EX-10.10 6 d18032dex1010.htm EX-10.10 EX-10.10

Exhibit 10.10

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of September 23, 2019 by and between Kemeera LLC, a California limited liability company (the “Company”), and Richard Stump (“Employee”).

RECITALS

WHEREAS, the Company desires to employ Employee and Employee desires to be employed by the Company upon the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereby agree as follows:

1. Employment; Position and Duties. The Company agrees to employ Employee, and Employee agrees to be employed by the Company, upon the terms and subject to the conditions of this Agreement. Employee shall be employed by the Company and shall report to the Chief Executive Officer of MCT Group Holdings, LLC (“Holdings”) and the Company (the “CEO”). In this capacity, Employee agrees to devote his full time, energy and skill to the faithful performance of his duties herein, and shall perform the duties and carry out the responsibilities assigned to him to the best of Employee’s ability and in a diligent, businesslike and efficient manner. Employee will not engage in any outside business activities that materially interfere with his obligations under this Agreement, and will not render services of a business, professional or commercial nature for compensation or otherwise to any other person or entity. Nothing in this Agreement shall preclude Employee from devoting reasonable time for: (i) participating in professional, educational, philanthropic, public interest, charitable or community activities; and (ii) managing Employee’s and his family’s personal investments; provided, that any such activities do not materially interfere with the performance of Employee’s duties and responsibilities hereunder. Employee’s duties shall include those duties customarily performed by an officer in Employee’s position and such additional duties as may be assigned from time to time by the CEO, Holdings, or their respective designee. Employee shall comply with any policies and procedures established for Company employees, including, without limitation, those policies and procedures contained in the Company’s employee handbook previously delivered to Employee. To the extent there is any conflict between those policies and this Agreement, this Agreement shall govern. Employee shall travel to such places in the United States and elsewhere as the CEO and the Board directs from time to time as needed.

2. Term of Employment. The Company shall employ Employee, and Employee shall serve the Company, beginning on the date hereof (the “Effective Date”) and continuing until this Agreement is terminated in accordance with its terms (the “Employment Period”). Notwithstanding anything to the contrary contained herein, either Employee or the Company may terminate Employee’s employment with the Company for any reason, at any time, upon not less than fifteen (15) days’ prior notice; provided that no prior notice shall be required from the

Company if Employee is terminated by the Company for Cause (as defined below). Upon the termination of Employee’s employment with the Company, the Company shall not have any further obligation or liability to pay any compensation or benefits to Employee, except as set forth in Section 4 of this Agreement.

3. Compensation. During the Employment Period, Employee shall be compensated by the Company for his services as follows:

(a) Base Salary. Employee shall be paid an annual base salary (the “Annual Base Salary”) of $250,000 less applicable withholdings for taxes, in accordance with the Company’s normal payroll procedures. Increases in Employee’s Annual Base Salary shall be as approved by the Board in its sole discretion.

(b) Benefits. Employee shall be eligible, on the same basis as other members of senior management of the Company, to participate in and to receive benefits under the Company’s executive and employee benefit plans, insurance programs, Company policies (including the Company’s paid time off policy) and/or indemnification agreements, as may be in effect from time to time, subject to any applicable waiting periods and other restrictions.

(c) Annual Bonus. Commencing in calendar year 2020 and for every subsequent calendar year, Employee shall be eligible to receive an annual performance bonus (the “Annual Bonus”) with an initial target of 40% of his Annual Base Salary (up to a maximum of 80% of his Annual Base Salary), less applicable withholdings for taxes, and based on the achievement of individual and Company performance objectives to be established for each calendar year by the Board. The determination of whether the Annual Bonus in any calendar year is earned, and the amount of any Annual Bonus, will be determined by the Board in its sole discretion. The Annual Bonus, if any, shall be paid in accordance with the Company’s normal payroll procedures on the first regularly scheduled payroll date after the audited financial statements for the calendar year to which the Annual Bonus relates are available; provided that Employee is employed by the Company on such payment date.

(d) Initial Phantom Equity Grant. So long as Employee remains employed with the Company following the three (3)-month anniversary of the Effective Date, Employee shall be eligible to receive a grant of incentive equity (the “Initial Grant”) in the form of phantom equity units that represent up to 0.50% of the appreciation in the value of Holdings following the date of issuance of the Initial Grant. The Initial Grant shall be subject to the terms and conditions of the underlying award agreement, plan documents, and all other documents related thereto (including, without limitation, terms relating to the manner, time and rate of vesting of the Initial Grant).

