EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT is
made
effective as of the 8th day
of
July, 2008
(the
“Effective Date”).
AMONG:
SPONGETECH
DELIVERY SYSTEMS, INC.,
having
an address at 00 Xxxx 00xx
Xxxxxx,
Xxxxx 000 Xxx Xxxx, Xxx Xxxx 00000 ("Employer");
AND
XXXXXX
XXXXXXXXX,
an
individual having an address at [redacted] (“Employee”)
WHEREAS,
Employee
has agreed to continue to serve as an Employee of Employer, and Employer has
agreed to hire Employee as such, pursuant to the terms and conditions of this
Employment Agreement (the “Agreement”).
NOW
THEREFORE THIS AGREEMENT WITNESSETH THAT in
consideration of the premises and the mutual covenants, agreements,
representations and warranties contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee and Employer hereby agree as follows:
ARTICLE
1
EMPLOYMENT
Employer
hereby affirms, renews and extends the employment of Employee as Chief Operating
Officer, and Employee hereby affirms, renews and accepts such employment by
Employer for the “Term” (as defined in Article 3 below), upon the terms and
conditions set forth herein.
ARTICLE
2
DUTIES
During
the Term, Employee shall serve Employer faithfully, diligently and to the best
of his ability, under the direction and supervision of the Board of Directors
of
Employer and the President and the Chief Executive Officer of Employer, and
shall use his best efforts to promote the interests and goodwill of Employer,
and any affiliates, successors, assigns, parent corporations, subsidiaries,
and/or future purchasers of Employer. Employee shall render such services during
the Term at Employer’s principal place of business or at such other place of
business as may be determined by the Board of Directors of Employer, as Employer
may from time to time reasonably require of him, and shall devote all of his
business time to the performance thereof. Employee shall have those duties
and
powers as generally pertain to each of the offices of which he holds, as the
case may be, subject to the control of the Board of Directors.
ARTICLE
3
TERM
The
“Term” of this Agreement shall commence on the Effective Date and continue
thereafter for a term of three (3) years, as may be extended or earlier
terminated pursuant to the terms and conditions of this Agreement.
ARTICLE
4
COMPENSATION
Salary
4.1
Employer
shall issue to Employee an aggregate of Four Million (4,000,000) shares of
the
Employer’s Class B Stock, payable upon execution of this Agreement.
Benefits
4.2
During
the Term, Employee shall be entitled to participate in all medical and other
employee benefit plans, including vacation, sick leave, retirement accounts
and
other employee benefits provided by Employer to similarly situated employees
on
terms and conditions no less favorable than those offered to such employees.
Such participation shall be subject to the terms of the applicable plan
documents, Employer’s generally applicable policies, and the discretion of the
Board of Directors or any administrative or other committee provided for in,
or
contemplated by, such plan.
Expense
Reimbursement
4.3
Employer
shall reimburse Employee for reasonable and necessary expenses incurred by
him
on behalf of Employer in the performance of his duties hereunder during the
Term, including, without limitation, reimbursement for cellular telephone
expenses in accordance with Employer's then customary policies, provided that
such expenses are adequately documented.
Bonus
4.4 Employee
shall be eligible to earn a cash bonus during the Employment Term at the
discretion of the Company’s Board of Directors, or if the Board organizes a
compensation committee, such committee. Executive’s bonus, if any, shall be
subject to all applicable tax and payroll withholdings.
ARTICLE
5
OTHER
EMPLOYMENT
Except
as
may otherwise be provided for herein, during the Term of this Agreement,
Employee shall devote substantially all of his business and professional time
and effort, attention, knowledge, and skill to the management, supervision
and
direction of Employer’s business and affairs as Employee’s highest professional
priority. Except as provided below, Employer shall be entitled to all benefits,
profits or other issues arising from or incidental to all work, services and
advice performed or provided by Employee. Nothing
in this Agreement shall preclude Employee from devoting reasonable periods
required for:
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(a)
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serving
as a director or member of a committee of any organization or corporation
involving no conflict of interest with the interests of Employer,
provided
that Employee must obtain the written consent of
Employer;
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(b)
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serving
as a consultant in his area of expertise (in areas other than in
connection with the business of Employer), to government, industrial,
and
academic panels where it does not conflict with the interests of
Employer;
and
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(c)
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managing
his personal investments or engaging in any other non-competing
business;
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provided
that such activities do not materially interfere with the regular performance
of
his duties and responsibilities under this Agreement.
