OMNIALUO, INC. AGREEMENT WITH PRINCIPAL SHAREHOLDER, CHIEF EXECUTIVE OFFICER AND DIRECTOR
OMNIALUO,
INC.
THIS
AGREEMENT (the “Agreement”) is made as of the 9th day of October, 2007 and is by
and between Wentworth II, Inc, a Delaware corporation which will change its
corporate name to OmniaLuo, Inc. (hereinafter referred to as “Company”) and
Xxxxx Xxx (hereinafter referred to as the “CEO”).
BACKGROUND
On
October 9, 2007, the Company entered into a Share Exchange Agreement, which
is
attached to the Company’s October 9, 2007 Current Report on Form 8-K under the
U.S. Securities Exchange Act of 1934, as amended (the “Exchange Agreement”),
with Omnia Luo Group Limited, a British Virgin Islands company (“Omnia”),
pursuant to which the Company will, subject to the terms and conditions thereof,
acquire all of the equity interest of Omnia and, indirectly, all of Omnia’s
subsidiaries, in exchange for 93.75% of the Company’s Common Stock on a fully
diluted basis as of the time of the closing of the exchange under the Exchange
Agreement (the “Exchange”). Concurrently with the Exchange, the Company will
consummate a private equity financing with accredited investors of at least
$4
million (the “Financing”). CEO is the principal shareholder and chief executive
officer and designer of Omnia.
The
closing of the Exchange is conditioned, among other things, on the prior
execution and delivery by CEO of this Agreement, the consummation of the
Financing is conditioned on the prior closing of the Exchange, and the
contemplated execution and delivery of this Agreement by the CEO has been
disclosed to investors in the Financing. This Agreement shall therefore be
deemed an integral part of the Exchange Agreement and a material term of the
Exchange.
The
Board
of Directors of the Company desires to appoint CEO as the chief executive
officer of the Company and as a director of the Company and to have CEO perform
the duties of chief executive officer and director and CEO desires to be so
appointed for such positions and to perform the duties required of such
positions in accordance with the terms and conditions of this Agreement and
applicable Delaware law.
The
CEO
acknowledges and agrees that her entry into this Agreement and agreement to
all
of its terms, including, without limitation, Sections 5 and 6, is a necessary
inducement to the approval and consummation of the Exchange by the Company
and
by other shareholders of Omnia, and that she will receive substantial and direct
benefits from the consummation of the Exchange.
AGREEMENT
In
consideration for the above recited promises and the mutual promises contained
herein, the adequacy and sufficiency of which are hereby acknowledged, Company
and CEO hereby agree as follows:
1. DUTIES.
The
Company requires that CEO be available to perform the duties of chief executive
officer and as an inside (non-independent) director and such other duties
customarily related to these positions as may be determined and assigned by
the
Board of Directors of the Company and as may be required by the Company’s
constituent instruments, including its certificate of incorporation, bylaws
and
its corporate governance and board committee charters, each as amended or
modified from time to time, and by applicable law, including the Delaware
General Corporation Law. CEO agrees to devote as much time as is necessary
to
perform completely the duties as Chief executive officer and as a director
of
the Company, including duties as a member of such committees as CEO may
hereafter be appointed to. The CEO will perform such duties described herein
in
accordance with the general fiduciary duties of officers and directors arising
under the Delaware General Corporation Law. The Company and the CEO acknowledge
and agree that the CEO is also serving as the General Manager, chief designer,
Legal Representative and as a director of Shenzhen Oriental Fashion Co., Ltd,
the Company’s primary operating subsidiary (“Oriental Fashion” or the “Operating
Company”), that a substantial portion of the CEO’s time and attention will be
devoted to the business and affairs of Oriental Fashion, that such time and
attention to the business and affairs of Oriental Fashion is for the benefit
of
the Company and in furtherance of the CEO’s duties and responsibilities to the
Company under this Agreement and applicable law, and that the CEO will not
be
required to allocate any fixed minimum required amount of time to any one entity
during any one time period, although is expected and required to devote
substantially all of her time and attention during normal business hours to
the
affairs of the Company and/or Oriental Fashion.
