Employment Agreement
This Employment Agreement (the “Agreement”) by and between Xxxxx Xxxxxx, an individual (the “Employee”), and The Source Vitamin Company, Inc., a Delaware corporation and Stone Harbor Investments, Inc. (collectively, the “Company” or the “Employer”), is hereby entered into as of March 31, 2011.
W I T N E S S E T H
WHEREAS, the Company desires to employ the Employee as its Chief Executive Officer upon the terms and subject to the conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein, and other good and valuable consideration the receipt and adequacy of which the Company and Employee each hereby acknowledge, the parties hereto, intending legally to be bound, agree as follows:
1. Employment.
The Company hereby agrees to employ Employee as its Chief Executive Officer, and Employee hereby agrees to accept such employment and serve in such capacities, during the Term (as defined in Section 2) and upon the terms and conditions set forth in this Agreement.
2. Term.
The Employee’s employment under this Agreement (the “Term”) shall commence as of the Effective Date provided above and shall continue for a term of three (3) years (the “Term”), unless sooner terminated pursuant to Section 8 of this Agreement. This Agreement shall automatically renew for successive periods of three (3) years unless either party gives written notice to the other at least three months in advance.
Notwithstanding anything to the contrary contained herein, the provisions of this Agreement governing protection of Confidential Information shall continue in effect as specified in Section 5 hereof and survive the expiration or termination hereof. The Term may be extended for additional one (1) year periods under the same terms and conditions upon mutual written consent of the Employee and the Board.
The term of employment of Employee under this Agreement (the “Term”) shall, unless this Agreement is terminated in accordance with Section 6 or 7, be a three-year period initially commencing on the effective date referenced above (hereinafter, “Effective Date”). At each anniversary of the Effective Date, the Term shall automatically be extended by one year, unless the Company notifies the Employee in writing prior to such anniversary (the “Termination Notice Date”) that the Term shall not be so extended any further.
3. Offices and Duties.
The provisions of this Section 3 will apply during the Term:
(a) Generally. Employee shall serve as the Chief Executive Officer of the Company. Employee shall have and perform such duties, responsibilities and authorities as are customary for the Chief Executive Officer of a publicly held corporation of the size, type, and nature of the Company as they may exist from time to time and consistent with such position and status and as the Company’s Board of Directors (the “Board”) shall from time to time direct, but in no event shall such duties, responsibilities, and authorities be reduced from those of Employee prior to the Effective Date. Employee shall devote such business time and attention as is necessary to appropriately and efficiently discharge his duties and responsibilities as set forth herein.
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(b) Place of Employment. Employee’s principal place of employment shall be the current corporate offices of the Company in Fort Lauderdale, Florida. In no event shall the Employee’s principal place of employment be relocated to any other location outside of the Greater Fort Lauderdale area without his prior written consent.
4. Salary and Annual Incentive Compensation.
As partial compensation for the services to be rendered hereunder by Employee, the Company agrees to pay to Employee during the Term the compensation set forth in this Section 4.
(a) Base Salary . The Company will pay to Employee commencing May 1, 2011 a base salary at the initial annual rate of $200,000.00 per year payable in cash in accordance with the Company’s usual payroll practices with respect to senior Employees or as a default on the 1st and 15th of each month. The base salary shall be determined, at least, on an annual basis by the Committee (as defined herein); provided that the base salary may be increased, but not decreased, from that in effect for the prior year. “Committee” means the Compensation Committee of the Board, or, if the Company does not then have a Compensation Committee, the Board
(b) Gross Revenue Bonus. The Company shall pay Employee quarterly, out of net revenues, no less then 1% of all of the Company’s gross revenue. Payment of the Gross Revenue Bonus shall be paid in four substantially equal quarterly installments, starting with the quarterly installment for and payable in the second quarter of 2011. Each quarterly installment shall be paid no later than 30 business days subsequent to the end of the quarter in which the installment is earned.
5. Long-Term Compensation, Benefits and Expense Reimbursement.
(a) Employee Compensation Plans. Employee shall be entitled during the Term to participate, without discrimination or duplication, in all Employee compensation plans and programs intended for general participation by senior Employees of the Company, as presently in effect or as they may be modified or added to by the Company from time to time, subject to the eligibility and other requirements of such plans and programs, including, without limitation, the Company’s to-be-determined 2011 Equity Incentive Plan, and any successor to such plan, any other stock option plans, performance share plans, management incentive plans, deferred compensation plans and supplemental retirement plans; provided, however, that such plans and programs, in the aggregate, shall provide Employee with benefits and compensation and incentive award opportunities substantially no less favorable than those provided by the Company to Employee under such plans and programs as in effect on the Effective Date.
