This Executive Employment Agreement involves
Title: CODE GREEN APPAREL CORP. FORM OF EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Nevada Date: 7/13/2016
Industry: Misc. Financial Services Sector: Financial
CODE GREEN APPAREL
FORM OF EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is entered into this ____ day of _______ 2016, to be effective as of the Effective Date as defined below between Code Green Apparel Corp., a Nevada corporation (the “ Company ”), and [Executive] (“ Executive ”) (each of the Company and Executive are referred to herein as a “ Party ”, and collectively referred to herein as the “ Parties ”).
W I T N E S S E T H:
WHEREAS , the Company desires to obtain the services of the Executive, and the Executive desires to be employed by the Company upon the terms and conditions hereinafter set forth.
NOW, THEREFORE , in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as of the Effective Date as follows:
EMPLOYMENT; TERM; DUTIES
Employment . Pursuant to the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts such employment, as an Executive Vice President of the Company for a period beginning on the Effective Date and ending on the one (1) year anniversary of the Effective Date (the “ Initial Term ”); provided that this Agreement shall automatically extend for additional one (1) year periods after the Initial Term (each an “ Automatic Renewal Term ” and the Initial Term together with all Automatic Renewal Terms, if any, the “ Term ”) in the event that neither Party provides the other written notice of their intent not to automatically extend the term of this Agreement at least thirty (30) days prior to the end of the Initial Term or any Automatic Renewal Term, as applicable (each a “ Non-Renewal Notice ”).
Duties and Responsibilities . Executive, as Executive Vice President, shall devote his full-time, attention, and energies to the business of the Company and will diligently and to the best of his ability perform all duties incident to his employment hereunder, shall perform such administrative, managerial and executive duties for the Company (i) as are prescribed by applicable job specifications for the Executive Vice President of a public company the size and nature of the Company, including, but not limited to managing (or co-managing in the discretion of the Company) and aggressively driving all aspects of the Company’s sales initiatives, including, but not limited to corporate apparel, uniforms and accessories, (ii) as may be prescribed by the Bylaws of the Company, (iii) as are customarily vested in and incidental to such position, and (iv) as may be assigned to him from time to time by the Board of Directors of the Company (the “ Board ”).
Other Activities . The Company expressly acknowledges that Executive may:
make and manage personal business investments of Executive’s choice without consulting the Board;
serve in any capacity with any non-profit civic, educational or charitable organization; and
undertake any other actions, business transactions, agreements and undertakings which the Executive has received approval of the Board of Directors to enter into and/or undertake, provided that
Executive shall undertake only such actions or services that do not interfere with the Executive’s obligations hereunder.
Covenants of Executive.
Best Efforts . Executive shall devote his best efforts to the business and affairs of the Company. Executive shall perform his duties, responsibilities and functions to the Company hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply, in all material respects, with all rules and regulations of the Company (and special instructions of the Board, if any) and all other rules, regulations, guides, handbooks, procedures and policies applicable to the Company and its business in connection with his duties hereunder, including all United States federal and state securities laws applicable to the Company.
Records . Executive shall use his best efforts and skills to truthfully, accurately, and promptly prepare, maintain, and preserve all records and reports that the Company may, from time to time, request or require, fully account for all money, records, equipment, materials, or other property belonging to the Company of which he may have custody, and promptly pay and deliver the same whenever he may be directed to do so by the Board.
Compliance . Executive shall use his best efforts to maintain the Company’s compliance with all rules and regulations of the Securities and Exchange Commission (“ SEC ”), and reporting requirements for publicly traded companies under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).
Location of Executive’s Principal Office . During the Term, the Executive’s principal office shall be in the Company’s Dallas office, unless mutually agreed otherwise by the Executive and the Company.
Effective Date . The “ Effective Date ” of this Agreement shall be April 1, 2016.
COMPENSATION AND OTHER BENEFITS
Base Salary . So long as this Agreement remains in effect, for all services rendered by Executive hereunder and all covenants and conditions undertaken by the Parties pursuant to this Agreement, the Company shall pay, and Executive shall accept, as compensation, a monthly base salary (“ Base Salary ”) as follows, beginning at the start of the first full month after the Effective Date:
[____] for the first two full calendar months following the Effective Date (the “ First Two Months ”);
[____] for the first full two calendar months following the end of the First Two Months (the “ Second Two Months ”); and
[____] per month thereafter during the Term of this Agreement.