ARTICLE
6
CONFIDENTIAL
INFORMATION/INVENTIONS
Confidential
Information
6.1 Employee
shall not, in any manner, for any reasons, either directly or indirectly,
divulge or communicate to any person, firm or corporation, any confidential
information concerning any matters not generally known in the wireless
communications industry or otherwise made public by Employer which affects
or
relates to Employer’s business, finances, marketing and/or operations, research,
development, inventions, products, designs, plans, procedures, or other data
(collectively, “Confidential Information”) except in the ordinary course of
business or as required by applicable law. Without regard to whether any item
of
Confidential Information is deemed or considered confidential, material, or
important, the parties hereto stipulate that as between them, to the extent
such
item is not generally known in the wireless communications industry, such item
is important, material, and confidential and affects the successful conduct
of
Employer’s business and goodwill, and that any breach of the terms of this
Section 6.1 shall be a material and incurable breach of this Agreement.
Confidential Information shall not include: (i) information obtained or which
became known to Employee other than through his employment by Employer; (ii)
information in the public domain at the time of the disclosure of such
information by Employee; (iii) information that Employee can document was
independently developed by Employee; (iv) information that is disclosed by
Employee with the prior written consent of Employer and (v) information that
is
disclosed by Employee as required by law, governmental regulation or court
order.
Documents
6.2 Employee
further agrees that all documents and materials furnished to Employee by
Employer and relating to the Employer’s business or prospective business are and
shall remain the exclusive property of Employer. Employee shall deliver all
such
documents and materials, not copied, to Employer upon demand therefore and
in
any event upon expiration or earlier termination of this Agreement. Any payment
of sums due and owing to Employee by Employer upon such expiration or earlier
termination shall be conditioned upon returning all such documents and
materials, and Employee expressly authorizes Employer to withhold any payments
due and owing pending return of such documents and materials.
Inventions
6.3 All
ideas, inventions, and other developments or improvements conceived or reduced
to practice by Employee, alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of
the
business of Employer or that relate to or result from any of Employer’s work or
projects or the services provided by Employee to Employer pursuant to this
Agreement, shall be the exclusive property of Employer. Employee agrees to
assist Employer, at Employer’s expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Employer.
Disclosure
6.4 During
the Term, Employee will promptly disclose to the Board of Directors of Employer
full information concerning any interest, direct or indirect, of Employee (as
owner, shareholder, partner, lender or other investor, director, officer,
employee, consultant or otherwise) or any member of his immediate family in
any
business that is reasonably known to Employee to purchase or otherwise obtain
services or products from, or to sell or otherwise provide services or products
to, Employer or to any of its suppliers or customers.
ARTICLE
7
COVENANT
NOT TO COMPETE
Except
as
expressly permitted in Article 5 above, during the Term of this Agreement,
Employee shall not engage in any of the following competitive activities: (a)
engaging directly or indirectly in any business or activity substantially
similar to any business or activity engaged in (or proposed to be engaged in)
by
Employer; (b) engaging directly or indirectly in any business or activity
competitive with any business or activity engaged in (or proposed to be engaged
in) by Employer; (c) soliciting or taking away any employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender
or
investor of Employer, or attempting to so solicit or take away; (d) interfering
with any contractual or other relationship between Employer and any employee,
agent, representative, contractor, supplier, vendor, customer, franchisee,
lender or investor; or (e) using, for the benefit of any person or entity other
than Employer, any Confidential Information of Employer. The foregoing covenant
prohibiting competitive activities shall survive the termination of this
Agreement and shall extend, and shall remain enforceable against Employee,
for
the period of two (2) years following the date this Agreement is terminated.
In
addition, during the two-year period following such expiration or earlier
termination, neither Employee nor Employer shall make or permit the making
of
any negative statement of any kind concerning Employer or its affiliates, or
their directors, officers or agents or Employee.
