LOANOUT AGREEMENT
Exhibit
10.18
This
LOANOUT AGREEMENT (this “Agreement”),
dated as of May 5, 2008 by and between Worldwide Officers, Inc. a California
Corporation sole owned by Bennet P. Tchaikovsky and having its principal
location of 0000 Xxxxxxxxxxx Xxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (“Lender”),
and Skystar Bio-Pharmaceutical Company a Nevada corporation having its principal
office at Room 10601, Jiezuo Plaza, No. 4, Fenghui Road South, Gaoxin District,
Xian Province, People’s Republic of China (the “Company”),
for the services of Lender’s employee, Bennet
P. Tchaikovsky (the “Executive”).
1. Employment, Duties and
Acceptance.
1.1 Effective
as of the date of this Agreement, the Company engages Lender and Lender agrees
to supply and make available to the Company, the services of the Executive to
serve as the Company’s Chief Financial Officer (“CFO”)
during the term of this Agreement, on the terms and conditions contained in this
Agreement. During the term of this Agreement, Executive shall make
himself available to the Company and to any of its subsidiaries or affiliates as
directed to pursue the business of the Company subject to the supervision and
direction of the Board of Directors of the Company (the “Board”).
1.2 The Board
may assign Executive such general management and supervisory responsibilities
and executive duties for the Company as are appropriate and commensurate with
Executive’s position as Chief Financial Officer of the Company with the
understanding that the CFO will be based where Lender’s principal offices are
located.
1.3 Lender
and Executive agree that Executive shall devote up to ninety hours per month of
Executive’s business time, energies and attention to the performance of his
duties hereunder and as an executive officer of the Company. Nothing
herein shall be construed as precluding 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; provided, however, that these activities do not
materially interfere with the performance of his duties hereunder or violate the
provisions of Section 4.4 hereof.
2. Compensation.
2.1 As
compensation for all services to be rendered by Executive pursuant to this
Agreement, the Company shall pay to Lender a fee at an annual base rate of
$75,000 for the term hereof. During Executive’s employment, salary
will be paid not less frequently than every four weeks in arrear. Payment will
be made to Executive via wire transfer. Company shall be responsible for any
applicable wire transfer fees for the salary and/or expense
reimbursement.
2.2 Upon
execution of this Agreement, Executive will have the right to receive 52,173
shares of the Company’s Common Stock, $0.001 par value, which shall vest during
the term of this Agreement, in the form of a restricted stock grant (the “Restricted
Stock”). The shares of the Restricted Stock shall vest in four
installments every three calendar months of three (3) equal installments of
thirteen thousand forty three (13,043) shares and one (1) installment of
thirteen thousand forty four (13,044) shares, with the first installment to vest
on August 5, 2008 (the “Vesting
Schedule”). The Restricted Stock shall be “restricted” and cannot be
resold without their prior registration or compliance with the terms of Rule 144
promulgated by the Act or an exemption from the Act. In addition, the
Restricted Stock shall further be subject to the terms and conditions of a
certain Lock-Up Agreement, a copy of which is attached hereto as Exhibit
A.
The
number of shares of Restricted Stock referenced in this section is subject to
adjustment in the case of any stock split, reverse stock split, combination or
similar events.
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Upon the
filing of an election pursuant to Section 83(b) of the Internal Revenue Code
(the “Code”)
with respect to such grant of Restricted Stock, the Company will not reimburse
you for any federal and state taxes due as a result of such
election.
During
the term of this Agreement, Executive shall not, directly or indirectly, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly, any
of the shares of the Restricted Stock or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any of the shares of Restricted Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of shares of the Restricted Stock, in cash or otherwise.
In connection with the issuance of the
Shares, Executive hereby represents and warrants to the Company, as of the date
hereof, that:
A. The Shares will be acquired for
investment for Executive’s own account, not as a nominee or agent, and not with
a view to the public resale or distribution thereof within the meaning of the
Securities Act of 1933, as amended (the “Securities
Act”), and the Executive has no present intention
of selling, granting any participation in or otherwise distributing the
same.
