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EXHIBIT 10.6
CONSULTING AGREEMENT
CONSULTING AGREEMENT ("Agreement") made and entered as of February 24,
1998 by and among GENELINK, INC. (the "Company"), a Pennsylvania corporation and
XXXXXX X. XXXXXXXXX, PH.D. (the "Consultant").
BACKGROUND
The parties want to enter into a consulting agreement and to set forth
the terms and conditions of the Consultant's relationship with the Company.
Accordingly, in consideration of the mutual covenants and agreements set forth
herein and the mutual benefits to be derived herefrom, and intending to be
legally bound, the Company and the Consultant agree as follows:
1. ENGAGEMENT
(a) Duties. The Company will engage the Consultant, on the
terms set forth in this Agreement, as a consultant and Treasurer. The Consultant
accepts such relationship with the Company and will perform and fulfill such
duties as are reasonable and necessary for such position for the Company and its
subsidiaries, devoting his best efforts to the performance and fulfillment of
his duties and to the advancement of the interests of the Company, subject only
to the direction of the Board of Directors of the Company (the "Board"). In no
event will the Consultant be required to provide more than eight (8) hours of
consulting services in any week. Notwithstanding the foregoing, the Company will
not require Consultant to provide more hours of service per week than would be
allowed by his current (or any future) position with the University of
Pennsylvania or other academic institution.
(b) Place of Performance. In his engagement by the Company,
the Consultant will be based in the Philadelphia, Pennsylvania metropolitan
area, except for required travel on Company business.
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2. TERM
The Consultant's engagement under this Agreement will be for a five
year term (the "Term") commencing as of the date of an initial closing of the
Company' limited offering (the "Commencement Date") and will continue
uninterrupted for the Term. Each year, unless one party notified the other party
in writing by sixty (60) days prior to the anniversary of the Commencement Date
(the "Anniversary Date"), on the Anniversary Date, the parties will
automatically extend the Term for an additional year. The parties intend the
effect that a full five year Term will always exist under this Agreement.
3. COMPENSATION
(a) Base Compensation. During the Term, the Consultant will be
entitled to receive annual compensation in the calendar year 1998 of $30,000 and
in the calendar year of 1999 of $60,000 (the "Base Compensation"). Each year
thereafter, Consultant will be entitled to an increase in the Base Compensation
equal to the greatest of: (i) the percentage increase in the Consumer Price
Index for the previous year as reported by the United States Department of
Commerce; (ii) 10%; or (iii) an amount determined by the Board or a committee of
the Board designated for this purpose, payable in installments at such time as
the Company customarily pays its senior management (but in any event no less
often than monthly). The increase determined in the previous sentence will be
added to the then current Base Compensation to become the Base Compensation for
purposes of this Agreement.
(b) If there is a change in control such as would require the
Company to file a Form 8-K with the Securities and Exchange Commission if the
Company was a reporting company under the Securities Exchange Act of 1934 (a
"Change in Control"), the Consultant will be entitled to be paid a lump sum
payment equal to the aggregate Base Compensation, with minimum 10% increases
each year, for the next five years, and a lump sum bonus equal to five
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times the largest bonus paid to Consultant under this Agreement. The Company
will pay the payments required under the previous sentence within 30 days of the
Change in Control.
(c) Bonus. Consultant will receive an annual bonus according
to a Company Bonus Plan adopted by the Board.
4. INSURANCE AND OTHER BENEFITS
During the Term, the Consultant will be entitled to opt into all
benefits offered by the Company to its key management employees, including,
without limitation, all pension, profit sharing, retirement, stock option,
deferred compensation, disability insurance, survivor benefits, life insurance
or any other benefit plan or arrangement established and maintained by the
Company, subject to the rules and regulations then in effect regarding
participation therein. In addition, the Company will obtain and fund for
Consultant a life insurance policy for $1,000,000, with beneficiary to be named
by Consultant.
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5. REIMBURSEMENT OF EXPENSES
The Company will reimburse Consultant for all items of travel,
entertainment and miscellaneous expenses that the Consultant reasonably incurs
in the performance of his duties hereunder, if the Consultant submits to the
Company evidence supporting these expenses as the Company may reasonably
require.
