EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the “Agreement”), dated as of December 12, 2007, between
Purple Beverage Company, Inc., a Nevada corporation having its principal office
in Florida (the “Company”), and Xxxxxxxx Xxxxxxxxxx (the
“Employee”).
WHEREAS,
the Company purchased Venture Beverage Company, of which the Employee was the
majority stockholder, sole director, and principal officer, pursuant to a
reverse merger transaction;
WHEREAS,
the Company believes its success is dependent upon retaining the Employee’s
services; and
WHEREAS,
the Company desires to employ Employee and Employee desires to be employed
by
the Company under the terms and conditions set forth herein.
NOW
THERFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Retention
as Employee; Duties.
The
Company hereby employs Employee as its Chief Executive Officer (“CEO”) at its
offices located at 000 Xxxx Xxx Xxxx Xxxx., Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx.
Employee will report directly to the Board of Directors of the Company (the
“Board”). Employee is responsible for the management of the Company and all
day-to-day operations of the Company. Employee hereby accepts such employment
and agrees to devote his full business time, attention and energies to the
performance of his duties hereunder. Notwithstanding the foregoing, Employee
may: (a) make and supervise passive investments in other and different
businesses, provided that the same
(i)
are not
in competition with the Business (as defined in paragraph 4, below) of the
Company and
(ii)
do not
interfere with the performance of Employee’s duties hereunder; provided,
however,
that,
notwithstanding the foregoing, Employee may own, directly or indirectly, solely
as an investment, securities of any entity that are traded on any national
securities exchange or the stock market, or are quoted in the Over-the-Counter
market, if Employee (A) is not a controlling person of, or a member of a
group which controls, such entity and (B) does not, directly or indirectly,
own 5% or more of any class of securities of such entity; and (b) participate
in
educational, charitable or civic activities that do not interfere with the
performance of Employee’s duties hereunder.
2. Compensation.
For all
services rendered hereunder by Employee, the Company shall pay Employee the
amounts as set forth below:
(a) During
the Initial Term and any Renewal Term, the Company shall pay to Employee a
salary (the “Base Salary”) at a rate of $225,000 per annum, payable in equal
semimonthly installments in accordance with the Company’s regular payroll
practices.
(b) Employee
shall be entitled to receive a monthly performance bonus (“Bonus”), during the
Initial Term and any Renewal Term (each, a “Bonus Month”). The amount of such
performance bonus shall be equivalent to six percent (6%) of the net invoice
price for all sales, at wholesale or retail, of the Company’s anti-oxidant
bottled beverages during such Bonus Month. The “net invoice price” shall be
computed by deducting from the gross sales price all taxes, freight, insurance
charges, credits (arising from returns or other adjustments), discounts, rebates
or allowances of any kind, except prompt payment discounts. A Bonus shall be
payable only in respect of funds received by the Company on a cash, rather
than
accrual, basis. Such Bonus shall be payable on the 15th
day of
the month following the respective Bonus Month.
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(c) All
amounts of Base Salary, Bonus, other compensation, if any, and such other
amounts payable to Employee under this Agreement are subject to all applicable
tax, Social Security and other legally required withholding pursuant to any
law
or regulation.
3. Benefits
and Reimbursement.
(a) Employee
shall be entitled to three weeks of paid vacation during each 12-month period
commencing on the date hereof, to be taken at the mutual convenience of Employee
and the Company, in addition to regular paid holidays provided to all employees
of the Company.
(b) Employee
shall receive such benefits, if any, as the Company may establish from time
to
time hereafter for employees of the Company, and any other benefits and
perquisites generally available to the Company’s executive employees;
provided,
however,
if the
Company does not provide a group health insurance plan to its employees, the
Company shall provide family medical insurance coverage acceptable to Employee
at the Company’s expense.
(c) Employee
shall receive a monthly car allowance of $800.00 per month.
(d) Employee
shall be reimbursed by the Company for all reasonable travel, entertainment,
conference, and other expenses incurred by Employee in connection with the
performance of his services under this Agreement, subject to the Company’s
policies in effect from time to time with respect to such expenses, including
the requirements with respect to reporting and documentation of such expenses.
4. Covenant
Not to Compete.