2. TERM.
The
term of this Agreement shall commence as of the date of the consummation of
the
Exchange, and shall continue until the CEO’s removal or resignation from all
executive positions with both the Company and Oriental Fashion (the
“Term”).
3. COMPENSATION. The
CEO
is and shall be compensated separately by Oriental Fashion for all future
services provided to Oriental Fashion in accordance with the terms of a separate
employment agreement dated as of January 1, 2007 between Oriental Fashion and
the CEO (the “Operating Company Employment Agreement”). The CEO shall also be
eligible to receive such other compensation, and to participate in such other
Company executive benefit plans, as is determined by the Company’s Board of
Directors (including in any such determination the affirmative vote or consent
of a majority of the Company’s independent directors).
4. EXPENSES. In
addition to the compensation provided in paragraph 3 hereof, the Company will
reimburse CEO for reasonable and necessary business related expenses incurred
in
good faith in the performance of CEO’s duties for the Company. Such payments
shall be made by the Company upon submission by the CEO of a signed statement
itemizing the expenses incurred. Such statement shall be accompanied by
sufficient documentation to support the expenditures. Reimbursement for
individual expenses (or groups of related expenses) exceeding $30,000 shall
require approval of the Company’s Board of Directors or of the Compensation
Committee of the Board.
2
5. CONFIDENTIALITY. The
Company and CEO each acknowledge that, in order for the intents and purposes
of
this Agreement to be accomplished, CEO shall necessarily be developing and
obtaining access to certain confidential information concerning the Company
and
its affairs, including, but not limited to (i) business methods, development,
marketing and sales plans and strategies, (ii) customer lists and customer
relationships, (iii) prices and pricing strategies, (iv) past, present and
future research, (v) training methods, (vi) information systems, inventions,
processes, software codes and specifications, (vii) compilations of information
(including without limitation studies, records, reports, drawings, memoranda,
drafts and any other related information), (viii) trade secrets, patents, works
and any and all other proprietary information whether embodied in products
or
otherwise, (ix) financial data, and (x) any and all other ideas, concepts,
strategies, suggestions and recommendations relating without limitation to
any
of the foregoing or to any products or services offered or developed, or to
be
developed or proposed to be developed by the Company (“Business Information”).
CEO covenants not to, either directly or indirectly, in any manner, utilize
or
disclose to any person, firm, corporation, association or other entity any
confidential Business Information during the Term and for a period of 60 months
thereafter.
6. NON-COMPETITION.
(a) During
the Term and for a period of sixty (60) months following the end of the Term
(the "Restricted Period"), the CEO shall not, directly or indirectly, unless
otherwise approved by the Company’s Board of Directors (including in any such
approval the affirmative vote or consent of a majority of the Company’s
independent directors, and provided further that if there shall then be no
independent directors, such approval shall be ratified by the affirmative vote
or written consent of the holders of a majority of the Company’s shares of
Common Stock which are not held by the CEO, her family relatives or other
officers of the Company or of Oriental Fashion):
| (i) |
in
any manner whatsoever engage, for the CEO’s own personal benefit or for
the benefit of any person or entity other than the Company or any
subsidiary or Company-controlled affiliate, in any capacity in any
business competitive with:
|
(1)
the
Company's current lines of business (which comprise the design, development,
marketing, sale, production and distribution of women’s apparel),
(2)
any
business currently proposed to be engaged in by the Company, any of its
subsidiaries (including Oriental Fashion) or by any Company-controlled
affiliates, with business currently proposed to be engaged in determined by
reference to the description under “Business of the Company” in the draft
prospectus included in the form of SB-2 Registration Statement attached to
the
Company’s Private Placement Memorandum dated September 10, 2007 delivered to
investors in the Financing, or
3
(3)
any
other business engaged in by the Company and primarily involving fashion or
apparel (collectively, the "Company's Business"); or
| (ii) |
have
any interest as owner, sole proprietor, shareholder, partner, lender,
director, officer, manager, employee, consultant, agent or otherwise
in
any business competitive with the Company's Business;
|
provided,
however,
that:
(1)
the
CEO may hold, directly or indirectly, solely as an investment, and with now
role
in operations or management, not more than five percent (5%) of the outstanding
securities of any person or entity notwithstanding the fact that such person
or
entity is engaged in a business competitive with the Company's Business;
(2)
family relatives of the CEO may own, control and manage the business of Shenzhen
Oumeng Industry Co., Ltd. (“Oumeng”) without such activities being attributed to
the CEO, provided Oumeng is at all time in compliance with the terms and
conditions of the Non-Competition Agreement between it and Oriental
Fashion; and
(3)
the
CEO may engage in not-for-profit activities related to the Company’s industry
and its and the industry’s products, but shall keep Company’s Board of Directors
(including the independent directors) advised of such activities on a periodic
basis.