ARTICLE
8
SURVIVAL
Employee
agrees that the provisions of Articles 6, 7 and 9 shall survive expiration
or
earlier termination of this Agreement for any reasons, whether voluntary or
involuntary, with or without cause, and shall remain in full force and effect
thereafter. Notwithstanding the foregoing, if this Agreement is terminated
upon
the dissolution of Employer, the filing of a petition in bankruptcy by Employer
or upon an assignment for the benefit of creditors of the assets of Employer,
Articles 6, 7 and 9 shall be of no further force or effect.
ARTICLE
9
INJUNCTIVE
RELIEF
Employee
acknowledges and agrees that the covenants and obligations of Employee set
forth
in Articles 6 and 7 with respect to non-competition, non-solicitation,
confidentiality and Employer’s property relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants
and obligations will cause Employer irreparable injury for which adequate
remedies are not available at law. Therefore, Employee agrees that Employer
shall be entitled to an injunction, restraining order or such other equitable
relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Employee from
committing any violation of the covenants and obligations referred to in this
Article 9. These injunctive remedies are cumulative and in addition to any
other
rights and remedies Employer may have at law or in equity.
ARTICLE
10
TERMINATION
Termination
by Employee
10.1 Employee
may terminate this Agreement for Good Reason at any time upon 30 days’ written
notice to Employer, provided the Good Reason has not been cured within such
period of time.
Good
Reason
10.2 In
this
Agreement, “Good Reason” means, without Employee’s prior written consent, the
occurrence of any of the following events, unless Employer shall have fully
cured all grounds for such termination within thirty (30) days after Employee
gives notice thereof:
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(i)
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any
material failure to timely grant, or timely honor, any equity or
long-term
incentive award;
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(ii)
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failure
to pay or provide required compensation and
benefits;
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(iii)
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any
failure to appoint, elect or reelect him to the position of Chief
Operating Officer of Employer; the removal of him from such position;
or
any changes in the reporting structure so that Employee reports to
someone
other than the President of
Employer;
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(iv)
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any
material diminution in his title or duties or the assignment to him
of
duties not customarily associated with Employee’s position as Chief
Operating Officer of Employer;
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(v)
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any
relocation of Employee’s office as assigned to him by Employer, to a
location more than 25 miles from Employer’s current
office;
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(vi)
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the
failure of Employer to obtain the assumption in writing of its obligation
to perform the Employment Agreement by any successor to all or
substantially all of the assets of Employer or upon a merger,
consolidation, sale or similar transaction of Employer;
or
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(vii)
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the
voluntary or involuntary dissolution of Employer, the filing of a
petition
in bankruptcy by Employer or upon an assignment for the benefit of
creditors of the assets of Employer.
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The
written notice given hereunder by Employee to Employer shall specify in
reasonable detail the cause for termination, and such termination notice shall
not be effective until thirty (30) days after Employer’s receipt of such notice,
during which time Employer shall have the right to respond to Employee’s notice
and cure the breach or other event giving rise to the termination.
Termination
by Employer
10.3 Employer
may terminate its employment of Employee under this Agreement for cause at
any
time by written notice to Employee. For purposes of this Agreement, the term
“cause” for termination by Employer shall be (a) a conviction of or plea of
guilty or nolo
contendere by
Employee to a felony, or any crime involving fraud or embezzlement; (b) the
refusal by Employee to perform his material duties and obligations hereunder;
(c) Employee’s willful and intentional misconduct in the performance of his
material duties and obligations; or (d) if Employee or any member of his family
makes any personal profit arising out of or in connection with a transaction
to
which Employer is a party or with which it is associated without making
disclosure to and obtaining the prior written consent of Employer. The written
notice given hereunder by Employer to Employee shall specify in reasonable
detail the cause for termination. For purposes of this Agreement, “family” shall
mean Employee’s spouse and/or children. In the case of a termination for the
causes described in (a) and (d) above, such termination shall be effective
upon
receipt of the written notice. In the case of the causes described in (b) and
(c) above, such termination notice shall not be effective until thirty (30)
days
after Employee’s receipt of such notice, during which time Employee shall have
the right to respond to Employer’s notice and cure the breach or other event
giving rise to the termination.