Payment of Base Salary . The Base Salary shall be payable in regular installments in accordance with the normal payroll practices of the Company, in effect from time to time, but in any event no less frequently than on a monthly basis. For so long as Executive is employed hereunder, beginning on December 31, 2016, and on each December 31st thereafter, the Base Salary may be increased as determined by the Board of Directors in its sole and absolute discretion. Such increase in salary, if any, shall be documented in the Company’s records, but shall not require the Parties enter into a new or amended form of this Agreement.
Equity Consideration . Within thirty (30) days of the Parties entry into this Agreement, the Company shall issue Executive [3,750,000/3,250,000] restricted shares of common stock of the Company, which shall be subject to vesting and forfeiture pursuant to the terms of the Restricted Stock Agreement attached hereto as Exhibit A (the “ Shares ”).
In addition to the Base Salary, and subject to the remaining terms and conditions of this Section 2.4 and this Agreement, the Executive shall earn:
a commission on Company Net Sales to accounts other than on “ On the Border ”, “ Sports Clips ” and “ 7-Eleven ”, determined on a case by case basis in the reasonable discretion of the Company (the “ Market Commission ”). The Market Commission rate will be set by the Company from time to time and from account to account, based upon the Net Sales and Net Profit of all shipments to specific accounts or programs originated through the Executive’s personal direct sales efforts as determined in the reasonable discretion of the Company; and
a commission equal to 1.50% of all Net Sales shipped by the Company (and paid by customers), after the Effective Date and through the Term, for on “ On the Border ”, “ Sports Clips ” and “ 7-Eleven ” accounts (the “ Sales Commission ”, and together with the Market Commission, the “ Commissions ”).
The Commissions shall be paid in cash no later than the end of the calendar month following the month during which the Company has received payment of such applicable underlying Net Sales and/or Net Profit, as applicable, or part thereof, unless otherwise agreed between the Company and Executive. “ Net Sales ” shall mean gross sales generated by the Company, less (i) returns, (ii) discounts, (iii) adjustments, (iv) allowances, and (v) any and all payments made to 10Star, LLC or the current or former equity owners thereof (“ 10Star ”) in accordance with the terms of an Asset Purchase Agreement between the Company and 10Star (which such parties currently plan to enter into as of the date of this Agreement), until such time as the cash portion of the purchase price of the Company’s purchase of assets from 10Star pursuant to the terms of the Asset Purchase Agreement have been satisfied in full. “ Net Profits ” shall mean Net Sales less Expenses. “ Expenses ” shall mean the cost of all raw materials, production costs, design and manufacturing costs, commissions, shipping and handling costs, taxes, marketing, labor costs and other expenses associated with the marketing and sale of the Company’s products. For the sake of clarity all Commissions payable or due pursuant to this Section 2.4 shall cease being payable and shall cease being due upon the termination of this Agreement, provided that any commissions due to the Executive for Net Sales and/or Net Profits generated by the Company through the date of termination, the payment of which has been received by the Company, but not yet paid by the Company to Executive, shall be paid by the Company to Executive promptly upon such termination.
Business Expenses . So long as this Agreement is in effect, the Company shall reimburse Executive for all reasonable, out-of-pocket business expenses incurred in the performance of his duties hereunder consistent with the Company’s policies and procedures, in effect from time to time, with respect to travel, entertainment, communications, technology/equipment and other business expenses customarily reimbursed to senior executives of the Company in connection with the performance of their duties on behalf of the Company.
Vacation . Executive will be entitled to 15 days of paid time-off (“ PTO ”) per year. PTO days shall accrue beginning on the 1st of January for each year during the term of this Agreement. Unused PTO days shall expire on December 31 of each year and shall not roll over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.
Other Benefits . During the Term, the Executive shall be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees, such as retirement, health, life insurance, and disability plans, vacation and sick leave policies, business expense reimbursement policies that the Company has in effect from time to time, and stock option plan, life, health, accident, disability insurance plans, pension plans and retirement plans, in effect from time to time (including, without limitation, any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board), to the extent and on such terms and conditions as the Company customarily makes such plans available to its senior executives. The Company retains the right to terminate or alter the terms of any benefit programs that it may establish, provided that no such termination or alteration shall adversely affect any vested benefit under any benefit program.
Withholding . The Company may deduct from any compensation payable to Executive (including payments made pursuant to this ARTICLE II or in connection with the termination of employment pursuant to ARTICLE III of this Agreement) amounts sufficient to cover Executive’s share of applicable federal, state and/or local income tax withholding, social security payments, state disability and other insurance premiums and payments.
