CONSULTING AGREEMENT
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Exhibit
10.3
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THIS
CONSULTING AGREEMENT (this “Agreement”) is made and
entered into as of the 1st day of
June, 2009 (the effective date), by and between Skinny Nutritional Corporation
(the “Company”), and
Xxxx Xxxxx Xxxxx (the “Consultant”).
Background
The
Company is engaged, among other things, in the business of developing, bottling
and distributing beverages strictly limited to, for the purpose of this
definition, enhanced waters, waters, juices, teas, shakes, smoothies, and
coffees, with each such beverage having a number of calories equal to or less
than the number of calories corresponding to such beverage as described on Exhibit A hereto
(collectively, the “Business”). The
Consultant has considerable expertise in the areas of product research,
development, design, and manufacturing of beverages and related
packaging.
NOW,
THEREFORE, the parties, for and in consideration of the foregoing and of the
covenants and agreements set forth below, intending to be legally bound,
contract and agree as follows:
Provisions
1. Engagement. The
Company hereby engages the Consultant in connection with the conduct of its
Business, including all extensions thereof, during the Term (as defined herein),
and the Consultant accepts such engagement, on the terms and conditions provided
herein (the “Engagement”).
2. Term. This
Agreement and the Engagement shall be for a term of two (2) years commencing as
of the date hereof, unless earlier terminated as hereinafter provided (the
“Term”).
3. Duties and
Performance. The Consultant covenants and agrees to provide
independent professional consultative advice to the Company on an as-requested
basis concerning product research, development, formulation, design, and
manufacturing of beverages and related packaging, including, without limitation,
conceiving of ingredients, trendy flavors, and sweetener systems (the “Consulting
Services”). Without limiting the generality of the foregoing,
the Consultant agrees to further develop and enhance the Intellectual Property
(as defined below). The Consultant shall not be required, however, to
spend more than a maximum average of twenty (20) hours per week on behalf of the
Company. The Consultant shall document and provide to the Company in
writing, upon the Company’s request, a description of the Consulting Services
performed each month, and the number of hours devoted thereto. The
Company recognizes that the Consultant shall not work exclusively for the
Company and agrees that the Consultant may continue his own research and
development for businesses unrelated to the Business.
4. Compensation. As
compensation for the Consulting Services, the Company hereby agrees to pay to
the Consultant the amount of One Hundred Thousand Dollars ($100,000.00)
annually, paid monthly in at advance on the first day of each month at the rate
of 1/12 of the annual amount. The Consultant shall be deemed to have
earned his retainer whether or not the Company requests that he performs
Consulting Services. The Company also shall reimburse the Consultant
for his reasonable out-of-pocket ordinary business expenses such as the purchase
of experimental materials or business travel expenses, which are incurred as a
result of performing the Consulting Services, as long as the Consultant has
obtained prior written authorization from the Company for those expenses before
they are incurred.
5. Independent
Contractor. The Consultant
is retained by the Company solely for the purposes set forth in this Agreement,
and his relation to the Company during the Term shall be that of an independent
contractor solely responsible for the manner and means by which he carries out
his duties. In addition, the Consultant shall be solely responsible
for paying any and all federal, state, and local income, withholding, payroll,
unemployment compensation, workers compensation, and other taxes that are
assessed or otherwise payable by the Consultant in connection with his services
under this Agreement, and the Consultant will indemnify and hold harmless the
Company from and against any such taxes (and any interest and penalties related
thereto). The Consultant shall not have the power to bind the
Company, and no employee of the Consultant shall be construed for any purpose to
be an employee subject to the control and direction of the
Company. In the performance of the Consulting Services, no employee
of the Consultant shall represent himself as an officer of, or use the title of
any officer of, the Company, but shall represent himself as an independent
consultant to the Company.