(b) Employee and Employee Benefit Plans. Employee shall be entitled during the Term to participate, without discrimination or duplication, in all employee, employee benefit and special individual plans and programs of the Company, as presently in effect or as they may be modified or added to by the Company from time to time, to the extent such plans and programs are available to other senior Employees or employees of the Company, subject to the eligibility and other requirements of such plans and programs, including, without limitation, plans providing health and medical insurance, life insurance, disability insurance and accidental death or dismemberment insurance, and pension or other retirement plans, savings plans, vacation and time-off programs, profit-sharing plans, stock purchase plans and stock ownership plans; provided, however, that such plans and programs, in the aggregate, shall provide Employee with benefits and compensation and incentive award opportunities substantially no less favorable than those provided by the Company to Employee under such plans and programs as in effect on the Effective Date. Notwithstanding, the Company shall provide the Employee and his spouse with health insurance coverage at no cost with no out of pocket expenses. If for any reason the Employee requests that coverage be waived, the Company’s shall pay to the Employee the amount of the health insurance premium otherwise due and payable to the health care provider.
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(i) Founder’s Shares Provision. Whereas the Company, in consideration for Employee’s employment hereunder, hereby issues and delivers to Employee 3,000,000 shares (the “Purchased Shares”) of common stock of Stone Harbor Investments, Inc. subject to the Vesting Schedule and Procedures set forth below.
(b) Vesting Schedule. On each anniversary of the date of this Agreement, 33.3% of the previously unvested Purchased Shares shall become vested, provided, however, that no additional shares, include all shares of stock now owned or hereafter acquired by the Employee (the “Shares”), shall become vested after the Termination Date, except that upon receipt by the Company of $50,000,000 in cumulative gross revenue, all then unvested shares shall immediately vest.
(ii) Stock Option Grant. Additionally, Employee shall be granted an option to purchase 1,000,000 shares of Stone Harbor Investments, Inc. common stock when the Company has received $25,000,000 in gross revenue, which option shall have an exercise price equal to the market price of the Company’s common stock on the grant date and which shall vest immediately in its entirety on the grant date.(iii)Section 83(b) Election. For purposes of Internal Revenue Code Section 83, the Employee’s receipt of common stock may be deemed a transfer in connection with the performance of services. Because of the restrictions on transfer and vesting requirements, the Employee will recognize taxable income in the tax year in which the Restricted Stock vests. The amount of taxable income is the fair market value of the Restricted Stock at the time the Restricted Stock vests. As an alternative, an election is available under Internal Revenue Code Section 83(b) to include the excess amount in taxable income for the year of the grant. If a Section 83(b) election were made, the Company would report the value of the Restricted Stock to the Internal Revenue Service and will include the excess amount on your W-2 for the year of grant. IN CONSIDERATION OF THE EMPLOYEE’S EMPLOYMENT AND THE ISSUANCE OF THE RESTRICTED STOCK TO THE EMPLOYEE, THE COMPANY ACKNOWLEDGES THAT THE EMPLOYEE INTENDS TO MAKE A SECTION 83(b) ELECTION WITH RESPECT TO THE RESTRICTED STOCK. The taxable amount due to the Internal Revenue Service as a result of the election will be paid by the Company and included in the compensation due to the Employee hereunder.
6. Termination Due to Death or Disability.
Employee’s employment and the Term shall terminate upon Employee’s death. The Company may terminate the employment of Employee as Chief Executive Officer due to Disability (as defined in Section 8(c)) of Employee, effective upon the expiration of the 30-day period set forth in Section 8(c), absent the actions referred to therein being taken by Employee to return to service and Employee’s presentation to the Company of a certificate of good health.
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
In the event of Employee’s Termination of Employment due to death or Disability, all obligations of the Company and Employee under Sections 1 through 5 of this Agreement will immediately cease; provided, however, that the Company will pay Employee (or, in the case of Employee’s death, his beneficiaries or estate), and Employee (or, in the case of Employee’s death, his beneficiaries or estate) will be entitled to receive, the following:
(i) The earned but unpaid portion of annual base salary;
(ii) Any annual cash incentive cash compensation earned, if any, but unpaid, for the calendar year prior to the calendar year in which such Termination of Employment occurs;
(iii)
(iii) All vested, non-forfeitable amounts owing or accrued at the date of Employee’s Termination of Employment under any compensation and benefit plans, programs and arrangements set forth or referred to in Sections 5(a) and 5(b) in which Employee theretofore participated, in accordance with the terms and conditions of the plans, programs and arrangements (and agreements and documents thereunder); and
(iv) Reimbursement of reasonable business expenses and disbursements incurred by Employee prior to such Termination of Employment, within 30 days after Employee (or Employee’s representative) submits reasonable evidence of such expenses and disbursements to the Company.
