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Executive Employment Agreement

Executive Employment Agreement

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CACHET FINANCIAL SOLUTIONS, INC. | Cachet Financial Solutions, Inc

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Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Minnesota     Date: 7/20/2016
Industry: Misc. Financial Services     Sector: Financial

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EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into effective April 1, 2014, by and between Cachet Financial Solutions, Inc., a corporation duly organized and existing under the laws of the State of Minnesota, with a place of business at 18671 Lake Drive East, Chanhassen, Minnesota 55317 (hereinafter referred to as the “Company”), and Jeffrey C. Mack, a resident of the state of Minnesota (hereinafter referred to as “Executive”).

 

BACKGROUND OF AGREEMENT

 

The Company desires to employ Executive as its Executive Vice President Chief Financial Officer, and Executive desires to accept such employment.

 

 

This Agreement provides, among other things, for base compensation for Executive, a term of employment and severance payments in the event Executive is terminated without Cause or by reason of a Change of Control of the Company.

 

In consideration of the foregoing, the Company and Executive agree as follows:

 

ARTICLE 1

 

EMPLOYMENT

 

1.1 Subject to the terms of Articles 3 and 6, the Company agrees to employ Executive as its President and Chief Executive Officer pursuant to the terms of this Agreement, and Executive agrees to such employment. Executive’s title shall be President and Chief Executive Officer. Executive’s primary place of employment shall be the Company’s executive offices currently located at Chanhassen, Minnesota.

 

1.2 Executive shall generally have the authority, responsibilities, and such duties as are customarily performed by a person of similar title in companies of similar size and industry. Notwithstanding the foregoing, Executive shall also render such additional services and duties within the scope of Executive’s experience and expertise as may be reasonably requested of him from time to time by the chief executive officer. Further, the Board of Directors of the Company may from time to time in its discretion redefine the duties and responsibilities of Executive as it determines the needs of the Company’s business warrant.

 

1.3 Executive shall carry out his duties in a professional and diligent manner and conduct himself respectfully in his interaction with others. Executive shall report to and be subject to direction by, the Company’s chief executive officer and other officers as the Board shall specify, and shall generally be subject to direction and advice of the Board.

 

 

 

 

 

 

 

ARTICLE 2

 

BEST EFFORTS OF EXECUTIVE

 

2.1 Executive shall use his best energies and abilities in the performance of his duties, services and responsibilities for the Company.

 

2.2 During the term of his employment, Executive shall devote substantially all of his business time and attention to the business of the Company and its subsidiaries and affiliates and shall not engage in any substantial activity inconsistent with the foregoing, whether or not such activity shall be engaged in for pecuniary gain, unless approved by the Board; provided, however, that, to the extent such activities do not violate, or substantially interfere with his performance of his duties, services and responsibilities under this Agreement, Executive may engage in such activities.

 

ARTICLE 3

 

TERM AND NATURE OF EMPLOYMENT

 

3.1 Executive’s employment hereunder shall be for an initial term commencing on the date hereof and ending on April 1, 2015 (the first anniversary of the date hereof). Neither the Company nor Executive shall be obligated to extend the term of Executive’s employment. In connection with the Company’s determination described in Sections 3.1 and 3.2 of this Agreement to extend or not extend the term of Executive’s employment, the Company shall extend such term, absent (a) Cause, or (b) the Board’s determination, in good faith and subject to the procedures described in the last paragraph of Section 6.2 of this Agreement, that Executive’s performance of his duties has been unsatisfactory, and the Company having given Executive at least 60 days’ written notice of such determination and opportunity to cure same.

 

3.2 The term of Executive’s employment shall automatically be extended for successive one (1) year periods commencing on April 1,2015 unless the Company or Executive elects not to extend employment, by giving written notice to the other not less than sixty (60) days prior to the end of the initial term or any extension period.

 

3.3 The terms and conditions of this Agreement may be amended from time to time with the consent of the Company and Executive. All such amendments shall be effective when memorialized by a written agreement between the Company and Executive, following approval by the Company’s Compensation Committee (the “Committee”).

