EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of May 11, 1999
is
entered into by and among XxxxxxxxxXxxxxxXxxxxx.xxx, a Delaware
Corporation
(the "Company"), Xxxxx Xxxxxx (the "Employee") and Xxxxx, Inc.
("Xxxxx").
W I T N E S S E T H:
WHEREAS, Employee is a principal stockholder and officer of Xxxxx,
Inc., a
Maryland corporation and one of the principal shareholders of the
Company;
WHEREAS, one of the principal objectives of the Company is to
develop,
market and distribute a line of cosmetic products developed by the
Employee
under the name "Natural Cover" or such other name as the Company
shall
determine;
WHEREAS, the Employee has contributed all of the rights to such
products
and certain other assets to the Company, including intellectual
property,
relationships with vendors and suppliers and know-how, in exchange
for an
interest in the Company and certain other payments; and
WHEREAS, in connection with the operation of the Company, the
respective
parties desire to perform pursuant to the terms and conditions of
this
Agreement.
NOW, THEREFORE, in consideration of the premises which shall be
incorporated as a substantial part of this Agreement, the mutual
promises
herein contained and other good and valuable consideration, the
receipt of
which is hereby acknowledged, it is understood and agreed as
follows:
1. Employment. The Company hereby engages Employee as a full-time
employee for the period (the "Employment Period") and as a part-time
consultant for the period (the "Consulting Period") specified in
Section 4
hereof and Employee hereby accepts such employment upon the terms
and
conditions set forth in this Agreement.
2. Duties and Status.
(a) Throughout the Employment Period, the Employee shall exercise
such
authority and perform such duties as are assigned to her by the
Company's
Board of Directors, which shall include but not be limited to the
following:
(i) serve as spokesperson for the Company which shall include, but
not be
limited to, appearing in infomercials, commercials, print
advertisements
and any other form of advertisement or public relations as the
Company
shall determine;
(ii) work on product development for the Company which shall
include
developing new products, improving existing products and expanding
the
existing line of products;
(iii) conduct lectures and seminars on such topics and at such
times and
locations as may be determined by the Company; and
(iv) perform all other duties and responsibilities for the Company,
provided that such duties and responsibilities are reasonable and
commensurate with the Employee's status as a principal employee of
the
Company.
(b) Throughout the Employment Period, the Employee shall (i)
devote her
full time and efforts to the business of the Company and will not
engage in
consulting work or any trade or business for her own account or for
or on
behalf of any other person, firm or corporation which competes,
conflicts
or interferes with the performance of her duties hereunder in any
way and
(ii) accept such additional or different duties and responsibilities
as are
assigned to her by the Company, provided that such duties and
responsibilities are reasonable and commensurate with the Employee's
status
as a principal employee of the Company.
(c) The Employee shall be required to perform the services and
duties
referred to in this Section 2 at the offices of the Company in
Baltimore,
Maryland or at such other locations; provided that the Employee
shall be
required to travel, at the Company's expense, to such regional
offices as
shall be established from time to time as well as to seminar,
client, job,
filming or any other locations as may be reasonably necessary in
the
performance of her duties hereunder.
3. Compensation and General Benefits. As compensation for her
services
under this Agreement, the Employee shall be compensated as follows:
(a) Salary. The Company shall pay to the Employee an annual base
salary
of $60,000, subject to adjustment as discussed below, provided that,
if due
to financial hardship, the [Company] requires a pay reduction for
all
senior employees of the Company generally, the salary hereunder may
be
reduced consistent with such pay decrease; provided that following
any such
decrease and until such time as base salaries are restored to their
levels
immediately prior to such decrease, all senior employees similarly
situated
shall be treated on an equivalent basis. Such salary shall be
payable at
least monthly or at shorter intervals as determined by the Company.
Such
salary shall be subject to normal periodic review at least annually
by the
Company's Board of Directors based on the salary policies of the
Company
and the Employee's contributions to the business of the Company.
(b) Compensation Pursuant to Partnership Agreement. It is
acknowledged
by the parties to this Agreement that a significant portion of
Employee's
compensation is in the form of Common Stock of the Company. The
Employee
has agreed to enter into this Employment Agreement.
