CONSULTING AGREEMENT
THIS
CONSULTING AGREEMENT (this “Agreement”) is made
and entered into as of the 10th day of
June, 2010 (the “Effective Date”), by
and between Skinny Nutritional Corp. (the “Company”), and Xxxxxx
X. Xxxxxx (the “Consultant”).
Background
The
Company is engaged, among other things, in the business of developing, bottling
and distributing beverages strictly limited to, for the purpose of this
definition, low-calorie or no-calorie enhanced waters, waters, juices, teas,
shakes, smoothies, and coffees (collectively, the “Business”). The
Consultant has served as the Chief Executive Officer and President of the
Company since December 2008.
NOW,
THEREFORE, the parties, for and in consideration of the foregoing and of the
covenants and agreements set forth below, intending to be legally bound,
contract and agree as follows:
Provisions
1. Engagement. The
Company hereby engages the Consultant in connection with the conduct of its
Business, including all extensions thereof, during the Term (as defined herein),
and the Consultant accepts such engagement, on the terms and conditions provided
herein (the “Engagement”).
2. Term. This
Agreement and the Engagement shall be for a term commencing on the Effective
Date and expiring December 31, 2010, unless earlier terminated as hereinafter
provided (the “Term”).
3. Duties and
Performance. Commencing upon his resignation as chief
executive officer of the Company, the Consultant covenants and agrees to provide
independent professional consultative advice to the Company on an as-requested
basis concerning the acquisition by the Company of significant distribution
accounts, as agreed upon by the Consultant and the Chief Executive Officer of
the Company and subject to the direction of the Chief Executive Officer of the
Company (the “Consulting
Services”). Consultant shall use his best efforts and shall devote such
time and effort to the performance of his duties hereunder as is reasonably
necessary for such performance. Subject to the terms set forth below, Consultant
shall furnish to the Company advice and recommendations with respect to such
aspects of the Business of the Company as the Company shall, from time to time,
reasonably request upon reasonable notice. Consultant shall deliver services at
Consultant’s place of business, the Company’s place of business, or at various
other sites as required and mutually and reasonably agreeable to the Company and
the Consultant. The Consultant shall document and provide to the Company in
writing, upon the Company’s request, a description of the Consulting Services
performed each month, and the number of hours devoted thereto. The Company
recognizes that the Consultant shall not work exclusively for the Company and
agrees that the Consultant may continue his own research and development for
businesses unrelated to the Business.
4. Compensation.
(a) As
full compensation for the Consulting Services, the Company hereby agrees to pay
to the Consultant the amount of $12,500 per each thirty day period during the
Term (the “Consulting
Fee”). The Consulting Fee shall be paid in accordance with the Company’s
pay periods for its executive officers. The Company also shall reimburse the
Consultant for his reasonable out-of-pocket ordinary business expenses and
business travel expenses, which are incurred as a result of performing the
Consulting Services, as long as the Consultant has obtained prior written
authorization from the Company for those expenses before they are incurred. Such
reimbursement shall cumulate and be paid on a monthly basis.
(b) In
addition, the Consultant shall be eligible to receive certain equity
compensation awards in the form of restricted shares of common stock as
follows:
(i) an
aggregate of 750,000 shares of restricted stock shall be deemed earned and
awarded as of the Effective Date;
(ii) a
maximum of 500,000 shares of restricted stock shall be granted upon the Company
achieving certain performance targets under currently existing distribution
arrangements, to be determined by mutual agreement between the Company and
Consultant; provided such events occur prior to June 30, 2011; and
(iii) an
aggregate of 250,000 shares of restricted stock may be granted upon the
Company’s execution of a distribution agreement with each of three beverage
distributors prior to June 30, 2011, as identified and agreed upon by the
Consultant and Chief Executive Officer of the Company (for a potential maximum
of 750,000 restricted shares issuable pursuant to this Section
4(b)(iii)).
(c) Consultant
acknowledges and agrees that the compensation paid to him in accordance with
this paragraph 4 shall be in lieu of all compensation to which he is entitled
pursuant to that certain Employment Agreement entered into between Consultant
and Company dated as of December 1, 2008.
