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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.
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(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.
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.
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(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 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.
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.
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6. OPTIONS: GRANT OF SHARES
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:
200,000 Shares upon execution of this Agreement, and
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
as soon as the Company is eligible to use Form S-8.
The Company will bear the entire cost of such
registration.
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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.
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
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), the
Company will have no further obligations or liabilities
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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.
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
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.
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.
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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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
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 transmitted and
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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.
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.
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
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modified or restricted, or as if such provision had
not been originally incorporated herein, as the case
may be.
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.
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.
Governing Law and Interpretation. The internal laws of the
State 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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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.
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/ Xxxxxx X. Xxxxxxxxx
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Xx. Xxxxxx X. Xxxxxxxxx
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