consent
of a majority of the Board of Directors of
Employer. Under no circumstances will Employee spend
more than 10% of his time providing consulting services and sitting
on the Boards.
(c) Representations and Warranties. Employee
represents and warrants that his execution of this Agreement, his
employment with Employer, and the performance of his proposed
duties under this Agreement shall not violate any obligations he
may have to any former employer (or other person or entity),
including any obligations with respect to proprietary or
confidential information of any other person or
entity. Employee agrees that he will not use for the
benefit of, or disclose to, Employer any confidential information
belonging to any former employer or other entity unless he has
written permission from the employer or entity to do so (or unless
Employer has been granted such permission).
3. Compensation and Benefits.
(a) Compensation. In consideration of the
services to be rendered under this Agreement, Employer shall pay
Employee as base compensation a salary of $150,000 each year or
Twelve Thousand Five Hundred Dollars ($12,500.00) per month,
payable monthly, pursuant to the Employer’s payroll
procedures regularly established and as they may be
amended. The Employee’s base salary shall be
reviewed annually by the Board of Directors of Employer.
(b) Benefits. Except as otherwise provided in
this Section, upon eligibility, Employee shall be entitled to four
(4) weeks of vacation, in addition to approved holidays during each
12-month period earned pro-rata throughout the year, in accordance
with Employer’s standard policies. As Employee
becomes eligible, he shall have the right to participate in and to
receive benefits from all present and future benefit plans adopted
by Employer, specified in Employer's policies and generally made
available to similarly situated employees of
Employer. The amount and extent of benefits to which
Employee is entitled shall be governed by the specific benefit
plan, as amended. No statement concerning benefits or
compensation to which Employee is entitled shall alter in any way
the term of this Agreement, any renewal thereof, or its
termination. (c) Medical,
Dental, Life and Disability Insurance. During the term
of this Agreement, the Corporation will pay all scheduled premiums
on the insurance and disability policies currently maintained by
the Employee and identified on Exhibit A attached hereto.
(d) Expenses. Employer shall
reimburse Employee for reasonable travel and other business
expenses incurred by Employee in the performance of his duties, in
accordance with Employer's policies, as they may be amended in
Employer's sole discretion.
(e) Automobile. While employed by Employer,
the Employer shall pay reasonable related costs of operating and
maintaining a vehicle, and shall reimburse the Employee for any
other automobile related costs if paid by Employee within ten days
of the Employer’s receipt of an itemized statement with
respect thereto.
(f) Post-Termination Payments. In the
event of the involuntary termination by the Employer of the
Employee’s employment hereunder, under the initial term or
any renewal period, other than (a) termination in the event of the
death or disability of the Employee, or (b) for cause pursuant to
the Section 5, then the Employee shall be entitled to
post-termination payment equal to 100% of his base salary at the
time of such termination for a period of 36 months minus the months
actually employed and paid under the initial term, and, for any
renewal period, for a period of 12 months minus the months actually
employed and paid during such renewal
period. Post-termination payments shall be paid
monthly commencing the month after the month in which the
termination occurs.
(g) Change in Control Benefits.
(a) If, during the term of this
Agreement, (x) there shall occur a Change of Control of the
Employer (as defined in Section 3(j)(b)), and (y) the Employee is
not employed by the Employer after the Change of Control in a
position of responsibility, with a level of compensation at least
as favorable as immediately prior to the Change of Control, the
Employee may terminate his employment hereunder at any time during
the term of this Agreement in which case he shall be entitled to
receive post-termination payments as set forth in Section 3(i),
including any bonuses, if any. In addition, if during
the term of this Agreement there shall occur a Change of Control
(as defined in Section 3(j)(b)) and the Employee’s employment
is terminated involuntarily by the person or persons who cause the
Change of Control, the Employee shall become entitled to receive
the post-termination payments as set forth in Section 3(i),
including any bonus, if any.