5. Authority. The Consultant
shall not have the power to bind the Company and in the performance of the
Consulting Services, Consultant shall not represent himself as an officer of, or
use the title of any officer of, the Company.
6. Non-Disclosure of
Confidential Information. Consultant agrees that the
provisions of Section
2 of that certain Confidentiality, Non-Solicitation and Assignment
Agreement dated as of December 1, 2008 (the “Confidentiality
Agreement”) shall remain in full force and effect in accordance with the
provisions thereof. Consultant further acknowledges and agrees that any
non-public and/or proprietary information of the Company and/or its customers
disclosed to or prepared by Consultant during Consultant’s engagement hereunder
remains confidential and may not be used and/or disclosed by Consultant
hereafter without the prior written consent of the Company. Such information
includes, without limitation, information concerning products and services
developed and under development, pending or completed Company regulatory matters
(internal or external), litigations, arbitrations, internal investigations or
reviews, internal compliance memoranda and reviews.
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7. Intellectual
Property. Consultant agrees and acknowledges that the Company
shall own and retain all right, title and interest in and to all of the
information of the Company which is considered to be confidential information in
accordance with Section 2 of the Confidentiality Agreement (such information may
be referred to in this Agreement, as “Confidential
Information”) and all derivatives thereof and all intellectual property
rights therein or thereto. Nothing contained herein shall be construed so as to
grant the Consultant any ownership or other rights in and to the intellectual
property of the Company except as expressly stated herein. No license is granted
by Company to the Confidential Information or to any intellectual property right
therein except for the limited purpose of enabling the Consultant to perform the
Consulting Services pursuant to this Agreement. In consideration of this
Engagement and free of any additional obligations of the Company to make
additional payment to Consultant, Consultant agrees to promptly disclose and
irrevocably assign to the Company any and all deliverables, inventions,
improvements, manuscripts, documentation, formulas, processes or other
deliverables and all intellectual property rights therein, relating to the
present or future business of the Company that are developed, conceived or
reduced to practice by Consultant, either alone or jointly with others, (i)
during or as a result of performance of this Agreement or any work performed for
the Company; (ii) using the Company’s facilities, equipment or proprietary or
Confidential Information; or (iii) relating to the business of the Company or
the Company’s demonstrably anticipated research or development (all of the
foregoing “Intellectual
Property”). Consultant agrees that all such Intellectual Property,
including without limitation all patents, copyrights, trademarks, and trade
secrets, is irrevocably assigned to and shall be and remain the sole and
exclusive property of the Company and shall be deemed the product of work for
hire and that the Company will be considered the author thereof. If
it is determined that any Intellectual Property is not work made for hire,
Consultant hereby irrevocably assigns to Company Consultant’s entire right,
title, and interest in and to such Intellectual Property and all
intellectual property rights therein, including patents, copyrights and trade
secrets, and other proprietary rights of Consultant, that Consultant now has or
may hereafter acquire. Intellectual Property, for the purposes of this section,
shall also include, without limitation, data, reports, correspondence,
specifications, technical notes, flow charts, documentation, blueprints,
sketches, equipment, software (source and object code) and all copies thereof,
and any other work product developed, prepared or created by Consultant. No
rights thereto are reserved by Consultant. The Consultant has made
and will make full and prompt disclosure to the Company of all Intellectual
Property and, at the Company’s request and expense (but without additional
compensation to the Consultant), will at any time and from time to time during
and after the Consultant’s affiliation with the Company execute and deliver to
the Company such applications, assignments, and other papers and take such other
actions (including, but not limited to, testifying in any legal proceedings) as
the Company, in its sole discretion, considers necessary to vest, perfect,
defend, or maintain the Company’s rights in and to such Intellectual
Property.
8. Indemnification. (a) Consultant
agrees to indemnify and hold harmless the Company, its employees, agents,
representatives and controlling persons (and the officers, directors, employees,
agents, representatives and controlling persons of each of them) from and
against any and all losses, claims, damages, liabilities, costs and expenses
(and all actions, suits, proceedings or claims in respect thereof) and any legal
or other expenses in giving testimony or furnishing documents in response to a
subpoena or otherwise (including, without limitation, the cost of investigating,
preparing or defending any such action, suit, proceeding or claim, whether or
not in connection with any action, suit, proceeding or claim in which the
Company is a party), as and when incurred, directly or indirectly, caused by,
relating to, based upon or arising out of Consultant’s gross negligence, willful
misconduct or unauthorized acts. Consultant’s obligation to indemnify
the other party shall be conditioned on the following: (a) the Company shall
notify the other party in writing as soon as practicable after its receipt of a
claim and (b) Consultant shall control of the defense and all related settlement
negotiations, provided, however, that any settlement be made with the consent of
the Company and such settlement include as an unconditional term thereof the
giving by the claimant of an unconditional release from all liability in favor
of the Company.