6. OPTIONS: GRANT OF SHARES
(a) Upon the execution of this Agreement, the Company
will issue to Consultant options to purchase
1,000,000 shares (the "Shares") of the Company's
common stock $.01 par value, exercisable at the price
of $0.10 per Share. These options will expire ten
years from the date hereof and will vest as follows:
(i) 200,000 Shares upon execution of this
Agreement, and
(ii) 200,000 Shares each January 1, beginning
January 1, 1999. Options will be exercisable
upon vesting. If there is a Change of
Control, all unvested options will be
immediately exercisable. The Consultant may
exercise vested options by giving the
Company a note equal to the exercise price
of the options exercised, which will bear
interest at a floating rate equal to the
Federal Funds Rate published in the Wall
Street Journal as adjusted from time to
time. In the alternative, the Consultant may
use Shares owned by the Consultant may
retire debt of the Company to the Consultant
in return for Shares. Shares issued or to be
issued pursuant to these options will be
registered for re-sale by the Company on a
Form S-8
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as soon as the Company is eligible to use
Form S-8. The Company will bear the entire
cost of such registration.
(b) The Consultant will also be eligible to participate
in any stock option, stock grant, phantom stock, or
other incentive plan when, as and if approved by the
Board. Eligibility in no way creates an obligation of
the Company to issue options to the Consultant, which
will be in the sole and absolute discretion of the
Compensation Committee of the Board.
(c) The stock grants and options granted under this
Section 6 of the Agreement will be adjusted for any
recapitalizations, stock dividends, stock splits or
other changes in the Company's capital stock.
7. TERMINATION OF EMPLOYMENT
(a) Death and Total Disability. If the Consultant dies
during the Term, this Agreement will end as of the
date of the Consultant's death. The Company will pay
the Consultant's compensation for the remaining Term
to Consultant's beneficiary or estate. In case of
Total Disability (as defined below) of the Consultant
for any consecutive twelve months during the Term,
the Company will have the right to end this Agreement
by giving the Consultant thirty (30) days' prior
written notice, and upon the expiration of such
thirty (30) day period, the Consultant's employment
under this Agreement will end. If there is such a
termination, the Company will pay Consultant his
Compensation for the remaining Term. If the
Consultant will resume his duties within thirty (30)
days after receipt of such a notice of termination,
this Agreement will continue in full force and
effect. Upon termination of this Agreement under this
Section 9(a),
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the Company will have no further obligations or
liabilities under this Agreement, except to pay to
the Consultant's estate or the Consultant, as the
case may be, the portion of Compensation that remains
unpaid for the Term, including minimum increases and
continuation of benefits.
The term "Total Disability", as used herein, will man
a mental or physical condition that in the reasonable opinion of an independent
medical doctor selected by the Company renders the Consultant unable or
incompetent to carry out the material duties and responsibilities of the
Consultant under this Agreement at the time the Consultant incurred the
disabling condition. If the Consultant is covered under any policy of disability
insurance under Section 4, the definition of Total Disability hereunder will be
the definition of that term in such policy.
(b) The Company may only terminate this Agreement for
cause under this Section 9(b) or under Section 9(a)
of this Agreement. Cause for termination exists only
if the Consultant is convicted of a felony involving
fraud or violation of the Federal Securities laws, or
a court of competent jurisdiction finds that the
Consultant has engaged in conduct involving the
Company that constitutes gross negligence or
intentional misconduct. If the Company terminates the
Consultant under this section, all unvested options
or stock grants will be void and the Consultant will
not receive any Compensation or benefit continuation.
8. NO MITIGATION
This Agreement does not require the Consultant to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor will the
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amount of any payment provided for in this Agreement be reduced by any
compensation earned by the Consultant as the result of his employment by another
employer.
9. RESTRICTIVE COVENANT
(a) Competition. Consultant undertakes and agrees that
until two years after termination of this Agreement,
he will not compete, directly or indirectly, or
participate as a director, officer, employee,
consultant agent, consultant, representative or
otherwise, or as a stockholder, partner or joint
venturer, or have any direct or indirect financial
interest, including, without limitation, the interest
of a creditor, in any business competing directly or
indirectly with the business of Company or any of its
subsidiaries.
(b) Trade Secrets. During the Term and after termination
for any reason, Consultant will not reveal, divulge,
copy or otherwise use any trade secret of the Company
or its subsidiaries, it being acknowledged that all
such information and materials compiled or obtained
by or disclosed to Consultant while employed by the
Company or its subsidiaries hereunder or otherwise
are confidential and are the exclusive property of
the Company and its subsidiaries.