The Company shall pay the amounts under clauses (i)-(v) in a single lump sum payment no later than 30 days after Termination of Employment.
iIn addition, upon a termination of Employee’s employment due to death or Disability, stock options then held by Employee will be exercisable to the extent and for such periods indicated in, and otherwise be governed by, the plans and programs (and agreements and other documents thereunder) pursuant to which such stock options were granted. Furthermore, for the period extending from such termination until Employee reaches age 65, Employee shall continue to participate in all health, medical and life insurance plans, programs and arrangements (including those self-funded by the Company) under Section 5(b) in which Employee was participating immediately prior to termination (“Insurance Plans”), as if Employee had continued in employment with the Company during such period. To the extent that the Insurance Plans do not allow such continued participation, the Company shall make cash payments to Employee equivalent on an after-tax basis to the value of the benefits Employee would have received under the Insurance Plans if Employee had so continued in the employment of the Company during such period and had continued to participate in the Insurance Plans, provided that (i) the value of any insurance-provided benefits (including under self-funded Insurance Plans) will be based on the premium cost to Employee, which shall not exceed the highest risk premium charged by a carrier having an investment grade or better credit rating, and (ii) such cash payments by the Company shall be made within 30 days after the Employee submits reasonable evidence to the Company of Employee’s payment of such premiums.
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
7. Termination of Employment For Reasons Other Than Death or Disability.
(a) Termination by the Company for Cause and Termination by Employee Other Than For Good Reason. In accordance with the provisions of this Section 7(a), the Company may terminate the employment of Employee as Chief Executive Officer for Cause at any time prior to a Change in Control, and Employee may terminate his employment as Chief Executive Officer voluntarily for reasons other than Good Reason (as defined in Section 8(d)) at any time.
Upon Termination of Employment by the Company for Cause or by the Employee for reasons other than Good Reason, the Term will immediately terminate, and all obligations of the Company and Employee under Sections 1 through 5 of this Agreement will immediately cease; provided, however, that the Company shall pay Employee, and Employee shall be entitled to receive, the following:
(i) The earned but unpaid portion of annual base salary;
(ii) The earned but unpaid portion of Gross Revenue bonus as provided in Section 4(b);
(iii) All vested, non-forfeitable amounts owing or accrued at the date of such Termination of Employment under any compensation and benefit plans, programs and arrangements set forth or referred to in Sections 5(a) and 5(b) in which Employee theretofore participated, in accordance with the terms and conditions of the plans, programs and arrangements (and agreements and documents thereunder); and
(iv) Reimbursement of reasonable business expenses and disbursements incurred by Employee prior to such termination of employment, within 30 days after Employee submits reasonable evidence of such expenses and disbursements to the Company.
The Company shall pay the amounts under clauses (i)- (iv) in a single lump sum payment no later than 30 days after Termination of Employment.
(b) Termination by the Company Without Cause and Termination by Employee for Good Reason. In accordance with the provisions of this Section 7(b), the Company may terminate the employment of Employee without Cause, including after a Change in Control, upon 90 days’ written notice to Employee, and Employee may terminate his employment with the Company for Good Reason upon 90 days’ written notice to the Company; provided, however, that the Company shall have 30 days after receipt of such notice to remedy the basis for such Good Reason. Notwithstanding the foregoing, the Company may terminate Employee without Cause and without providing 90 days’ written notice to Employee provided that the Company pays Employee three (3) times the amount of the then-current annual base salary under Sections 4(a-c) and health insurance premiums as provided under Section 5(b) for the same period in a single lump sum payment on 30th day following such Termination of Employment.
Upon a Termination of Employment by the Company without Cause, or a Termination of Employment by Employee for Good Reason, the Term will immediately terminate and all obligations of the parties under Sections 1 through 5 of this Agreement will immediately cease, except that the Company shall pay Employee, and Employee shall be entitled to receive, the following (in addition to any amount payable under the last sentence of the first grammatical paragraph of this Section 7(b) beginning with “Notwithstanding the foregoing,”):
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(i) A cash payment in an amount equal to the product of two (2) times the sum of (A) Employee’s annual base salary under Section 4(a) at the annual rate in effect immediately prior to termination;
(ii) The earned but unpaid portion of annual base salary and gross bonus;
(iii) Any annual cash incentive cash compensation earned, but unpaid, for the calendar year prior to the calendar year in which occurs such termination of employment;
(iv) All vested, non-forfeitable amounts owing or accrued at the date of Employee’s Termination of Employment under any compensation and benefit plans, programs and arrangements set forth or referred to in Sections 5(a) and 5(b) in which Employee theretofore participated, in accordance with the terms and conditions of the plans, programs and arrangements (and agreements and documents thereunder) pursuant to which such compensation and benefits were granted; and
(v) Reimbursement of reasonable business expenses and disbursements incurred by Employee prior to such termination of employment, within 30 days after Employee submits reasonable evidence of such expenses and disbursements to the Company.