(b) In
addition, during the Restricted Period, the CEO shall not (i) publicize, market
or otherwise associate (whether through financing or otherwise) herself and/or
her name, “Xxx Xxxxx”, “C Luo”, “Omnia Luo” or any derivative of her name,
whether in Chinese or English, in connection with the development or marketing
of any fashion brands, products or accessories, other than fashion brands owned
by the Company, its subsidiaries or Company-controlled affiliates, or (ii)
otherwise develop, enhance, license or support (including making public
appearances on behalf of) any brands, trademarks, designs or any other property
for use in a business competitive with the Company's Business on behalf of
any
person or entity other than the Company, its subsidiaries and Company-controlled
affiliates, provided,
however,
that it
is acknowledged and agreed that the CEO may and will participate in the ordinary
course as a well-known and leading designer in women’s fashion industry-related
trade shows, conferences, presentations and exhibits in which fellow and often
competing designers may provide each other with mutual publicity, support,
encouragement and advice, including public appearances on each others’ behalf,
without violating the terms of this Section 6.
(c) CEO
agrees that if any pending, unregistered or otherwise incomplete transfers
of
the “C-LUO INTUITION” or “CLUO Little Princess” trademarks to third parties are,
for any reason, not completed within 18 months of this Agreement, she will
either (a) terminate and permanently abandon any use of such trademarks, or
(b)
transfer them to Oriental Fashion for no additional consideration.
4
(d) CEO
acknowledges and agrees that she is not entitled to any additional cash, equity
or other compensation under applicable United States law for performance by
her
or enforcement by the Company of the provisions of this Section 6 of this
Agreement. The parties acknowledge that enforcement of any post-employment
non-competition provisions of the Operating Company Employment Agreement may
require payment by Oriental Fashion to the CEO of reasonable compensation as
required by applicable non-U.S. law.
7. NON-SOLICITATION
OF EMPLOYEES.
During
the Term and during the Restricted Period, the CEO shall not, directly or
indirectly, solicit the employment of, or offer employment to, any individual
who is or was at any time within the 12 months preceding such solicitation
or
such offer an employee or full-time consultant to the Company or to any
subsidiary or Company-controlled affiliate, provided, however, that general
advertising to hire employees not directed to any specific individual shall
not
be deemed solicitation of employment for purposes of the foregoing.
| 8. |
ENFORCEMENT
OF RESTRICTIVE COVENANTS; SPECIFIC PERFORMANCE.
|
It
is
expressly understood by and between the Company and the CEO that the covenants
contained in Sections 5, 6 and 7 are an essential element of this Agreement
and
that but for the agreement by the CEO to comply with these covenants and thereby
not to diminish the value of the organization and goodwill of the Company or
any
Company-controlled affiliate or subsidiary of the Company, including relations
with their employees, clients, customers and accounts, the Company would not
enter into this Agreement or permit Oriental Fashion or any other subsidiary
to
enter into compensatory arrangements with the CEO. If, at any time, the
provisions of Sections 5, 6 or 7 shall be determined to be invalid or
unenforceable by reason of being vague or unreasonable as to area, duration
or
scope of activity, such Section shall be considered severable and shall become
and shall be immediately amended solely with respect to such area, duration
and
scope of activity as shall be determined to be reasonable and enforceable by
the
court or other body having jurisdiction over the matter and the CEO hereby
agrees that such Section as so amended shall be valid and binding as though
any
invalid or unenforceable provision had not been included herein. Except as
provided in Sections 5, 6 or 7, nothing in this Agreement shall prevent or
restrict the CEO from engaging in any business or industry in any capacity.