 

ARTICLE 4

 

COMPENSATION AND BENEFITS

 

4.1 During the initial term of employment hereunder, Executive shall be paid a base annual salary of Two Hundred Sixty Five Thousand Dollars ($265,000) per year (“Base Salary”), payable in accordance with the Company’s established pay periods, reduced by all deductions and withholdings required by law and as otherwise specified by Executive. The Company agrees to review Executive’s performance and compensation annually. Executive’s Base Salary may be increased (but not decreased) in the sole discretion of the Board. Base Salary shall not be reduced after any such increase except in connection with Company compensation reductions applied to all other senior executives of the Company. In the event Executive’s employment shall for any reason terminate during the Term, Executive’s final monthly Base Salary payment shall be made on a pro-rated basis as of the last day of the month in which such employment terminated.

 

 

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During the term of employment, in addition to payments of Base Salary set forth above, Executive may be eligible to participate in any performance-based cash bonus or equity award plan for senior executives of the Company, based upon achievement of individual and/or Company goals established by the Board or Committee. The extent of Executive’s participation in bonus plans shall be within the discretion of the Company’s Board or Compensation Committee.

 

4.2 During the term of employment, Executive shall be entitled to participate in employee benefit plans, policies, programs and arrangements, as the same may be provided and amended from time to time, that are provided generally to similarly situated executive employees of the Company, to the extent Executive meets the eligibility requirements for participation therein.

 

4.3 The Company shall reimburse Executive for all reasonable business and travel expenses incurred by Executive in carrying out Executive’s duties, services, and responsibilities under this Agreement. Executive shall comply with generally applicable policies, practices and procedures of the Company with respect to reimbursement for, and submission of expense reports, receipts or similar documentation of, such expenses.

 

ARTICLE 5

 

VACATION AND LEAVE OF ABSENCE

 

5.1 Paid Time Off and leaves of absence shall be in accordance with the Company’s policies for executive-level employees. Such policies shall be subject to change from time to time. As of the date of this Agreement and for the 12-month period commencing on the date of this Agreement, Executive shall annually be entitled to twenty-two (22) business days of paid time off (“PTO”), in addition to the Company’s normal paid holidays. The Company furnished Executive with a copy of its PTO policy prior to the execution of this Agreement.

 

 

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ARTICLE 6

 

TERMINATION

 

6.1 The Company may terminate Executive’s employment upon written notice thereof. In the event of a termination of Executive without Cause, or a termination by Executive for Good Reason, Executive shall be entitled to receive: (i) the Severance Payment provided in Section 7.1 and (ii) the bonus described in Section 7.3. For the purposes of this Agreement, an election by the Company not to extend this Agreement pursuant to Section 3.1 or 3.2 or the determination at any time by the Company that Executive has not satisfactorily performed his duties shall be deemed a termination without Cause.

 

Executive’s employment will terminate as of the date of the death or Disability of the Executive. In the event of such termination, there shall be payable to Executive or Executive’s estate or beneficiaries Base Salary earned through the date of death together with a pro-rata portion of any bonus due Executive pursuant to any bonus plan or arrangement established or mutually agreed-upon prior to termination, to the extent earned or performed based upon the requirements or criteria of such plan or arrangement, as the Board shall in good faith determine. If the Board is /has insufficient information to make such determination within the timeframe specified in the following sentence, it will be assumed that all bonus arrangements are met at their target levels, at the end of the period during which they are to be earned. Such pro-rated bonus shall be payable at the earlier of (a) the time and in the manner payable to other executives of the Company who participate in such plan or arrangement, or (b) within sixty (60) days following the termination. For purposes of this Agreement “Disability” shall mean a determination by the Board of the Company of the inability of Executive to perform substantially all of his duties and responsibilities under this Agreement due to illness, injury, accident or condition of either a physical or psychological nature, and such inability continues for an aggregate of ninety (90) days during any period of three hundred and sixty-five (365) consecutive calendar days. Such determination shall be made in good faith by the Board, the decision of which shall be conclusive and binding.

