EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (“Agreement”)
is made as of July 11, 2007 (“Effective Date”), by and between Baywood
International, Inc., a Nevada corporation (the “Company”), and Xxxx Xxxxxxxxxx,
an individual, (“Employee”).
W
I T N E S S E T H:
WHEREAS,
the Company wishes to ensure that it will continue to have the benefits of
Employee’s services on the terms and conditions hereinafter set forth;
and
WHEREAS,
Employee desires to work for the Company on the terms and conditions hereinafter
set forth.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, the parties hereto hereby agree as follows:
1.
Employment; Term. The Company hereby employs Employee, and
Employee hereby accepts employment with the Company, in accordance with and
subject to the terms and conditions set forth herein. The term of
employment shall commence upon the Effective Date and shall continue for
a
period of five (5) years (the “Term”), unless earlier terminated in accordance
with Section 5 hereof.
2.
Employment.
(a) The
Company hereby agrees to employ Employee as a President and Chief Executive
Officer for the Term. Employee agrees to serve in such capacity and
shall have primary responsibility for the operation and strategic direction
of
the Company and its subsidiaries and such other duties, responsibilities
and
authority, commensurate with such position as shall be assigned to him by
the
Board of Directors (the “Board”).
(b) Employee
shall devote Employee’s full business time and attention to Employee’s duties on
the Company’s behalf.
3.
Compensation.
(a) The
Company shall pay Employee a base salary of One Hundred Fifty Thousand Dollars
($150,000) per annum (the “Base Salary”), payable bi-weekly, in accordance with
the Company’s then existing payroll practices and subject to all legally
required or customary withholdings and other applicable taxes. The
Base Salary will be retroactive to April 1, 2007. Amounts due between
April 1, 2007 and the date of this Agreement will be due in one payment within
30 days following the date of this Agreeement. Executive shall be
entitled to an increase in Base Salary of five percent (5%) per annum upon
meeting performance standards reasonably established by the Board or otherwise
based on performance as reasonably determined by the Board.
(b) Employee
shall be entitled to receive an annual bonus award (“Annual Bonus”) based on the
achievement of established financial goals or as reasonably determined by
the
Board, commencing fiscal year 2007. Employee’s Annual Bonus shall be
subject to review and approval each year by the Board.
(c) As
of the Effective Date, the Company shall grant to Employee, pursuant to the
Company’s 2004 Stock Option Plan as may be amended from time to time (the
“Plan”), options (the
“Options”)
to purchase ten million (10,000,000) shares of Common Stock, par value $0.001
per share, of the Company (the “Common Stock”) at an exercise price equal to the
Current Market Price (as hereinafter defined) on the date of
grant. The Options will vest as of the Effective Date and will expire
if not exercised within ten (10) years after the date of
vesting. Subject to the foregoing, the terms and provision of the
Options shall be consistent with the Plan and all exhibits thereto.
3
For
purposes of this Agreement,
“Current Market Price” on any day of determination means the closing price of a
share of Common Stock on the over-the-counter bulletin board as reported
by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by
any
NASDAQ member firm of the National Association of Securities Dealers, Inc.
selected from time to time by the Board for that purpose, or if not so
available, a price determined in good faith by the Board as being equal to
the
fair market value thereof, as the case may be.
4.
Benefits.
(a) The
Company agrees to reimburse Employee for all reasonable out-of-pocket business
expenses incurred by Employee in the normal course of business in connection
with the performance of Employee’s duties under this Agreement in accordance
with the Company’s policy as it may be amended from time to time. The
Company shall make such reimbursements within a reasonable amount of time
after
submission by Employee of vouchers, receipts, credit card bills or other
documentation in accordance with the Company’s then applicable policies and
procedures. In addition, the Company shall pay Employee’s monthly
cellular telephone xxxx.
(b) Employee
shall be entitled to participate in any and all medical insurance, group
health
care programs, disability insurance, pension and other benefit plans (“Medical
Benefits”) which are made generally available by the Company (“Medical
Benefits”) to other similarly situated senior level employees of the Company
performing similar functions as Employee. The costs of such Medical
Benefits for the Employee as well as any of Employee’s dependents, not including
Employee’s spouse, shall be borne by the Company. The Company, in its
sole discretion, may at any time amend or terminate its benefit plans or
programs.