6. Non-Disclosure of Company’s
Confidential Information. In the course of conducting the
Business, the Company acquires and develops trade secrets and confidential and
proprietary information of the Company and its customers which is not generally
known in the industry. The Consultant recognizes that the knowledge
and information acquired from the Company and/or developed by the Consultant as
Intellectual Property (as defined below), concerning the Company’s business
plans, products, customer prospects, customer lists, supplier and vendor lists
and information, customer contacts, customer information, customer data,
marketing plans, promotional materials, technologies, reports, plans, studies,
price lists, profit margins, financial statements, catalogs and other trade
secrets, inventions, designs, know-how, or other private, confidential, or
proprietary information of or about the Company and its Business (collectively,
“Company Confidential
Information”) are valuable, special, and unique aspects of the Company’s
Business. The Consultant recognizes that such Company Confidential
Information would not have been and would not be provided to the Consultant by
the Company in the absence of this signed Agreement because of the risks that
valuable Company Confidential Information might otherwise be divulged and
thereby damage the Company’s competitive position in the marketplace and/or
cause the Company to be in breach of its contractual obligations to its
customers. The Consultant agrees that he will not at any time (i)
disclose, in whole or in part, any Company Confidential Information to any
person, firm, corporation, association, or other entity for any reason or
purposes whatsoever unless authorized in writing to do so by the Company, or
(ii) use any Company Confidential Information for his own purposes or for the
benefit of any person, firm, corporation, association, or other entity other
than the Company except in the proper performance of his duties as instructed by
the Company. The Consultant shall be responsible for the breach of
this provision by any of his agents.
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Company
Confidential Information shall not be:
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a.
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Information
which is in the public domain as of the date of this Agreement or which
later comes into the public domain from a source other than the
Consultant;
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b.
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Information
approved for release by written authorization of the
Company;
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c.
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Information
rightfully acquired by the Consultant on a non-confidential basis from a
third party having a right to disclose the same;
and
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d.
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Information
independently developed by the Consultant which does not constitute
Intellectual Property (as defined
below).
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7. Intellectual
Property. (a) "Consultant Developments” are defined
as all discoveries, inventions, materials, and ideas (including any
modifications or further developments or enhancements thereto) which are
conceived, made, obtained, designed, developed, originated, or prepared by the
Consultant (either alone or in conjunction with others) within the scope of this
Agreement (whether prepared prior to or after the date hereof, and whether
during or outside of working hours). Consultant Developments related in any way
to the Company’s Business are defined as “Intellectual Property.” The
Company will own exclusively the Intellectual Property. Notwithstanding,
Consultant shall be entitled to use Consultant Developments without restriction
on products which do not relate in any way to the Company's
Business. Intellectual Property will belong to the Company whether or
not patent, trademark, copyright, and/or other intellectual property right
applications are or can be filed thereon. Consultant hereby agrees to
further develop and enhance the Intellectual Property. Consultant
hereby assigns to the Company all of the Consultant’s right, title, and interest
(including patents, trademarks, copyrights, trade secrets, and other
intellectual property rights) in the Intellectual Property, whether or not it is
“work made for hire” under the U.S. Copyright Act of 1976, 17 U.S.C. §§ 101 et
seq. The
Consultant has made and will make full and prompt disclosure to the Company of
all Intellectual Property and, at the Company’s request and expense (but without
additional compensation to the Consultant), will at any time and from time to
time during and after the Consultant’s affiliation with the Company execute and
deliver to the Company such applications, assignments, and other papers and take
such other actions (including, but not limited to, testifying in any legal
proceedings) as the Company, in its sole discretion, considers necessary to
vest, perfect, defend, or maintain the Company’s rights in and to such
Intellectual Property.