(e) Additional Phantom Equity Grant. So long as Employee remains employed with the Company at the time of payment (if any) of any Earnout Payment (as defined in that certain Equity Contribution and Purchase Agreement, dated as of the date hereof (as amended, modified or supplemented from time to time, the “Purchase Agreement”), by and among the Company, Kemeera Holdings Inc., a California corporation, Employee, the other Stockholders party thereto, the Representative named therein and Holdings) Employee shall be eligible to receive a grant of incentive equity (the “Additional Grant”) in the form of phantom

 

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equity units that represent (i) if the Earnout Payment is $6,750,000, up to 0.25% of the appreciation in the value of Holdings following the date of issuance of the Additional Grant, and (ii) if the Earnout Payment is $7,500,000, up to 0.50% of the appreciation in the value of Holdings following the date of issuance of the Additional Grant. For the avoidance of doubt, Employee shall not receive an Additional Grant if the Earnout Payment is less than $6,750,000 or if no Earnout Payment is earned. The Additional Grant shall be subject to the terms and conditions of the underlying award agreement, plan documents, and all other documents related thereto (including, without limitation, terms relating to the manner, time and rate of vesting of the Additional Grant).

(f) Expenses. Employee shall be entitled to receive reimbursement for business expenses incurred by Employee in the normal and ordinary course of his employment by the Company pursuant to the Company’s standard business expense reimbursement policies and procedures, which policies and procedures shall be administered in compliance with applicable federal law. Employee shall provide the Company with documentation evidencing all requests for reimbursement of business expenses.

4. Benefits Upon Termination.

(a) Termination for Cause or Other Terminations. In the event of (i) the termination of Employee’s employment by the Company for Cause (as defined below), (ii) the termination of Employee’s employment by reason of Employee’s death or Disability, or (iii) the termination of Employee’s employment by Employee for any reason, Employee shall be entitled to no further compensation or benefits from the Company other than (x) any portion of Employee’s Annual Base Salary that had accrued but had not yet been paid (including any amount for accrued and unused vacation payable in accordance with the Company’s vacation policy then in effect or applicable law), and (y) any reimbursement due to Employee pursuant to Section 3(e) under the Company’s standard business expense reimbursement policies and procedures.

For purposes of this Agreement, “Disability” shall mean a physical or mental infirmity which materially impairs Employee’s ability to perform the essential duties of his position under this Agreement with or without accommodation which continues for a period of at least ninety (90) consecutive days.

For purposes of this Agreement, a termination for “Cause” occurs if Employee’s employment is terminated by the Company in connection with the Company’s reasonable determination that Employee has engaged in any of the following: (i) Employee’s material breach of this Agreement or any other agreement involving Employee and any Company Entity; provided, however, that any breach of Section 2.8(f) of the Purchase Agreement shall be deemed to be a material breach of the Purchase Agreement; (ii) theft, fraud, misappropriation, embezzlement or wrongful self-dealing against any Company Entity, or falsification of any employment or Company records by Employee; (iii) the determination by the Board that Employee has committed an act or acts constituting a felony or any act involving dishonesty or moral turpitude; (iv) insobriety or drug abuse during business hours or excessive absenteeism (other than sick leave or as a result of a physical or mental infirmity); (v) the determination by the Board that Employee has engaged in willful misconduct or gross negligence in the

 

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performance of his duties hereunder; (vi) any persistent and willful or bad faith refusal or persistent and willful or bad faith failure to perform his duties diligently and competently and in conformity with the Company’s written and oral policies and the instruction of the Board or is designee, or the persistent and willful or bad faith refusal to perform any material aspect of his duties or responsibilities for the Company Entities; (vii) any act or omission by Employee in material violation of the Company’s policies then in effect (including, without limitation, the Company’s harassment and discrimination policies), in such a manner as to proximately cause material loss, damage or injury to the property, reputation or employees of CORE Industrial Partners, LLC, Holdings, the Company, or any of their respective subsidiaries (each, a “Company Entity”); and (viii);) Employee’s failure to cooperate in good faith with a governmental or internal investigation of any Company Entity or its directors, officers or employees, if the Company has requested Employee’s cooperation.

(b) Termination Without Cause. If Employee’s employment (x) is terminated by the Company for any reason other than (A) for Cause, or (B) by reason of his death or Disability, then Employee shall be eligible to receive the continued payment of Employee’s Annual Base Salary as in effect on the date of the termination of Employee’s employment, less applicable withholdings for taxes, in accordance with the Company’s normal payroll procedures, for six (6) month following the termination of Employee’s employment (the “Severance Payment”).