(c) The
Company shall match Employee’s contributions, if any, made to the Company’s
401(k) plan, dollar for dollar, up to 6% of Employee’s Base Salary per
annum.
(d) Employee
shall be entitled to four (4) weeks paid vacation per annum. Vacation
not taken or used shall be deferred or paid in cash to the extent, if at
all,
consistent with the Company’s employment polices in effect from time to
time.
(e) Employee
shall be entitled to such other benefits as are generally available to other
similarly situated senior level employees of the Company performing similar
functions as Employee.
5.
Termination. Employee’s employment hereunder may be terminated
under the following circumstances:
(a) Death. Employee’s
employment hereunder shall terminate immediately upon Employee’s
death.
(b) Disability. The
Company may terminate Employee’s employment hereunder at any time after Employee
becomes “Disabled.” For purposes of this Agreement, Employee shall
be
“Disabled”
upon the earlier of (i) the date Employee becomes entitled to receive disability
benefits under the Company’s long-term disability plan or (ii) Employee’s
inability to perform the essential functions of the duties and responsibilities
contemplated under this Agreement for a period of more than ninety (90)
consecutive days or for more than one hundred twenty (120) days in any 270-day
period due to physical or mental incapacity or impairment, as determined
in the
reasonable judgment of a physician licensed in the State of California, selected
by the Company. Such termination shall become effective five (5)
business days after the Company gives written notice of such termination
to
Employee or to his legal representative, in accordance with Section 9
hereof.
4
(c) Termination
by the Company without Cause. The Company may terminate
Employee’s employment hereunder without Cause (as hereinafter defined) at any
time after providing written notice to Employee.
(d) Termination
by the Company for Cause. The Company may terminate Employee’s
employment hereunder for Cause at any time after providing written notice
to
Employee, which notice shall provide in reasonable detail the reason(s) for
such
termination. For purposes of this Agreement, “Cause” shall mean any
of the following: (i) Employee’s willful or intentional failure or refusal to
perform or observe any of Employee’s significant duties, responsibilities or
obligations set forth in, or as contemplated under, this Agreement where
such
failure or refusal shall not have ceased or been remedied within thirty (30)
days following written warning from the Company, provided that such obligation
to provide written warning and the related right to cure shall not apply
to (x)
such matters as are not curable, or (y) repeated violations of this clause
(i);
(ii) acts or omissions by Employee involving Employee’s gross negligence related
to the discharge of Employee’s duties; (iii) any act or failure to act by
Employee constituting fraud or involving a knowing, willful or intentional
misrepresentation, theft, embezzlement, dishonesty or moral turpitude
(collectively, “Fraud”); (iv) conviction of (or a plea of
nolocontendere to) an offense which is a felony in the
jurisdiction involved or which is a misdemeanor in the jurisdiction involved
but
which involves Fraud; (v) any willful or intentional act or omission by Employee
which is intended to or which materially injures the reputation, business
or
business relationships of the Company, or Employee’s reputation or business
relationships; (vi) alcoholism, drug abuse or other substance abuse having
a
material adverse effect on the performance of Employee’s duties hereunder; or
(vii) Employee’s willful or intentional failure or refusal to comply with any
reasonable and lawful request or direction of the Company not contrary to
the
provisions of this Agreement, where such failure or refusal shall not have
ceased or been remedied within thirty (30) days following written warning
from
the Company, provided that such obligation to provide written warning and
the
related right to cure shall not apply to (x) such matters as are not curable,
or
(y) repeated violations of this clause (vii).
(e) Termination
by Employee for Good Reason. Employee may terminate Employee’s
employment hereunder at any time for either of the following reasons (a
termination for “Good Reason”): (i) the Company’s breach of any
material provision of this Agreement, which shall continue unremedied for
thirty
(30) days after written notice by Employee to the Company, or (ii) if
Employee is relieved by the Company of primary responsibility for the operations
of the business of the Company, except (x) for Cause, or (y) if Employee
is
given other duties of substantially the same responsibility and importance
to
the Company.