The Company shall pay the amounts under clauses (i)- (v) in a single lump sum payment no later than 30 days after Termination of Employment.
In addition, upon a Termination of Employment by the Company without Cause, or Termination of Employment by the Employee for Good Reason, stock options then held by Employee will be exercisable to the extent and for such periods indicated in, and otherwise be governed by, the plans and programs (and agreements and other documents thereunder) pursuant to which such stock options were granted. Furthermore, for a period of one (1) year after such termination, Employee shall continue to participate in the Insurance Plans (as defined in Section 6) as if Employee had continued in employment with the Company during such period. To the extent that the Insurance Plans do not allow such continued participation, the Company shall make cash payments to Employee equivalent on an after-tax basis to the value of the benefits Employee would have received under the Insurance Plans if Employee had so continued in the employment of the Company during such period and had continued to participate in the Insurance Plans, provided that (i) the value of any insurance-provided benefits (including under self-funded Insurance Plans) will be based on the premium cost to Employee, which shall not exceed the highest risk premium charged by a carrier having an investment grade or better credit rating, and (ii) such cash payments by the Company shall be made within 30 days after the Employee submits reasonable evidence to the Company of Employee’s payment of such premiums.
8. Definitions.
The definitions in this Section 8 apply for purposes of this Agreement.
(a) “Cause” means Employee’s gross misconduct (as defined below) or willful (as defined below) and material breach of Section 10 of this Agreement. For purposes of this definition, “gross misconduct” shall mean (A) a felony conviction in a court of law under applicable federal or state laws which results in material damage to the Company or its subsidiaries or materially impairs the value of the Employee’s services to the Company, or (B) willfully engaging in one or more material acts of misconduct, or willfully omitting to perform material duties hereunder, which act or omission demonstrably and materially damages the Company. For purposes of this Agreement, a “willful” act or omission by Employee means an act or omission that is done or omitted to be done by him not in good faith, and does not include any act or failure to act resulting from any incapacity of Employee. Notwithstanding the foregoing, Employee may not be terminated for Cause unless and until there shall have been delivered to him, within six months after the Board (A) had knowledge of conduct or an event allegedly constituting Cause and (B) had reason to believe that such conduct or event could be grounds for Cause, a copy of a resolution duly adopted by a majority affirmative vote of the membership of the Board (excluding Employee) (after giving Employee reasonable notice specifying the nature of the grounds for such termination and not less than 30 days to correct the acts or omissions complained of, if correctable, and affording Employee the opportunity, together with his counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, Employee was guilty of conduct set forth above in this Section 8(a).
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(b) “Change in Control” means the happening of any of the following events:
(i) An acquisition by any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (1) the then outstanding shares of Common Stock of the Company (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise, exchange or conversion of any Convertible Securities unless such securities were themselves acquired directly from the Company, (2) any acquisition by the Company; or (3) any acquisition by any Person pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 8(b); or
(ii) Within any period of 24 consecutive months, a change in the composition of the Board such that the individuals who, immediately prior to such period, constituted the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes hereof, that any individual who becomes a member of the Board during such period, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or
(iii) The consummation of a reorganization, merger or consolidation of the Company or of the sale or other disposition of all or substantially all of the assets of the Company and its direct and indirect subsidiaries taken as a whole (a “Corporate Transaction”), excluding, however, a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Corporate Transaction (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (2) no Person (other than the Company) will beneficially own, directly or indirectly, more than twenty-five percent (25%) of, respectively, the outstanding shares of common stock of the entity resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such entity entitled to vote generally in the election of directors, except to the extent that such ownership existed with respect to the Company prior to the Corporate Transaction, and (3) individuals who were members of the Board immediately prior to the approval by the stockholders of the Company of such Corporate Transaction will constitute at least a majority of the members of the board of directors of the entity resulting from such Corporate Transaction; or
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, other than to an entity pursuant to a transaction which would comply with clauses (1), (2) and (3) of subsection (iii) of this Section 8(b), assuming for this purpose that such transaction were a Corporate Transaction.
For purposes this definition of “Change of Control”, a series of transactions with a common purpose shall be treated as a single transaction that begins on the date of the first transaction in the series and ends on the date of the last transaction in the series.
(c) “Convertible Security” means any security convertible into or exchangeable for shares of common stock of the Company, or any option, warrant or other right to acquire shares of common stock of the Company.
(d) “Disability” means the failure of Employee to render and perform the services required of him under this Agreement, for a total of 180 days of more during any consecutive 12 month period, because of any physical or mental incapacity or disability as determined by a physician or physicians selected by the Company and reasonably acceptable to Employee, unless, within 30 days after Employee has received written notice from the Company of a proposed termination due to such absence, Employee shall have returned to the full performance of his duties hereunder and a physician or physicians (selected by the Employee and reasonably acceptable to the Company) shall have determined that Employee’s health permits him to handle the full performance of such duties.
