EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of May 11, 1999 is
entered into by and among XxxxxxxxxXxxxxxXxxxxx.xxx, a Delaware Corporation
(the "Company"), Xxxxx Xxxxxx (the "Employee") and Xxxxx, Inc. ("Xxxxx").
W I T N E S S E T H:
WHEREAS, Employee is a principal stockholder and officer of Xxxxx, Inc., a
Maryland corporation and one of the principal shareholders of the Company;
WHEREAS, one of the principal objectives of the Company is to develop,
market and distribute a line of cosmetic products developed by the Employee
under the name "Natural Cover" or such other name as the Company shall
determine;
WHEREAS, the Employee has contributed all of the rights to such products and
certain other assets to the Company, including intellectual property,
relationships with vendors and suppliers and know-how, in exchange for an
interest in the Company and certain other payments; and
WHEREAS, in connection with the operation of the Company, the respective
parties desire to perform pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises which shall be incorporated
as a substantial part of this Agreement, the mutual promises herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is understood and agreed as follows:
1. Employment. The Company hereby engages Employee as a full-time
employee for the period (the "Employment Period") and as a part-time
consultant for the period (the "Consulting Period") specified in Section 4
hereof and Employee hereby accepts such employment upon the terms and
conditions set forth in this Agreement.
2. Duties and Status.
(a) Throughout the Employment Period, the Employee shall exercise such
authority and perform such duties as are assigned to her by the Company's
Board of Directors, which shall include but not be limited to the following:
(i) serve as spokesperson for the Company which shall include, but not be
limited to, appearing in infomercials, commercials, print advertisements and
any other form of advertisement or public relations as the Company shall
determine;
(ii) work on product development for the Company which shall include
developing new products, improving existing products and expanding the
existing line of products;
(iii) conduct lectures and seminars on such topics and at such times and
locations as may be determined by the Company; and
(iv) perform all other duties and responsibilities for the Company,
provided that such duties and responsibilities are reasonable and
commensurate with the Employee's status as a principal employee of the
Company.
(b) Throughout the Employment Period, the Employee shall (i) devote her
full time and efforts to the business of the Company and will not engage in
consulting work or any trade or business for her own account or for or on
behalf of any other person, firm or corporation which competes, conflicts or
interferes with the performance of her duties hereunder in any way and (ii)
accept such additional or different duties and responsibilities as are
assigned to her by the Company, provided that such duties and
responsibilities are reasonable and commensurate with the Employee's status
as a principal employee of the Company.
(c) The Employee shall be required to perform the services and duties
referred to in this Section 2 at the offices of the Company in Baltimore,
Maryland or at such other locations; provided that the Employee shall be
required to travel, at the Company's expense, to such regional offices as
shall be established from time to time as well as to seminar, client, job,
filming or any other locations as may be reasonably necessary in the
performance of her duties hereunder.
3. Compensation and General Benefits. As compensation for her services
under this Agreement, the Employee shall be compensated as follows:
(a) Salary. The Company shall pay to the Employee an annual base salary
of $60,000, subject to adjustment as discussed below, provided that, if due
to financial hardship, the [Company] requires a pay reduction for all senior
employees of the Company generally, the salary hereunder may be reduced
consistent with such pay decrease; provided that following any such decrease
and until such time as base salaries are restored to their levels
immediately prior to such decrease, all senior employees similarly situated
shall be treated on an equivalent basis. Such salary shall be payable at
least monthly or at shorter intervals as determined by the Company. Such
salary shall be subject to normal periodic review at least annually by the
Company's Board of Directors based on the salary policies of the Company and
the Employee's contributions to the business of the Company.
(b) Compensation Pursuant to Partnership Agreement. It is acknowledged
by the parties to this Agreement that a significant portion of Employee's
compensation is in the form of Common Stock of the Company. The Employee
has agreed to enter into this Employment Agreement.