(f) Other
Termination by Employee. Employee may terminate Employee’s
employment hereunder at any time, other than for Good Reason, after providing
thirty (30) days-prior written notice to the Company.
6.
Compensation Following Termination Prior to the End of the
Term. In the event that Employee’s employment hereunder is
terminated prior to the end of the Term, Employee shall be entitled only
to the
following compensation and benefits upon such termination:
5
(a) Termination
by Reason of Death or Disability. In the event that Employee’s
employment is terminated by reason of Employee’s death or Disability,
respectively, the Company shall pay the following amounts to Employee (or
Employee’s spouse or estate, as applicable):
(i) Any
accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof)
for services rendered to the date of termination.
(ii) Any
accrued but unpaid expenses required to be reimbursed pursuant to Section
4(a)
hereof.
(iii) A
pro rata share, based on the portion of the fiscal year in which Employee
was
employed at the time of his death or Disability, of the Annual Bonus to which
Employee would have been entitled had Employee remained employed by the Company
through the end of the then current fiscal year (as determined pursuant to
Section 3(b) hereof). Such amount shall be paid as soon as reasonably
practicable following the calculation thereof at the end of such fiscal
year.
Except
as
otherwise specifically provided herein, in the event Employee’s employment is
terminated pursuant to this Section 6(a), the benefits to which Employee
may be
entitled upon such termination pursuant to the plans, programs and arrangements
referred to in Section 4(b) hereof shall be determined and paid in accordance
with the terms of such plans, programs and arrangements.
(b) Termination
by the Company for Cause or by Employee without Good Reason. In
the event that Employee’s employment hereunder is terminated by the Company for
Cause or by Employee without Good Reason, the Company shall pay the following
amounts to Employee:
(i) Any
accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof)
for services rendered to the date of termination.
(ii) Any
accrued but unpaid expenses required to be reimbursed pursuant to Section
4(a)
hereof.
(c) Termination
by the Company Without Cause or by Employee for Good Reason.
(A) In
the event that Employee’s employment hereunder is terminated by the Company
without Cause or by Employee for Good Reason, the Company shall pay the
following amounts to Employee:
(i) Any
accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof)
for services rendered to the date of termination.
(ii) Any
accrued but unpaid expenses required to be reimbursed pursuant to Section
4(a)
hereof.
(iii) Base
Salary for a period of twelve (12) months from the date of
termination.
(iv) A
pro rata share, based on such period of the fiscal year in which Employee
was
employed, of Annual Bonus to which Employee would have been entitled had
Employee remained employed by the Company through the end of the then current
fiscal year (as determined pursuant to Section 3(b) hereof); provided,
however, that Employee shall be entitled to the entire Annual Bonus
to
which Employee would have been entitled had Employee remained employed by
the
Company through the end of the then current fiscal year if, at the time of
termination of Employee’s employment pursuant to this Section 6(c), Employee was
employed by the Company for at least the first six (6) months of such fiscal
year. Such amount shall be paid as soon as reasonably practicable
following the calculation thereof at the end of such fiscal year.
6
(B) Notwithstanding
the foregoing, the Company shall have no obligation to make any further payments
pursuant to Section 6(c)(A)(iii) or 6(c)(A)(iv) hereof in the event that
Employee breaches any of his obligations set forth in Section 7
hereof.
(C) Except
as otherwise specifically provided herein, in the event Employee’s employment is
terminated pursuant to this Section 6(c), the benefits to which Employee
may be
entitled upon such termination pursuant to the plans, programs and arrangements
referred to in Section 4(b) hereof shall be determined and paid in accordance
with the terms of such plans, programs and arrangements.