(e) “Good Reason” means, without Employee’s prior written consent, (A) a material diminution in Employee’s authority, duties or responsibilities as set forth in Section 3(a), (B) a change in the Company’s reporting structure whereby Employee is no longer reporting to the Company’s Board of Directors, (C) a material reduction by the Company in Employee’s annual base compensation (including base salary and guaranteed bonus) as set forth in Section 4(a) (in which event, the Employee’s annual base compensation in effect prior to such reduction shall be treated, for purposes of calculating amounts payable under Sections 6 and 7, as the annual base compensation in effect immediately prior to termination), (D) any material breach of this Agreement by the Company, and (E) a relocation of Employee to an office that is more than 35 miles from the latest location of Employee’s office prior to the date of a Change in Control.
(f) “Termination of Employment” means Employee’s termination of employment from the Company which constitutes a “separation from service”, as such term is defined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
9. Reserved
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
10. Employee Covenants.
() Employee’s Acknowledgment. Employee agrees and acknowledges that in order to assure the Company that the Company will retain its value as a going concern, it is necessary that Employee undertake not to utilize his special knowledge of the Company’s business and his relationships with customers and suppliers to compete with the Company. Employee further acknowledges that:
(i) Employee is one of a limited number of persons who has developed the Company’s business;
(ii) Employee has occupied a position of trust and confidence with the Company prior to the date of this Agreement and, during such period and Employee’s employment under this Agreement, Employee has acquired and will acquire an intimate knowledge of proprietary and confidential information concerning the Company and its business;
(iii) the agreements and covenants contained in Sections 10(b), (c), (d), (e), (f) and (g) are essential to protect the Company and the goodwill of its business;
(iv) Employee’s employment with the Company has special, unique and extraordinary value to the Company, and the Company would be irreparably damaged if Employee were to provide services to any person or entity or otherwise act in violation of the provisions of this Agreement;
(v) the scope and duration of the restrictive covenants in Section 10(b) are reasonably designed to protect a protected interest of the Company and are not excessive in light of the circumstances; and
(vi) Employee has a means to support himself and his dependents other than by engaging in conduct prohibited by the restrictive covenants in Section 10(b), and the provisions of Sections 10(b) will not impair such ability.
(b) Non-Competition; Non-Solicitation; Non-Interference. During the Term and for a period of one year after the termination of Employee’s employment hereunder, Employee will not by himself or in conjunction with others, directly or indirectly engage (either as owner, investor, partner, member stockholder, employer, employee, consultant, advisor, manager or director) in any business in Miami Dade and Broward Counties which, at the time of such termination, is directly or indirectly in competition with a business then conducted by the Company or any of its subsidiaries; provided, however, this the limitation shall not apply if Employee’s employment is terminated as a result of a termination by the Company without Cause or a termination by Employee for Good Reason. During the Term and for a period of three years after the termination of Employee’s employment hereunder, Employee will not by himself or in conjunction with others, directly or indirectly (i) induce any customers of the Company or any of its subsidiaries with whom Employee has had personal contacts or relationships, during and within the scope of his employment with the Company, to curtail or cancel their relationship with the Company or its subsidiaries; or (ii) induce, or attempt to influence, any employee of the Company or any of its subsidiaries to terminate their employment therewith. The provisions of the first sentence of this Section 10(b) and clauses (i) and (ii) of the immediately preceding sentence are separate and distinct commitments independent of each other. It is agreed that the ownership of not more than one percent of the equity securities of any company having securities listed on an exchange or regularly traded in an over-the-counter market shall not, of itself, be deemed inconsistent with the first sentence of this Section 10(b).
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(c) Non-Disclosure. Employee shall not, at any time during the Term and thereafter (including following Employee’s termination of employment for any reason), disclose, use, transfer or sell, except in the course of employment with, or providing other service to, the Company, any confidential or proprietary information of the Company and its subsidiaries so long as such information has not otherwise been publicly disclosed or is not otherwise in the public domain, except as required by law or pursuant to legal process.
(d) Return of Company Materials Upon Termination. Employee acknowledges that all records and documents containing confidential or proprietary information of the Company or its subsidiaries prepared by Employee or coming into his possession by virtue of his employment by the Company are and will remain the property of the Company and its subsidiaries. Upon termination of his employment with the Company, Employee shall immediately return to the Company all such items and all copies of such items, in his possession.