(a) Employee
acknowledges that (i) the principal business of the Company is formulating,
designing, producing, manufacturing, marketing, distributing, selling,
consigning, and promoting beverages that contain anti-oxidants (the “Business”);
(ii) Employee is and likely will remain one of a limited number of persons
critical to the success of the Company; (iii) the Company currently engages
in the Business in New York, Florida, California, and Hawaii, and currently
plans to expand the geographical scope of the Business broadly and has taken
significant steps in support of such planned expansion; (iv) the Company has
spent substantial money, time and effort in developing its business plan,
business, and business relationships throughout the Territory and in developing
its trade secret information, initial customers, customer relationships and
goodwill; (v) the Company pays its managerial level employees (such as
Employee), among other things, to develop, preserve and utilize the Company’s
trade secret information for its competitive advantage, and to help develop
and
implement the Company’s strategic plans; (vi) Employee’s work for the
Company will give Employee access to the confidential information and trade
secrets of the Company and will enable Employee to develop business
relationships with the Company’s customers; (vii) the agreements and
covenants of Employee contained in this Section 4 are reasonable and necessary
to the business and goodwill of the Company; and (viii) the Company would not
have entered into this Agreement or retained Employee but for the covenants
and
agreements set forth in this Section 4. For purposes of this Section 4, the
“Territory” means New York, Florida, California, and Hawaii, and any country,
state, or local jurisdiction in which the Company engaged in the Business within
one year before the date on which Employee ceases employment for any reason
(the
“Termination Date”), as well as any country, state, or local jurisdiction in
which the Company both was actively planning, as of the Termination Date, to
engage in the Business and actually engaged in the Business within one year
after the Termination Date (“Additional Territory”), provided,
however,
that
the restrictions applicable to the Additional Territory shall only apply after
the Company notifies Employee that the Company has commenced doing Business
in
such Additional Territory.
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(b) During
his term of employment with the Company and for a period ending two years after
Employee ceases employment for any reason, Employee, without the prior written
consent of the Company, shall not, directly or indirectly:
(i)
enter
into the employ of or render any services to any individual or entity engaged
in
the Business within the Territory;
(ii)
engage
in the Business for his own account within the Territory; or
(iii)
become
associated with or lend any money to any individual or entity, or have an
ownership interest in any entity, which is engaged in the Business in the
Territory; provided,
however,
that
notwithstanding the foregoing, Employee may own, directly or indirectly, solely
as a passive investment, securities of any such entity that are traded on any
national securities exchange or the stock market, or are quoted in the
Over-the-Counter market, if Employee (A) is not a controlling person of, or
a member of a group which controls, such entity and (B) does not, directly
or indirectly, own 5% or more of any class of securities of such entity.
(c) During
his employment with the Company and for a period ending two years thereafter,
Employee, without the prior written consent of the Company, which may be
withheld, delayed, or denied for any reason or for no reason, shall not,
directly or indirectly, solicit any person who was employed by the Company,
at
any time during the six month period before the termination of Employee’s
employment, to end his employment with the Company.
5. Confidentiality.
(a) Employee
acknowledges and agrees that as a result of his employment by the Company,
Employee has obtained and will obtain non-public proprietary, trade secret
and
confidential information concerning the business of the Company including,
without limitation, discoveries, ideas, concepts, software, plans, techniques,
models, data, or documentation relating to strategic and business plans; product
pricing information and analyses; profit margins; research and development
activities, investments and plans; product positioning and related strategies;
customer identities and customer-related information; new product plans;
marketing techniques and materials, marketing and development plans, and target
markets; and expansion plans and strategies; price lists and cost and pricing
policies; and financial information (collectively, “Confidential
Information”).
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(b) Employee
agrees that he will not at any time, either during the term of this Agreement
or
thereafter, divulge to any individual or entity or make use of any Confidential
Information obtained or learned by him during the course of his employment
with
the Company or its predecessor, except
(i)
in the
course of performing his duties hereunder,
(ii)
with the
Company’s express written consent, which may be withheld, delayed, or denied for
any reason or for no reason,
(iii)
to the
extent that any such information is in the public domain other than as a result
of Employee’s breach of any of his obligations hereunder, or
(iv)
where
required to be disclosed by court order, subpoena or other government process.
In the event that Employee shall be required to make a disclosure pursuant
to
the provisions of clause (iv) above, Employee promptly, but in no event more
than two business days after learning of such subpoena, court order or other
government process nor less than 24 hours prior to the return date for any
such
subpoena, court order or other government process, shall notify (by personal
delivery or by telecopy, confirmed by mail) the Company and, at the Company’s
expense, Employee shall (1) take all necessary steps requested by the Company
to
defend against the enforcement of such subpoena, court order or government
process, and (2) permit the Company to intervene and participate with counsel
of
its choice in any proceeding relating to the enforcement thereof.