(c) Vacation and Sick Leave. The Employee may take up to four
weeks'
annual vacation provided an absence of such duration or at such time
would
not adversely affect the operations, profitability, or growth
prospects of
the Company's business and provided that the Employee may not take
more
than two consecutive weeks of vacation at any time. Unused vacation
time
shall not accumulate from year to year. The Employee shall be
entitled to
paid sick leave and holidays in accordance with the Company's
announced
policy for senior employees, as established by the Company's Board
of
Directors and as in effect from time to time.
(d) Expenses. All reasonable business related expenses of the
Employee
shall be reimbursed within thirty (30) days of submission of
sufficient
evidence of such expenses to substantiate the Company's right to
claim
income tax deductions for such expenses. Any individual expense
item
exceeding $1,000 in amount must be approved by the Company in
advance of
the incurrence of such expense.
(e) Perquisites and Other Benefits.
(i) Throughout the Employment Period, the Employee shall be
entitled to
participate in such retirement plans, group and individual
disability,
group and individual life, survivor income, sickness, accident,
dental,
medical and health benefits and other similar plans of the Company
which
are in effect from time to time for other employees of the Company
and in
any successor or additional benefit programs, plans or arrangements
of the
Company which may be established by the Company, as and to the
extent any
such benefit programs, plans and arrangements are or may from time
to time
be in effect, to the extent determined by the Company but subject to
the
terms hereof and provided that the Employee is eligible to
participate in
such plans under the terms of such plans. This paragraph (i) in no
way
creates any obligation of the Company to adopt such employee benefit
plans.
(ii) Throughout the Employment Period, the Employee shall be
entitled to
the following additional benefits: (A) comprehensive medical
insurance with
standard and reasonable deductibles or co-insurance, (B) long-term
disability insurance paying disability benefits of at least 50% of
the
Employee's salary upon the termination of the Employee's employment
by
reason of disability; and (C) annual physical examinations (as more
fully
discussed in Section 11 hereof).
(f) Fees. All fees or other consideration paid or given to the
Employee
or to the Company in respect of the services rendered in connection
with
the Employee's employment shall be the property of the Company, and
all
such services shall be performed by the Employee on behalf of the
Company.
The Company reserves full right to xxxx for all services performed
by the
Employee for the Company at such standard rates as the Company shall
from
time to time establish, and the Employee agrees that all such fees,
when
accrued and paid, are the sole property of the Company and that the
Employee has no interest in any such fees whatsoever, unless
otherwise
determined by the Company's Board of Directors.
4. Employment Period and Consulting Period. The Employment
Period
shall commence on the signing of this Agreement (the "Effective
Date") and
shall continue for a period of five (5) years provided that each of
the
parties hereto have the right to extend the Employment Period for an
additional five (5) year term upon written notice to the other
provided at
least ninety (90) days prior to the end of the first term. If the
Employee
has been employed by the Company for both five (5) year terms
provided
above, then the Employee has the option, upon written notice to the
Company
provided at least ninety (90) days prior to the end of the second
term to
extend the Employment Period for an additional ten (10) years. In
the
event that the Employee elects not to extend the Employment Period
for the
additional ten (10) year term provided for in the preceding
sentence, then
the Consulting Period shall commence immediately upon the end of the
Employment Period if either party has given written notice to the
other no
later than ninety (90) days prior to the commencement of such period
that
it wishes to commence the consulting arrangement described in
Section 15
hereof. The Consulting Period shall continue for a period of five
(5)
years provided that each of the parties hereto have the right to
extend the
Consulting Period for an additional five (5) year term upon written
notice
to the other provided at least ninety (90) days prior to the end of
the
first term of the Consulting Period.
5. Termination.
(a) This Agreement shall be terminable by the Company only upon
cause.
In such event, the Company must give the Employee at least ninety
(90) days
prior written notice. Cause shall be generally defined to mean the
material malfeasance or nonfeasance of the Employee, which is
substantially
detrimental to the success of the business of the Company and which
is not
corrected immediately, if possible, upon notice from the Company and
in any
event within thirty (30) days of receipt of such notice.