(e) Cooperation With Regard to Litigation. Employee agrees to cooperate with the Company, during the Term and thereafter (including following Employee’s termination of employment for any reason), by making himself available to testify on behalf of the Company or any subsidiary or affiliate of the Company, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, and to assist the Company, or any subsidiary or affiliate of the Company, in any such action, suit or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company or any subsidiary or affiliate of the Company, as reasonably requested and at a time mutually convenient to Employee and the Company. The Company agrees to reimburse the Employee, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance.
(f) Non-Disparagement. Employee shall not, at any time during the Term and thereafter, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Company or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude Employee from making truthful statements or disclosures that are required by applicable law, regulation or legal process.
(g) Inventions. Employee acknowledges that all inventions, innovations, discoveries, improvements, developments, methods, know-how, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) which (i) relate to the then current business or any anticipated business of the Company, the Company’s research and development or the Company’s existing or future services or products and (ii) which are conceived, developed or made by Employee during and in the scope of his employment by the Company (“Work Product”) belong to the Company. Employee shall promptly disclose such Work Product to the Company and perform all actions reasonably requested by the Company (whether during or after his period of employment with the Company) to establish and confirm such ownership (including the execution of assignments, consents, powers of attorney and other instruments).
(h) Remedies. Employee acknowledges that the agreements and covenants in Sections 10(b), (c), (d), (e) and (f) are reasonable and necessary for the protection of the Company’s business interests, that in the event of any actual or threatened violation of the covenants contained in Sections 10(b), (c), (d), (e) and (f), the Company will suffer irreparable injury, Company’s damages will be difficult to ascertain and the Company’s remedy at law will be inadequate. Employee accordingly agrees that, subject to applicable law, in the event of any actual or threatened breach by him of any of the covenants set forth in Sections 10(b), (c), (d), (e) and (f), the Company shall be entitled to injunctive and other equitable relief, including immediate temporary injunctive and other equitable relief. Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove.
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
March 31, 2011
(i) Survival. The provisions of this Section 10 shall survive the termination or expiration of this Agreement in accordance with the terms hereof.
11. Governing Law; Disputes; Arbitration.
(a) Governing Law. This Agreement is governed by and is to be construed, administered and enforced in accordance with the laws of the State of Florida, without regard to conflicts of law principles. If, under the governing law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation, ordinance or other principle of law, such portion shall be deemed to be modified or altered to the extent necessary to conform thereto or, if that is not possible, to be omitted from this Agreement. The Company and Employee each hereby irrevocably consent to the jurisdiction of the courts of the State of Florida for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Florida. The invalidity of any such portion shall not affect the force, effect, and validity of the remaining portion hereof. If any court determines that any provision of Section 10 is unenforceable because of the duration or geographic scope of such provision, it is the parties’ intent that such court may have the power to modify the duration or geographic scope of such provision, as the case may be, to the extent necessary to render the provision enforceable, and, in its modified form, such provision shall be enforced.
(b) Reimbursement of Expenses in Enforcing Rights. All reasonable costs and expenses (including reasonable fees and disbursements of counsel) incurred by Employee during the Term and thereafter (including following Employee’s termination of employment for any reason) in seeking to interpret this Agreement or enforce rights pursuant to this Agreement shall be paid on behalf of or reimbursed to Employee promptly by the Company, whether or not Employee is successful in asserting such rights; provided, however, that no reimbursement shall be made of such expenses relating to any unsuccessful assertion of rights if and to the extent that Employee’s assertion of such rights was in bad faith or frivolous, as determined by independent counsel mutually acceptable to the Employee and the Company.
(c) Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration in Fort Lauderdale, Florida by a panel of three arbitrators in accordance with the rules of the American Arbitration Association in effect at the time of submission to arbitration. Judgment may be entered on the arbitrators’ award in any court having jurisdiction in Broward County, Florida. For purposes of entering any judgment upon an award rendered by the arbitrators, the Company and Employee hereby consent to the jurisdiction of any or all of the following courts: (i) the United States District Court for the Southern District of Florida, (ii) any of the courts of the State of Florida, or (iii) any other court having jurisdiction. The Company and Employee further agree that any service of process or notice requirements in any such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and Employee hereby waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to such jurisdiction and any defense of inconvenient forum. The Company and Employee hereby agree that a judgment upon an award rendered by the arbitrators may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Subject to Section 11(b), the Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 11. Notwithstanding any provision in this Section 11, Employee shall be entitled to seek (in the arbitration proceeding or in any court proceeding) specific performance of Employee’s right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement.
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The Source Vitamin Company, Inc.
Employment Contract – Xx. Xxxxx Xxxxxx
Xxxxx 00, 0000
(x) Interest on Unpaid Amounts. Any amounts that have become payable pursuant to the terms of this Agreement or any decision by arbitrators or judgment by a court of law pursuant to this Section 11 but which are not timely paid shall bear interest at the prime rate in effect at the time such payment first becomes payable, as quoted in The Wall Street Journal. Any interest payable under this Section 11(d) shall be paid on the same date as the amounts to which such interest relates are actually paid.
