LOANOUT AGREEMENT
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 (“CFO”)
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.
1
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 (4)
equal installments of seventeen thousand three hundred ninety one (17,391)
shares every three calendar months, 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.
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.
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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.
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
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.
4
(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.
5
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:
(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.
6
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:
|
| If to Executive: |
Bennet
P. Tchaikovsky
c/o
Worldwide Officers, Inc.
0000
Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxx, XX 00000
Fax:
|
| If to the Company: |
Xxxx
00000, Xxxxxx Xxxxx
Xx.
0, Xxxxxxx Xxxx Xxxxx
Xxxxxx
Xxxxxxxx, Xxxx Xxxxxxxx, PRC
Attn:
Xxxxxxx Xx
Fax:
|
7
| 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.
8
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.
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 Employment Agreement as of
the
date first above written.
|
“COMPANY”
|
“EXECUTIVE”
|
|||||
|
BENNET
P. TCHAIKOVSKY
|
||||||
| By: |
/s/
Xxxxxxx Xx
|
By: |
Bennet
P. Tchaikovsky
|
|||
| Title: |
Chief
Executive Officer
|
|||||
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