B. Executive understands
that the acquisition of the Shares involves substantial risk. Executive has
experience as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of its investment and protecting its
own interests in connection with this investment.
C. Executive is an
“accredited investor” within the meaning of Regulation D of the Securities
Act.
D.
Executive understands that (i) the Shares are characterized as “restricted
securities” under the Securities Act, inasmuch as it are being acquired from the
Company in a transaction not involving a public offering, and (ii) under the
Securities Act and applicable rules and regulations thereunder, such securities
may be resold without registration under the Securities Act only in certain
limited circumstances. Executive is familiar with Rule 144 under the Securities
Act, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
2.3 During the term of this
Agreement, the Company shall include Executive as insured under a directors and officers
insurance policy (the “D&O
Insurance”)
with initial coverage of $1,000,000 from an insurance carrier that has a minimum
rating of XII A as defined by the A.M. Best Company. If any member of the
Board enters into an indemnification agreement with the Company as part of the
D&O Insurance, Executive shall be entitled to enter into an agreement of
like tenor with the Company. Additionally, if the Board decides to increase the
coverage of the D&O Insurance, Executive shall be covered by such
policy.
2.4 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, provided that any expense in excess
of $500.00 shall require the prior written approval of the
Company. When Executive is required to travel on behalf of the
Company’s business, the cost of a business class ticket for any flight that is
in excess of two hours and an economic class ticket shall be included hereunder
as a reimbursable business expense.
3. Term and
Termination.
3.1 The term
of this Agreement commences as of the consummation of the Agreement and shall
continue for one (1) years unless sooner terminated as herein
provided.
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3.2 If
Executive dies during the term of this Agreement, this Agreement shall thereupon
terminate, except that the Company shall pay to Lender any accrued and unpaid
fee due Lender pursuant to Section 2.1 hereof as well as a pro rata allocation
of the shares of the Restricted Stock under Section 2.2 based on the days of
service prior to the death in conjunction with the Vesting Schedule, and all
previously accrued but unpaid expense reimbursements at the time of termination,
including for.
3.3 The
Company reserves the right to terminate this Agreement upon ten (10) days
written notice if, for a continuous or accumulated period of forty-five (45)
days during the one year term of this Agreement, Executive is prevented from
discharging his duties under this Agreement due to any physical or mental
disability. With the exception of the covenants included in Section 4
below, upon such termination, the obligations of Executive and Company under
this Agreement shall immediately cease. In the event of a termination
pursuant to this section, Executive shall be entitled to receive any accrued and
unpaid amounts earned pursuant to Section 2.1 hereof as well as a pro rata
allocation of the shares of the Restricted Stock under Section 2.2 based on the
days of service prior to the cessation of Executive’s services in conjunction
with the Vesting Schedule, and all previously accrued but unpaid expense
reimbursements.
3.4 The
Company reserves the right to declare Executive in default of this Agreement if
Executive willfully breaches or habitually neglects the duties which he is
required to perform under the terms of this Agreement, or if Executive commits
such acts of dishonesty, fraud, misrepresentation, gross negligence or willful
misconduct as would prevent the effective performance of his duties or which
results in material harm to the Company or its business. The Company
may terminate this Agreement for cause by giving written notice of termination
to Executive. With the exception of the covenants included in Section
4 below, upon the date of delivery of the written notice of such termination,
the obligations of Executive and the Company under this Agreement shall
immediately cease. Such termination shall be without prejudice to any
other remedy to which the Company may be entitled either at law, in equity, or
under this Agreement. In the event of a termination pursuant to this
section, Executive shall be entitled to receive any accrued and unpaid amounts
earned pursuant to Section 2.1 hereof. The Company shall also pay to
Executive all previously accrued but unpaid expense reimbursements at the time
of termination.
3.5 Executive’s
employment may be terminated at any time by Executive upon not less than ninety
(90) days written notice by Executive to the Board. With the
exception of the covenants included in section 4 below, upon such termination
the obligations of Executive and the Company under this Agreement shall
immediately cease. In the event of a termination pursuant to this
section, Executive shall be entitled to receive any accrued and unpaid amounts
earned pursuant to Section 2.1 hereof. The Company shall also pay to
Executive all previously accrued but unpaid expense reimbursements at the time
of termination.