(d) General. In
the event that Employee’s employment is terminated for any reason, Employee
shall cease to be an employee of the Company for all purposes, and, except
as
may be provided under this Agreement or under the terms of any incentive
compensation, employee benefit or fringe benefit plan applicable to Employee
at
the time of Employee’s termination prior to the end of the Term, shall have no
right to receive any other compensation, employee benefits or perquisites,
or to
participate in any other plan, arrangement or benefit, with respect to any
future period after such termination. In the event that Employee’s
employment is terminated for any reason, the Company’s payment of salary and
other amounts specifically provided for in the applicable previous paragraph
of
this Section 6 shall constitute complete satisfaction of all payment obligations
of the Company to Employee pursuant to this Agreement, and Employee’s rights set
out in this Section 6 shall constitute Employee’s sole and exclusive rights and
remedies as a result of any actual or constructive termination of his employment
hereunder.
7.
Non-Competition and Non-Solicitation; Non-Disclosure of Proprietary
Information; Surrender of Records; Company Property.
(a) Non-Competition Employee
acknowledges and recognizes the highly competitive nature of the Company’s
business and that Employee’s position with the Company and access to the
Company’s confidential records and proprietary information renders Employee
special and unique. In consideration of payments made and to be made
by the Company to Employee pursuant to this Agreement (including, without
limitation, pursuant to Section 3 hereof), Employee agrees that (A) during
the
Term and until one year thereafter, or (B) until such time that Employee’s
employment is terminated by the Company without Cause or by Employee for
good
reason prior to the end of the Term, Employee will not, directly or indirectly,
in the United States or any other place in which the Company then does business,
engage in, or be affiliated in any manner with any individual, partnership,
venture, unincorporated association, organization, syndicate, corporation,
limited liability company, or other entity, trust and trustee, executor,
administrator or other legal or personal representative, or any government
or
agency or political subdivision thereof (any of the foregoing, a “Person”)
engaged in, the business of manufacturing, marketing, distributing and/or
selling (A) nutraceutical products, including but not limited to dietary
supplements and pharmaceuticals; (B) any other product categories the Company
is
actively manufacturing, marketing, distributing and/or selling as of the
date of
termination or expiration of this Agreement; or (C) any other product categories
manufactured, marketed, distributed and/or sold by the Company during the
Term.
(c) Non-Solicitation. In
further consideration of the payments made and to be made by the Company
to
Employee pursuant to this Agreement (including, without limitation, pursuant
to
Section
3
hereof), Employee agrees that (A) during the Term and until one year thereafter,
or (B) until such time that Employee’s employment is terminated by the Company
without Cause or by Employee for good reason prior to the end of the Term,
Employee shall not, directly or indirectly, on his own behalf or on behalf
of
any Person, (A) advise or encourage any employee, agent, consultant,
representative, customer, licensor, vendor or supplier of the Company to
terminate his, her or its relationship with the Company, or (B) solicit or
attempt to solicit or participate in the solicitation of or employ or otherwise
engage any employee, agent, consultant or representative of the Company,
or
otherwise encourage any such person to become an employee, agent, representative
or consultant of or to any other Person.
7
(d) Proprietary
Information. Employee acknowledges that during the course of
Employee’s employment with the Company Employee will necessarily have access to
and make use of proprietary information and confidential records of the
Company. Employee covenants that Employee shall not, during the Term
or any time thereafter (irrespective of the circumstances under which Employee’s
employment with the Company terminates), directly or indirectly, use for
Employee’s own purpose or for the benefit of any person or entity other than the
Company, nor otherwise disclose, any proprietary information of which Employee
has knowledge to any person or entity, unless such disclosure has been
authorized in writing by the Company or is otherwise required by
law. Employee acknowledges and understands that the term “proprietary
information” includes, but is not limited to, patents, copyrights and trade
secrets, including, without limitation: (i) the proprietary software products,
programs, applications and processes utilized by or on behalf of the Company
to
the extent such information is unique to the Company or is not known to others
outside the Company; (ii) the name and/or address of any customer, licensor
or
vendor of the Company, to the extent confidential, or any proprietary
information concerning the transactions or relations of any customer of the
Company with the Company or any of its principals, directors, employees or
agents; (iii) any proprietary information concerning any product, technology
or
procedure employed by or on behalf of the Company but not generally known
to its
customers or competitors, or under development by or being tested by or on
behalf of the Company but not at the time offered generally to customers;
(iv)
any information which is generally regarded and treated as confidential or
proprietary in any line of business engaged in by or on behalf of the Company;
(v) information belonging to customers or affiliates of the Company or any
other
individual or entity which the Company has agreed to hold in confidence
(provided that Employee has knowledge of the Company’s duty to hold such
third-party information in confidence); and (vi) all written, graphic or
other
material relating to or containing any of the foregoing. The term
“proprietary information” shall not include information generally available to
or known by the public or in the industry, or information that is or becomes
available to Employee on a non-confidential basis from a source other than
the
Company or the Company’s stockholders, principals, directors, officers,
employees or agents (other than as a breach of any obligation of
confidentiality).