Notwithstanding anything to the contrary herein, no payments shall be due under this Section 4(b)(i) unless and until Employee shall have executed and not revoked, within thirty (30) days after Employee’s termination date (or such other longer period as required by applicable law), a separation agreement and general release and waiver of claims against the Company (other than (a) the payments and benefits contemplated by Section 4(a), and (b) any rights to indemnification Employee has or may have as an officer or director of the Company or as an insured under any directors and officers liability insurance policy) in a form customarily used by the Company, and the execution and non-revocation of such general release and waiver shall be a condition to Employee’s rights under this Section 4(b) or (ii) if Employee breaches any restrictive covenants (including, without limitation, the confidentiality, non-competition, non-solicitation and non-hire covenants set forth in Sections 6 and 7 of this Agreement) applicable to Employee pursuant to any written agreement that contains restrictive covenants applicable to Employee for the benefit of any Company Entity. If the cash severance hereunder is considered deferred compensation subject to Section 409A of the Code and the period to consider and revoke the general release and waiver of claims spans two calendar years, the payments will begin in the second calendar year provided the release becomes effective. Any severance payments that would have been made during the release consideration and revocation period will be accumulated and paid on the first installment payment date.

5. Section 409A of the Code.

(a) Except to the extent earlier payment is permitted by Section 409A of the Code and the regulations promulgated thereunder, in the event that any amount due to Employee hereunder after the termination of his employment shall be considered to be deferred compensation pursuant to Section 409A of the Code, and it is determined that Employee is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then the Company shall delay the payment of such amount for six (6) months after the termination of Employee’s employment (or until Employee’s death, if earlier) or for such other amount of time as may be necessary to comply with the requirements of Section 409A(a)(2)(B)(i) of the Code.

 

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(b) This Agreement is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and the interpretative guidance thereunder or be exempt therefrom, including the exceptions for short-term deferrals and separation pay arrangements. This Agreement shall be construed and interpreted in accordance with such intent. In addition, each payment shall be considered a separate payment for purposes of Section 409A of the Code, and any termination of employment under this Agreement shall mean a separation from service as defined in Section 409A of the Code and Treas. Reg. §1.409A-1(h)(1)(ii) (or other similar or successor provision) for purposes of any amounts considered deferred compensation subject to Section 409A of the Code. To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Section 409A, such reimbursements and in-kind benefit payments shall be made in accordance with Treas. Reg. §1.409A-3(i)(1)(iv) (or any similar or successor provisions). The parties agree to make such other amendments to this Agreement as are necessary to comply with the requirements of Section 409A of the Code if Section 409A is applicable to this Agreement.

6. Confidentiality. From and after the Effective Date, Employee shall treat and hold as confidential any proprietary information of the business and affairs of each Company Entity that is not already generally available to the public or that does not become generally available after the date of this Agreement without any violation by Employee of his obligations hereunder (the “Confidential Information”), refrain from using any of the Confidential Information except in the ordinary course operation (consistent with past custom and practice) of the Company Entities (to the extent that Employee is involved in such activities as a director, officer, employee or independent contractor of any Company Entity following the Effective Date) and, upon termination of Employee’s relationship with all Company Entities, deliver promptly to the Company or destroy, at the request and option of the Company, all tangible embodiments (and all copies and all electronically stored versions) of the Confidential Information which are in the possession or under the control of Employee or any of his Controlled Affiliates. For purposes hereof, the term (A) “Controlled Affiliates” shall mean any other Person of which Employee directly or indirectly owns more than fifty percent (50%) of the voting equity interest or of which Employee is entitled, directly or indirectly, by contract or otherwise, to appoint a majority of the board of directors, board of managers, or comparable body of such Person, (B) “Person” shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, or other entity or any governmental authority, and (C) Confidential Information shall not include information that Employee can document is or becomes readily publicly available without restriction through no fault of his or her own. Notwithstanding anything to the contrary contained herein, nothing in this Section 6 or any other provision of this Agreement shall prohibit Employee from reporting possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions or state or federal law or regulation, in each case without notification to or prior approval by the Company Entities.

 

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7. Enforceability and Breaches.

(a) If any restrictive covenant contained herein is unenforceable with respect to the duration and geographic area of restriction of the covenant, then the duration and geographic area of restriction shall be reduced to the maximum duration and geographic area of restriction deemed legal, valid and enforceable and that come closest to expressing the intention of the parties with respect to the covenant, and the covenant shall be enforceable as so modified. The parties agree that a court with proper jurisdiction shall be allowed to reduce the restrictive covenants contained herein to the maximum duration and geographic area of restriction deemed legal, valid and enforceable.

(b) Employee acknowledges and agrees that, in the event of a breach or threatened breach by Employee of any of the provisions of this Agreement, monetary damages shall not constitute a sufficient remedy. Consequently, in the event of any such breach or threatened breach, the Company may (and shall be entitled to), in addition to other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions of this Agreement (including the extension of the Non-Compete Period by a period equal to the length of court proceedings necessary to stop such violation), in each case without the requirement of posting a bond or proving actual damages.

