EXHIBIT 10.1
FIRST AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
This First Amendment to Executive Employment Agreement (this
"AMENDMENT"), effective as of June 15, 2004, is made and entered into by and
between SeaLife Corporation, a Delaware corporation (the "COMPANY"), and Barre
Rorabaugh (the "EXECUTIVE"), and amends that certain Executive Employment
Agreement (the "AGREEMENT"), made and entered into as of June 14, 2004, between
the Company and the Executive.
Terms used but not defined herein shall have the meanings ascribed to
such terms in the Agreement.
RECITALS
WHEREAS, pursuant to the terms of the Agreement, the Company engaged
the Executive as President of the Company's wholly-owned subsidiary, SeaLife
Marine Products, Inc. (the "SUBSIDIARY"), with such duties and responsibilities
as those normally and customarily vested in the office of President of a
corporation;
WHEREAS, the Company and the Executive desire to amend the Agreement to
provide for "Gross-Up Payments" to reflect the agreement between the parties
that Executive shall be entitled to additional compensation in the event that
value of the shares Executive receives on the date of payment is more than
Executive's net proceeds upon the sale of such shares.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and agreeing to be bound by the
terms hereof, the parties to this Amendment hereby agree as follows:
AMENDMENT
I. Section 4 of the Agreement shall be amended and restated in
its entirety to read as follows:
"4. COMPENSATION; EXECUTIVE BENEFIT PLANS
4.1 BASE SALARY. The Company shall pay to the Executive a
base salary (the "BASE SALARY") at an annual rate of One Hundred Fifty
Thousand Dollars ($150,000) during each fiscal year in which this
Agreement is in effect (the "REGULAR COMPENSATION ARRANGEMENT"),
subject to adjustment, upward but not downward, by the Board on an
annual basis at the beginning of each fiscal year. The Base Salary
shall be payable in installments throughout the year in the same manner
and at the same times the Company pays base salaries to other executive
officers of the Company.
Notwithstanding the foregoing, for the period commencing on the
Effective Date and ending on the date the Company completes a
"QUALIFIED FINANCING" (as defined below), the Base Salary will be
payable as follows (the "PRE-FINANCING COMPENSATION ARRANGEMENT"): (i)
payment monthly, at the Company's option, of either (a) a cash amount
equal to two hundred percent (200%) of the applicable minimum wage
amount then in effect in the State of California for a month of work
based on forty hours of work per week (currently calculated to be
$2,340.00 in the aggregate for a month of work) (the "CASH PORTION"),
or (b) a number of shares of common stock, par value $0.0001 per share
of the Company ("COMMON Stock"), having a value at the time of issuance
(the "ISSUANCE DATE"), based on the average trading price of Common
Stock, as quoted on the Over The Counter Bulletin Board, for the twenty
(20) consecutive trading days immediately preceding the date of
issuance of such shares of Common Stock (the "20-DAY VOLUME WEIGHTED
AVERAGE VALUE"), equal to the Cash Portion (the "OPTIONAL COMPENSATION
COMMON STOCK"), to be issued to the Executive without restriction
pursuant to a Form S-8 Registration Statement (the "S-8 REGISTRATION
STATEMENT"); plus (ii) issuance monthly of a number of shares of Common
Stock having a 20-day Volume Weighted Average Value of not less than
$10,160.00 (the "MANDATORY COMPENSATION COMMON STOCK" and together with
the Optional Compensation Common Stock, the "COMPENSATION COMMON
STOCK"), to be issued to the Executive without restriction pursuant to
the S-8 Registration Statement. For purposes of this Agreement, a
"QUALIFIED FINANCING" shall mean the completion of an equity or debt
financing by the Company in which a gross amount equal to or greater
than $1,000,000 is invested in or loaned to the Company in one or a
series of related transactions. The Company will use commercially
reasonable efforts to complete the Qualified Financing within six (6)
months following the Effective Date. The Company will prepare and file
the S-8 Registration Statement as soon as reasonably practicable
following the Effective Date, and will update the S-8 Registration
Statement and otherwise keep it current as necessary in order for the
Executive to receive and sell the Compensation Common Stock as it is
issued pursuant to valid exemptions from registration statement and
prospectus delivery requirements under applicable federal and state
securities laws. The foregoing Pre-Financing Arrangement will be
pro-rated to and including the date on which a Qualified Financing is
completed, and thereafter the Regular Compensation Arrangement will
apply.