 

6.2 Any other provision of this Agreement notwithstanding, the Company may terminate Executive’s employment upon written notice specifying a termination date based on any of the following events that constitute Cause:

 

 

(a)

Any conviction or nolo contendere plea by Executive to a felony, gross misdemeanor or misdemeanor involving moral turpitude, or any public or private conduct or behavior by Executive that has or can reasonably be expected to have a detrimental effect on the Company and the image of its management;

 

 

 

 

(b)

Any act of material misconduct, willful or gross negligence, or breach of duty with respect to the Company, including, but not limited to, embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the Company, or willful breach of fiduciary duty to the Company which results in harm or loss to the Company;

 

 

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(c)

Any material breach of any material provision of this Agreement or of the Company’s announced or written rules, codes or polices; provided, however, that such breach shall not constitute Cause if Executive cures or remedies such breach within thirty (30) days after written notice to Executive, without material harm or loss to the Company, unless (i) such breach is part of a pattern of chronic breaches of the same, which may be evidenced by reports or warning letters given by the Company to Executive, or (ii) such breach is of a nature that it is deemed by Board not to be curable, including situations where the Board determines that the harm or loss to the Company has already occurred or can reasonably be expected to occur and cannot be eliminated by such cure.

 

 

 

 

(d)

Any act of insubordination by Executive; provided, however, an act of insubordination by Executive shall not constitute Cause if Executive cures or remedies such insubordination within thirty (30) days after written notice to Executive, without material harm or loss to the Company, unless (i) such insubordination is a part of a pattern of chronic insubordination, which may be evidenced by reports or warning letters given by the Company to Executive, or (ii) such insubordination is of a nature that it is deemed by the Board not to be curable, including situations where the Board determines that harm or loss to the Company has already occurred or can reasonably be expected to occur and cannot be eliminated by such cure.

 

 

 

 

(e)

Any unauthorized disclosure of any Company trade secret or confidential information, or conduct constituting unfair competition with respect to the Company, including inducing a party to breach a contract with the Company; or

 

 

 

 

(f)

A willful violation of federal or state securities laws or employment laws.

 

In making such determination of Cause, the Board shall act in good faith and give Executive a reasonably detailed written notice and a reasonable opportunity to be heard on the issues at a Board or Committee meeting. A resolution providing for the termination of Executive’s employment for Cause must be approved by a majority of the members of the Board; provided, however, that if Executive is a member of the Board, he shall not vote on the resolution shall not be deemed to be a member of the Board for purposes of whether a majority of its members have approved such termination. Executive’s employment shall be deemed terminated for Cause upon the approval by the Board of a resolution terminating Executive’s employment for Cause unless a later time or date is specified.. For purposes of this Agreement, no act or failure by the Executive shall be considered “willful” if such act is done by Executive in good faith in the belief that such act is or was lawful and in the best interest of the Company or one or more of its businesses. Nothing in this Section 6.03 shall be construed to prevent Executive from contesting the Board or Committee’s determination that Cause exists. In the event of a termination for Cause, and not withstanding any contrary provision otherwise stated, Executive shall receive only his Base Salary earned through the date of termination.

 

6.3 Executive may terminate his employment upon sixty (60) days prior written notice to the Company for “Good Reason.” For purposes of this Agreement, “Good Reason” means any of the following actions taken by the Company without Cause:

 

 

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(a)

the Company or any of its subsidiaries materially reduces Executive’s Base Salary or base rate of annual compensation, or otherwise materially changes benefits provided to Executive under compensation and benefit plans, arrangements, policies and procedures to be as a whole materially less favorable to Executive, other than reductions in Base Salary permitted under Section 4.01;

 

 

 

 

(b)

without Executive’s express written consent, the Company or any of its subsidiaries requires Executive to change the location of Executive’s job or office, to a location more than the lesser of (a) fifty (50) miles from the location of Executive’s job or office immediately prior to such required change, or (b) 50 miles from the Executive’s then current residence;

 

 

 

 

(c)

a successor company fails or refuses to assume the Company’s obligations under this Agreement;

 

 

 

 

(d)

the Company or any successor company breaches any of the material provisions of this Agreement; or

 

 

 

 

(e)

the material diminution of the authority, responsibility, or perquisites, the transfer of substantial numbers of his direct or indirect reports to other reporting relationships, or the creation of additional reporting relationships between the Executive and the Company’s chief executive.