(e) Confidentiality
and Surrender of Records. Employee shall not, during the Term or
any time thereafter (irrespective of the circumstances under which Employee’s
employment with the Company terminates), except as required by law or as
is
necessary for the performance of Employee’s duties hereunder, directly or
indirectly, publish, make known or in any fashion disclose any confidential
records to, or permit any inspection or copying of confidential records by,
any
Person, and Employee shall not retain, and shall deliver promptly to the
Company, any of the same following termination of Employee’s employment for any
reason or upon request by the Company. The term “confidential
records” means all correspondence, memoranda, files, manuals, books, designs,
sketches, lists, financial, operating or marketing records, magnetic tape,
or
electronic or other media or equipment for records of any kind which may
be in
Employee’s possession or under Employee’s control or accessible to Employee
which may contain any proprietary information. All confidential
records shall be and remain the sole property of the Company during the Term
and
thereafter.
(f) Disclosure
Required by Law. In the event Employee is required by law or
court order to disclose any proprietary information or confidential records
of
the Company, Employee shall provide the Company with prompt written notice
so
that the Company may seek a protective order or other appropriate remedy,
and if
such protective order or other remedy is not obtained, Employee shall furnish
only that portion of the proprietary information that is legally required
as
determined by counsel to the Company.
8
(g) No
Other Obligations. Employee represents and warrants to the
Company that Employee is not precluded or limited in Employee’s ability to
undertake or perform the duties described herein by any contract, agreement,
or
restrictive covenant. Employee covenants that Employee shall not
employ the trade secrets or proprietary information of any other Person in
connection with Employee’s employment by the Company.
(h) Confidentiality
of this Agreement. Employee agrees to keep confidential the terms
of this Agreement, to the extent public disclosure is not made by the Company
as
provided below. This provision does not prohibit Employee from
providing this information as required by law or to his attorneys, accountants
or business advisors for purposes of obtaining legal, tax or business advice;
provided, however, that Employee shall be responsible for breaches of the
confidentiality restrictions contained herein by such persons as if Employee
had
breached such restrictions. The Company shall not disclose the terms
of this Agreement except as necessary in the ordinary course of its business,
as
required by law or as required by any governmental or quasi-governmental
entity
or any self regulatory organization.
All
rights (if any) in reports,
materials, inventions, processes, discoveries, improvements, modifications,
know-how or trade secrets conceived, developed or otherwise made by Employee
during the Term, alone or with others, and in any way relating to the present
or
future products or business of the Company (collectively, the “Developments”),
shall be the sole property of the Company. Employee agrees to, and
hereby does, assign to the Company for no consideration all of Employee’s right,
title and interest in and to all Developments. Employee agrees that
all such Developments that are copyrightable shall constitute works made
for
hire under the copyright laws of the United States and Employee hereby assigns
to the Company all copyrights and other proprietary rights Employee may have
in
any such Developments to the extent that they might not be considered works
made
for hire. Employee shall make and maintain adequate and current
written records of all Developments, and shall disclose all Developments
fully
and in writing to the Company promptly after development of the same, and
at any
time upon request.
(i) Enforcement. Employee
acknowledges and agrees that, by virtue of Employee’s position, Employee’s
services, and access to and use of proprietary information and confidential
records, any violation by Employee of any of the undertakings contained in
this
Section 7 would cause the Company immediate, substantial and irreparable
injury
for which it has no adequate remedy at law. Accordingly, Employee
agrees that in the event of a breach by Employee of any said undertakings,
the
Company will be entitled to seek temporary and permanent injunctive relief
in
any court of competent jurisdiction (without the need to post any bond and
without proving that damages would be inadequate). Rights and
remedies provided for in this Section 7 are cumulative and shall be in addition
to rights and remedies otherwise available to the parties hereunder or under
applicable law.