(b) Notwithstanding anything herein to the contrary, this Agreement
shall
terminate upon the happening of any of the following events or
instances:
(i) the termination, liquidation or dissolution of the Company;
(ii) the Company is deemed to be insolvent, files for relief under
federal
bankruptcy laws, makes an assignment for the benefit of creditors,
or
otherwise becomes insolvent;
(iii) the death or incompetency of the Employee; or
(iv) at the option of the Company, the disability, mental or
physical, of
the Employee as defined in Section 6 hereof.
(c) Upon termination of this Agreement, the Employee shall be bound
by and
shall observe all covenants and obligations, which by their nature
or
expressed agreement, are intended to survive the termination or
expiration
of this Agreement including, without limitation, the covenants
provided in
Section 8 hereof.
6. Disability.
(a) As used in this Agreement, the term "disability" shall mean the
mental
or physical inability of the Employee to perform her duties as
contemplated
in this Agreement which is sustained for a period of ninety (90)
days.
(b) If the Employee is disabled, she shall be entitled to receive
the
salary to which she otherwise would have been entitled, were she not
disabled, for a period of twelve (12) months from the onset of such
disability. Unless this Agreement is terminated at the option of
the
Company upon the disability of the Employee, this Agreement will be
suspended, other than the obligation of the Company to make the
payments
for twelve months pursuant to the preceding sentence and the
provisions of
Sections 8, 9, 11, 12 and 14 which will remain in effect. Upon the
end of
the disability, this Agreement will be reinstated with full force
and
effect but the term of the Employment Period pursuant to this
Agreement
will not be extended beyond the time that it would otherwise have
expired
without the occurrence of the disability.
7. Termination Benefits.
(a) In the event of a termination of this Agreement as a result of
the
disability of the Employee, (i) then to the extent the proceeds from
the
disability insurance which the Company has maintained on the
Employee are
paid directly to the Employee, such proceeds shall offset on a
dollar-for-
dollar basis the payments due under Section 6, (ii) the Company
shall at
its expense continue benefits under the Company's health and
accident
programs, plans and arrangements, if the Company has adopted such a
program, plan or arrangement, for two years following the date of
disability for the Employee; and (iii) the Employee will receive
such
benefits as they may be entitled under the terms of the benefit
programs,
plans, and arrangements described in Section 3 which provide
benefits upon
disability of the Employee.
(b) In the event of a termination of this Agreement as a result of
the
normal expiration of this Agreement or for any other reason other
than the
death, incompetence or disability of the Employee, the Company shall
have
no further contractual obligations to pay the Employee any
additional
salary or bonus or to continue any benefits under the Company's
health and
accident programs, plans and arrangements except to pay or provide
for the
payment of any statutory or vested benefits such as COBRA benefits
or
401(k) amounts, if any, and except for the obligation to pay the
bonus in
respect of the current year during which the Agreement was
terminated pro
rated for the portion of the year that the Agreement was in effect.
8. Confidential Information and Non-Competition.
(a) The Employee and the Company recognize that, due to
relationship of
the Employee to the Company, the Employee will have access to and
will
acquire, and may assist in developing, confidential and proprietary
information relating to the business and operations of the Company.
The
Employee acknowledges that such information has been and will
continue to
be of central importance to the business of the Company p and that
disclosure of it to or its use by others could cause substantial
loss to
the Company. The Employee and the Company also recognize that an
important
part of the Employee's duties will be to develop goodwill for the
Company
as a spokesperson and through her personal contact with customers,
agents
and others having business relationships with the Company and that
there is
a danger that this goodwill, a proprietary asset of the Company, may
follow
the Employee if her relationship with the Company is terminated.
Accordingly, the Employee agrees to the following provisions
relating to
confidential information and non-competition with the Company as
provided
in this Section 8.
