EMPLOYMENT AGREEMENT
This
Employment Agreement (the “Agreement”) is entered into as of September 13, 2010,
by and between Xxxx X. Xxxxxxx (the “Executive”) and AWESOME LIVING, INC., a
Nevada corporation (the “Company”).
WHEREAS,
the Company believes that Executive’s service, experience, and knowledge are
valuable to the Company in connection with its business; and
WHEREAS,
the Company desires to employ Executive, and Executive desires to be employed by
the Company, as Chief Financial Officer of the Company.
NOW, THEREFORE, in consideration of the
mutual promises and covenants herein contained, the parties hereto agree as
follows:
1. Employment. The
Company hereby employs Executive and Executive accepts such employment upon the
terms and conditions hereinafter set forth.
2. Term of
Employment. Subject to the provisions of Section 6, the term
of Executive’s employment pursuant to this Agreement shall commence on and as of
the date hereof and shall terminate on the fifth (5th)
anniversary of such date.
3. Duties; Extent of
Service.
(a) Service. During
Executive’s employment under this Agreement, Executive (i) shall serve as an
employee of the Company with the title and position of Chief Executive Officer,
reporting to the Board of Directors of the Company and shall have such executive
responsibilities as the Board of Directors of the Company shall from time to
time designate, provided that,
in all cases Executive shall be subject to the oversight and supervision
of the Board of Directors of the Company in the performance of his duties, and
(ii) shall render all services reasonably incident to the
foregoing. Executive hereby accepts such employment, agrees to serve
the Company in the capacity indicated, and agrees to use Executive’s best
efforts in, and shall devote Executive’s full working time, attention, skill and
energies to, the advancement of the interests of the Company and its
subsidiaries and the performance of Executive’s duties and responsibilities
hereunder.
(b) Other
Activities. Nothing in this Agreement shall preclude Executive
from owning, purchasing, selling, or otherwise dealing in any manner with any
property or engaging in any business whatsoever, including without limitation,
providing consulting services, acting as a director of another company, or
starting a new business, without notice to the Company, without participation of
the Company, and without liability to the Company so long as the same does not
materially interfere with the performance of Executive’s services and such
business does not compete with the Company’s business.
4. Salary and
Bonus.
(a) Salary. During
Executive’s employment under this Agreement, the Company shall pay Executive a
salary at the rate of $180,000 per annum (the “Salary”). Such Salary
shall be subject to withholding under applicable law, shall be prorated for
partial years and shall be payable in periodic installments not less frequently
than monthly in accordance with the Company’s usual practice for its executive
officers as in effect from time to time.
The
Salary shall increase to $250,000 per annum if either: (1) the Company raises $1
million of debt or equity financing in the aggregate (i.e., in one or more
financing transactions) after the date hereof; or (2) the Company recognizes $1
million in cumulative gross revenues (i.e., the sum of all revenues recognized
since commencement of operations).
The
Salary shall increase to $360,000 per annum if either: (1) the Company raises
$2.5 million of debt or equity financing in the aggregate (i.e., in one or more
financing transactions, and including transactions counted towards the $1
million target in the immediately preceding paragraph) after the date hereof; or
(2) the Company recognizes $2.5 million in cumulative gross revenues (i.e., the
sum of all revenues recognized since commencement of operations).
The
Salary shall increase to $500,000 per annum if either: (1) the Company raises $5
million of debt or equity financing in the aggregate (i.e., in one or more
financing transactions, and including transactions counted towards the $1
million and $2.5 million targets in the immediately preceding paragraphs) after
the date hereof; or (2) the Company recognizes $5 million in cumulative gross
revenues (i.e., the sum of all revenues recognized since commencement of
operations).
(b) Bonus. At
signing of this Agreement, Executive shall receive a one-time grant of
restricted shares of the Company’s common stock valued at
$50,000. Thereafter, Executive shall be entitled to receive a
performance bonus based on “Adjusted EBITDA” (the “Performance
Bonus”). For purposes of this Section, “Adjusted EBITDA” shall mean
earnings before interest, taxes, depreciation and amortization, but adjusted to
account for non-cash expenses, and calculated from financial statements that are
prepared in accordance with GAAP. Executive shall receive a
Performance Bonus in an amount equal to 5% of Adjusted EBITDA for each fiscal
year. The Board shall have the right to grant Executive a bonus in
addition to the foregoing Performance Bonus or, if so determined by the Board, a
bonus in lieu thereof.