(c) Vacation and Sick Leave. The Employee may take up to four weeks'
annual vacation provided an absence of such duration or at such time would
not adversely affect the operations, profitability, or growth prospects of
the Company's business and provided that the Employee may not take more than
two consecutive weeks of vacation at any time. Unused vacation time shall
not accumulate from year to year. The Employee shall be entitled to paid
sick leave and holidays in accordance with the Company's announced policy
for senior employees, as established by the Company's Board of Directors and
as in effect from time to time.
(d) Expenses. All reasonable business related expenses of the Employee
shall be reimbursed within thirty (30) days of submission of sufficient
evidence of such expenses to substantiate the Company's right to claim
income tax deductions for such expenses. Any individual expense item
exceeding $1,000 in amount must be approved by the Company in advance of the
incurrence of such expense.
(e) Perquisites and Other Benefits.
(i) Throughout the Employment Period, the Employee shall be entitled to
participate in such retirement plans, group and individual disability, group
and individual life, survivor income, sickness, accident, dental, medical
and health benefits and other similar plans of the Company which are in
effect from time to time for other employees of the Company and in any
successor or additional benefit programs, plans or arrangements of the
Company which may be established by the Company, as and to the extent any
such benefit programs, plans and arrangements are or may from time to time
be in effect, to the extent determined by the Company but subject to the
terms hereof and provided that the Employee is eligible to participate in
such plans under the terms of such plans. This paragraph (i) in no way
creates any obligation of the Company to adopt such employee benefit plans.
(ii) Throughout the Employment Period, the Employee shall be entitled to the
following additional benefits: (A) comprehensive medical insurance with
standard and reasonable deductibles or co-insurance, (B) long-term
disability insurance paying disability benefits of at least 50% of the
Employee's salary upon the termination of the Employee's employment by
reason of disability; and (C) annual physical examinations (as more fully
discussed in Section 11 hereof).
(f) Fees. All fees or other consideration paid or given to the Employee or
to the Company in respect of the services rendered in connection with the
Employee's employment shall be the property of the Company, and all such
services shall be performed by the Employee on behalf of the Company. The
Company reserves full right to xxxx for all services performed by the
Employee for the Company at such standard rates as the Company shall from
time to time establish, and the Employee agrees that all such fees, when
accrued and paid, are the sole property of the Company and that the Employee
has no interest in any such fees whatsoever, unless otherwise determined by
the Company's Board of Directors.
4. Employment Period and Consulting Period.The Employment Period shall
commence on the signing of this Agreement (the "Effective Date") and shall
continue for a period of five (5) years provided that each of the parties
hereto have the right to extend the Employment Period for an additional five
(5) year term upon written notice to the other provided at least ninety (90)
days prior to the end of the first term. If the Employee has been employed
by the Company for both five (5) year terms provided above, then the
Employee has the option, upon written notice to the Company provided at
least ninety (90) days prior to the end of the second term to extend the
Employment Period for an additional ten (10) years. In the event that the
Employee elects not to extend the Employment Period for the additional ten
(10) year term provided for in the preceding sentence, then the Consulting
Period shall commence immediately upon the end of the Employment Period if
either party has given written notice to the other no later than ninety (90)
days prior to the commencement of such period that it wishes to commence the
consulting arrangement described in Section 15 hereof. The Consulting
Period shall continue for a period of five (5) years provided that each of
the parties hereto have the right to extend the Consulting Period for an
additional five (5) year term upon written notice to the other provided at
least ninety (90) days prior to the end of the first term of the Consulting
Period.
5. Termination.
(a) This Agreement shall be terminable by the Company only upon cause.
In such event, the Company must give the Employee at least ninety (90) days
prior written notice. Cause shall be generally defined to mean the material
malfeasance or nonfeasance of the Employee, which is substantially
detrimental to the success of the business of the Company and which is not
corrected immediately, if possible, upon notice from the Company and in any
event within thirty (30) days of receipt of such notice.