4.2 GROSS-UP PAYMENTS
(a) In the event that all of the Compensation
Common Stock received by the Executive for services provided
during any one month period (the "COMPENSATION PERIOD") is
offered and sold by Executive pursuant to an effective
registration statement on Form S-8 within 3 months of the
Issuance Date of such Compensation Common Stock, and the
proceeds of the sale of such Compensation Common Stock, less
the brokers fees attributable to such sales (the "NET
PROCEEDS"), are less than the 20-day Volume Weighted Average
Value as of the Issuance Date of such shares (the "ISSUANCE
VALUE"), then Executive shall be entitled to receive an
additional payment (a "GROSS-UP PAYMENT") in an amount equal
to the difference between the Net Proceeds and the Issuance
Value (the "GROSS-UP VALUE"), which shall be payable on the
last day of any calendar month in which the Company received
notice of such circumstances pursuant toe SECTION 4.2(b)
hereof, at the Company's option, in either (a) cash, or (b) a
number of shares of Common Stock having a 20-day Volume
Weighted Average Value at the time of issuance (the "ISSUANCE
DATE").
(b) The determination as to whether a Gross-Up
Payment is required pursuant to this Agreement and the amount
of such Gross-Up Payment shall be made by Executive and
delivered, in writing, to the Company, together with detailed
supporting calculations and documentation (a "GROSS-UP
NOTICE"). Upon completion of the sale of all common stock
issued to Executive as a Gross-Up Payment for any particular
Compensation Period, Executive shall provide written notice to
Company within ten (10) business days, of the Net Proceeds
attributable to the sale of such shares (the "NET PROCEEDS
NOTICE")
(c) If the Net Proceeds from the sale of
Compensation Common Stock plus any Gross-Up Payment related to
a particular Compensation Period will not equal or exceed the
related Issuance Value of the original Compensation Common
Stock Company shall continue to provide Gross-up Payments for
such Compensation Period consistent with SECTIONS 4.2(a) and
(b) hereof, until the Net Proceeds and any subsequent Gross-Up
Payments equal or exceed the Issuance Value for such
Compensation Period.
(d) If, after issuance by the Company of a
Gross-up Payment with respect to any particular Compensation
Period, the Net Proceeds from the sale of any Compensation
Common Stock plus any Gross-Up Payment related to a particular
Compensation Period exceeds the related Issuance Value of the
original Compensation Common Stock (an "EXCESS PAYMENT"), as
reported to the Company in any Net Proceeds Notice, then the
Executives next monthly installment of Base Salary shall be
reduced by an amount equal to the Excess Payment.
4.3 SEVERANCE. In the event that the Executive's
employment is terminated pursuant to SECTION 3(e) above, subject to the
qualification set forth below with respect to terminations that occur
within one (1) year following the Effective Date: (i) the Company shall
continue to pay the Executive's then-current Base Salary in accordance
with SECTION 4.1 above, (A) for a period of two (2) months if the
effective date of such termination occurs prior
to the three (3)-month anniversary of the Effective Date; (B) for a
period of four (4) months if the effective date of such termination
occurs between the three (3)-month and the six (6)-month anniversaries
of the Effective Date; (C) for a period of six (6) months if the
effective date of such termination occurs between the six (6)-month and
the twelve (12)-month anniversary of the Effective Date; and (D) for a
period of twelve (12) months if the effective date of such termination
occurs after the twelve (12)-month anniversary of the Effective Date;
and (ii) the Executive shall retain only those options described in
SECTION 4.6 below that have vested prior to the effective date of such
termination. Notwithstanding the foregoing, in the event the
Executive's employment is terminated in accordance with SECTION 3(e)
above within one (1) year following the Effective Date, the severance
payment described above will be paid (i) one-half in the form of Common
Stock having a value at the time of issuance, based on the average
trading price of Common Stock, as quoted on the Over The Counter
Bulletin Board, for the twenty (20) consecutive trading days
immediately preceding the date of issuance of such shares of Common
Stock, of not less than one-half of the dollar amount of the applicable
severance payment to be issued to the Executive without restriction
pursuant to a Form S-8 Registration Statement, and (ii) one-half in the
form of Common Stock having a value at the time of issuance, based on
the average trading price of Common Stock, as quoted on the Over The
Counter Bulletin Board, for the twenty (20) consecutive trading days
immediately preceding the date of issuance of such shares of Common
Stock, of not less than one-half of the dollar amount of the applicable
severance payment the resale of which is subject to the restrictions
under Rule 144 promulgated under the Securities Act of 1933, as
amended. In addition, the Company shall not be obligated to pay the
Executive any amounts hereunder following the termination of the
Executive's employment pursuant to SECTION 3(e) above from and after
any time that the Executive accepts an employment or consulting
position with any person or entity that is determined by the Board, in
the exercise of its reasonable discretion, to be a competitor of the
Company.