(c) Cost of Living
Adjustment. Commencing as of January 1, 2011, and on each
January 1st thereafter, the then effective Salary shall be increased (but not
decreased) by an amount which shall reflect the increase, if any, in the cost of
living during the previous 12 months by adding to the Salary an amount computed
by multiplying the Salary by the percentage by which the level of the Consumer
Price Index for the Los Angeles, California Metropolitan Area, as reported on
January 1st of the new year by the Bureau of Labor Statistics of the United
States Department of Labor has increased over its level as of January 1st of the
prior year.
(d) Payment upon Change of
Control. At any time prior to the one month anniversary of the
Executive’s termination, if the Company shall merge, sell a controlling
interest, or sell a majority of its assets; or if there is a transaction (or
series of transactions) in which the Company’s shareholders sell a majority of
outstanding shares of Company capital stock, then the Company shall pay
Executive the greater of the remainder of his salary or Two Hundred Fifty
Thousand Dollars ($250,000). Further, at the date of any such merger
or sale is consummated, all unvested options shall be immediately accelerated
and as to any unexercised options to purchases shares in the Company which are
held by Executive, the Company shall pay Executive cash in the amount equal to
the difference between the consideration paid to the Company on a per share
basis less the exercise price of the option, the value of which is multiplied to
the number of options which Executive holds.
-2-
(e) Options. Upon
execution of this Agreement and implementation of Company’s Employment Stock
Option Plan, Executive shall receive an option to purchase 10,000,000 shares of
Company common stock exerciseable at $0.025 per share. The option
shall be issued under the Company’s 2010 Stock Option, Deferred Stock and
Restricted Stock Plan (the “Plan”) when implemented. The option shall
be governed to the provisions of the Plan. The option shall become
exercisable at the rate of 1,000,000 shares on Dec. 31, 2010 and 1,000,000
shares every six months, commencing January 1, 2011, unless they become subject
to accelerated vesting as outlined in paragraph (f) Accelerated Option Vesting
presented below, and shall expire in ten (10) years, subject to early
termination for death, disability or other termination of employment as set
forth in the Plan.
(f) Accelerated Option
Vesting. Option shares shall vest at the earlier of, (i) the
vesting schedule as outlined in paragraph (e) above, and (ii) the Company’s
achievement of cumulative gross revenue milestones (i.e., the sum of all
revenues recognized since commencement of operations), with cumulative revenue
milestones and amount of shares vesting as follows:
|
Cumulative
Revenues
|
Vesting
Shares
|
|
$1,400,000
– $1,800,000
|
1,000,000
|
|
$1,800,001
– $2,200,000
|
1,000,000
|
|
$2,200,001
– $2,600,000
|
1,000,000
|
|
$2,600,001
– $3,000,000
|
1,000,000
|
|
$3,000,001
– $3,400,000
|
1,000,000
|
|
$3,400,001
– $3,800,000
|
1,000,000
|
|
$3,800,001
– $4,200,000
|
1,000,000
|
|
$4,200,001
– $4,600,000
|
1,000,000
|
|
Greater
than $4,600,000
|
1,000,000
|
(g) Stock In Lieu of Cash
Payment. In the event that Executive believes that it would be
in the best interests of the Company for Executive to accept shares of Company
common stock in lieu of the payment to him of Salary, benefits and/or bonus
owing by the Company, Executive shall have the right in his sole discretion to
elect to accept shares of Company common stock for amounts owing to him (or a
portion thereof) as he shall determine from time to time. In determining the
number of shares to be issued to Executive in lieu of the cash payment, the
shares of common stock issued to him shall be valued at 25% below the then
current market price for the Company’s common stock.
5. Benefits.
(a) Regular
Benefits. During Executive’s employment under this Agreement,
Executive shall be entitled to participate in any and all medical, pension,
dental and life insurance plans and disability income plans, retirement
arrangements and other employment benefits as in effect from time to time for
executive officers of the Company generally. Such participation shall
be subject to (i) the terms of the applicable plan documents (including, as
applicable, provisions granting discretion to the Board of Directors of the
Company or any administrative or other committee provided for therein or
contemplated thereby) and (ii) generally applicable policies of the
Company.
-3-
(b) Vacation. During
Executive’s employment under this Agreement, Executive shall receive paid
vacation annually in accordance with the Company’s practices for executive
officers, as in effect from time to time, but in any event not less than four
weeks per calendar year.