3.6 Company
may terminate Executive’s employment upon not less than thirty (30) days written
notice by Company to Executive. With the exception of the covenants
included in section 4 below, upon such termination the obligations of Executive
and the Company under this Agreement shall immediately cease. In the
event of a termination pursuant to this section, Executive shall be entitled to
receive any accrued and unpaid amounts earned pursuant to Section 2.1 hereof as
well as a pro rata allocation of the shares of Restricted Stock under Section
2.2 based on the days of service prior to the termination in conjunction with
the Vesting Schedule, and all previously accrued but unpaid expense
reimbursements at the time of termination.
4. Protection of Confidential
Information; Non-Competition, Corporate Opportunities.
4.1 Lender
and Executive acknowledge that:
(a) As a
result of his association with the Company pursuant to this Agreement, Executive
will obtain secret and confidential information concerning the business of the
Company and its subsidiaries and affiliates (referred to collectively in this
Article 4 as the “Group”),
including, without limitation, trade secrets and any information concerning
products, processes, formulas, designs, inventions (whether or not patentable or
registrable under copyright or similar laws, and whether or not reduced to
practice), discoveries, concepts, ideas, improvements, techniques, methods,
research, development and test results, specifications, data, know-how,
software, formats, marketing plans, and analyses, business plans and analyses,
strategies, forecasts, customer and supplier identities, characteristics and
agreement (“Confidential
Information”). In addition, Executive may become aware of
business opportunities that may be beneficial to the Group including, but not
limited, opportunities to acquire or purchase, or, except for Permitted
Competitive Investments, otherwise make equity or debt investments in, companies
primarily involved in a Competitive Business (“Corporate
Opportunities”), during the term of this Agreement, whether in the course
of his employment or otherwise, and that such Corporate Opportunities shall
considered to be business opportunities of the Group.
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(b) The Group
will suffer substantial damage which will be difficult to compute if, during the
term of this Agreement or thereafter, Lender and/or Executive should enter a
business competitive with the Group or divulge Confidential
Information.
(c) The
provisions of this Agreement are reasonable and necessary for the protection of
the business of the Group.
4.2 Executive
agrees that he will not at any time, either during the term of this Agreement or
thereafter, divulge to any person or entity any Confidential Information
obtained or learned by him as a result of his employment with the Group, except
(i) in the course of performing his duties hereunder, (ii) to the
extent that any such information is in the public domain other than as a result
of Executive’s breach of any of his obligations hereunder, (iii) where
required to be disclosed by court order, subpoena or other government process,
or (iv) if such disclosure is made without Executive’s knowing intent to
cause material harm to the Group. If Executive shall be required to
make disclosure pursuant to the provisions of clause (iii) of the preceding
sentence, Executive promptly, but in no event more than 24 hours after learning
of such subpoena, court order, or other government process, shall notify, by
personal delivery or by electronic means, confirmed by mail, the Company and, at
the Company’s expense, Executive shall: (a) take reasonably necessary and lawful
steps required by the Group to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Group to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon
termination of this Agreement, Executive will promptly deliver to the Group all
memoranda, correspondence, notes, records, reports, manuals, drawings,
blue-prints and other documents (and all copies thereof) relating to the
business of the Group and all property associated therewith, which he may then
possess or have under his control whether prepared by Executive or
others.