(b) In
consideration specifically for Consultant’s services in further developing and
enhancing the Intellectual Property, the Company hereby grants to the Consultant
warrants to purchase Three Million (3,000,000) shares of the Company’s Common
Stock, exercisable at a per share price equal to five cents ($0.05) per share of
Common Stock. One warrant shall be issued to Consultant in the amount
of 2,850,000 shares; the other warrant shall be issued to Consultant in the
amount of 150,000 shares. These warrants shall be issued in the form
of the Common Stock Purchase Warrant ("Warrant") attached hereto as
Exhibit B, and
as a condition of the grant of each Warrant, the Consultant agrees to the terms
set forth in the Warrant, including without limitation, the restrictions on
transfer and the redemption provisions. Each Warrant and the Common
Stock issuable thereunder shall be expressly conditioned upon board approval of
the issuance of such Warrant and board and shareholders approval of the increase
in authorized shares of Common Stock of the Company (the “SNC
Approvals”).
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8. Indemnification. The
Consultant shall indemnify, defend, and hold the Company harmless from and
against all claims, costs, losses, damages, liabilities (including, but not
limited to, costs of investigation and attorney’s fees), damage to property,
injury to, or death of persons (collectively, “Losses”) whatsoever arising
out of or in connection with (i) a breach by the Consultant of any term of this
Agreement, and (ii) the negligence or willful misconduct of the
Consultant.
In
good faith, the Consultant warrants that the use of any Intellectual Property,
or any part thereof, furnished under this Agreement, to the best of his
knowledge, will not infringe any patent, copyright, trade secret, trademark or
other proprietary right. The Consultant further warrants that he is
not currently bound by any other consultant agreement, restriction, or
obligation, and will not assume any such obligation or restriction, which does
or would in any way interfere or be inconsistent with the Consulting Services to
be furnished hereunder.
9. Non-Solicitation and
Non-Competition. The Consultant agrees that during his
affiliation with the Company and for a period of two (2) years after the
cessation of such affiliation (hereinafter, the “Restricted Period”), he shall
not directly or indirectly:
(a) render
services to, become employed by, own, or have a financial or other interest in
(either as an individual, partner, joint venturer, owner, manager, stockholder,
employee, partner, officer, director, independent contractor, or other such
role) with another business which is competitive to the
Company’s Business at any place in the world; or
(b) induce,
offer, assist, encourage or suggest (i) that another competitive business or
enterprise offer employment to or enter into a business affiliation with any
Company employee, agent, or representative, or (ii) that any Company employee,
agent, or representative terminate his or her employment or business affiliation
with the Company.
The Restricted Period shall xxxxx during any period of breach or non-compliance
by the Consultant and shall only resume after such breach or non-compliance has
been fully and finally cured and the Consultant is in full compliance with the
terms hereof.
10. Return of Company Documents
and Other Information. Upon the cessation of the Consultant’s
affiliation with the Company or at any other time, upon request of the Company,
the Consultant shall deliver to the Company all correspondence, memoranda,
notes, records, reports, plans, product and other designs and compositions,
studies, price lists, customer lists and information, customer contracts,
financial statements, catalogs, programs, disks, tapes, other papers, as well as
any medium on or by which information is stored, received, or made by the
Consultant in connection with the Consultant’s affiliation with the Company, in
the Consultant’s possession or control, regardless of whether or not such
information is Company Confidential Information.
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11. Notices. The
parties agree that all notices under this Agreement will be in writing and will
be either delivered personally to a party, transmitted by facsimile
transmission, or sent by registered mail or reputable courier to the address set
forth below or such other address as may be furnished by such party to the other
from time to time:
The Company:
Skinny Nutritional Corporation
0
Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Telephone: ____________
Fax: _________________
The Consultant:
Xxxx Xxxxx Xxxxx
00
Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Telephone: ___________
Fax: _________________
12. Termination. The
Company has the right to terminate this Agreement and the Engagement (i)
immediately upon the death or disability of the Consultant, (ii) immediately
upon written notice if there is a termination due to a failure to close of the
Intellectual Property Assets Purchase Agreement dated May 22, 2009, or (iii)
upon five (5) days’ written notice to the Consultant as a result of a breach by
the Consultant of any provision of this Agreement or the negligence or willful
misconduct of the Consultant in the performance of the Consultant’s duties under
this Agreement, and the Consultant fails to cure such breach or negligence or
willful misconduct within such five (5) day period to the extent
curable. In the event that the SNC Approvals are not obtained as of
the date of any termination of this Agreement, then each of the Warrants shall
become null and void.