(b) The Employee agrees that, during the term of this Agreement,
and for a
period of two (2) years after the termination of this Agreement for
any
reason whatsoever, she shall not, anywhere in the United States (or
the
world if during the term of the Employee's employment, the Company
shall
have engaged in operations or conducted sales or marketing efforts
outside
of the United States), participate or engage in any business in
competition
with the business of the Company, whether directly or indirectly, as
a
partner, director, officer, proprietor, employee, consultant, agent
or
otherwise. The Employee further agrees that during the term of this
Agreement, and for a period of two (2) years following the
termination of
this Agreement for any reason whatsoever, she shall not anywhere in
the
United States (or those foreign countries in which the Company shall
have
engaged in operations or conducted sales or marketing efforts during
the
term of the this Agreement), solicit (directly or indirectly, for
her own
account or for the account of others) orders for services or
products of a
kind or nature like or similar to services performed or products
sold by
the Company during the term of this Agreement. The Employee further
agrees
that she shall not, at any time, directly or indirectly, urge any
client or
customer or potential client or potential customer of the Company to
discontinue business, in whole or in part, or not to do business,
with the
Company.
(c) The Employee expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope,
duration,
geographic area and otherwise, (ii) that the protections afforded to
the
Company are necessary to protect its legitimate business interests,
and
(iii) that the agreement to observe such restrictions form a
material part
of the consideration for this Agreement, the Employee's employment
by the
Company and the Common Stock interest of Xxxxx, Inc. The
restrictions set
forth in this Section 8 will not apply subsequent to the termination
of
this Agreement in the event that (x) the Company is not in
compliance with
all of the material obligations to the Employee under this Agreement
(and
fails to take all reasonable action to correct such non-compliance
within
ninety (90) days of receipt of notice from the Employee of such non-
compliance), (y) the Company is no longer diligently pursuing the
business
of the Company or (z) the Employee was terminated by the Company in
violation of this Agreement.
(d) The Employee agrees that during the term of this Agreement, and
for a
period of two years after the termination of this Agreement for any
reason
whatsoever, she shall not disclose to any person, other than in the
discharge of her duties under this Agreement, any trade secret or
confidential or proprietary information relating to (i) the
business,
operations or internal structure of the Company, (ii) the clients or
customers or potential clients or potential customers of the
Company, (iii)
any method or procedure (such as records, programs, systems,
correspondence
or other documents) relating or pertaining to projects developed by
the
Company or contemplated to be developed by the Company or (iv) the
Company's business. Further, upon leaving the employ of the Company
for
any reason whatsoever, the Employee shall not take with her, without
prior
written consent of the Company's Board of Directors, any documents,
forms,
or other reproductions of any data or any information relating to or
pertaining to the Company, any of the clients or customers or
potential
clients or potential customers of the Company or any other
confidential
information or trade secrets. For purposes of this Agreement,
"trade
secrets or confidential or proprietary information" means
information
unique to the Company which has a significant business purpose and
is not
known by or generally available from sources outside the Company or
typical
of industry practice.
(e) In the event that the Employee violates the provisions of this
Section
without knowledge of such violation, upon written notice from the
Company
informing her of the nature of such violation, the Employee shall
immediately terminate any actions which constitute such violation.
(f) It is recognized that damages in the event of breach of this
Section 8
by the Employee would be difficult, if not impossible, to ascertain,
and it
is therefore agreed that the Company, in addition to and without
limiting
any other remedy or right it may have, shall have the right to an
injunction or other equitable relief, in any court of competent
jurisdiction, enjoining any such breach, it being agreed that the
Employee
shall submit to any federal or state court located in Baltimore,
Maryland,
and the Employee hereby waives any and all defenses she may have on
the
ground of lack of jurisdiction or competence of the court to grant
such an
injunction or other equitable relief. The existence of this right
shall
not preclude any other rights and remedies at law or in equity which
the
Company may have.
9. Intellectual Property. Any improvements, inventions, new
techniques,
processes, programs or products made or developed by the Employee
during
the course of her employment, within or after normal business hours,
relating to the business of the Company, shall be deemed to have
been made
or developed by her solely for the benefit of the Company and shall
be the
sole and exclusive property of the Company. In order to further
effectuate
the terms of this Agreement, the Employee agrees to assign to the
Company
all her rights to patents, copyrights, trademarks and all other
proprietary
interests which she might have in any process, program, technique,
product,
research item, invention or other improvement which she develops
during the
course of her employment by the Company. The Employee shall not,
during or
after the course of her employment, use or disclose to any other
person or
entity any such process, program, technique, product, research item,
invention or other improvement except as expressly authorized in
writing by
the Company.