(b) Notwithstanding anything herein to the contrary, this Agreement shall
terminate upon the happening of any of the following events or instances:
(i) the termination, liquidation or dissolution of the Company;
(ii) the Company is deemed to be insolvent, files for relief under federal
bankruptcy laws, makes an assignment for the benefit of creditors, or
otherwise becomes insolvent;
(iii) the death or incompetency of the Employee; or
(iv) at the option of the Company, the disability, mental or physical, of
the Employee as defined in Section 6 hereof.
(c) Upon termination of this Agreement, the Employee shall be bound by and
shall observe all covenants and obligations, which by their nature or
expressed agreement, are intended to survive the termination or expiration
of this Agreement including, without limitation, the covenants provided in
Section 8 hereof.
6. Disability.
(a) As used in this Agreement, the term "disability" shall mean the mental
or physical inability of the Employee to perform her duties as contemplated
in this Agreement which is sustained for a period of ninety (90) days.
(b) If the Employee is disabled, she shall be entitled to receive the
salary to which she otherwise would have been entitled, were she not
disabled, for a period of twelve (12) months from the onset of such
disability. Unless this Agreement is terminated at the option of the
Company upon the disability of the Employee, this Agreement will be
suspended, other than the obligation of the Company to make the payments for
twelve months pursuant to the preceding sentence and the provisions of
Sections 8, 9, 11, 12 and 14 which will remain in effect. Upon the end of
the disability, this Agreement will be reinstated with full force and effect
but the term of the Employment Period pursuant to this Agreement will not be
extended beyond the time that it would otherwise have expired without the
occurrence of the disability.
7. Termination Benefits.
(a) In the event of a termination of this Agreement as a result of the
disability of the Employee, (i) then to the extent the proceeds from the
disability insurance which the Company has maintained on the Employee are
paid directly to the Employee, such proceeds shall offset on a dollar-for-
dollar basis the payments due under Section 6, (ii) the Company shall at its
expense continue benefits under the Company's health and accident programs,
plans and arrangements, if the Company has adopted such a program, plan or
arrangement, for two years following the date of disability for the
Employee; and (iii) the Employee will receive such benefits as they may be
entitled under the terms of the benefit programs, plans, and arrangements
described in Section 3 which provide benefits upon disability of the
Employee.
(b) In the event of a termination of this Agreement as a result of the
normal expiration of this Agreement or for any other reason other than the
death, incompetence or disability of the Employee, the Company shall have no
further contractual obligations to pay the Employee any additional salary or
bonus or to continue any benefits under the Company's health and accident
programs, plans and arrangements except to pay or provide for the payment of
any statutory or vested benefits such as COBRA benefits or 401(k) amounts,
if any, and except for the obligation to pay the bonus in respect of the
current year during which the Agreement was terminated pro rated for the
portion of the year that the Agreement was in effect.
8. Confidential Information and Non-Competition.
(a) The Employee and the Company recognize that, due to relationship of the
Employee to the Company, the Employee will have access to and will acquire,
and may assist in developing, confidential and proprietary information
relating to the business and operations of the Company. The Employee
acknowledges that such information has been and will continue to be of
central importance to the business of the Company p and that disclosure of
it to or its use by others could cause substantial loss to the Company. The
Employee and the Company also recognize that an important part of the
Employee's duties will be to develop goodwill for the Company as a
spokesperson and through her personal contact with customers, agents and
others having business relationships with the Company and that there is a
danger that this goodwill, a proprietary asset of the Company, may follow
the Employee if her relationship with the Company is terminated.
Accordingly, the Employee agrees to the following provisions relating to
confidential information and non-competition with the Company as provided in
this Section 8.