Termination
Upon Death
10.4 If
Employee dies during the Term of this Agreement, this Agreement shall terminate,
except that Employee’s legal representatives shall be entitled to receive any
earned but unpaid compensation or expense reimbursement due hereunder through
the date of death.
Termination
Upon Disability
10.5 If,
during the Term of this Agreement, Employee suffers and continues to suffer
from
a “Disability” (as defined below), then Employer may terminate this Agreement by
delivering to Employee thirty (30) calendar days’ prior written notice of
termination based on such Disability, setting forth with specificity the nature
of such Disability and the determination of Disability by Employer. For the
purposes of this Agreement, “Disability” means Employee’s inability, with
reasonable accommodation, to substantially perform Employee’s duties, services
and obligations under this Agreement due to physical or mental illness or other
disability for a continuous, uninterrupted period of sixty (60) calendar days
or
ninety (90) days during any twelve month period. Upon any such termination
for
Disability, Employee shall be entitled to receive any earned but unpaid
compensation or expense reimbursement due hereunder through the date of
termination.
ARTICLE
11
PERSONNEL
POLICIES, CONDITIONS, AND BENEFITS
Except
as
otherwise provided herein, Employee’s employment shall be subject to the
personnel policies and benefit plans which apply generally to Employer’s
employees as the same may be interpreted, adopted, revised or deleted from
time
to time, during the Term of this Agreement, by Employer in its sole discretion.
During the Term hereof, Employee shall be entitled to vacation during each
year
of the Term at the rate of four (4) weeks per year. Employee shall take such
vacation at a time approved in advance by Employer, which approval will not
be
unreasonably withheld but will take into account the staffing requirements
of
Employer and the need for the timely performance of Employee's
responsibilities.
ARTICLE
12
BENEFICIARIES
OF AGREEMENT
This
Agreement shall inure to the benefit of Employer and any affiliates, successors,
assigns, parent corporations, subsidiaries, and/or purchasers of Employer as
they now or shall exist while this Agreement is in effect.
ARTICLE
13
GENERAL
PROVISIONS
No
Waiver
13.1 No
failure by either party to declare a default based on any breach by the other
party of any obligation under this Agreement, nor failure of such party to
act
quickly with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.
Modification
13.2 No
waiver
or modification of this Agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
parties to be charged therewith.
Choice
of Law/Jurisdiction
13.3 This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, without regard to any conflict-of-laws principles. Employer
and Employee hereby consent to personal jurisdiction before all courts in the
State of New York, and hereby acknowledge and agree that New York is and shall
be the most proper forum to bring a complaint before a court of
law.
Entire
Agreement
13.4 This
Agreement embodies the whole agreement between the parties hereto regarding
the
subject matter hereof and there are no inducements, promises, terms, conditions,
or obligations made or entered into by Employer or Employee other than contained
herein.
Severability
13.5 All
agreements and covenants contained herein are severable, and in the event any
of
them, with the exception of those contained in Articles 1 and 4 hereof, shall
be
held to be invalid by any competent court, this Agreement shall be interpreted
as if such invalid agreements or covenants were not contained
herein.
Headings
13.6 The
headings contained herein are for the convenience of reference and are not
to be
used in interpreting this Agreement.
Independent
Legal Advice
13.7 Employer
has obtained legal advice concerning this Agreement and has requested that
Employee obtain independent legal advice with respect to same before executing
this Agreement. Employee, in executing this Agreement, represents and warranties
to Employer that he has been so advised to obtain independent legal advice,
and
that prior to the execution of this Agreement he has so obtained independent
legal advice, or has, in his discretion, knowingly and willingly elected not
to
do so.
No
Assignment
13.8 Employee
may not assign, pledge or encumber his interest in this Agreement nor assign
any
of his rights or duties under this Agreement without the prior written consent
of Employer.
[Signature
page follows]
IN
WITNESS WHEREOF the
parties have executed this Agreement effective as of the day and year first
above written.
SPONGETECH
DELIVERY SYSTEMS, INC.
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By:
/s/
Xxxxxxx
Xxxxxx
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Xxxxxxx
Xxxxxx
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President
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/s/
Xxxxxx
Xxxxxxxxx
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Xxxxxx
Xxxxxxxxx
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