4.4 During
the term of this Agreement and terminating three years after termination of
employment, Executive, without the prior written permission of the Company,
shall not for any reason whatsoever, (i) enter into the employ of or render any
services to any person, firm or corporation engaged in any business which is in
competition with the Group’s principal existing business at the time of
termination (“Competitive
Business”); (ii) engage in any Competitive Business as an individual,
partner, shareholder, creditor, director, officer, principal, agent, employee,
trustee consultant, advisor or in any other relationship or capacity; (iii)
employ, or have or cause any other person or entity to employ, any person who
was employed by the Group at the time of termination of Executive’s employment
by the Company; or (iv) solicit, interfere with, or endeavor to entice away from
the Group, for the benefit of a Competitive Business, any of its
customers. Notwithstanding the foregoing, (i) Executive shall not be
precluded from investing and managing the investment of, his or his family’s
assets in the securities of any corporation or other business entity which is
engaged in a Competitive Business if such securities are traded on a national
stock exchange or in the over-the-counter market and if such investment does not
result in his beneficially owning, at any time, more than 2% of any class of the
publicly-traded equity securities of such Competitive Business (“Permitted
Competitive
Investment”); and (ii) during the term of this Agreement and terminating
one year after termination of Executive’s employment (except for investments in
a class of securities trading on public markets), Executive: (a) shall be
prohibited from taking for himself personally any Corporate Opportunities, and
(b) shall refer to the Company for consideration (before any other party) any
and all Corporate Opportunities that arise during the term of this Agreement or
for a period of one year thereafter. If the Company determines not to
exploit any Corporate Opportunity, the Company shall determine what, if
anything, should be done with such opportunity. Executive shall not
be entitled to any compensation, as a finder or otherwise, if either the Company
or Executive introduces such opportunity to other persons, it being understood
that any such compensation shall be paid to the Company.
4.5 If
Executive commits a breach of any of the provisions of Sections 4.2 or 4.4, the
Company shall have the right:
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(a) to have
the provisions of this Agreement specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed by Executive that the
services being rendered hereunder to the Company are of a special, unique and
extraordinary character and that any breach or threatened breach will cause
irreparable injury to the Group and that money damages will not provide an
adequate remedy to the Group; and
(b) to
require Executive to account for and pay over to the Company all monetary
damages determined by a non-appealable decision by a court of law to have been
suffered by the Group as the result of any actions constituting a breach of any
of the provisions of Section 4.2 or 4.4, and Executive hereby agrees to account
for and pay over such damages to the Company.
(c) to not
perform any obligation owed to Executive under this Agreement, to the fullest
extent permitted by law. Company shall also have the right, to the
fullest extent permitted by law, to adjust any amount due and owing or to be due
and owing to Executive, whether under this Agreement or any other agreement
between Company and Executive in order to satisfy any losses to the Group as a
result of Executive’s breach.
4.6 If
Executive shall violate any covenant contained in Section 4.4, the duration of
such covenant so violated shall be automatically extended for a period of time
equal to the period of such violation.
5. Lender
Representations. Lender represents that it is a validly
existing corporation and has the sole and exclusive right and authority to
provide the services of Executive to the Company as contemplated by this
Agreement, and that the entering into and performance of this Agreement by
Lender and the provision of services hereunder by Executive and the acceptance
thereof by the Company will not violate any law, rule, regulation, order,
contract or agreement to which either Lender or Executive is a party or is bound
or affected.
6. Miscellaneous
Provisions.
6.1 The
parties acknowledge and agree that the relationship between the Company and the
Lender is that of independent contractors and not that of employer and employee.
Nothing in this Agreement is intended to create or will be deemed to create or
constitute a joint venture or partnership between the Company and
Lender.
6.2 Lender
will be responsible for the payment of all withholding, payroll and other taxes
payable in respect of the payments received by Lender under this Agreement and
hereby agrees to indemnify and hold the Company harmless from any obligation or
penalty arising from the failure to pay such taxes.
6.3 All
notices provided for in this Agreement shall be in writing, and shall be deemed
to have been duly given when delivered personally to the party to receive the
same, when delivered via overnight courier providing for next day delivery
service (“Overnight Courier”), when transmitted by facsimile (electronic receipt
confirmed), or when mailed first class postage prepaid, by certified mail,
return receipt requested, addressed to the party to receive the same at his or
its address set forth below, or such other address as the party to receive the
same shall have specified by written notice given in the manner provided for in
this Section 5.1. All notices shall be deemed to have been given: (a)
as of the date of personal delivery, (b) the first business day after delivery
via Overnight Courier, (c) on the electronically confirmed date of receipt
during business hours of the facsimile transmittal (or the following business
day if the facsimile is received after 5:30 p.m. PDT), or (d) three calendar
days after the date of deposit (postage pre-paid) with the U.S. Postal Service
if delivered via first class or certified mail.