4.4 PERFORMANCE BONUS. In addition to the Base Salary to
be paid to the Executive hereunder, the Company shall pay the Executive
a performance bonus (the "BONUS") determined in accordance with a
management incentive plan to be agreed upon between the Executive and
the Board (the "MANAGEMENT INCENTIVE PLAN") on an annual basis. The
Management Incentive Plan will provide for the payment of Bonus amounts
equal to the respective percentages of the Company's targeted earnings
before interest and tax set forth in EXHIBIT A attached hereto and by
this reference made a part hereof, and for payments of such lesser or
greater Bonus amounts upon achieving results less than or greater than
the targeted objectives as shall be contained in the applicable
Management Incentive Plan.
4.5 VACATION. The Executive shall be entitled each year
to vacation for a minimum of four (4) calendar weeks, plus such
additional
period or periods as the Board may approve in the exercise of its
reasonable discretion, during which time his compensation shall be paid
in full.
4.6 STOCK OPTIONS. The Executive shall be granted options
(the "OPTIONS") to purchase shares of Common Stock in the respective
amounts set forth on EXHIBIT A upon achievement of the respective
targets specified thereon, in each case at a per share exercise price
equal to the "fair market value" of such shares on the date of grant as
set forth in the Company's Stock Incentive Plan (the "STOCK Plan"). The
Options shall be issued pursuant to the terms of the Stock Plan, and
shall vest as to 1/48th of the Options on the last day of each calendar
month thereafter until fully vested. The Option Agreement pursuant to
which the Options are granted will provide for the acceleration of all
vesting upon a change of control, as defined in the Option Agreement.
4.7 EXPENSE REIMBURSEMENTS. The Executive shall be
entitled to reimbursement from the Company for the reasonable costs and
expenses which he incurs in connection with the performance of his
duties and obligations under this Agreement in a manner consistent with
the Company's practices and policies as adopted or approved from time
to time by the Board for executive officers.
4.8 WITHHOLDING. The Company may deduct from any
compensation payable to the Executive the minimum amounts sufficient to
cover applicable federal, state and/or local income tax withholding,
old-age and survivors' and other social security payments, state
disability and other insurance premiums and payments ("TAXES"). To the
extent that the Executive receives Compensation Common Stock, Executive
shall be responsible for any and all amounts of Taxes the Company is
required to (or would be required to) pay or withhold as a result of
the grant of Compensation Common Stock in accordance with this
Agreement. Accordingly, within five (5) business days of the delivery
of any shares of Compensation Common Stock to the Executive, the
Executive shall pay over to the Company the amounts of minimum
withholding requirements of Taxes (as stated in a written notice
delivered to the Executive concurrently with the delivery of
Compensation Common Stock) the Company will be required to (or would be
required to) pay in connection with the issuance of any and all
Compensation Common Stock to the Executive in accordance with this
Agreement.
4.9 PAYMENT MECHANICS. The Company may issue,
periodically as payments are due or as an aggregate sum for a period
agreed upon by the Company and the Executive, any Compensation Common
Stock issuable pursuant to the terms of SECTION 4 of this Agreement. In
the event the Company determines to issue an aggregate sum for any
agreed upon period pursuant to this SECTION 4.9, the Executive shall
only be permitted to draw down or otherwise receive and utilize such
shares of Compensation Common Stock as shall be sufficient to
compensate the Executive for any periodic
payments then due pursuant to the terms of this Agreement, upon written
approval of such draw down from the Company. Unless the Company
provides written notice to the Executive detailing the reasons for
which it shall not provide such approval, the Company shall provide
written approval pursuant to this SECTION 4.9 no later than the date
that any periodic payment required under SECTION 4 shall become due."
II. Except as expressly modified herein, all terms and conditions
of the Agreement are hereby ratified, confirmed and approved and shall remain in
full force and effect. In the event of any conflict or inconsistency between
this Amendment and the Agreement, this Amendment shall govern.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Executive Employment Agreement as of the date first above written.
PARENT SEALIFE CORPORATION,
a Delaware corporation
By /s/ Xxxxxx XxXxxxxx
-------------------
Name: Xxxxxx XxXxxxxx
Title: CEO
EXECUTIVE /s/ Barre Rorabaugh
--------------------------
Barre Rorabaugh