(c) Injunctive Relief. The parties hereto agree that the
remedy at law for any breach of the provisions of
this Section 9 will be inadequate and that this
Agreement entitles the Company or any of its
subsidiaries or other successors or assigns to
injunctive relief without a bond. Such injunctive
relief will not be exclusive, but will be in addition
to any other rights and remedies Company or any of
its subsidiaries or their successors or assigns might
have for such breach.
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(d) Scope of Covenant. Should the duration, geographical
area or range or proscribed activities contained in
subparagraph (a) be held unreasonable by any court of
competent jurisdiction, then such court may modify
the duration, geographical area or range of
proscribed activities to such degree as to make it or
them reasonable and enforceable.
10. INDEMNITY
The Company will indemnify and hold the Consultant harmless to
the maximum extent permitted by law against any claim, action, demand, loss,
damage, cost, expense, liability or penalty arising out of any act, failure to
act, omission or decision by him while performing services as an officer,
director or employee of the Company, other than an act, omission or decision by
the Consultant that is not in good faith and is without his reasonable belief
that the same is, or was, in the best interests of the Company. To the extent
permitted by law, the Company will pay all attorneys' fees, expenses and costs
actually incurred by the Consultant in the defense of any of the claims
referenced herein.
11. MISCELLANEOUS
(a) Notices. Any notice, demand or communication required
or permitted under this Agreement will be in writing
and will either be hand-delivered to the other party
or mailed to the addresses set forth below by
registered or certified mail, return receipt
requested or sent by overnight express mail or
courier or facsimile to such address, if a party has
a facsimile machine. Notice will be deemed to have
been given and received when so hand-delivered or
after three business days when so deposited in the
U.S. Mail, or when
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transmitted and received by facsimile or sent by
express mail properly addressed to the other party.
The addresses are:
To the Company: GeneLink, Inc.
X.X. Xxx 0000
Xxxxxxx, XX 00000
Fax No. (609) ____-________
To the Consultant:
The parties may change the foregoing addresses at any time by written notice
given in the manner herein provided.
(b) Integration; Modification. This Agreement is the
entire understanding and agreement between the
Company and the Consultant regarding its subject
matter and supersedes all prior negotiations and
agreement, whether oral or written, between them with
respect to its subject matter. This Agreement may not
be modified except by a written agreement signed by
the Consultant and a duly authorized officer of the
Company.
(c) Enforceability. If any provision of this Agreement
will be invalid or unenforceable, in whole or in
part, such provision will be deemed to be modified or
restricted to the extent and in the manner necessary
to render the same valid and enforceable, or will be
deemed excised from this Agreement, as the case may
be, and this Agreement will be construed and enforced
to the maximum extent permitted by law as if such
provision had been originally incorporated herein as
so modified or restricted, or as if such
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provision had not been originally incorporated
herein, as the case may be.
(d) Binding Effect. This Agreement will be binding upon
and inure to the benefit of the parties, including
and their respective heirs, executors, successors and
assigns, except that the Consultant may not assign
this Agreement.
(e) Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term
or covenant continued in this Agreement, whether by
conduct or otherwise, in any one or more instances
will be deemed or construed as a further or
continuing waiver of any such condition or breach or
a waiver of any other condition, or the breach of any
other term or covenant set forth in this Agreement.
Moreover, the failure of either party to exercise any
right hereunder will not bar the later exercise of
it.
(f) Governing Law and Interpretation. The internal laws
of the Sate of New Jersey will govern this Agreement.
Each party agrees that he or it, as the case may be,
will deal fairly and in good faith with the other
party in performing, observing and complying with the
covenants, promises, duties, obligations, terms and
conditions to be performed, observed or complied with
by him or it, as the case may be, hereunder; and that
this Agreement shall be interpreted, construed and
enforced according to this covenant despite any law
to the contrary.
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(g) Headings. The headings of the various sections and
paragraphs have been included herein for convenience
only and will not be considered in interpreting this
Agreement.
(h) Counterparts. The parties may execute this Agreement
in several counterparts, each of which will be deemed
to be an original but al of which together will make
up the same instrument.
IN WITNESS WHEREOF, the Consultant and the duly authorized officers of
the Company have executed this Agreement on the date first written
above.
GENELINK, INC.
By: /s/ Xxxx X. XxXxxxxxxx
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Xxxx X. XxXxxxxxxx
/s/ Xx. Xxxxxx X. Xxxxxxxxx
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Xx. Xxxxxx X. Xxxxxxxxx
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