 

If Executive intends to terminate this Agreement for Good Reason, Executive must give not less than sixty (60) days written notice to the Company of the facts or events giving rise to Good Reason, and must give such notice within ninety (90) days following the facts or event alleged to give rise to Good Reason. The Company shall, within such sixty (60)-day notice period, have the right to cure or remedy events or any action or event constituting “Good Reason” within the meaning of this Section 6.3, unless events or actions are of such a nature that they cannot or are highly unlikely to be cured within such sixty (60)-day period, in which case the termination shall take effect immediately, or when the non-curability becomes evident. The failure to give such notice shall be deemed a waiver of the right to terminate this Agreement for Good Reason based on such fact or event.

 

6.4 During the term of his employment and for 24 months after the date of Executive’s termination of employment, (i) Executive shall not, directly or indirectly, make or publish any disparaging statements (whether written or oral) regarding the Company or any of its affiliated companies or businesses, or the affiliates, directors, officers, agents, principal shareholders or customers of any of them and (ii) the Company’s directors and officers shall not directly or indirectly, make or publish any disparaging statements (whether written or oral) regarding Executive. Information which the Company’s directors, officers or Executive is required to make or disclose regarding the other to comply with laws or regulations, or makes in a pleading on the advice of litigation counsel, and information which the directors or officers need to disclose for legitimate business reasons (for example disclosure to the Company’s insurers or business associates), shall not constitute a disparaging statement. At the Executive’s request, absent termination for Cause, Company will provide positive request to subsequent employers, other than employers prohibited by this Agreement.

 

 

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6.5 Upon any termination of Executive’s employment with the Company, Executive will immediately return to the Company all equipment, property and documents of the Company, including, specifically all property and documents containing any “Confidential Information” as described in Section 8.1 of this Agreement.

 

6.6 Upon any termination of Executive’s employment with the Company, Executive shall be deemed to have resigned from all other positions he then holds as an officer, employee or director or other independent contractor of the Company or any of its subsidiaries or affiliates, unless otherwise agreed by the Company and Executive.

 

6.7 The provisions of Sections 6.5 and 6.7 shall survive the termination of this Agreement.

 

ARTICLE 7

 

SEVERANCE PAYMENTS

 

7.1 The Company, its successors or assigns, will pay Executive as severance pay (the “Severance Payment”) amount equal to twelve (12) months of the Executive’s monthly Base Salary for full-time employment at the time of Executive’s termination if:

 

 

(a)

(i) there has been a Change of Control of the Company (as defined in Section 7.2), and (ii) Executive is a full-time employee at the time of the Change of Control, and (iii) within twelve (12) months following the date of the Change of Control, Executive’s employment is involuntarily terminated for any reason (including Good Reason (as defined in Section 6.4)), other than for Cause or death or disability; or

 

 

 

 

(b)

if Executive’s employment is terminated by the Company without Cause, or by Executive for Good Reason, other than in connection with a Change of Control.

 

Nothing in this Section 7.1 shall limit the authority of the Committee or Board to terminate Executive’s employment in accordance with Section 6.3. Except as provided in Section 7.9 below, payment of the Severance Payment pursuant to Section 7.1, less customary withholdings, shall be made on or before the thirtieth day following the Executive’s termination or resignation. No Severance shall be payable if Executive’s employment is terminated due to death or Disability. Except as provided in Section 7.6, payment of the Severance Payment pursuant to Section 7.1, less customary withholdings, shall be made in equal monthly installments commencing on the thirtieth day following the Executive’s termination or resignation and shall be made over the non-competition period specified in Section 9.1.

 

7.2 For the purposes of this Agreement, “Change of Control” shall mean any one of the following:

 

 

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(a)

an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of 50% or more of either: (1) the then outstanding Stock; or (2) the combined voting power of the Company’s outstanding voting securities immediately after the merger or acquisition entitled to vote generally in the election of directors; provided, however, that the following acquisition shall not constitute a Change of Control: (i) any acquisition directly from the Company; (ii) any acquisition by the Company or Subsidiary; (iii) any acquisition by the trustee or other fiduciary of any employee benefit plan or trust sponsored by the Company or a Subsidiary; or (iv) any acquisition by any corporation with respect to which, following such acquisition, more than 50% of the Stock or combined voting power of Stock and other voting securities of the Company is beneficially owned by substantially all of the individuals and entities who were beneficial owners of Stock and other vot


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