EXHIBIT 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive
Employment Agreement
(this "AGREEMENT") is made and
entered into as of this 28 day of February, 2005 (the "EFFECTIVE DATE"), by
and
between Patron Systems, Inc., a Delaware corporation (the "Company") and
Brett
Newbold ("EXECUTIVE").
1.
ENGAGEMENT AND DUTIES.
1.1 Commencing
upon the Effective Date, and upon the terms and
subject to the
conditions
set forth in this
Agreement,
the Company hereby
engages and employs
Executive as an officer of the Company, with the title and
designation of President and Chief Technology Officer of the
Company. Executive
hereby accepts such engagement and employment.
1.2
Executive's duties
and responsibilities
shall
be those
normally and customarily vested in the office of President
and Chief Technology
Officer of a corporation, subject to the supervision,
direction and control
of
the Board of Directors of the Company ("BOARD"). In addition,
Executive's duties
shall include
those duties and
services for the Company and its affiliates as
the Board shall from time to time reasonably direct. Executive shall report
directly to the Chief Executive Officer of the Company.
1.3 Executive
agrees
to devote his primary business time,
energies, skills,
efforts and attention to his duties hereunder, and will not,
without the prior
written consent of the Board, which consent will not be
unreasonably withheld,
render any material services to any other business
concern. Executive
will use his best
efforts and abilities faithfully and
diligently to promote the Company's business interests.
1.4 Except for
routine travel incident to the business of the
Company, Executive shall perform his duties and obligations under
this Agreement
principally from an office provided by the Company in Cambridge,
Idaho.
2. TERM
OF EMPLOYMENT. Unless earlier terminated pursuant to the
provisions hereof, the
initial term ("INITIAL TERM") of Executive's employment
under this Agreement
shall be for a period
of one (1) year
commencing on the
Effective Date.
Said term shall be automatically renewed thereafter for
successive one
(1)-year terms (the Initial Term and any renewal terms, the
"TERM") unless the Board or any successor entity provides Executive
with written
notice 90 days prior to the expiration of the then current
Term.
3.
TERMINATION.
3.1
Executive's
employment pursuant
to this Agreement shall
terminate on the earliest to occur of the following:
(a) the
expiration of the Term;
(b) the death
of Executive;
(c) delivery
to Executive of written notice of
termination by the Company if Executive shall suffer a "permanent
disability,"
which for purposes of this Agreement shall mean a physical or
mental disability
which, in the reasonable judgment of the
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Board, is likely to render Executive unable to perform his duties and
obligations under this Agreement for 90 days in any 12-month
period;
(d) delivery
to Executive of written notice of
termination by the
Company "for
cause," by reason of:
(i) any act or omission
knowingly undertaken
or omitted by Executive with the intent of causing
damage
to the Company or its
affiliates, its
properties, assets or
business, or its
stockholders,
officers, directors
or employees; (ii) any act of Executive
involving a
material personal profit to Executive, including, without
limitation, any fraud,
misappropriation or embezzlement, involving properties,
assets or funds of the
Company or any of its
subsidiaries; (iii)
Executive's
consistent failure to
perform his normal
duties or any
obligation
under any
provision of this
Agreement,
in either case,
as directed by the
Board; (iv)
conviction of, or pleading nolo contendere to, any crime or offense
involving
monies or other property of the Company.
(e) delivery
to the Company of written notice of
termination by Executive "for good reason," by reason of
(i) a material
change
in Executive's function, authority, duties, compensation or
responsibilities,
without Executive's
express written consent; (ii) a substantial difference of
opinion between Executive and the Board develops, or other circumstances should
arise such
that Executive, in good faith, no longer believes that he can
function effectively
as President and Chief
Technical Officer of
the Company;
(iii) any material
failure by the Company to comply with any of the provisions
of this Agreement;
or (iv) any other
matter or circumstance
requested by the
Board if either
(a) made with the intent of hindering Executive in the
performance of his
duties hereunder or
creating an incentive
for Executive to
exercise his rights under this Section 3.1(e) hereof or (b) the effect of
such
request could
reasonably be expected to hinder Executive in the performance
of
his duties hereunder or create an incentive for Executive to
exercise his rights
under this Section 3.1(e); or
(f) delivery
to Executive of written notice of
termination by the Company "without cause."