Without intending to limit the remedies available to the Company or its
affiliates or subsidiaries, the CEO hereby agrees that damages at law would
be
an insufficient remedy to the Company or its affiliates or subsidiaries in
the
event that the Executive violates any of the provisions of Section 5, 6 or
7,
and that, in addition to money damages, the Company or its affiliates or
subsidiaries may apply for and, upon the requisite showing, obtain injunctive
relief in any court of competent jurisdiction to restrain the breach or
threatened breach of or otherwise to specifically enforce any of the covenants
contained in Section 5, 6 or 7.
9. ENFORCEMENT
OF OBLIGATIONS TO, AND RIGHTS OF, OPERATING COMPANY AND OTHER
SUBSIDIARIES.
The
CEO
acknowledges and agrees that the CEO’s duties and obligations to, and the rights
of, the Company’s subsidiaries, including Oriental Fashion, under the CEO’s
Operating Company Employment Agreement(s) with the Operating Company, are of
material importance to the Company, and that the Company has a significant
and
continuing interest in the enforcement of those obligations and duties and
assertion of the Operating Company’s rights under those agreements. Therefore
the CEO agrees that the Company shall be entitled to enforce those rights on
behalf of the Company as if the Company were a direct party to those agreements,
and the CEO waives any right to object to the Company’s standing to appear in
any proceeding, whether in the People’s Republic of China or elsewhere, in lieu
of, or in addition to, Oriental Fashion.
5
10. INDEMNIFICATION
FOR NON-ASSUMED LIABILITIES.
(a)
The
CEO
hereby agrees, that provided each of the following conditions is
met:
(i)
a
third party (whether a private party or governmental body or agency) asserts
in
writing that the Company , the Operating Company or any other subsidiary of
the
Company is liable or obligated for debts, liabilities or obligations of Shenzhen
Oumeng Industry Co., Ltd, a company incorporated and organized in Shenzhen,
Guangdong Province, PRC (“Oumeng”), and previously an affiliate of the CEO, to
such third party (a “Claim”); and
(ii)
Oumeng fails within 30 days of demand by the Company or the Operating Company
to
pay in full or otherwise satisfy or provide adequate security for such Claim
(which demand on Oumeng may be authorized without the vote or approval of the
CEO or any director of the Company affiliated with Oumeng);
then
the
CEO will indemnify and hold harmless the Company and/or the Operating Company
or
subsidiary from and against the Claim.
(b)
The
CEO shall not be required to pay any alleged Claim as long as Oumeng is actively
contesting the validity or legality of the Claim as against Oumeng or the
Company or the Operating Company, provided each of the following requirements
is
met:
(i)
such
defense by Oumeng has a good faith basis in law, as supported by an opinion
of
outside counsel to the Operating Company;
(ii)
no
overt action has been taken by the third party to enforce such Claim against
the
Company or Operating Company assets or operations; and
(iii)
the
continued assertion of the Claim does not, in the judgement of the Company’s
Board of Directors, have a material adverse effect on the Company’s business,
operations, financial condition or the market price of its publicly-traded
securities. The existence of a requirement under U.S. securities law for the
Company to publicly disclose the existence of a Claim, or the disclosure by
Company of such Claim, shall not by itself constitute a failure to meet this
requirement.
11. ARBITRATION. Except
as
provided in Section 8, and except to the extent not permitted by applicable
local law for all enforcement proceedings on behalf of any subsidiary pursuant
to Section 9, or to the extent that a parallel arbitration proceeding in the
PRC
has been commenced by the CEO, the Company or the Operating Company and has
not
yet concluded with a decision, all controversies, claims or disputes arising
out
of or relating to this Agreement shall be settled by binding arbitration before
a board of three arbitrators under the rules of the American Arbitration
Association in San Francisco, as the sole and exclusive remedy of either party,
and judgment upon such award rendered by the arbitrators(s) may be entered
in
any court of competent jurisdiction. The CEO shall select one arbitrator, the
Company (at the direction of the independent directors of the Company) shall
select a second arbitrator, and the two arbitrators so chosen shall select
the
third arbitrator. The costs of arbitration shall be borne by the unsuccessful
party or otherwise as determined by the arbitrators in their discretion.