(b) The Employee agrees that, during the term of this Agreement, and for a
period of two (2) years after the termination of this Agreement for any
reason whatsoever, she shall not, anywhere in the United States (or the
world if during the term of the Employee's employment, the Company shall
have engaged in operations or conducted sales or marketing efforts outside
of the United States), participate or engage in any business in competition
with the business of the Company, whether directly or indirectly, as a
partner, director, officer, proprietor, employee, consultant, agent or
otherwise. The Employee further agrees that during the term of this
Agreement, and for a period of two (2) years following the termination of
this Agreement for any reason whatsoever, she shall not anywhere in the
United States (or those foreign countries in which the Company shall have
engaged in operations or conducted sales or marketing efforts during the
term of the this Agreement), solicit (directly or indirectly, for her own
account or for the account of others) orders for services or products of a
kind or nature like or similar to services performed or products sold by the
Company during the term of this Agreement. The Employee further agrees that
she shall not, at any time, directly or indirectly, urge any client or
customer or potential client or potential customer of the Company to
discontinue business, in whole or in part, or not to do business, with the
Company.
(c) The Employee expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area and otherwise, (ii) that the protections afforded to the
Company are necessary to protect its legitimate business interests, and
(iii) that the agreement to observe such restrictions form a material part
of the consideration for this Agreement, the Employee's employment by the
Company and the Common Stock interest of Xxxxx, Inc. The restrictions set
forth in this Section 8 will not apply subsequent to the termination of this
Agreement in the event that (x) the Company is not in compliance with all of
the material obligations to the Employee under this Agreement (and fails to
take all reasonable action to correct such non-compliance within ninety (90)
days of receipt of notice from the Employee of such non-compliance), (y) the
Company is no longer diligently pursuing the business of the Company or (z)
the Employee was terminated by the Company in violation of this Agreement.
(d) The Employee agrees that during the term of this Agreement, and for a
period of two years after the termination of this Agreement for any reason
whatsoever, she shall not disclose to any person, other than in the
discharge of her duties under this Agreement, any trade secret or
confidential or proprietary information relating to (i) the business,
operations or internal structure of the Company, (ii) the clients or
customers or potential clients or potential customers of the Company, (iii)
any method or procedure (such as records, programs, systems, correspondence
or other documents) relating or pertaining to projects developed by the
Company or contemplated to be developed by the Company or (iv) the Company's
business. Further, upon leaving the employ of the Company for any reason
whatsoever, the Employee shall not take with her, without prior written
consent of the Company's Board of Directors, any documents, forms, or other
reproductions of any data or any information relating to or pertaining to
the Company, any of the clients or customers or potential clients or
potential customers of the Company or any other confidential information or
trade secrets. For purposes of this Agreement, "trade secrets or
confidential or proprietary information" means information unique to the
Company which has a significant business purpose and is not known by or
generally available from sources outside the Company or typical of industry
practice.
(e) In the event that the Employee violates the provisions of this Section
without knowledge of such violation, upon written notice from the Company
informing her of the nature of such violation, the Employee shall
immediately terminate any actions which constitute such violation.
(f) It is recognized that damages in the event of breach of this Section 8
by the Employee would be difficult, if not impossible, to ascertain, and it
is therefore agreed that the Company, in addition to and without limiting
any other remedy or right it may have, shall have the right to an injunction
or other equitable relief, in any court of competent jurisdiction, enjoining
any such breach, it being agreed that the Employee shall submit to any
federal or state court located in Baltimore, Maryland, and the Employee
hereby waives any and all defenses she may have on the ground of lack of
jurisdiction or competence of the court to grant such an injunction or other
equitable relief. The existence of this right shall not preclude any other
rights and remedies at law or in equity which the Company may have.
9. Intellectual Property. Any improvements, inventions, new techniques,
processes, programs or products made or developed by the Employee during the
course of her employment, within or after normal business hours, relating to
the business of the Company, shall be deemed to have been made or developed
by her solely for the benefit of the Company and shall be the sole and
exclusive property of the Company. In order to further effectuate the terms
of this Agreement, the Employee agrees to assign to the Company all her
rights to patents, copyrights, trademarks and all other proprietary
interests which she might have in any process, program, technique, product,
research item, invention or other improvement which she develops during the
course of her employment by the Company. The Employee shall not, during or
after the course of her employment, use or disclose to any other person or
entity any such process, program, technique, product, research item,
invention or other improvement except as expressly authorized in writing by
the Company.