10. Other Agreements. Any earlier employment agreements or
arrangements,
whether oral or written, between the Employee and the Company are
hereby
terminated and shall be of no further effect after the effective
date
hereof.
11. Public Image, Health and Well-Being of Employee. As discussed
in
Section 2 hereof, one of the principal duties of the Employee will
be act
as public spokesperson for the Company and certain products and
services to
be marketed and distributed by the Company. The parties hereto
agree that
the public image, health and well-being of the Employee are critical
to the
ability of the Employee to perform such duties for and on behalf of
the
Company and to the ultimate success of the Company's business.
Accordingly, the Employee agrees not to make any statements or take
any
actions which could in any way adversely affect her public image,
health
and well-being. In the event that the Employee violates the
provisions of
this Section without knowledge of such violation, upon oral or
written
notice from the Company informing her of the nature of such
violation, the
Employee shall immediately terminate any actions which constitute
such
violation and will make any statements or take any actions which the
Company's Board of Directors requests in order to repair any damage
incurred due to the prior violation of this Section. In addition,
the
Employee agrees to submit annually to a physical examination by her
current
physician or a physician jointly selected by the Employee and the
Company
and will follow any reasonable medical recommendations or advice
provided
by such physician. In the event that the Employee incurs any health
problem, then the Employee may be required to submit to a physical
examination more frequently than on an annual basis. The Employee
shall
have the right to obtain a second opinion from a physician mutually
agreeable to the Employee and the Company regarding the medical
recommendation or advice provided by the primary physician. The
Employee
further agrees not to consume any medication or drugs (prescription
or
otherwise) without the approval of the Employee's physician. The
Employee
further agrees to refrain from any action which the Company's Board
of
Directors reasonably requests in order to maintain the Employee's
public
image, health and well-being.
12. Indemnification, Holdback and Right of Set Off. The Employee
shall
indemnify and hold harmless the Company, the Company's Board of
Directors
and their Affiliates from any liability, damage, loss, penalty, cost
or
expense, including reasonable attorney's fees and costs of
investigating
and defending against lawsuits, complaints, actions or other pending
or
threatened litigation arising from, related to or attributable to
the
assets or properties contributed to the Company by the Employee, an
affiliate of the Employee, or the predecessor company of the
Employee. The
Employee agrees, that, upon a final adjudication or arbitrator's
determination that the Employee is liable for indemnity payments,
the
Company may holdback and set off the amount of any claim made by the
Company against the Employee pursuant to such indemnification
provisions
against the amount of any payment due the Employee hereunder, except
that
the Company shall not be entitled to holdback or set off against up
to
$50,000 of the Employee's compensation. Any indemnification
obligation
arising pursuant to this Section 12 shall be limited to the amounts
payable
to the Employee pursuant to this Agreement (excluding up to $50,000
in
compensation) and the Employee's Common Stock interest in the
Company
through Xxxxx, Inc. or any affiliated Company of the Employee.
13. Key Man Insurance. At any time during the term of this
Agreement,
the Company shall have the right to insure the life of the Employee
for the
Company's sole benefit, and to determine the amount of insurance and
the
type of policy. The Company shall be required to pay all premiums
due on
such policies. The Employee shall cooperate with the Employee in
taking
out the insurance by submitting to a physical examination, by
supplying all
information required by the insurance company and by executing all
necessary documents. The Employee, however, shall incur no
financial
obligation by executing any required document, and shall have no
interest
in any such policy. In the event of the termination of this
Agreement,
then Employee shall have the right to buy any insurance policies on
her
life purchased by the Company for a price agreed upon between the
Company
and the Employee.