6
12. TERMINATION.
With or
without cause, the Company and CEO may each terminate this Agreement at any
time
upon ten (10) days written notice, and the Company shall be obligated to pay
to
CEO any compensation and expenses due up to the date of the termination, but
the
provisions of Sections 5, 6, 7, 8, 9, 10, 11 and 13 shall survive such
termination. If the CEO voluntarily resigns prior to December 31st of any year,
the Company shall be entitled to receive, upon written request by the Company,
a
prorated refund of any Company-paid compensation that relates to the period
after the termination date. Such written request must be submitted within ninety
(90) days of the termination date. Nothing contained herein or omitted herefrom
shall prevent the shareholder(s) of the Company from removing the CEO as a
director with immediate effect at any time for any reason.
13. INDEMNIFICATION.
(a) The
Company shall indemnify, defend and hold harmless CEO, to the full extent
allowed by the law of the State of Delaware and as provided by, or granted
pursuant to, any charter provision, bylaw provision, agreement (including,
without limitation, the Indemnification Agreement executed herewith), vote
of
stockholders or disinterested directors or otherwise, both as to action in
CEO’s
official capacity and as to action in another capacity while holding such
office, provided
that this Section shall not be applicable to the CEO’s indemnification
obligations under Section 10.
The
Company and the CEO may enter into the Company’s standard form of
Indemnification Agreement for directors and executive officers, provided that
that Indemnification Agreement shall not be applicable to the CEO’s
indemnification obligations under Section 10.
(b) The
CEO
shall indemnify, defend and hold the Company and Oriental Fashion harmless
from
and against any damages incurred or suffered by the Company or Oriental Fashion,
as the case may be, resulting from or arising out of any failure by the CEO
to
perform any covenant of the CEO in Sections 5, 6 or 7 of this Agreement.
14. EFFECT
OF WAIVER.
The
waiver by either party of the breach of any provision of this Agreement shall
not operate as or be construed as a waiver of any subsequent breach
thereof.
15. NOTICE.
Any and
all notices referred to herein shall be sufficient if furnished in writing
at
the addresses specified on the signature page hereto or, if to the Company,
to
the Company’s address as specified in filings made by the Company with the U.S.
Securities and Exchange Commission.
7
16. GOVERNING
LAW.
This
Agreement shall be interpreted in accordance with, and the rights of the parties
hereto shall be determined by, the laws of the State of Delaware without
reference to that state’s conflicts of laws principles.
17. ASSIGNMENT.
The
rights and benefits of the Company under this Agreement shall be transferable,
and all the covenants and agreements hereunder shall inure to the benefit of,
and be enforceable by or against, its successors and assigns. The duties and
obligations of the CEO under this Agreement are personal and therefore CEO
may
not assign any right or duty under this Agreement without the prior written
consent of the Company.
18. MISCELLANEOUS.
If any
provision of this Agreement shall be declared invalid or illegal, for any reason
whatsoever, then, notwithstanding such invalidity or illegality, the remaining
terms and provisions of the within Agreement shall remain in full force and
effect in the same manner as if the invalid or illegal provision had not been
contained herein.
19. ARTICLE
HEADINGS.
The
article headings contained in this Agreement are for reference purposes only
and
shall not affect in any way the meaning or interpretation of this
Agreement.
20. COUNTERPARTS.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one instrument. Facsimile execution and delivery
of
this Agreement is legal, valid and binding for all purposes.
21. ENTIRE
AGREEMENT. Except
as
provided elsewhere herein, this Agreement sets
forth the entire agreement of the parties with respect to
its
subject
matter and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by
any
officer, employee or representative of any party to this
Agreement with respect
to
such
subject matter.
[Signature
Page Follows]
8
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and signed as of the day and year first above written.
|
WENTWORTH,
INC.
|
||
| |
|
|
| By: | ||
|
Name: Xxxxx
X. Xxxxxxx
|
||
| Title: President | ||
|
CEO
|
||
| |
|
|
| By: | ||
|
Name: Xxxxx Xxx |
||
|
Address:
|
||