TERMINATION OF EMPLOYMENT
Termination of Employment . Executive’s employment pursuant to this Agreement shall terminate on the earliest to occur of the following:
upon the death of Executive;
upon the delivery to Executive of written notice of termination by the Company if Executive shall suffer a physical or mental disability which renders Executive, in the reasonable judgment of the Board, unable to perform his duties and obligations under this Agreement for either 90 consecutive days or 180 days in any 12-month period;
upon the expiration of the Initial Term, unless a notice of termination pursuant to Section 1.1 is not given by either Party, in which case upon the expiration of the first Automatic Renewal Term that such a notice of termination is given with respect to either Party (if any);
upon delivery to the Company of written notice of termination by Executive for any reason other than for Good Reason;
upon delivery to Executive of written notice of termination by the Company for Cause;
upon delivery of written notice of termination from Executive to the Company for Good Reason, provided, however, prior to any such termination by Executive pursuant to this Section 3.1.6 , Executive shall have advised the Company in writing within fifteen (15) days of the occurrence of any circumstances that would constitute Good Reason, and the Company has not cured such circumstances within 15 days following receipt of Executive’s written notice, with the exception of only five (5) days written notice in the event the Company reduces Executive’s salary without Executive’s consent or fails to pay Executive any compensation due him; or
upon delivery to Executive of written notice of termination by the Company without Cause.
Certain Definitions . For purposes of this Agreement, the following terms shall have the following meanings:
“ Cause ” shall mean, in the context of a basis for termination by the Company of Executive’s employment with the Company, that:
Executive materially breaches any obligation, duty, covenant or agreement under this Agreement, which breach is not cured or corrected within thirty (30) days of written notice thereof from the Company (except for breaches of Section 1.3 and ARTICLE IV of this Agreement, which cannot be cured and for which the Company need not give any opportunity to cure); or
Executive commits any act of misappropriation of funds or embezzlement; or
Executive commits any act of fraud; or
Executive is indicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or applicable state law.
“ Good Reason ” shall mean, in the context of a basis for termination by Executive of his employment with the Company (a) without Executive’s consent, his position or duties are modified by the Company to such an extent that his duties are no longer consistent with the position of Executive Vice President of the Company, (b) there has been a material breach by the Company of a material term of this Agreement or Employee reasonably believes that the Company is violating any law which would have a material adverse effect on the Company’s operations and such violation continues uncured following thirty (30) days after such breach and after notice thereof has been provided to the Company by the Executive, or (c) Executive’s compensation as set forth hereunder is reduced without Executive’s consent, or the Company fails to pay to Executive any compensation due to him hereunder upon five (5) days written notice from Executive informing the Company of such failure.
“ Termination Date ” shall mean the date on which Executive’s employment with the Company hereunder is terminated.
Effect of Termination . In the event that Executive’s employment hereunder is terminated in accordance with the provisions of this Agreement, Executive shall be entitled to the following:
If Executive’s employment is terminated pursuant to Section 3.1.1 (death), Section 3.1.2 (disability), Section 3.1.3 (the end of the Initial Term if either Party has timely delivered a Non-Renewal Notice as provided in Section 1.1 or the end of any Automatic Renewal Term pursuant to which either Party has timely delivered a Non-Renewal Notice as provided in Section 1.1 ), Section 3.1.4 (without Good Reason by the Executive), or Section 3.1.5 (by the Company for Cause), Executive shall be entitled to salary accrued through the Termination Date and no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and all Commissions and other commissions due pursuant to the terms of this Agreement shall cease and the Company shall have no obligations to pay such Commissions or commissions, except for those accrued and unpaid as of the Termination Date. Additionally, any unvested stock options or equity compensation (including the Shares) held by Executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation, including the Shares) shall be subject to terms and conditions set forth in the applicable Stock Incentive Plan or Equity Compensation Plan, or award agreement, as such may describe the rights and obligations upon termination of employment of Executive.