13. Severability; Specific
Performance. The parties acknowledge that the time and scope
and other provisions of this Agreement have been specifically negotiated by
sophisticated parties and agree that all such provisions are reasonable under
the circumstances of the transactions contemplated by this
Agreement. If any portion of this Agreement shall be determined to be
invalid, illegal, or unenforceable as written, each such portion shall be
enforced to the extent reasonable under the circumstances and such determination
shall not affect the validity or enforceability of the balance hereof, and such
balance shall remain in full force and effect. The Consultant
acknowledges and agrees that any breach of this Agreement will result in
irreparable injury to the Company, that monetary damages will be an inadequate
remedy of such breach, and that, accordingly, in addition to any other remedy
that the Company may have, the Company shall be entitled to enforce the specific
performance of this Agreement and to seek both permanent and temporary relief in
the event of any breach hereof.
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14. Entire Agreement /
Amendments. This Agreement, together with that certain
Settlement Agreement and Intellectual Property Assets Purchase Agreement, each
of even date herewith, contains all of the terms and conditions agreed upon by
the parties with reference to the subject matter and supersedes any and all
other agreements, oral or written, between the parties or their predecessors
relating to the subject matter. This Agreement may not be modified or
amended except by a written instrument executed by both parties or their
permitted successors in interest, if any.
15. Investment
Representations. Consultant
understands and agrees that the Warrants issuable pursuant to this Agreement and
the shares of Common Stock issuable upon exercise of such Warrants (the “Warrant
Shares”) shall bear a restrictive legend and be subject to such restrictions on
their transfer as are set forth in the Securities Act of 1933, as amended and
the rules promulgated thereunder by the Securities and Exchange Commission.
Consultant represents and warrants to the Company that (i) it is acquiring the
Warrants for its own account for investment purposes and not with a view towards
the distribution of the Warrants or the Warrant Shares or any part
thereof; (ii) it is an “accredited investor” as defined in Rule 501(a) under the
Securities Act; and (iii) it has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of acquiring the Warrants, has so evaluated such merits and risks and
is able to bear the economic risk of holding the Warrants and Warrant
Shares.
16. Assignment. This
Agreement shall not be assignable by the Consultant. Subject to the
preceding sentence, this Agreement shall inure to the benefit of and be binding
upon the parties and their respective heirs, successors, and
assigns.
17. Counterparts. This
Agreement may be executed in counterparts, each of which so executed shall be
deemed to be an original and all of which, when taken together, shall constitute
one and the same instrument. This Agreement shall be effective as of
the date first above written despite the fact that various dates of execution by
the parties may differ from that date.
18. Waiver. No
action taken pursuant to this Agreement shall be deemed to constitute a waiver
by the party taking such action of complete compliance with the representations,
warranties, covenants, and agreements contained herein. No waiver
shall be binding unless in writing and signed by the party making the
waiver. A waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach. Either party may waive or modify performance of any act which
is intended solely for their benefit as long as the party for whom such act is
intended to benefit consents to such waiver or modification in
writing.
19. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts (without regard to
its conflicts of laws principles).
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.
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SKINNY
NUTRITIONAL CORPORATION
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XXXX
XXXXX XXXXX
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By:
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/s/ Xxxxxx X. Xxxxxx
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/s/ Xxxx Xxxxx Xxxxx
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Name:
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Xxxxxx X. Xxxxxx
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Title:
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Pres. and CEO
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Exhibit
A
Beverage
and Calories
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Beverage
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Calories per eight (8) ounce serving
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Enhanced
Water
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40
calories
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Water
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40
calories
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Juice
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45
calories
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Tea
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40
calories
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Shake
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70
calories
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Smoothie
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70
calories
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Coffee
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70
calories
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