10. Other Agreements. Any earlier employment agreements or arrangements,
whether oral or written, between the Employee and the Company are hereby
terminated and shall be of no further effect after the effective date
hereof.
11. Public Image, Health and Well-Being of Employee. As discussed in
Section 2 hereof, one of the principal duties of the Employee will be act as
public spokesperson for the Company and certain products and services to be
marketed and distributed by the Company. The parties hereto agree that the
public image, health and well-being of the Employee are critical to the
ability of the Employee to perform such duties for and on behalf of the
Company and to the ultimate success of the Company's business. Accordingly,
the Employee agrees not to make any statements or take any actions which
could in any way adversely affect her public image, health and well-being.
In the event that the Employee violates the provisions of this Section
without knowledge of such violation, upon oral or written notice from the
Company informing her of the nature of such violation, the Employee shall
immediately terminate any actions which constitute such violation and will
make any statements or take any actions which the Company's Board of
Directors requests in order to repair any damage incurred due to the prior
violation of this Section. In addition, the Employee agrees to submit
annually to a physical examination by her current physician or a physician
jointly selected by the Employee and the Company and will follow any
reasonable medical recommendations or advice provided by such physician. In
the event that the Employee incurs any health problem, then the Employee may
be required to submit to a physical examination more frequently than on an
annual basis. The Employee shall have the right to obtain a second opinion
from a physician mutually agreeable to the Employee and the Company
regarding the medical recommendation or advice provided by the primary
physician. The Employee further agrees not to consume any medication or
drugs (prescription or otherwise) without the approval of the Employee's
physician. The Employee further agrees to refrain from any action which the
Company's Board of Directors reasonably requests in order to maintain the
Employee's public image, health and well-being.
12. Indemnification, Holdback and Right of Set Off. The Employee shall
indemnify and hold harmless the Company, the Company's Board of Directors
and their Affiliates from any liability, damage, loss, penalty, cost or
expense, including reasonable attorney's fees and costs of investigating and
defending against lawsuits, complaints, actions or other pending or
threatened litigation arising from, related to or attributable to the assets
or properties contributed to the Company by the Employee, an affiliate of
the Employee, or the predecessor company of the Employee. The Employee
agrees, that, upon a final adjudication or arbitrator's determination that
the Employee is liable for indemnity payments, the Company may holdback and
set off the amount of any claim made by the Company against the Employee
pursuant to such indemnification provisions against the amount of any
payment due the Employee hereunder, except that the Company shall not be
entitled to holdback or set off against up to $50,000 of the Employee's
compensation. Any indemnification obligation arising pursuant to this
Section 12 shall be limited to the amounts payable to the Employee pursuant
to this Agreement (excluding up to $50,000 in compensation) and the
Employee's Common Stock interest in the Company through Xxxxx, Inc. or any
affiliated Company of the Employee.
13. Key Man Insurance. At any time during the term of this Agreement,
the Company shall have the right to insure the life of the Employee for the
Company's sole benefit, and to determine the amount of insurance and the
type of policy. The Company shall be required to pay all premiums due on
such policies. The Employee shall cooperate with the Employee in taking out
the insurance by submitting to a physical examination, by supplying all
information required by the insurance company and by executing all necessary
documents. The Employee, however, shall incur no financial obligation by
executing any required document, and shall have no interest in any such
policy. In the event of the termination of this Agreement, then Employee
shall have the right to buy any insurance policies on her life purchased by
the Company for a price agreed upon between the Company and the Employee.
