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EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (the “
Agreement ”),
is made and is effective as of July 1, 2007 (the “
Effective Date ”),
by and between Blue Holdings, Inc., a Nevada corporation (the
“
Company ”),
and Glenn S. Palmer, a resident of the State of New Jersey
(“
Executive ”).
PRELIMINARY STATEMENTS
A.
The
Company desires to employ Executive in the capacity of Chief
Executive Officer and President, upon the terms and conditions
hereinafter set forth; and
B.
Executive
is willing to enter into this Agreement with respect to his
employment and services upon the terms and conditions
hereinafter set forth.
Now,
therefore, for good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, now
agree as follows:
STATEMENT OF AGREEMENT
1.
Term of Employment .
The term of employment under this Agreement shall commence on the
Effective Date and shall expire on December 31, 2010 (the
“
Expiration Date ”),
unless such employment is terminated or extended prior to the
expiration of said period as hereinafter provided. Subject to the
provisions of
Section 8 of
this Agreement, this Agreement and the employment of Executive
hereunder shall be automatically renewed for successive renewal
periods of one (1) year each (each, a “
renewal period ”),
upon and subject to the terms and conditions hereof, commencing on
the Expiration Date and on each anniversary of the Expiration Date
thereafter, unless either party hereto gives the other party hereto
notice of such former party’s intent to terminate this
Agreement and Executive’s employment hereunder at least
ninety (90) days prior to the Expiration Date or the end of any
renewal period.
2.
Duties of Executive .
2.1.
During
the term of this Agreement Executive shall serve as the
President and Chief Executive Officer of the Company.
Executive agrees that during the term of this Agreement, he
will devote his full professional and business-related time,
skills and efforts to the businesses of the Company. In
addition, Executive shall devote all necessary time and
efforts in the performance of such duties for the benefit of
the Company and its affiliates as is consistent with
Executive’s position or related thereto and as may be
assigned to him from time to time by the Board of Directors of
the Company (“
Board ”).
Executive shall devote his full professional and business skills to
the Company as his primary responsibility. Executive may engage in
personal, passive investment activities provided such activities do
not interfere with the performance of his duties hereunder or
violate the provisions of the Employee Proprietary Information and
Inventions Agreement attached hereto as
Exhibit A .
2.2.
Within
ninety (90) days of the Effective Date the Company shall cause
Executive to be elected to its Board and at each annual
meeting of its shareholders during the term hereof the Company
shall nominate Executive for re-election to its
Board.
3.
Compensation .
3.1.
Base Salary .
The Company shall pay Executive as follows: $87,500 for the third
quarter of fiscal 2007; $87,500 for the fourth quarter of fiscal
2007; and at an annual rate of Four Hundred Thousand Dollars
(
$ 400,000)
(the “
Base Salary ”)
for the remainder of the term of employment. Executive’s Base
Salary shall be reviewed by the Board (or a committee thereof) on
an annual basis no later than January 15 of each year commencing
2008 to determine if Executive’s Base Salary should be
increased. Executive’s Base Salary shall be subject to all
appropriate federal and state withholding taxes and shall be
payable in accordance with the Company’s standard payroll
practices for executive employees.
3.2.
Annual Bonus .
(a) Executive shall be eligible to receive an annual bonus (the
“
Bonus ”)
equivalent to 2.5% of the Company’s earnings before interest,
taxes, depreciation and amortization (EBITDA) for each calendar
year during the term commencing with 2008, which shall be paid no
later than March 31
st of
the following year. Executive shall be eligible to receive a bonus
for the period ended December 31, 2007, if any, as determined by
the Compensation Committee of the Board by January 31, 2008 and
paid no later than March 31, 2008. Except in the case of
termination for cause, expiration or termination of
Executive’s employment shall not relieve the Company of the
obligation to pay any Bonus, or portion thereof, due Executive in
respect of the year during which this Agreement terminates or
expires.
(b)
Notwithstanding
anything to the contrary contained in this Agreement other
than Section 3.2(c), in the event that this Agreement or
Executive’s employment hereunder shall terminate or
expire for any reason whatsoever during any particular year,
any Bonus which might otherwise have been payable to Executive
in respect of such year shall be pro rated based on the period
of Executive’s employment hereunder during such year,
and such pro rated amount (
i.e. ,
in respect of the portion of such year during which Executive
performed services hereunder prior to the expiration or termination
hereof) shall be payable in accordance with the provisions
of
Section 9.4 .
(c)
Notwithstanding
anything to the contrary contained in this Agreement, in the
event that the Company shall terminate this Agreement or the
employment of Executive hereunder for cause, as defined
in
Section 8 below,
no Bonus shall be payable to Executive in respect of the year of
the Company during which such termination occurs.
3.3.
Stock Options .
Executive shall be granted an option to purchase 625,000 shares of
the Company’s Common Stock at an exercise price per share of
$1.40 (the “
Option ”).
The Option will be subject to the terms and conditions set forth in
a stock option agreement between the Company and Executive.
Executive shall vest in 125,000 shares on the date of grant and
125,000 shares on each six-month anniversary of the date of grant
thereafter until fully vested.
4.
Benefits .
During Executive’s term of employment hereunder, Executive
and, to the extent applicable, Executive’s spouse, dependents
and beneficiaries, shall be allowed to enjoy and participate in all
benefit plans and programs, including improvements or modifications
of the same, which are now, or may hereafter be, available to other
executive employees of the Company. Such benefit plans and programs
shall be similar to and consistent with the Company’s past
practice and shall include, without limitation, medical insurance,
disability insurance, vacation and sick leave plan, and such
similar benefits, plans and programs as may be maintained by the
Company. The Company shall not, however, be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing, any
such benefit plan or program, so long as such changes are similarly
applicable to executive employees generally.
5.
Vacations .
The Executive shall be entitled to four (4) weeks of paid vacation
annually; provided, however, that Executive shall not be entitled
to utilize more than two consecutive weeks of vacation at any time
without board approval; and provided, further, that Executive shall
not be entitled to use any vacation days for the six-month period
beginning on the Effective Date. The Executive shall also be
entitled to all paid holidays given by the Company to its senior
executives.
6.
Reimbursement of Expenses .
The Company recognizes that Executive will incur legitimate
business expenses in the course of rendering services to the
Company hereunder. Accordingly, during the term of this Agreement,
Executive shall be entitled to receive reimbursement, upon
presentation of receipts or other adequate documentation, for all
appropriate business expenses incurred by him in connection with
his duties under this Agreement in accordance with the policies of
the Company as in effect from time to time. In addition, during the
term of this Agreement, Executive shall be entitled to receive
reimbursement in an amount up to and not to exceed $2,000 per month
for all expenses incurred by him with respect to his personal
automobile including, without limitation, lease payments,
insurance, tolls, parking, maintenance, repairs and
gas.
7.
Housing/Travel .
The Company will provide Executive a furnished apartment or
comparable living space in Los Angeles, California suitable to his
position for the initial twelve months of the term of this
Agreement. Executive agrees that he will establish a permanent
place of abode within twenty miles of Los Angeles, California no
later than the one year anniversary of the Effective Date.
Additionally, the Company will pay for no more than two coach or
economy class round trip tickets from Los Angeles to New Jersey for
Executive to visit with his family for no more than two weekends,
per month prior to Executive’s relocation to Los Angeles,
California.
8.
Termination .
The employment relation
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