8.
No Third Party Rights. The parties do not intend the benefits
of this Agreement to inure to any person or entity not a party to this Agreement
(other than to the spouse or estate of Employee in the case of death or
Disability of Employee, in which case such spouse or estate shall be entitled
to
only those rights set forth in Section 6(a) hereof). Notwithstanding
anything contained in this Agreement, this Agreement shall not be construed
as
creating any right, claim or cause of action against any party by any
person
or
entity not a party to this Agreement (other than the spouse or estate of
Employee in the case of the death or Disability of Employee, in which case
such
spouse or estate shall be entitled to only those rights set forth in Section
6(a) hereof).
9
9.
Notices. Unless otherwise provided herein, any notice required
or permitted under this Agreement shall be given in writing and shall be
deemed
to have been duly given upon personal delivery to the party to be notified
or
three (3) days after being mailed by United States certified or registered
mail,
postage prepaid, return receipt requested or one (1) day after being sent
by
Federal Express or other recognized overnight delivery to the following
respective addresses, or at such other address as each may specify by notice
to
the other:
Notice
to the Company:
Baywood
International, Inc.
00000
Xxxxx 00xx
Xxxxx, Xxxxx 0
Xxxxxxxxxx,
Xxxxxxx 00000
Attention: Secretary
Facsimile: (000)
000-0000
Notice
to Employee:
Xxxx
Xxxxxxxxxx
10. Assignability;
Binding Effect. This Agreement is a personal contract calling for
the provision of unique services by Employee, and Employee’s obligations
hereunder may not be sold, transferred, assigned, pledged or
hypothecated. In the event of any attempted assignment or transfer of
obligations hereunder by Employee contrary to the provisions hereof, the
Company
will have no further liability for payments hereunder. The rights and
obligations of the Company hereunder will be binding upon and inure to the
benefit of the successors and assigns of the Company.
11. Entire
Agreement; Amendment; Waiver. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof. This Agreement shall not be modified or amended except by a
written instrument duly executed by each of the parties hereto. Any
waiver of any term or provision of this Agreement shall be in writing signed
by
the party charged with giving such waiver. Waiver by either party
hereto of any breach hereunder by the other party shall not operate as a
waiver
of any other breach, whether similar to or different from the breach
waived. No delay on the part of the Company or Employee in the
exercise of any of their respective rights or remedies shall operate as a
waiver
thereof, and no single or partial exercise by the Company or Employee of
any
such right or remedy shall preclude other or further exercise
thereof.
12. Severability. If
any term or provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such term or provision shall be ineffective
to the
extent of such invalidity or unenforceability without invalidating the remaining
terms and provisions hereof, and this Agreement shall be construed as if
such
invalid or unenforceable term or provision had not been contained
herein.
13. Survivability. The
provisions of this Agreement, which by their terms call for performance
subsequent to termination of Employee’s employment hereunder, or of this
Agreement, shall survive such termination.
14. Counterparts
and Headings. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all which together
shall constitute one and the same instrument. Facsimile signatures
shall be given the same legal effect as original signatures. All
headings are inserted for convenience of reference only and shall not affect
the
meaning or interpretation of this Agreement.
10
15. Governing
Law. This Agreement shall be construed in accordance with the internal laws
of the State of Arizona, without regard to principles of conflicts of
laws.
16. Waiver
of Jury Trial. Each party hereto irrevocably waives, to the
fullest extent permitted by law, all rights to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise)
arising out of or relating to this Agreement or any of the transactions
contemplated hereby.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above
written.
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BAYWOOD
INTERNATIONAL, INC.
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By:
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Name: Xxxx
X. Xxxxxxx
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Title: Secretary
& Director
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EMPLOYEE
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______________________________
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XXXX
XXXXXXXXXX
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