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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made and entered as of February 24,
1998 by and among GENELINK, INC. (the "Company"), a New Jersey corporation and
XXXX XXXXXXXXXX (the "Executive).
BACKGROUND
The parties want to enter into an employment agreement and to set forth
the terms and conditions of the Executive's employment by 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 Executive agree as follows:
1. EMPLOYMENT.
(a) Duties. The Company will employ the Executive, on the terms
set forth in this Agreement, as Chairman of the Board, President and Chief
Executive Officer. The Executive accepts such employment 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, approval, control and
directives of the Board.
(b) Place of Performance. In his employment by the Company, the
Executive will be based in the Margate, New Jersey metropolitan area, except for
required travel on Company business.
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2. TERM.
The Executive's employment under this agreement will be for a five year
term (the "Term") commencing as of January 1, 1998 (the "Commencement Date") and
will continue uninterrupted for the Term. Each year, unless one party notified
the other party in writing by November 1 of the preceding year, on the
anniversary date of the Commencement 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 Salary. During the Term, the Executive will be
entitled to receive an annual salary in the calendar year 1998 of $125,000 (the
"Base Salary"). Each year thereafter, Executive will be entitled to an increase
in the Base Salary 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 other senior executive employees
(but in any event no less often than monthly). The increase determined in the
previous sentence will be added to the then current Base Salary to become the
Base Salary for purposes of this Agreement.
(b) I 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, the Executive will be entitled to be paid a
lump sum payment equal to the aggregate Base Salary, with minimum 10% increases
each year, for the next five years, and a lump sum bonus equal to five time the
largest bonus paid to Executive under this Agreement. The Company will pay the
payments required under the previous sentence within 30 days of the change in
control.
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(c) Bonus. Executive will receive an annual bonus according to
a Company Bonus Plan adopted by the Board.
4. HEALTH INSURANCE AND OTHER BENEFITS.
During the Term, the Executive will be entitled to all employee benefits
offered by the Company to its senior executives and key management employees,
including, without limitation, all pension, profit sharing, retirement, stock
option, salary continuation, deferred compensation, disability insurance,
hospitalization insurance, major medical insurance, medical reimbursement,
survivor income, 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 Executive a life insurance policy for $1,000,000, with the
beneficiary.
5. REIMBURSEMENT OF EXPENSES.
The Company will reimburse Executive for all items of travel,
entertainment and miscellaneous expenses that the Executive reasonably incurs in
the performance of his duties hereunder, if the Executive submits to the Company
evidence supporting these expenses as the Company may reasonably require.
6. AUTOMOBILE ALLOWANCE.
The Company will pay Executive a monthly automobile allowance of $800 for
the first year of this Agreement, $800 per month for the second year and $1000
per month thereafter, subject to increase by the Board. In the alternative, the
Company may obtain an automobile for the Executive's sole use, to be approved by
the Executive. The Company will pay directly or reimburse Executive for all
expenses of the automobile, including, but not limited to, taxes, insurance,
maintenance, fuel, parking, and the like.
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7. OPTIONS: GRANT OF SHARES.
(a) Upon the execution of this Agreement, the Company will
issue to Executive options to purchase 1,200,000 shares (the "Shares") of the
Company's common stock $.001 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) 400,000 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 in control
that would require the Company to file a Form 8-K with the Securities and
Exchange Commission of the Company was a reporting company, all unvested options
will be immediately exercisable. The Executive may exercise vested options by
giving the Company a note equal to the Federal Funds Rate published in the Wall
Street Journal as adjusted from time to time. In the alternative, the Executive
may use Shares owned by the Executive, valued at the then-prevailing market
price of the Shares.
(b) The Executive will also be eligible to participate in any
stock option, stock grant, phantom stock, or other employee incentive plan when,
as and if approved by the Board. Eligibility in no way creates an obligation of
the Company to issue options to Executive, which will be in the sole and
absolute discretion of the Compensation Committee of the Board.
(c) Upon execution of this Agreement. Executive will receive a
grant of 200,000 Shares as a signing bonus.
(d) The stock grants and options granted under this Section 7
of the Agreement will be adjusted for any recapitalizations, stock dividends,
stock splits or other changes in the Company's capital stock.
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8. VACATION.
This Agreement entitles the Executive to four weeks paid vacation in each
calendar year (prorated in any calendar year during which the Company employs
the Executive under this Agreement for less than the entire year according to
the number of days in such calendar year during which he is employed). The
Executive will also be entitled to all paid holidays given by the Company to its
senior executive officer.
9. TERMINATION OF EMPLOYMENT.
(a) Death or Total Disability. If the Executive dies during the
Term, the Agreement will end as of the date of the Executive's death. The
Company will pay the Executive's salary for the remaining Term to Executive's
beneficiary or estate, and all health insurance benefits for Executive's family
will continue for at least two years following the Executive's death. In case of
the Total Disability (as defined below) of the Executive for any consecutive
twelve months during the Term, the Company will have the right to end this
Agreement by giving the Executive thirty (30) days' prior written notice, and
upon the expiration of such thirty (30) day period, the Executive's employment
under this Agreement will end. If there is such a termination, the Company will
pay Executive his salary for the remaining Term. If the Executive 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 under this Agreement, except to pay to the
Executive's estate or the Executive, as the case may be, the portion of salary
that remains unpaid for the Term, including minimum increases and continuation
of benefits.
The term "Total Disability", as used herein, will mean a mental or
physical condition that in the reasonable opinion of an independent medical
doctor selected by the Company
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renders the Executive unable or incompetent to carry out the material duties and
responsibilities of the Executive under this Agreement at the time the Executive
incurred the disabling condition. If the Executive is covered under any policy
or 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 Executive is convicted of a felony involving
fraud or violation of the Federal Securities Laws, or a court of competent
jurisdiction finds that the Executive has engaged in conduct involving the
Company that constitutes gross negligence or intentional misconduct. If the
Company terminates the Executive under this Section, all unvested options or
stock grants will be void and the Executive will not receive any salary or
benefit continuation.
10. NO MITIGATION.
This Agreement does not require the Executive to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor will the amount of any payment provided for in this
Agreement be reduced by any compensation earned by the Executive as the result
of his employment by another employer.
11. RESTRICTIVE COVENANT.
(a) Competition. Executive 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
venture, 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.
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(b) Trade Secrets. During the Term and after termination for
any reason, Executive 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 Executive
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 11 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
remedies Company or any of its subsidiaries or their successors or assigns might
have for such breach.
(d) Scope of Covenant. Should the duration, geographical area
or range or prescribed activities contained in subparagraph (a) above be held
unreasonable by any court of competent jurisdiction, then such court may modify
the duration, geographical area or range of prescribed activities to such degree
as to make it or them reasonable and enforceable.
12. INDEMNIFY.
The Company will indemnify and hold the Executive 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 Executive 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 Executive in the defense of any of the claims referenced herein.
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13. 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 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 Executive:
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 Executive regarding its
subject matter and supersedes all prior negotiations and agreements, 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 Executive 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
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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
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 Executive 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 contained 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. This Agreement will be
governed by the internal laws of the State of New Jersey. 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.
(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 all of
which together will make up the same instrument.
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IN WITNESS WHEREOF, the Executive 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/ Xxxx X. XxXxxxxxxx
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Xxxx X. XxXxxxxxxx
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