EMPLOYMENT AND NON-COMPETITION AGREEMENT
EMPLOYMENT
AND NON-COMPETITION AGREEMENT
THIS
EMPLOYMENT AND NON-COMPETITION AGREEMENT (“Agreement”) is made as of the
1st
day of
February, 2006, by and between Sweetskinz, Inc., a Pennsylvania corporation
(the
“Company”), and Xxxxxx Xxxxxxx, a resident of New York, New York (the
“Employee”).
WITNESSETH:
WHEREAS,
the Company desires to retain the services of the Employee in the manner
hereinafter specified in its business, thereby retaining for the Company the
benefit of the Employee's business knowledge and experience and also to make
provisions for the payment of reasonable and proper compensation to the Employee
for such services; and
WHEREAS,
the parties have agreed to enter into this Agreement subject to the terms and
conditions herein; and
WHEREAS,
the Employee is willing to be employed by the Company and to perform the duties
incident to such employment upon the terms and conditions hereinafter set
forth;
NOW,
THEREFORE, in consideration of the premises and mutual covenants and
representations herein contained, the Company and the Employee mutually agree
as
follows:
1
AGREEMENT:
ARTICLE
I
EMPLOYMENT
AND DUTIES
2
Section
1.1 Employment.
Commencing on the date hereof, the Company shall employ the Employee, and the
Employee shall accept employment with the Company as an employee of the Company,
upon the terms and subject to the conditions hereinafter set forth until the
earlier of an investment of a minimum aggregate of $3,500,000 into the Company
or any parent or subsidiary of the Company (“Capital Raise”) or May 31, 2006
(“Termination Date”). The period of employment commencing on the date hereof and
terminating at the earlier of the Capital Raise or the Termination Date shall
be
referred to herein as the “Interim Period”. During the Interim Period, the
Employee shall have the title of Interim Chief Executive Officer and shall
devote approximately 20 hours per week to his duties as Interim Chief Executive
Officer. During the Interim Period Employee shall: (i) accrue a monthly salary
of $7,708; (ii) be issued 20,833 (as calculated on a .48 conversion ratio
pursuant to the proposed Capital Raise) shares of common stock per month of
the
Company; and (iii) be reimbursed for those expenses found solely in paragraph
(b) of Exhibit B to this Agreement. Subject to the other provisions of this
paragraph, in the event the Company fails to complete the Capital Raise during
the Interim Period, this Agreement shall be terminated and deemed null and
void
without further actions by either of the parties hereto; provided,
however, that the provisions of Section 5.13 shall survive termination;
provided, further, that
in
the event the Company fails to complete the Capital Raise but does complete
an
investment of a minimum aggregate of $1,000,000 on or before the six month
anniversary of the Termination Date, then on the date of funding, the Company
shall pay to the Employee a fee of $15,000 for assistance provided in connection
with the Company’s capital raising efforts in addition to the accrued salary set
forth in clause (i) above; and provided,
further,
if the
Company fails to successfully complete the Capital Raise and this Agreement
terminates pursuant to the terms of this Agreement, the Company shall, on or
before November 30, 2006 deliver the shares of common stock accrued pursuant
to
clause (ii) above, and the Company shall owe the Employee $30,832 and any
outstanding but unpaid business expenses referenced above, which amount shall
be
paid on or before March 15, 2007. However, if the Company successfully completes
the Capital Raise, on the first business day after the completion of the Capital
Raise (the “Effective Date”) the Company shall employ the Employee, and the
Employee shall accept employment with the Company as an employee of the Company,
upon the terms and subject to the conditions hereinafter set forth and shall
hold the title of Chief Executive Officer.
3
Section
1.2 Duties.
the
Employee shall serve as Chief Executive Officer or, during the Interim Period,
Interim Chief Executive Officer, of the Company and, subject
to
the general operating policies, as amended from time to time, of the Board
of
Directors (the “Board”) and the Company’s Certificate of Incorporation and
By-Laws, Employee shall
have supervision and control over, and executive responsibility for, the day
to
day business operations of the Company and its subsidiaries.
Employee shall
have such other duties as customarily performed by the Chief Executive Officer
and also have such other powers and duties as may be, from time to time,
prescribed by the Board, provided that the nature of Employee’s powers and
duties so prescribed shall not be inconsistent with Employee’s position and
duties hereunder. Employee
shall
report directly and exclusively to the Board and no
other
executive officer will be appointed with authority over the business operations
of the Company or its subsidiaries.
During
the Term, Employee shall also be nominated to serve as a member of the
Board.
The
Employee shall devote his best efforts to the business and affairs of the
Company and, during the Term (as defined in Section 2.1 of this Agreement)
as
well as the period provided in Article III, shall observe at all times the
covenants regarding non-competition, and confidentiality provided in Article
III
hereof. The Company and Employee acknowledge and agree that, during the Term,
Employee shall be permitted to (i)
serve
on corporate, civic or charitable boards or committees, (ii) manage passive
personal investments and (iii) devote
up
to approximately 5 hours per week running Cycle Craft retail bicycle
stores,
so long
as any such activities do not unduly interfere with the performance of
Employee’s responsibilities as an employee of the Company in accordance with
this Agreement.