(b) Company agrees
to indemnify and hold harmless the Consultant from and against any and all
losses, claims, damages, liabilities, costs and expenses (and all actions,
suits, proceedings or claims in respect thereof) and any legal or other expenses
in giving testimony or furnishing documents in response to a subpoena or
otherwise (including, without limitation, the cost of investigation, preparing
or defending any such action, suit, proceeding or claim, whether or not in
connection with any action, suit, proceeding or claim in which the Consultant is
a party), as and when incurred to the greater of the fullest extent of the law
and the fullest extent of Company’s by-laws or other policies concerning
indemnification as if Consultant was an employee of Company. Company’s
obligation to indemnify Consultant shall be conditioned on the
following: (a) the Consultant shall notify Company in writing as soon
as practicable after its receipt of a claim and (b) Company shall control the
defense and all related settlement negotiations, provided, however, that any
settlement be made with the consent of the Consultant and such settlement
include as an unconditional term thereof the giving by the claimant of an
unconditional release from all liability in favor of the
Consultant.
9. Representations and
Warranties. Consultant hereby represents and warrants to the Company, in
good faith, as follows that:
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(a) it
owns or has the right to provide any confidential information in connection with
providing services hereunder and the use of any Intellectual Property, or any
part thereof, furnished under this Agreement, to the best of its knowledge, will
not infringe any patent, copyright, trade secret, trademark or other proprietary
right of a third party;
(b) it
is not currently bound by any other consultant agreement, restriction, or
obligation, and will not assume any such obligation or restriction, which does
or would in any way interfere or be inconsistent with the Consulting Services to
be furnished hereunder;
(c) it
will provide the Consulting Services in accordance with all applicable laws and
regulations and with care, skill and diligence, in accordance with the
applicable professional standards currently recognized by such profession;
and
(d) it
has full right, power, and authority to enter into this Agreement, to perform
its obligations and duties under this Agreement, and that its execution,
delivery, and performance of this Agreement does not and will not conflict with,
violate, or result in a breach of any other agreement, judgment, order,
stipulation, or decree by which it is bound.
10. Covenants. Consultant
shall coordinate his activities with the Company and report to the Chief
Executive Officer of the Company. All activities of Consultant shall
require the prior written consent of the Chief Executive Officer of the
Company. During the term hereof, neither Consultant nor any
affiliate, partner, employee, agent or representative of Consultant, shall
render the same or similar services to any business, entity or person engaged in
any business which is the same as or similar to or competitive with, the
businesses of the Company or its subsidiaries.
11. Termination. The
Company has the right to terminate this Agreement and the Engagement (i)
immediately upon written notice upon the death or disability of the Consultant;
(ii) immediately upon any breach by Consultant of its obligations under Section
6 or 7 of this Agreement; or (iii) upon thirty (30) days’ written notice to the
Consultant as a result of a breach by the Consultant of any provision of this
Agreement, and the Consultant fails to cure such breach within such thirty (30)
day period to the extent curable. This Agreement may only be renewed or extended
upon the written consent of both parties to this Agreement. Sections 6, 7, 8, 9,
10, 11 and 18 and any other provision of this Agreement that expressly
contemplates ongoing obligations or rights of a party shall survive the
expiration or termination of this Agreement under all circumstances. Upon the
expiration or termination of this Agreement: (A) Consultant shall (x) fully
cooperate with the Company in all matters relating to the winding up of the
Consultant’s services and the orderly transfer of such matters to any person
designated by the Company and (y) deliver to Company any deliverables created up
to the date of termination and Company shall have all right, title and interest
thereto; and (B) the Company shall pay to Consultant any amounts accrued prior
to such termination or expiration which have not been paid. In
addition, upon the expiration or termination of this Agreement or at any other
time, upon request of the Company, the Consultant shall (i) promptly deliver to
the Company all Confidential Information and any correspondence, memoranda,
notes, records, reports, plans, product and other designs and compositions,
studies, price lists, customer lists and information, customer contracts,
financial statements, catalogs, programs, disks, tapes, other papers, as well as
any medium on or by which information is stored, received, or made by the
Consultant in connection with the Consultant’s affiliation with the Company, in
the Consultant’s possession or control, regardless of whether or not such
information is Confidential Information and (ii) shall delete or erase (and
certify to such action) all copies of Confidential Information stored on any
electronic media in Consultant’s possession or control.