14. Endorsements; Exclusivity. The Employee agrees that, during the term
of this Agreement, and for a period of two (2) years after the termination
of this Agreement for any reason whatsoever, she shall not endorse any other
products or services or permit the use of her name or likeness in any
advertisements or marketing materials without the express written consent of
the Company. In the event that the Company consents to such endorsements or
advertising, then the Company will act as exclusive agent for the Employee
representing her in all negotiations regarding such endorsements and
advertising and all fees and other compensation to be paid to the Employee
will be paid to the Company and will constitute gross receipts of the
Company.
15. Consulting Arrangement. Under the terms of the consulting
arrangement, the Employee will remain employed by the Company but will not
be required to devote more than 25% of her time to the Company and will be
paid an annual base salary equal to 50% of her annual base salary paid
during the last year of the Employment Period. The Employee will perform
all the same duties and responsibilities as she did during the Employment
Period, subject to adjustment or modification to reflect the reduced time
commitment of the Employee. During the Consulting Period, the Employee
shall be subject to all the restrictions and obligations referred to in this
Agreement, including specifically those contained in Sections 8, 9, 11, 12
and 14. Any other matters not specifically included herein regarding the
consulting arrangement will be agreed to between the Employee and the
Company upon the commencement of the Consulting Period.
16. Miscellaneous.
(a) Any notices required by this Agreement shall, unless otherwise provided
herein, (i) be made in writing and mailed by certified mail, return receipt
requested, with proper postage prepaid; (ii) be deemed given when so mailed;
(iii) be deemed received by the addressee within five (5) days after given
or when the certified mail receipt for such mail is executed, whichever is
earlier; and (iv) in the case of the Company, be mailed to its principal
office, or in the case of the Employee, be mailed to the last address that
the Employee has given to the Company.
(b) This Agreement shall be effective as of the date hereof and shall be
binding upon and inure to the benefit of the Employee, her executors,
administrators and personal representatives. The Employee acknowledges that
her services are unique and personal. Accordingly, the Employee may not
assign her rights or delegate her duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the Company, and
shall be transferred to and be binding upon any successor of the Company as
defined by applicable laws as now are in effect, including, but not limited
to, any successor of the Company pursuant to the sale by the Company of all
or substantially all of its assets to another entity or the sale by all of
the Common Stock to another entity; provided, that in the case of a
successor by transfer of all or substantially all of the assets of the
Company, or any other successor in connection with which the Company does
not cease to exist by operation of the transaction in question as a matter
of law, the Company shall not be relieved of its obligations hereunder.
(c) If any term or provision of this Agreement is held to be illegal or
invalid, said illegality or invalidity shall not affect the remaining terms
or provisions hereof, and each term and provision of this Agreement shall be
enforced to the fullest extent permitted by law.
(d) As monetary damages may not be an adequate remedy for the breach by
either party of its obligations under this Agreement, each party agrees that
it may be subjected to a decree of specific performance, injunction or other
appropriate equitable or legal relief, for the enforcement of its
obligations hereunder.
(e) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware.
(f) This Agreement may not be changed, modified or discharged orally, but
only by an instrument in writing signed by the parties.
(g) Headings in this Agreement are for convenience only and shall not be
used to interpret or construe its provisions.
(h) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(i) The Parties hereby agree to execute, file, seal, deliver and
acknowledge any and all certificates, documents or applications and to take
or cause to be taken any and all other actions necessary to effect the terms
and conditions herein.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date first above written.
XxxxxxxxXxxxxxXxxxxx.xxx, INC.
a Delaware Corporation
Witness: By: Xxxxx Xxxxxxx
Chief Executive Officer and Director
XxxxxxxxXxxxxxXxxxxx.xxx, INC.
a Delaware Corporation
Witness: By: Xxxxx Xxxxxx
Employee and Director
Xxxxx, Inc.
a Maryland Corporation
Witness: By: Xxxxx Xxxxxx
President of Xxxxx, Inc.