(b) For purposes hereof, the term
"Change of Control" shall be deemed to occur upon:
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(i)
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the sale of all or substantially all of the Employer’s
assets:
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(ii)
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a merger or consolidation of Employer with one or more
corporations or entities as a result of which the Employer’s
voting securities outstanding immediately before such merger or
consolidation represent less than 50% of the combined voting power
of voting
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securities of the Employer or the surviving entity outstanding
immediately after such merger or consolidation; or
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(iii)
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any “person”, as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) or persons acting in concert (other
than Robert Matthews, Employee;) become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act, or
any successor rule or regulation thereto as in effect from time to
time), directly or indirectly, of the Employer’s securities
representing 50% or more of the combined voting power of the
Employer’s then outstanding securities, whether pursuant to a
merger of the Employer in which the Employer is the surviving
corporation, an acquisition of securities or otherwise; provided,
however, that no Change in Control shall be deemed to occur as a
result of the issuance of securities to any person solely in
connection with a financing of the Employer.
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(C) All compensation and comparable payments
in any form to be paid to Employee under this Agreement shall be
less withholdings required by law.
4. Termination of Employment.
(a) By Death. The Period of Employment shall
terminate automatically upon the death of
Employee. Employer shall pay to Employee's beneficiaries
or estate, as appropriate, any compensation then due and owing,
including payment for accrued unused vacation, expense
reimbursement, if any, and any other benefits provided hereunder,
including without limitation the exercisability of any exercisable
options held by the Employee. Thereafter, all
obligations of Employer under this Agreement shall
cease. Nothing in this Section shall affect any
entitlement of Employee's heirs to the benefits of any life
insurance plan or other applicable benefits.
(b) By Disability. If, by reason of any
physical or mental incapacity, Employee has been or will be
prevented from properly performing his duties under this Agreement
for more than sixty (60) consecutive business days in any one (1)
year period, then, to the extent permitted by law, Employer may
terminate the Period of Employment upon ten (10) days' advance
written notice. Termination by disability shall be
determined by a physician selected by the Board of
Directors. If such physician is unable to schedule an
appointment with Employee within ten days of physician’s
written request, the Board of Directors is authorized to determine
whether disability of Employee has occurred at its sole
discretion. Employer shall pay Employee all compensation
to which he is entitled up through the last business day of the
notice period, including payment for accrued unused vacation,
expense reimbursement, if any, and any other benefits provided
hereunder, including without limitation the exercisability of any
exercisable option held by the Employee; thereafter, all
obligations of Employer under this Agreement shall
cease. Nothing in this Section shall affect Employee's
rights under any applicable Employer disability plan.
(c) By Employer Not For Cause. At any time,
Employer may terminate Employee without Cause (as defined below) by
providing Employee sixty (60) days' advance written
notice. Employer shall have the option, in its complete
discretion, to terminate Employee at any time prior to the end of
such notice period, provided Employer pays Employee all
compensation and benefits due and owing, including payment for
accrued unused vacation, expense reimbursement, and any other
benefits through the last day actually worked, plus an amount equal
to the base salary Employee would have earned through the balance
of the above notice period and all post-termination payments due as
set forth in Sections 3(k); thereafter, all of Employer's
obligations under this Agreement shall cease.
(d) By Employer For Cause. At any time, and
upon ten days written notification to Employee, and if curable and
not cured within such ten-day notification period, Employer may
terminate Employee for Cause. Employer shall pay
Employee all compensation then due and owing, including payment for
accrued unused vacation, expense reimbursement, if any, and any
other benefits provided hereunder, thereafter, all of Employer's
obligations under this Agreement shall
cease. Termination shall be for "Cause"
if: (i) Employee acts in bad faith, which causes
material damage or potential material damage to the Employer, and
to the detriment of Employer; (ii) Employee refuses or fails to act
in accordance with any specific written direction or order of the
Board more than once; (iii) Employee exhibits in regard to his
employment material
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