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12. Notices. Any
notices hereunder shall be sent to the Company and to Consultant at their
respective addresses set forth below. Any notice shall be given by
certified mail, return receipt requested, postage prepaid, overnight courier or
personal delivery. Notices shall be deemed to have been given when
deposited in the United States mail or delivered to a nationally-recognized
courier service. Either party may designate any other address to
which notice shall be given, by giving written notice to the other of such
change of address in the manner herein provided.
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The
Company:
Three
Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxx
Xxxxxx, XX 00000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
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The
Consultant:
Xxxxxx
X. Xxxxxx
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13. Severability; Specific
Performance. If any portion of this Agreement shall be determined to be
invalid, illegal, or unenforceable as written, each such portion shall be
enforced to the extent reasonable under the circumstances and such determination
shall not affect the validity or enforceability of the balance hereof, and such
balance shall remain in full force and effect. Consultant acknowledges and
agrees that any breach of this Agreement will result in irreparable injury to
the Company, that monetary damages will be an inadequate remedy of such breach,
and that, accordingly, in addition to any other remedy that the Company may
have, the Company shall be entitled to enforce the specific performance of this
Agreement and to seek both permanent and temporary injunctive relief in the
event of any breach of this Agreement or threat thereof. Consultant expressly
waives the defense that a remedy in damages will be adequate and any requirement
in an action for specific performance or injunction for the posting of a bond by
the Company.
14. Entire Agreement and
Amendments. This Agreement contains the entire agreement
between the parties, may not be altered or modified except in writing and signed
by the party to be charged thereby, and supersedes any and all previous
agreements between the parties relating to the subject matter hereof.
Notwithstanding the foregoing, however, nothing in this Agreement shall
supersede or modify any term or provision of (i) the Confidentiality Agreement
or (ii) that certain Separation Agreement and Release between the Consultant and
Company, dated as of the Effective Date, and the parties hereto agree that this
Agreement is being entered into in accordance with Section 2 of the Separation
Agreement and Release.
15. Assignment. This
Agreement shall not be assignable by the Consultant. Subject to the preceding
sentence, this Agreement shall inure to the benefit of and be binding upon the
parties and their respective heirs, successors, and assigns.
16. Counterparts. This
Agreement may be executed in counterparts, each of which so executed shall be
deemed to be an original and all of which, when taken together, shall constitute
one and the same instrument.
17. Waiver. No
action taken pursuant to this Agreement shall be deemed to constitute a waiver
by the party taking such action of complete compliance with the representations,
warranties, covenants, and agreements contained herein. No waiver shall be
binding unless in writing and signed by the party making the
waiver. A waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach. Either party may waive or modify performance of any act which
is intended solely for their benefit as long as the party for whom such act is
intended to benefit consents to such waiver or modification in
writing.
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18. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (without regard to
its conflicts of laws principles). Any lawsuit arising from or
related to this Agreement shall be brought exclusively before the United State
District Court for the Eastern District of Pennsylvania, and each party hereby
consents to the jurisdiction of any such courts.
IN
WITNESS WHEREOF, the parties have caused their respective duly authorized
representatives to execute this Agreement as of the Effective Date.
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Consultant:
Xxxxxx X. Xxxxxx
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By:
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/s/ Xxxxxx X. Xxxxxx
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By:
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/s/ Xxxxxx X. XxXxxxxx
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Name: Xxxxxx
X. Xxxxxx
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Name: Xxxxxx
X. XxXxxxxx
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Title: Chief
Financial
Officer
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