If Executive’s employment is terminated by Executive pursuant to Section 3.1.6 (Good Reason), or pursuant to Section 3.1.7 (without Cause by the Company), (a) Executive shall be entitled to continue to receive the Base Salary at the rate in effect upon the Termination Date of employment for six months, payable in accordance with the Company’s normal payroll practices and policies, as if Executive’s employment had not terminated (as applicable, the “ Severance Period ”); (b) provided Executive elects to receive continued health insurance coverage through COBRA, the Company will pay Executive’s monthly COBRA contributions for health insurance coverage, as may be amended from time to time (less an amount equal to the premium contribution paid by active Company employees, if any) through the Severance Period; provided, however, that if at any time Executive is covered by a substantially similar level of health insurance through subsequent employment or otherwise, the Company’s health benefit obligations shall immediately cease, and the Company shall have no further obligation to make COBRA contributions on Executive’s behalf. Additionally, unvested benefits (whether equity or cash benefits and bonuses (i.e., the pro rata amount of any such bonus)) will vest immediately upon such termination and any outstanding stock options previously granted to the Executive will vest immediately upon such termination and shall be exercisable by the Executive until the earlier of (A) one (1) year from the date of termination and (B) the latest date upon which such stock options would have expired by their original terms under any circumstances; and (c) all Commissions and other commissions due pursuant to the terms of this Agreement shall cease and the Company shall have no obligations to pay such Commissions or commissions, except for those accrued and unpaid as of the Termination Date. Additionally, all restricted stock awards granted to Executive shall vest immediately (including the Shares). Executive shall be entitled to no other post-employment benefits except as provided for under this Section 3.4.2 and for benefits payable under applicable benefit plans in which Executive is entitled to participate pursuant to Section 2.7 hereof through the Termination Date, subject to and in accordance with the terms of such plans.
As a condition to Executive’s right to receive any benefits pursuant to Section 3.4.2 of this Agreement, (A) Executive must execute and deliver to the Company a written release in form and substance reasonably satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit); and (B) Executive must not breach any of his covenants and agreements under Section 1.3 and ARTICLE IV of this Agreement, which shall continue following the Termination Date.
In the event of termination of Executive’s employment pursuant to Section 3.1.5 (by the Company for Cause), and subject to applicable law and regulations, the Company shall be entitled to offset against any payments due Executive the loss and damage, if any, which shall have been suffered by the Company as a result of the acts or omissions of Executive giving rise to termination. The foregoing shall not be construed to limit any cause of action, claim or other rights, which the Company may have against Executive in connection with such acts or omissions.
Upon termination of Executive’s employment hereunder, or on demand by the Company during the term of this Agreement, Executive will immediately deliver to the Company, and will not keep in his possession, recreate or deliver to anyone else, any and all Company property, as well as all devices and equipment belonging to the Company (including computers, handheld electronic devices, telephone equipment, and other electronic devices), Company credit cards, records, data, notes, notebooks, reports, files, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, photographs, charts, all documents and property, and reproductions of any of the aforementioned items that were developed by Executive pursuant to his employment with the Company, obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to this Agreement.
Executive also agrees to keep the Company advised of his home and business address for a period of two (2) years after termination of Executive’s employment hereunder, so that the Company can contact Executive regarding his continuing obligations provided by this Agreement. In the event that Executive’s employment hereunder is terminated, Executive agrees to grant consent to notification by the Company to Executive’s new employer about his obligations under this Agreement.
Consulting . During the sixty day period following any termination of this Agreement pursuant to Section 3.1.3 , Section 3.1.4 , Section 3.1.6 , or Section 3.1.7 , Executive shall be available, subject to his other reasonable commitments or obligations made or incurred in mitigation of the termination of his employment, by telephone, email or fax, as a consultant to the Company, with payment by the Company of $50 per hour, plus reasonable documented expenses, to consult with its officers and directors regarding projects and/or tasks as defined by the Board.
INVENTIONS; CONFIDENTIAL/TRADE SECRET INFORMATION
AND RESTRICTIVE COVENANTS
Inventions . All processes, technologies and inventions relating to the business of the Company (collectively, “ Inventions ”), including new contributions, improvements, ideas, discoveries, trademarks and trade names, conceived, developed, invented, made or found by Executive, alone or with others, during his employment by the Company, whether or not patentable and whether or not conceived, developed, invented, made or found on the Company’s time or with the use of the Company’s facilities or materials, shall be the property of the Company and shall be promptly and fully disclosed by Executive to the Company. Executive shall perform all necessary acts (including, without limitation, executing and delivering any confirmatory assignments, documents or instruments requested by the Company) to assign or otherwise to vest title to any such Inventions in the Company and to enable the Company, at its sole expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.
Confidential/Trade Secret Information/Non-Disclosure.