12. Income Tax Treatment.
Employee and the Company acknowledge that it is the intention of the Company to deduct all amounts paid by the Company to Employee pursuant to this Agreement, including under Sections 6 and 7 as ordinary and necessary business expenses for income tax purposes. Employee agrees and represents that he will treat all such amounts as ordinary income for income tax purposes, and should he report such amounts as other than ordinary income for income tax purposes, he will indemnify and hold the Company harmless from and against any and all taxes, penalties, interest, costs and expenses, including reasonable attorneys’ and accounting fees and costs, which are incurred by Company directly or indirectly as a result thereof.
13. Key Man Life Insurance.
If the Company, in its sole discretion, desires to procure “key man” insurance covering the life of Employee, Employee shall cooperate with the Company in procuring such insurance and shall, at the request of the Company, submit to such medical examinations, supply such information and execute such documents as may be required by the insurance company to which the Company has applied for insurance. Employee shall use his reasonable efforts to qualify for the standard premium category of such insurance company. Employee shall have no interest whatsoever in any “key man” insurance policy procured by the Company.
14. D&O Policy; Indemnification
(A) Directors and Officers Insurance.
Company agrees to maintain a Directors and Officers liability insurance policy (hereinafter, “D&O Policy”) covering Employee. The D&O Policy shall be maintained in an amount mutually agreed upon and in a coverage sum no less what other Chief Executive Officers in comparable size corporations receive.
(B) Indemnification.
(i) General. To indemnify Employee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent paid, or acknowledged to be payable, directly to or on behalf of Employee by an insurance carrier under a policy of officers’ and directors’ liability insurance. NOTWITHSTANDING ANYTHING TO THE CONTRARY, EMPLOYEE SHALL NOT BE INDEMNIFIED HEREUNDER FOR ANY CLAIMS, LIABILITIES AND THE LIKE WHICH ARE THE DIRECT OR INDIRECT RESULT IN WHOLE OR IN PART OF HIS NEGLIGENCE, GROSS NEGLIGENCE, OR INTENTIONAL MISCONDUCT
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(ii) Third Party Proceedings. The Company shall indemnify Employee if Employee is or was a party to any threatened, pending or completed action, suit, arbitration or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he or she is or was, (1) a director, officer, employee or agent of the Company, (2) named in a registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”), as a person who is about to become a director of the Company, or (3) serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Employee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
(iii) Proceedings by or in the Right of the Company. The Company shall indemnify Employee if Employee is or was a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he or she is or was, (1) a director, officer, employee or agent of the Company, (2) named in a registration statement filed by the Company under the Securities Act as a person who is about to become a director of the Company, or (3) serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification shall be made in respect of any claim, issue or matter as to which Employee shall have been adjudged to be liable to the Company unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Employee is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.
(iv) Expenses; Indemnification Procedure. Expenses (including reasonable attorneys’ fees) incurred by Employee in defending any civil, criminal, administrative or investigative action, suit or proceeding described in Section 1(a) or (b) hereof shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of Employee to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company as authorized under this Agreement.
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15. Miscellaneous.
(a) General. This Agreement cancels and supersedes any and all prior agreements and understandings between the parties hereto with respect to the employment of Employee by the Company and its subsidiaries. This Agreement constitutes the entire agreement among the parties with respect to the matters herein provided, and no modification or waiver of any provision hereof shall be effective unless in writing and signed by the parties hereto. Employee shall not be entitled to any payment or benefit under this Agreement which duplicates a payment or benefit received or receivable by Employee under such prior agreements and understandings or under any benefit or compensation plan of the Company. As used in this Agreement: (1) the terms “including”, “includes” and words of like import shall be construed broadly as if followed by “without limitation”; and (2) the terms “herein”, “hereof” and “hereunder” refer to this Agreement as a whole, not just the particular section where such term appears.
(b) Non-Transferability. Neither this Agreement nor the rights or obligations hereunder of the parties hereto shall be transferable or assignable by Employee, except in accordance with the laws of descent and distribution or as specified in Section 12(c). The Company may assign this Agreement and the Company’s rights and obligations hereunder, and shall assign this Agreement, to any Successor (as hereinafter defined) which, by operation of law or otherwise, continues to carry on substantially the business of the Company prior to the event of succession, and the Company shall, as a condition of the succession, require such Successor to assume in writing the Company’s obligations under (and agree in writing to be bound by) this Agreement. For purposes of this Agreement, “Successor” shall mean any person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company’s business directly, by merger or consolidation, or indirectly, by purchase of the Company’s voting securities or all or substantially all of its assets, or otherwise.