(c) Expenses. The
Company shall reimburse Executive for all reasonable business expenses incurred
by Executive during Executive’s employment hereunder to the extent in compliance
with the Company’s business expense reimbursement policies in effect from time
to time and upon presentation by Executive of such documentation and records as
the Company shall from time to time require.
(d) Car
Allowance. During Executive’s employment under this Agreement,
Executive shall receive a car allowance of $750 per month.
(e) Taxation of Payments and
Benefits. The Company shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Company to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
(f) Exclusivity of Salary and
Benefits. The Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement. Compliance with the
provisions of this Section 5 shall in no way create or be deemed to create any
obligation, express or implied, on the part of the Company or any of its
affiliates with respect to the continuation of any particular benefit or other
plan or arrangement maintained by them or their subsidiaries as of or prior to
the date hereof or the creation and maintenance of any particular benefit or
other plan or arrangement at any time after the date hereof.
6. Termination and Termination
Benefits. Notwithstanding the provisions of Section 2,
Executive’s employment under this Agreement shall terminate under the following
circumstances set forth in this Section 6.
(a) Termination by the Company
for Cause. Executive’s employment under this Agreement may be
terminated for Cause without further liability on the part of the Company other
than for accrued but unpaid Salary through the date of termination effective
immediately upon written notice to Executive. “Cause” shall mean the
following:
(i) the
commission by Executive of any act of embezzlement, fraud, larceny or theft on
or from the Company or an affiliate of the Company;
(ii) the
commission by Executive of, or indictment of Executive for a
felony;
-4-
(iii) failure
to perform, or materially poor performance of, Executive’s duties and
responsibilities assigned or delegated under this Agreement, or any material
misconduct or violation of the Company’s policies, in either case, which
continues for a period of thirty (30) days after written notice given to
Executive; or
(iv) a
material breach by Executive of any of the covenants, terms or provisions of
this Agreement or any agreement between the Company and Executive regarding
confidentiality, non-competition or assignment of inventions.
(b) Termination by
Executive. Executive’s employment under this Agreement may be
terminated by Executive by written notice to the Board of Directors at least
sixty (60) days prior to such termination.
(c) Termination by the Company
Without Cause. Subject to the payment of Termination Benefits
pursuant to Section 6(d), Executive’s employment under this Agreement may be
terminated without Cause by the Company upon written notice to
Executive.
(d) Certain Termination
Benefits. Unless otherwise specifically provided in this
Agreement or otherwise required by law, all compensation and benefits payable to
Executive under this Agreement shall terminate on the date of termination of
Executive’s employment under this Agreement. Notwithstanding the
foregoing, in the event of termination of Executive’s employment with the
Company pursuant to Section 6(c) above: (1) the Company shall pay to Executive
the lesser of (i) Executive’s Salary for the remainder of the Term, payable
in the manner set forth in Section 4(a) or (ii) one year’s Salary payable
in the manner set forth in Section 4(a) (the “Severance Benefits”); and (2) all
stock options issued to Executive under the Plan shall immediately vest in full
and shall remain outstanding and exercisable until ten (10) years from the date
of grant.
The
parties hereto agree that the Severance Benefits are to be in full satisfaction,
compromise and release of any claims arising out of any termination of the
Executive’s employment pursuant to Section 6(c), and such amounts shall be
contingent upon the Executive’s delivery of a general release of such claims
upon termination of employment in a form reasonably satisfactory to the Company,
it being understood that no Severance Benefits shall be provided unless and
until the Executive determines to execute and deliver such release.
(e) Death;
Disability. Upon the death of the Executive, or upon the
permanent disability (as defined below) of the Executive continuing for a period
in excess of one hundred eighty (180) consecutive days, all obligations of the
Company under this Agreement shall immediately terminate other than any
obligation of the Company with respect to earned but unpaid Salary and earned
benefits contemplated hereby to the extent accrued or vested through the date of
termination. As used herein, the terms “permanent disability” or
“permanently disabled” shall mean the inability of the Executive, by reason of
injury, illness or other similar cause, to perform a major part of his duties
and responsibilities in connection with the conduct of the business and affairs
of the Company, as determined reasonably and in good faith by the
Company.
(f) Notwithstanding
termination of this Agreement as provided in this Section 6 or any other
termination of Executive’s employment with the Company, Executive’s obligations
under Section 7 hereof shall survive any termination of Executive’s employment
with the Company at any time and for any reason.