Confidential/Trade Secret Information Defined . During the course of Executive’s employment, Executive will have access to various Confidential/Trade Secret Information of the Company and information developed for the Company. For purposes of this Agreement, the term “ Confidential/Trade Secret Information ” is information that is not generally known to the public and, as a result, is of economic benefit to the Company in the conduct of its business, and the business of the Company’s subsidiaries. Executive and the Company agree that the term “ Confidential/Trade Secret Information ” includes but is not limited to all information developed or obtained by the Company, including its affiliates, and predecessors, and comprising the following items, whether or not such items have been reduced to tangible form (e.g., physical writing, computer hard drive, disk, tape, e-mail, etc.): all methods, techniques, processes, ideas, research and development, product designs, engineering designs, plans, models, production plans, business plans, add-on features, trade names, service marks, slogans, forms, pricing structures, menus, business forms, marketing programs and plans, layouts and designs, financial structures, operational methods and tactics, cost information, the identity of and/or contractual arrangements with suppliers and/or vendors, accounting procedures, and any document, record or other information of the Company relating to the above. Confidential/Trade Secret Information includes not only information directly belonging to the Company which existed before the date of this Agreement, but also information developed by Executive for the Company, including its subsidiaries, affiliates and predecessors, during the term of Executive’s employment with the Company. Confidential/Trade Secret Information does not include any information which (a) was in the lawful and unrestricted possession of Executive prior to its disclosure to Executive by the Company, its subsidiaries, affiliates or predecessors, (b) is or becomes generally available to the public by lawful acts other than those of Executive after receiving it, or (c) has been received lawfully and in good faith by Executive from a third party who is not and has never been an executive of the Company, its subsidiaries, affiliates or predecessors, and who did not derive it from the Company, its subsidiaries, affiliates or predecessors.
Restriction on Use of Confidential/Trade Secret Information . Executive agrees that his use of Confidential/Trade Secret Information is subject to the following restrictions for an indefinite period of time so long as the Confidential/Trade Secret Information has not become generally known to the public:
Non-Disclosure . Executive agrees that he will not publish or disclose, or allow to be published or disclosed, Confidential/Trade Secret Information to any person without the prior written authorization of the Company unless pursuant to or in connection with Executive’s job duties to the Company under this Agreement; and
Non-Removal/Surrender . Executive agrees that he will not remove any Confidential/Trade Secret Information from the offices of the Company or the premises of any facility in which the Company is performing services, except pursuant to his duties under this Agreement. Executive further agrees that he shall surrender to the Company all documents and materials in his possession or control which contain Confidential/Trade Secret Information and which are the property of the Company upon the termination of his employment with the Company, and that he shall not thereafter retain any copies of any such materials.
Prohibition Against Unfair Competition/ Non-Solicitation of Customers . Executive agrees that at no time after his employment with the Company will he engage in competition with the Company while making any use of the Confidential/Trade Secret Information, or otherwise exploit or make use of the Confidential/Trade Secret Information. Executive agrees that during the twelve-month period following the Termination Date, he will not directly or indirectly accept or solicit, in any capacity, the business of any customer of the Company with whom Executive worked or otherwise had access to the Confidential/Trade Secret Information pertaining to the Company’s business with such customer during the last year of Executive’s employment with the Company, or solicit, directly or indirectly, or encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or otherwise interfere with such business relationships.
Non-Solicitation of Employees . Executive agrees that during the twelve-month period following the Termination Date, he shall not, directly or indirectly, solicit or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit, directly or indirectly, any of the Company’s employees for employment.
Non-Solicitation During Employment . During his employment with the Company, Executive shall not: (a) interfere with the Company’s business relationship with its customers or suppliers, (b) solicit, directly or indirectly, or otherwise encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or (c) solicit, directly or indirectly, or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit any of the Company’s employees for employment.
Conflict of Interest . During Executive’s employment with the Company, Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with the Company. If the Company or the Executive have any question as to the actual or apparent potential for a conflict of interest, either shall raise the issue formally to the other, and if appropriate and necessary the issue shall be put to the Board of Directors of the Company for consideration and approval or non-approval, which approval or non-approval the Executive agrees shall be binding on the Executive.
Breach of Provisions . If Executive materially breaches any of the provisions of this ARTICLE IV , or in the event that any such breach is threatened by Executive, in addition to and without limiting or waiving any other remedies available to the Company at law or in equity, the Company shall be entitled to immediate injunctive relief in any court, domestic or foreign, having the capacity to grant such relief, to restrain any such breach or threatened breach and to enforce the provisions of this ARTICLE IV .
Reasonable Restrictions . The Parties acknowledge that the foregoing restrictions, as well as the duration and the territorial scope thereof as set forth in this ARTICLE IV , are under all of the circumstances reasonable and necessary for the protection of the Company and its business.
Specific Performance . Executive acknowledges and agrees that the Company’s remedies a