If to
Lender: Worldwide
Officers, Inc.
0000
Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxx, XX 00000
Fax:
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If to
Executive: Bennet
P. Tchaikovsky
c/o
Worldwide Officers, Inc.
0000
Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxx, XX 00000
Fax:
If to the
Company: Skystar
Bio-Pharmaceutical Company
Xxxx
00000, Xxxxxx Xxxxx
Xx. 0,
Xxxxxxx Xxxx Xxxxx
Xxxxxx
Xxxxxxxx, Xxxx Xxxxxxxx, PRC
Attn:
Xxxxxxx Xx
Fax:
With a copy
to: Xxxxxxxxxx
& Xxxxx, LLP
Xxxxxxx Plaza
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx
000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx,
Esq.
Fax:
(000) 000-0000
6.4 In the
event of any claims, litigation or other proceedings arising under this
Agreement, Executive shall be reimbursed by the Company within sixty (60) days
after delivery to the Company of statements for the costs incurred by Executive
in connection with the analysis, defense and prosecution thereof, including
reasonable attorneys’ fees and expenses; provided, however, that Executive shall
reimburse the Company for all such costs if it is determined by a non-appealable
final decision of a court of law that Executive shall have acted in bad faith
with the intent to cause material damage to the Company in connection with any
such claim, litigation or proceeding.
6.5 The
Company, shall to the fullest extent permitted by law, indemnify Executive for
any liability, damages, losses, costs and expenses arising out of alleged or
actual claims (collectively, “Claims”)
made against Executive for any actions or omissions as an officer and/or
director of the Company or its subsidiary. To the extent that the
Company obtains directors and officers insurance coverage for any period in
which Executive was an officer, director or consultant to the Company, Executive
shall be a named insured and shall be entitled to coverage
thereunder.
6.6 The
provisions of Article 4, Sections 5.2 and 5.3 and any provisions relating to
payments owed to Executive after termination of employment shall survive
termination of this Agreement for any reason.
6.7 This
Agreement sets forth the entire agreement of the parties relating to the
employment of Executive and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement may be
waived or changed except by writing by the party against whom such waiver or
change is sought to be enforced. The failure of any party to require
performance of any provision hereof or thereof shall in no manner affect the
right at a later time to enforce such provision.
6.8 All
questions with respect to the construction of this Agreement, and the rights and
obligations of the parties hereunder, shall be determined in accordance with the
law of the State of Nevada applicable to agreements made and to be performed
entirely in the State of Nevada. Any disputes, claims or causes of
action by one party against the other arising out of, in related to or
concerning this Agreement shall be commenced and maintained in any state or
federal court located in Xxxxx County of the State of Nevada, and Executive
hereby submits to the jurisdiction and venue of any such court.
6.9 This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company. This Agreement shall not be assignable by
Executive, but shall inure to the benefit of and be binding upon Executive’s
heirs and legal representatives.
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6.10 It is the
desire and intent of the parties that the terms, provisions, covenants and
remedies contained in this Agreement shall be enforceable to the fullest extent
permitted by law. If any such term, provision, covenant or remedy of
this Agreement or the application thereof to any person or circumstances shall,
to any extent, be construed to be invalid or unenforceable in whole or in part,
then such term, provision, covenant or remedy shall be construed in a manner so
as to permit its enforceability under the applicable law, to the fullest extent
permitted by law. In any case, the remaining provisions of the
Agreement and the application thereof to any person or circumstance other than
those to which they have been held invalid or unenforceable, shall remain valid
and in full force and effect.
[Remainder
of Page Intentionally Blank]
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IN
WITNESS WHEREOF, the parties have executed this Loanout Agreement as of the date
first above written.
|
“COMPANY”
|
“LENDER”
|
|
WORLDWIDE
OFFICERS, INC.
|
|
|
By:
/s/ Xxxxxxx
Xx
|
By:
/s/ Bennet P.
Tchaikovsky
|
|
Title
Chief Executive
Officer
|
Title
Chief Executive
Officer
|
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