6. Term.
(a) The
term
of this Agreement shall be for the period (the “Initial Term”) commencing on the
date hereof and terminating on December 31, 2010 (the “Initial Expiration
Date”), provided that this Agreement shall be renewed for successive one-year
periods (each, a “Renewal Term”) on the same terms and conditions set forth
herein unless either party shall have delivered written notice of non-renewal
to
the other party not less than 90 days prior to the Initial Expiration Date
or
the expiration of any Renewal Term. (The Initial Expiration Date and the
expiration of any Renewal Term are referred to at times herein as “Expiration
Date”). Notwithstanding the foregoing, this Agreement shall terminate on the
date Employee dies and may be terminated by delivery of written notice pursuant
to this Agreement (i) by the Company for Cause (as hereinafter defined) or
because of Disability (as hereinafter defined), or (ii) by Employee for Good
Reason (as hereinafter defined). If Employee dies, resigns without Good Reason
or is terminated for Cause, Employee shall be paid Base Salary through the
date
of termination, benefits accrued pursuant to Section 3(b) through the date
of
termination, any unpaid car allowance for the month in which the termination
occurred, and expenses reimbursable pursuant to Section 3(d) that have been
incurred before the date of termination (collectively, “Accrued Benefits”). If
Employee resigns without Good Reason or is terminated for Cause, then the
Employee will only receive the Accrued Benefits and the Company will not have
any other contractual obligation to Employee.
(b) In
the
event that the employment of Employee is terminated prior to an Expiration
Date
because of Employee’s death, by the Company without Cause or because of
Disability, or by Employee for Good Reason, or the Company delivers a timely
non-renewal notice pursuant to this Agreement, then the Company shall pay to
Employee, in addition to the Accrued Benefits,
provided
Employee has entered into an irrevocable (except to the extent required by
law,
and to the extent required by law to be revocable, has not revoked) general
release of claims (“Release”) which, subject to Section 6(i) below, is
reasonably satisfactory to the Company (and is not revoked by the
Employee):
(i) a
severance payment (the “Severance Payment”) calculated by adding an amount equal
to three times the sum of (x) the Base Salary in the calendar year in which
the
termination occurs plus (y) the Bonus earned for the Bonus Year prior to the
year in which the termination occurs; (ii) a Bonus for the Bonus Year in which
termination occurred based on payments received by the Company through the
last
day of actual employment (“Pro Rata Bonus”); and (iii) for a period of three
years following the termination date Employee’s costs of COBRA continuation
coverage of health insurance, or if COBRA coverage is unavailable, the actual
cost incurred by Employee in obtaining comparable coverage (“COBRA Payments”).
Notwithstanding
anything else contained herein to the contrary,
the
aggregate of the payments to be made under Section 6(b)(i) and (iii) are subject
to a cap, which is the maximum amount Employee could receive without incurring
an excise tax under Section 4999(a) of the Internal Revenue Code of 1986, as
amended (the “Code”) if the payments to be made under Section 6(b)(i) and (iii)
were deemed to be an “excess parachute payment” (as defined in Section 280G
of the Code). The
payments the Company is obligated to make pursuant to this Section 6(b) are
not
subject to mitigation or a duty to mitigate.
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(c) The
Severance Payment required to paid pursuant to Section 6(b)(i) shall be paid
in
two installments: (i) the first installment, in the amount of $450,000, shall
be
paid within 30 days after the Termination Date; and (ii) the balance of the
Severance Payment shall be paid immediately after the expiration of six months
from the Termination Date. The Pro Rata Bonus required to paid pursuant to
Section 6(b)(ii) shall be paid within 30 days after the Termination Date. The
COBRA Payments required to paid pursuant to Section 6(b)(iii) shall commence
on
the last day of the month following the month in which the Termination Date
occurs, and continue on a monthly basis thereafter.
(d) For
purposes of this Agreement, “Cause” shall mean that Employee has
(i) continually
failed to perform his duties under this Agreement for a period of 20 business
days (without taking into account days not worked because of medical or physical
injury, illness or other incapacity, authorized vacation days or authorized
leave) after written notice from the Company setting forth with particularity
such failure and such failure is not cured within ten (10) business
days,
(ii)
committed an act of fraud upon the Company,
(iii)
been
convicted of or plead guilty or nolo
contendere
to a
felony or a crime of dishonesty, fraud or moral turpitude under the laws of
the
United States or any state thereof;
or
(iv)
materially breached this Agreement, and such breach is not cured within 30
calendar days after written notice from the Company setting forth with
particularity such breach.