14. Endorsements; Exclusivity. The Employee agrees that, during
the term
of this Agreement, and for a period of two (2) years after the
termination
of this Agreement for any reason whatsoever, she shall not endorse
any
other products or services or permit the use of her name or likeness
in any
advertisements or marketing materials without the express written
consent
of the Company. In the event that the Company consents to such
endorsements or advertising, then the Company will act as exclusive
agent
for the Employee representing her in all negotiations regarding such
endorsements and advertising and all fees and other compensation to
be
paid to the Employee will be paid to the Company and will constitute
gross
receipts of the Company.
15. Consulting Arrangement. Under the terms of the consulting
arrangement, the Employee will remain employed by the Company but
will not
be required to devote more than 25% of her time to the Company and
will be
paid an annual base salary equal to 50% of her annual base salary
paid
during the last year of the Employment Period. The Employee will
perform
all the same duties and responsibilities as she did during the
Employment
Period, subject to adjustment or modification to reflect the reduced
time
commitment of the Employee. During the Consulting Period, the
Employee
shall be subject to all the restrictions and obligations referred to
in
this Agreement, including specifically those contained in Sections
8, 9,
11, 12 and 14. Any other matters not specifically included herein
regarding the consulting arrangement will be agreed to between the
Employee
and the Company upon the commencement of the Consulting Period.
16. Miscellaneous.
(a) Any notices required by this Agreement shall, unless otherwise
provided herein, (i) be made in writing and mailed by certified
mail,
return receipt requested, with proper postage prepaid; (ii) be
deemed given
when so mailed; (iii) be deemed received by the addressee within
five (5)
days after given or when the certified mail receipt for such mail is
executed, whichever is earlier; and (iv) in the case of the Company,
be
mailed to its principal office, or in the case of the Employee, be
mailed
to the last address that the Employee has given to the Company.
(b) This Agreement shall be effective as of the date hereof and
shall be
binding upon and inure to the benefit of the Employee, her
executors,
administrators and personal representatives. The Employee
acknowledges
that her services are unique and personal. Accordingly, the
Employee may
not assign her rights or delegate her duties or obligations under
this
Agreement. The rights and obligations of the Company under this
Agreement
shall inure to the benefit of and shall be binding upon the Company,
and
shall be transferred to and be binding upon any successor of the
Company as
defined by applicable laws as now are in effect, including, but not
limited
to, any successor of the Company pursuant to the sale by the Company
of all
or substantially all of its assets to another entity or the sale by
all of
the Common Stock to another entity; provided, that in the case of a
successor by transfer of all or substantially all of the assets of
the
Company, or any other successor in connection with which the Company
does
not cease to exist by operation of the transaction in question as a
matter
of law, the Company shall not be relieved of its obligations
hereunder.
(c) If any term or provision of this Agreement is held to be
illegal or
invalid, said illegality or invalidity shall not affect the
remaining terms
or provisions hereof, and each term and provision of this Agreement
shall
be enforced to the fullest extent permitted by law.
(d) As monetary damages may not be an adequate remedy for the
breach by
either party of its obligations under this Agreement, each party
agrees
that it may be subjected to a decree of specific performance,
injunction or
other appropriate equitable or legal relief, for the enforcement of
its
obligations hereunder.
(e) This Agreement shall be governed by, and construed in
accordance with,
the laws of the State of Delaware.
(f) This Agreement may not be changed, modified or discharged
orally, but
only by an instrument in writing signed by the parties.
(g) Headings in this Agreement are for convenience only and shall
not be
used to interpret or construe its provisions.
(h) This Agreement may be executed in two or more counterparts,
each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(i) The Parties hereby agree to execute, file, seal, deliver and
acknowledge any and all certificates, documents or applications and
to take
or cause to be taken any and all other actions necessary to effect
the
terms and conditions herein.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement
on the date first above written.
XxxxxxxxXxxxxxXxxxxx.xxx, INC.
a Delaware Corporation
Witness: By: Xxxxx Xxxxxxx
Chief Executive Officer and Director
XxxxxxxxXxxxxxXxxxxx.xxx, INC.
a Delaware Corporation
Witness: By: Xxxxx Xxxxxx
Employee and Director
Xxxxx, Inc.
a Maryland Corporation
Witness: By: Xxxxx Xxxxxx
President of Xxxxx, Inc.