(c) Beneficiaries. Employee shall be entitled to designate (and change, to the extent permitted under applicable law) a beneficiary or beneficiaries to receive any compensation or benefits payable hereunder following Employee’s death.
(d) Notices. Whenever under this Agreement it becomes necessary to give notice, such notice shall be in writing, signed by the party or parties giving or making the same, and shall be deemed to have been duly given (i) upon actual receipt (or refusal of receipt) if delivered personally; (ii) three business days following deposit, if sent by certified or registered mail, return receipt requested, postage prepaid; (iii) one business day following deposit with a documented overnight delivery service or (iv) upon transmission, if sent by facsimile (with confirmation receipt and followed by a copy sent by regular mail), in each case to the appropriate address or number as set forth below or at such other address as may be designated by such party by like notice:
If to the Company:
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx #0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
If to Employee:
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
(e) Reformation. The invalidity of any portion of this Agreement shall not be deemed to render the remainder of this Agreement invalid.
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(f) Headings. The headings of this Agreement are for convenience of reference only and do not constitute a part hereof.
(g) No General Waivers. The failure of any party at any time to require performance by any other party of any provision hereof or to resort to any remedy provided herein or at law or in equity shall in no way affect the right of such party to require such performance or to resort to such remedy at any time thereafter, nor shall the waiver by any party of a breach of any of the provisions hereof be deemed to be a waiver of any subsequent breach of such provisions. No such waiver shall be effective unless in writing and signed by the party against whom such waiver is sought to be enforced.
(h) No Obligation To Mitigate. Employee shall not be required to seek other employment or otherwise to mitigate Employee’s damages upon any termination of employment; provided, however, that, to the extent Employee receives from a subsequent employer health or other insurance benefits that are substantially similar to the benefits referred to in Section 5(c) hereof, any such benefits to be provided by the Company to Employee following the Term shall be correspondingly reduced.
(i) Offsets; Withholding. The amount required to be paid by the Company to Employee pursuant to this Agreement shall not be subject to offset. The foregoing and other provisions of this Agreement notwithstanding, all payments to be made to Employee under this Agreement, including under Sections 6 and 7, or otherwise by the Company will be subject to required withholding taxes and other required deductions.
(j) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Employee, his heirs, executors, administrators and beneficiaries, and shall be binding upon and inure to the benefit of the Company and its successors and assigns.
(k) Reimbursement of Expenses, Certain Other Payments. Notwithstanding any provision to the contrary herein:
(i) any payment to Employee for reimbursement of expenses or disbursements pursuant to this Agreement (including pursuant to Section 5(c), Section 10(e), Section 11(b), clause (v) of Section 6, clause (iv) of Section 7(a) or clause (vi) of Section 7(b)), any payment on Employee’s behalf pursuant to Section 11(b), and any payment pursuant to Section 9 or the last grammatical paragraph of Sections 6 and 7(b), shall be made no later than the end of the Employee’s taxable year following the taxable year in which such expenses and disbursements (including insurance premiums contemplated by Sections 6 and 7(b)) are incurred;
(ii) any such amount paid during one taxable year shall not affect any such amount payable the Company during a subsequent taxable year; and
(iii) the right to such payment may not be exchanged or substituted for other forms of compensation to Employee.
(l) Section 409A. The parties intend that the payments and benefits under this Agreement are either exempt from Section 409A of the Code or fully comply with the payout and other limitations and restrictions imposed under Section 409A of the Code. In this connection, the payout timing provisions and any other terms of this Agreement shall be interpreted to be exempt from Section 409A of the Code or comply with the payout and other limitations and restrictions imposed under Section 409A of the Code, to the extent necessary to avoid the penalties otherwise imposed under Section 409A of the Code. The Company and Employee agree to make in good faith such changes to this Agreement, without changing the basic economics of this Agreement, as are necessary to avoid penalties imposed under Section 409A of the Code.
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(X) Amendment. This Agreement cannot be amended orally, or by any course of conduct or dealing, but only by a written agreement signed by the Employee and the Company.
(N) Board Appointment. Upon execution of this Agreement, the Employee shall be appointed to the Company’s Board of Directors. Employee will serve on the Board of Directors until the next annual shareholders meeting or the shareholders act by written consent without a meeting. If a shareholder meeting is held, and subject to the Employee’s consent, the Board of Directors will nominate Employee to serve on the Company’s Board of Directors.
(O) Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original.
[Signature page follows this page.]
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March 31, 2011
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
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The Source Vitamin Company, Inc.
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By:/s/ Xxxxxxxx Xxxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxxx
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Title: President
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By:/s/ Xxxxxxxx Xxxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxxx
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Title: Chairman
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EMPLOYEE
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/s/ Xxxxx Raymans
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Xx. Xxxxx Xxxxxx
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