-5-
7. Non-Solicitation;
Confidentiality; Proprietary Rights.
(a) Noncompetition. Executive
agrees that he shall not, during the term of this Agreement, and for a period of
one (1) year thereafter, solicit any employee of the Company to terminate such
employee’s employment with the Company, or agree to hire any such employee or
former employee of the Company (unless at least 12 months have passed since the
termination of such employee’s employment with the Company); or
(b) Confidential
Information. As used in this Agreement, the term “Confidential
Information” shall mean information belonging to the Company (for purposes of
this Section 7 including all predecessors of the Company) of value to the
Company or with respect to which Company has right in the course of conducting
its business and the disclosure of which could result in a competitive or other
disadvantage to the Company. Confidential Information includes
information, whether or not patentable or copyrightable, in written, oral,
electronic or other tangible or intangible forms, stored in any medium,
including, by way of example and without limitation, trade secrets, ideas,
concepts, designs, configurations, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts processes, techniques,
formulas, software, improvements, inventions, domain names, data, know-how,
discoveries, copyrightable materials, marketing plans and strategies, sales and
financial reports and forecasts, customer lists, studies, reports, records,
books, contracts, instruments, surveys, computer disks, diskettes, tapes,
computer programs and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the management of the
Company. Confidential Information includes information developed by
Executive in the course of Executive’s employment by the Company, as well as
other information to which Executive may have access in connection with
Executive’s employment. Confidential Information also includes the
confidential information of others with which the Company has a business
relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of
Executive’s duties under Section 7(c).
(c) Confidentiality. In
the course of performing services hereunder on behalf of the Company and its
affiliates, Executive has had and from time to time will have access to
Confidential Information. Executive agrees (i) to hold the
Confidential Information in strict confidence, (ii) not to disclose the
Confidential Information to any person (other than in the regular business of
the Company or its affiliates), and (iii) not to use, directly or indirectly,
any of the Confidential Information for any purpose other than on behalf of the
Company and its affiliates. All documents, records, data, apparatus,
equipment and other physical property, whether or not pertaining to Confidential
Information, that are furnished to Executive by the Company or are produced by
Executive in connection with Executive’s employment will be and remain the sole
property of the Company. Upon the termination of Executive’s
employment with the Company for any reason and as and when otherwise requested
by the Company, all Confidential Information (including, without limitation, all
data, memoranda, customer lists, notes, programs and other papers and items, and
reproductions thereof relating to the foregoing matters) in Executive’s
possession or control, shall be immediately returned to the
Company.
(d) Third Party Agreements and
Rights. Executive hereby confirms that Executive is not bound
by the terms of any agreement with any previous employer or other party that
restricts in any way Executive’s use or disclosure of information or Executive’s
engagement in any business. Executive represents to the Company that
Executive’s execution of this Agreement, Executive’s employment with the Company
and the performance of Executive’s proposed duties for the Company will not
violate any obligations Executive may have to any such previous employer or
other party. In Executive’s work for the Company, Executive will not
disclose or make use of any information in violation of any agreements with or
rights of any such previous employer or other party, and Executive will not
bring to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.
-6-
(e) Litigation and Regulatory
Cooperation. During and after Executive’s employment,
Executive shall cooperate fully with the Company in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Company that relate to events or occurrences that
transpired while Executive was employed by the Company. Executive’s
full cooperation in connection with such claims or actions shall include, but
not be limited to, being available to meet with counsel to prepare for discovery
or trial and to act as a witness on behalf of the Company at mutually convenient
times. During and after Executive’s employment, Executive also shall
cooperate fully with the Company in connection with any investigation or review
of any federal, state or local regulatory authority as any such investigation or
review relates to events or occurrences that transpired while Executive was
employed by the Company. The Company shall reimburse Executive for
any reasonable out-of-pocket expenses incurred in connection with Executive’s
performance of obligations pursuant to this Section 7(e).