(e) If
Employee by virtue of ill health, injury or other physical or mental impairment
has been unable or in the judgment of the Board will be unable to perform his
duties hereunder for more than 100 business days out of any consecutive
twelve-month period (“Disability”), the Company shall have the right to
terminate his employment upon 30 calendar days notice in writing to Employee,
subject to the reasonable accommodation provisions of applicable laws;
provided,
however,
if
Employee returns to work before the expiration of that 30-day period, and the
Employee has been unavailable for fewer than 100 business days, then Employee
may continue in employment. No provision of this Agreement shall limit any
of
Employee’s rights under the terms of any insurance, pension or other benefit
programs of the Company for which Employee shall be eligible at the time of
death or Disability.
(f) For
purposes of this Agreement, the term “Good Reason” shall mean the following:
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(i)
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changing
Employee’s title or assigning Employee a title inconsistent with the
specific provisions of this
Agreement;
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(ii)
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changing,
in any material manner, Employee’s responsibilities and duties in
violation of this Agreement;
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(iii)
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requiring
Employee to report to anyone other than the
Board;
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(iv)
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relocating
the Company’s offices to, or requiring Employee to regularly report to
work at, a location more than 50 miles from the location specified
in
Paragraph 1;
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(v)
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failing
to pay the Base Salary or Bonus owed to Employee pursuant to this
Agreement;
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(vi)
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continued
failure to pay any reimbursement, or provide any benefits, owed to
Employee pursuant to this Agreement;
or
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(vii)
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Employee’s
resignation for any or no reason within 90 days following a Change
in
Control (as defined hereinafter).
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After
receiving written notice of a resignation for Good Reason, the Company will
have
30 calendar days to cure the grounds for resignation for Good Reason except
(x)
there is no cure period for a resignation under clauses (iv) and (vii) above,
and (y) the cure period for a resignation under clause (v) above is 10 calendar
days. If the Company fails to cure such act(s) or omission(s) within the
specified time period, the resignation for Good Reason shall be effective upon
the expiration of such specified period.
(g) Any
written notice delivered by the Company in connection with a termination for
Cause, or by Employee in connection with a resignation for Good Reason, must
specify both the contractual provision and the alleged acts or omissions on
which the party delivering the notice is relying.
(h) For
purposes of this Agreement, a “Change of Control” shall mean:
(i) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either (A)
the then outstanding shares of the Company (the “Outstanding Shares”) or (B) the
combined voting power of the then outstanding voting shares of the Company
entitled to vote generally on matters brought to a vote of the holders (the
“Outstanding Voting Shares”); provided,
however,
that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (x) any acquisition by any employee benefit
plan
(or related trust) sponsored or maintained by the Company or any company
controlled by the Company, or (y) any acquisition by any company (including
the Company) pursuant to a transaction that complies with clauses (x), (y)
and (z) of subsection (iii) of this Section 6(h); or
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(ii) As
of the
date the Board consists of not less than three members, the individuals who
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; or
(iii) Consummation
of a reorganization, merger or consolidation or sale or other disposition of
all
or substantially all of the assets of the Company (a “Business Combination”), in
each case, unless, following such Business Combination, (x) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Shares and Outstanding Voting Shares
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then-outstanding common shares
and the combined voting power of the then-outstanding shares entitled to vote
generally in the election of directors, as the case may be, of the company
resulting from such Business Combination in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Shares and Outstanding Voting Shares, as the case may be, (y) no
Person (excluding any employee benefit plan (or related trust) of the Company
or
such company resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then outstanding
common shares of the company resulting from such Business Combination or the
combined voting power of the then outstanding voting shares of such company
except to the extent that such ownership existed prior to the Business
Combination, and (z) at least a majority of the members of the board of
directors of the company resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial agreement,
or
of the action of the Board providing for such Business Combination;
or
(iv) approval
by the stockholders of the Company of a complete liquidation or dissolution
of
the Company.
(i) Notwithstanding
any other provision hereof, Employee shall not be required by any general
release to release any or all of the following: claims that Employee may have
against the Company for reimbursement of ordinary and necessary business
expenses incurred by him during the course of his employment; claims arising
from Employee’s ownership of shares of capital stock or options to purchase
shares of capital stock of the Company; claims that arise after the effective
date of the Release; any rights Employee may have to enforce Section 6(b) of
this Agreement; and claims for which Employee is entitled to be indemnified
pursuant to this Agreement, under the Company’s organizational documents, under
applicable law, or pursuant to the Company’s directors’ and officers’ liability
insurance policies.