3.2 With
regard to Section 3.1(d), the Company shall first provide
Executive with 30-days
written notice of such alleged misconduct, including a
specific description
of such misconduct sufficient to allow Executive an
opportunity to correct such noted problems. Executive shall have
the opportunity
to appear before the
Board, with his legal
counsel, to present any relevant
information he
believes the Board should consider. Executive shall not be
terminated under
Section 3.1(d) unless, after the notice period expires,
Executive continues to fail to satisfactorily perform his
duties.
3.3 With
regard to Section
3.1(e), if Executive
determines that
"good reason" as defined in Section 3.1(e) exists, Executive shall
so notify the
Company in writing.
The Company shall have thirty (30) days to remedy the facts
and circumstances
that provided "good
reason" as defined in Section 3.1(e). If
adequate remedy has
occurred, Executive shall continue in the employ of the
Company as if no notice had been given. If adequate remedy has not occurred,
Executive may, at his
option, terminate
his employment for "good reason" as
defined in Section 3.1(e).
4.
COMPENSATION; EXECUTIVE BENEFIT PLANS.
4.1 The
Company shall pay to
Executive a base salary at an annual
rate of
2
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$190,000 during each fiscal year of this Agreement ("BASE
SALARY"), subject to
adjustment on an annual basis by the Board. The Base Salary shall be payable
in
installments
throughout the year in
the same manner and at
the same times the
Company pays base salaries to other executive officers of the Company.
In the
event that Executive's
employment is
terminated pursuant to
SECTION 3.1(E) OR
(F), above,
Executive shall continue to receive
Executive's
Base Salary and
shall be entitled to continued participation in the Company
Executive Benefit
Plans (as defined
below) for a period of
six (6) months.
Notwithstanding
the
foregoing, the Company
shall not be
obligated to pay Executive any amounts
hereunder following
the termination of Executive's employment pursuant to
SECTION 3.1(E) OR (F), above, from and after any time that
Executive accepts an
employment or
consulting position
with any person or entity that is determined
by the Board, in the exercise of its reasonable discretion, to be a competitor
of the Company. In addition, the Company owes back-pay to Executive
for services
previously rendered.
The Company and the Executive will negotiate in good faith
to resolve the back-pay within 30 days of the date of this
agreement.
4.2 In
addition to the Base Salary to be paid to Executive
hereunder, the Company shall pay a performance bonus (the "BONUS")
determined in
accordance with a management incentive plan to be agreed upon
between Executive
and the Board on an annual basis. The management incentive plan
will provide for
the payment of a Bonus
equal to 50 percent
(50%) of Executive's
then-current
Base Salary upon
achieving the "target"
objectives set forth in the management
incentive plan,
and payments of such
lesser or greater
amounts upon achieving
results less than or greater than the "target" objectives as shall be
contained
in the management incentive plan.
4.3 Executive
shall be entitled each year to vacation for a
minimum of four (4) calendar weeks, plus such additional period or periods as
the Board may approve in the exercise of its reasonable discretion,
during which
time his compensation shall be paid in full.
4.4 Executive
shall be entitled to reimbursement from the Company
for the reasonable
costs and expenses
which he incurs in
connection with
the
performance of his
duties and obligations
under this Agreement in a manner
consistent with the Company's practices and policies as adopted or
approved from
time to time by the Board for executive officers.
4.5 The
Company may deduct from any compensation payable to
Executive the minimum
amounts sufficient to
cover applicable
federal, state
and/or local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums
and payments.
5.
OTHER BENEFITS. During the term of his employment hereunder,
Executive
shall be eligible to participate in all operative employee benefit and welfare
plans of the Company
then in effect
from time to time and
in respect of which
all executive officers of the Company and its affiliates
generally are
entitled
to participate
("COMPANY EXECUTIVE
BENEFIT PLANS"),
including, to the
extent
then in effect, group
life, medical,
disability and other insurance plans, all
on the same
basis applicable to employees of the Company whose level of
management and authority is comparable to that of Executive.
3
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6.
CONFIDENTIALITY OF PROPRIETARY INFORMATION AND MATERIAL.
6.1 INDUSTRIAL
PROPERTY