(f) Inventions. Executive
recognizes that the Company and its affiliates possess a proprietary interest in
all of the Confidential Information and have the exclusive right and privilege
to use, protect by copyright, patent or trademark, or otherwise exploit the
processes, ideas and concepts described therein to the exclusion of Executive,
except as otherwise agreed between the Company and Executive in
writing. Executive expressly agrees that any products, inventions,
discoveries or improvements made by Executive in the course of Executive’s
employment, including any of the foregoing which is based on or arises out of
the Confidential Information, shall be the property of and inure to the
exclusive benefit of the Company. Executive further agrees that any
and all products, inventions, discoveries or improvements developed by Executive
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the time, materials or
other resources of the Company or any of its affiliates, shall be promptly
disclosed to the Company and shall become the exclusive property of the Company,
and Executive shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
i. Excluded from
“Inventions” are information-oriented products that Executive has
Company’s permission to develop, copyright and market in Executive’s name and
retain all personal rights to. Such examples would include Books,
coaching products, personal appearances, speaking engagements, and all drafts,
ideas, pictures, drawings, graphics, titles and outlines (collectively the
“Work”), under the copyright laws of the United States and any other
jurisdiction where the Work may be recognized. As such, Executive is
and will be the sole owner of all rights in and to the Work (including
copyrights therein), from inception, perpetually, throughout the
universe. Executive will have the right to register Books or other
Works and all elements thereof for copyright in his sole name, and the right to
edit, alter, sell, license, distribute and otherwise exploit the Book or other
Works and/or any portions thereof in all media or formats now known or hereafter
devised, in perpetuity, throughout the universe. Executive can
utilize the marketing and/or publishing services of his choice for the Books or
Works that he authors and develops.
-7-
(g) Business
Opportunities. Executive agrees, while he is employed by the
Company, to offer or otherwise make known or available to it, as directed by the
Board of Directors of the Company and without additional compensation or
consideration, any business prospects, contracts or other business opportunities
that Executive may discover, find, develop or otherwise have available to
Executive in the Company’s general industry and further agrees that any such
prospects, contacts or other business opportunities shall be the property of the
Company.
(h) Acknowledgment. Executive
acknowledges that the provisions of this Section 7 are an integral part of
Executive’s employment arrangements with the Company.
8. Parties in Interest; Certain
Remedies. It is specifically understood and agreed that this
Agreement is intended to confer a benefit, directly or indirectly, on the
Company and its direct and indirect subsidiaries and affiliates, and that any
breach of the provisions of this Agreement by the Executive or any of the
Executive’s affiliates will result in irreparable injury to the Company and its
subsidiaries and affiliates, that the remedy at law alone will be an inadequate
remedy for such breach. Accordingly, subject to Section 9 hereof, the
Executive agrees that if the Executive breaches, or proposes to breach, any
portion of this Agreement, the Company or its subsidiaries and affiliates shall
be entitled, in addition to any other remedy it may have, to enforce the
specific performance of this Agreement by the Executive through both temporary
and permanent injunctive relief without the necessity of posting a bond or
proving actual damages, but without limitation of their right to damages and any
and all other remedies available to them, it being understood that injunctive
relief is in addition to, and not in lieu of, such other remedies.
9. Integration. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties with respect to any related subject matter.
10. Assignment; Successors and
Assigns, etc. Neither the Company nor the Executive may make
any assignment of this Agreement or any interest herein without the prior
written consent of the other party; provided that the
Company may assign its rights under this Agreement without the consent of the
Executive in the event that the Company shall effect a reorganization,
consolidate with or merge into any other corporation, partnership, organization
or other entity, or transfer all or substantially all of its properties or
assets to any other corporation, partnership, organization or other
entity. This Agreement shall inure to the benefit of and be binding
upon the Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
11. Enforceability. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
-8-
12. Waiver. No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving parry. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
13. Notices. Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Company or, in the case of
the Company, at 0000 Xxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000.
14. Amendment. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Company.
15. Governing
Law. This contract shall be construed under and be governed in
all respects by the laws of the State of California, without giving effect to
the conflict of laws principles thereof.
16. Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original and all of which taken
together shall constitute one and the same document.
17. Certain
Definitions. For purposes of this Agreement, the term “person”
means an individual, corporation, limited liability company, partnership,
entity, association, trust or any unincorporated organization; a “subsidiary”
means any corporation more than 50 percent of whose outstanding voting
securities, or any limited liability company, partnership, joint venture or
other entity more than 50 percent of whose total equity interest, is directly or
indirectly owned by such person; and an “affiliate” of a person shall mean, with
respect to a person or entity, any person or entity which directly or indirectly
controls, is controlled by, or is under common control with such person or
entity.
18. Attorneys’ Fees and
Costs. If any action at law or in equity is necessary to
enforce or interpret any of the rights or obligations under this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs, and
disbursements in addition to any other relief to which the prevailing party may
be entitled.
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first set forth above.
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
Xxxx
X. Xxxxxxx
|
-9-