7. Indemnification.
In
addition to statutory rights and the Articles of Incorporation and Bylaws of
the
Company, the Company agrees that if Employee is made a party, or is threatened
to be made a party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a “Proceeding”), by reason of the fact
that he is or was a director, officer or employee of the Company or is or was
serving at the request of the Company as a director, officer, member, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
or
not the basis of such Proceeding is Employee’s alleged action in an official
capacity while serving as a director, officer, member, employee or agent,
Employee shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by applicable law and their organizational
documents, including for negligence (but not for gross negligence) by Employee,
against all cost, expense, liability and loss reasonably incurred or suffered
by
Employee in connection therewith, and such indemnification shall continue as
to
Employee even if he has ceased to be a director, member, employee or agent
of
the Company or other entity and shall inure to the benefit of Employee’s heirs,
executors and administrators. The Company shall advance to Employee all such
reasonable costs and expenses incurred by him in connection with any such
Proceeding within 15 days after receiving written notice requesting such an
advance, subject to and conditioned on Employee’s having provided to the Company
a written undertaking, in a form reasonably acceptable to the Company, to repay
the amount advanced if he is ultimately determined not to be entitled to
indemnification against such costs and expenses. The Company agrees to maintain
a directors’ and officers’ liability insurance policy covering Employee to the
extent the Company provides such coverage for their other executive
officers.
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8. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Florida.
(b) This
Agreement sets forth the entire agreement between the parties hereto with
respect to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements.
(c) No
provision of this Agreement may be waived or amended, except by a writing signed
by the parties hereto.
(d) This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and together which shall constitute one and the same
instrument.
(e) This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors, assigns and personal
representatives.
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(f) All
notices, demands or other communications to be given or delivered by reason
of
the provisions of this Agreement will be in writing and will be deemed to have
been given (i) on the date of personal delivery to Employee, or to the Secretary
of the Company on its behalf, or (ii) on the date of transmission when sent
by
facsimile machine to the number shown below on the date of such confirmed
facsimile transmission (provided that a confirming copy is sent via overnight
mail), if sent at or before 5 p.m. (local time at recipient’s location) on such
date, or on the business day following the date of transmission if sent after
5
p.m. (local time at recipient’s location), or (iii) on the business day
following the date of deposit when properly deposited for next day delivery
by a
nationally recognized commercial overnight delivery service, prepaid; or (iv)
on
the date received by a recipient when properly deposited in the United States
mail, certified or registered mail, postage prepaid, return receipt requested.
Such notices, demands and other communications will be sent to each party at
the
address indicated for such party below:
Notices
to Employee, to:
Xxxxxxxx
Xxxxxxxxxx
000
Xxxx
Xxx Xxxx Xxxx., Xxxxx 000
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
with
a
copy (which will not constitute notice to Employee) to:
Xxx
Xxxxxxxxx
__________________
__________________
Notices
to the Company, to:
Purple
Beverage Company, Inc.
000
Xxxx
Xxx Xxxx Xxxx., Xxxxx 000
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
with
a
copy (which will not constitute notice to the Company), to:
Xxxxx
Xxxx LLP
Attn:
Xxxxxxx X. Xxxx
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
or
to
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.
(g) Any
legal
action, suit or proceeding arising out of or relating to this Agreement shall
be
instituted in any state or federal court of competent jurisdiction located
in
Broward County, Florida, and each party agrees not to assert, by way of motion,
as a defense, or otherwise, in any such action, suit or proceeding, any claim
that it is not subject personally to the jurisdiction of such court, that its
property is exempt or immune from attachment or execution, that the action,
suit
or proceeding is brought in an inconvenient forum, that the venue of the action,
suit or proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court. Each party further irrevocably
submits to the exclusive jurisdiction of any such court in any such action,
suit
or proceeding.
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(h) Any
provision of this Agreement that is invalid, illegal or unenforceable in any
jurisdiction will, as to that jurisdiction, be ineffective to the extent of
such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction. In addition, if a judicial determination is made that any
provision of Section 4 of this Agreement constitutes an unreasonable or
otherwise unenforceable restriction against Employee, then the provisions of
Section 4 shall be rendered void only to the extent that such judicial
determination finds such provisions to be unreasonable or otherwise
unenforceable. In this regard, any judicial authority construing Section 4
of
this Agreement shall be empowered to modify the scope of restricted activities,
the Territory and/or the duration of the covenants to make the same reasonable
under the circumstances, and Employee acknowledges that he shall be bound
thereby.
[Signatures
on Following Page]
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IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as
of the date first above written.
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PURPLE
BEVERAGE COMPANY, INC.
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| By: |
/s/
Xxxxxxxx Xxxxxxxxxx
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Name:
Xxxxxxxx Xxxxxxxxxx
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Title:
President
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/s/
Xxxxxxxx Xxxxxxxxxx
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XXXXXXXX
XXXXXXXXXX
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