8. Development of Inventions, Improvements or Know-How.

(a) Disclosure Obligation. Employee and his heirs, assigns and representatives shall disclose fully and promptly to the Company any and all promotional and advertising materials, catalogs, brochures, plans, customer lists, distributor lists, supplier lists, manuals, handbooks, information relating to customers, distributors or suppliers or their respective employees, inventions, discoveries, improvements, trade secrets, secret processes and any technology, know-how or intellectual property made or developed or conceived of by Employee, in whole or in part, alone or with others, which results from any work Employee may do for, or at the request of, any Company Entity or which relates to the business, operations, activities, research, investigations or obligations of such Company Entity, including, without limitation, any and all facts, test data, findings, designs, formulas, processes, sketches, drawings, models and figures (collectively, “Work Product”).

(b) Assignment. All Work Product is deemed a “work of hire” in accordance with the U.S. Copyright Act and is owned exclusively by the Company. If, and to the extent, any of the Work Product is not considered a “work of hire,” Employee does hereby assign to the Company and shall, without further compensation, assign to the Company, Employee’s entire right, title and interest in and to all Work Product. At the Company’s expense and at the Company’s request, Employee shall provide reasonable assistance and cooperation, including, without limitation, the execution of documents in order to obtain, enforce and/or maintain the Company’s proprietary rights in the Work Product throughout the world. Employee appoints the Company as his agent and grants the Company a power of attorney for the limited purpose of executing all such documents.

 

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(c) Publication. Employee shall not publish or submit for publication, or otherwise disclose to any person or entity other than the Company, any data or results from Employee’s work on behalf of the Company without the prior written consent of the Board.

9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to any choice of law or conflict of laws rules, provisions or principles.

10. Jurisdiction. All judicial proceedings brought against any party arising out of or relating to this Agreement, or any obligations or liabilities hereunder, shall be brought and maintained in any federal court sitting in the State of California or, if any such court fails to satisfy applicable jurisdictional requirements, then the state courts of the State of California, provided that any party may seek injunctive relief in any court of competent jurisdiction. By executing this Agreement, each party irrevocably: (a) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts; (b) waives, to the fullest extent permitted by applicable law any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute; (c) agrees that service of all process in any such proceeding in any such court may be made by nationally recognized overnight courier or by registered or certified mail, return receipt requested, to such party at its last known address; (d) agrees that service as provided in clause (c) above is sufficient to confer personal jurisdiction over the party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; (e) agrees that the parties retain the right to serve process in any other manner permitted by law but shall not have any right to bring proceedings against the other party in the courts of any other jurisdiction; and (f) agrees that the provisions of this Section 10 relating to jurisdiction and venue shall be binding and enforceable to the fullest extent permissible under applicable law. Notwithstanding the foregoing, either the Company or Employee may seek injunctive or equitable relief to enforce the terms of this Agreement in any court of competent jurisdiction.

11. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Without limiting the generality of the foregoing, the Company may assign this Agreement to any combined entity, newly-formed entity or subsidiary of Holdings, whether in connection with a reorganization of Holdings and/or any of its respective subsidiaries or otherwise, and Employee hereby consents to such assignment. In view of the personal nature of the services to be performed under this Agreement by Employee, he shall not have the right to assign or transfer any of his rights, obligations or benefits under this Agreement, except as otherwise noted herein.

12. Entire Agreement. This Agreement constitutes the entire agreement between Employee and the Company regarding the terms and conditions of his employment. This Agreement supersedes all prior negotiations, representations or agreements between Employee and the Company, whether written or oral, concerning Employee’s employment.

13. No Conflict. Employee represents and warrants to the Company that neither his entry into this Agreement nor his performance of his obligations hereunder will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or obligation to which Employee is a party or by which Employee is bound, including, without limitation, any non-competition or confidentiality agreement previously entered into by Employee.

 

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14. Validity. If any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby.

15. Modification. This Agreement may not be modified or amended except by a written agreement signed by Employee and the Company.

16. Withholding. All payments made to Employee pursuant to this Agreement shall be subject to applicable withholding taxes, if any, and any amount so withheld shall be deemed to have been paid to Employee for purposes of amounts due to Employee under this Agreement.

17. Counsel. Each party has been represented by his or its own counsel in connection with the negotiation and preparation of this Agreement, and, consequently, each party waives the application of any rule of law that would otherwise be applicable in connection with the interpretation of this Agreement, including, but not limited to, any rule of law to the effect that any provision of this Agreement will be interpreted or construed against the party whose counsel drafted that provision.

18. Survival. Sections 5 through 19 will survive and continue in full force in accordance with their terms notwithstanding the termination of the Employment Period.

19. Counterparts. This Agreement may be executed simultaneously in counterparts (including by means of electronically transmitted reproductions of signature pages), each of which shall be deemed an original, but all of which together constitute one and the same instrument.

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date and year first written above.

 

KEMEERA LLC
By:  

/s/ John May

  Name: John May
  Title: President

/s/ Richard Stump

Richard Stump

[Signature Page to Employment Agreement]