ARTICLE
II
TERMS
OF
EMPLOYMENT; COMPENSATION AND BENEFITS
Section
2.1 Term.
Except
as otherwise provided herein, the term of this Agreement shall be three
(3)
years beginning on the Effective Date (the “Initial Term”). This Agreement shall
be renewed automatically in one (1) year increments (each a “Renewal Term” and
together with the Initial Term, the “Term”) unless notice by either party is
given in writing no less than ninety (90) days from the expiration of the
Initial Term or the applicable Renewal Term.
4
Section
2.2 Compensation.
Except
as otherwise set forth herein, the Company shall pay, and the Employee shall
accept as full consideration for the services to be rendered hereunder, and
the
covenants entered into hereunder, compensation as set forth in Exhibit
“A”,
attached hereto and incorporated herein by reference.
Section
2.3 Benefits.
The
Employee shall be entitled to participate in such fringe benefits as are
generally available to employees of the Company or key executive personnel,
and
to the normal perquisites provided to such executives. Such benefits, if any,
shall be provided upon the terms and conditions as set forth on Exhibit
“B”,
attached hereto and incorporated herein by reference. Provided however, nothing
in this Agreement shall be construed to require the Company to offer any
specific fringe benefit to Employee, except those specifically enumerated in
Exhibit B, to effect compliance with this Section 2.3.
ARTICLE
III
NON-COMPETITION
AND CONFIDENTIALITY
Section
3.1 Restrictive
Covenants.
(a) Non-Competition.
The
Employee and the Company agree that the Company's business depends, to a
considerable extent, on the individual skills, efforts and judgment of the
Employee. The Employee and the Company further agree that the Employee's
position enables him to maintain and develop specialized knowledge and
information of value to the Company. Accordingly, and in consideration of the
mutual promises contained herein, and with the exception of the specific duties
related to the operation of Cycle Craft, the Employee agrees that he shall
not
engage, or cause another to engage, within a geographic area and for a duration
as set forth in this Section 3.1(a), either directly or indirectly, as
principal, including, without limitation owner, shareholder, partner or member;
agent; employer; employee; or consultant; in the Business (as hereinafter
defined); provided, however, that the foregoing restriction shall not prevent
the Employee from engaging in retail operations which are related to the
Business such as the operation of a retail bicycle store. The duration of the
covenant shall commence on the Effective Date and extend for a period of one
(1)
year following the termination of the Term; provided, however, that the covenant
not to compete shall terminate immediately if Company materially breaches this
Agreement, terminates Employee’s employment without cause or does not renew this
Agreement in accordance with Section 2.1 for any Renewal Term. This covenant
shall be applied within a two hundred (200) mile radius of any office or
facility operated or owned by the Company and shall be applied to any Client
(as
hereinafter defined) of the Company serviced by the Company during the six
(6)
month period prior to the termination of the Employee’s employment with the
Company. The Employee and the Company agree that the geographic scope and the
duration of time pursuant to this covenant are reasonable.
5
(b) Non-Solicitation.
The
Employee shall not contact any Client (as hereinafter defined) of the Company
for purposes of soliciting such Client's business on behalf of a competing
Business except on behalf of the Company. The Employee shall not employ, cause
another to employ or solicit the employment of any person employed by the
Company or that has been an employee of the Company at any time during the
six
(6) months preceding the termination of this Agreement for any reason. The
duration of the covenants set forth in this Section 3.1(b) shall commence on
the
Effective Date and extend for a period of one (1) year following the date of
termination of the Term; provided, however, that the covenants not to solicit
shall terminate immediately if Company materially breaches this Agreement,
terminates Employee’s employment without cause or does not renew this Agreement
in accordance with Section 2.1 for any Renewal Term.
(c) Confidentiality.
The
Employee specifically agrees that, without the consent of the Company, he will
not at any time, in any fashion, form, or manner, either directly or indirectly,
divulge, disclose, or communicate to any person, firm or corporation (other
than
to an attorney or accountant in the regular course of the Company’s business)
any Confidential Information (as hereinafter defined). Upon the termination
of
this Agreement for any reason, the Employee shall immediately surrender and
deliver to the Company all Confidential Information in all forms. The covenants
set forth in this Section 3.1(c) shall survive the termination of this Agreement
in perpetuity.
(d) Continuing
Obligations.
The
Employee agrees that his obligations and duties contained in this Article III
are continuing obligations and, except as otherwise set forth herein, said
duties shall survive the termination or expiration of this Agreement for any
reason whatsoever.
6
(e) Definitions.
For the
purposes of this Article III, the following terms have the meanings set forth
below:
“Business”
shall
mean the manufacturing, marketing, sale and distribution of SweetskinZ brand
tires and other products of the SweetskinZ family of businesses as they are
developed to include that which directly aids or is directly incidental to
the
manufacturing, marketing, sale and distribution of such products.
“Client”
shall
mean any entity, including without limitation, any natural person, company,
partnership, corporation, trust, association, organization or governmental
unit,
(i) with whom the Employee has direct contact and/or to whom the Employee
renders any services; and/or (ii) about whom the Employee has access to
Confidential Information (as hereinafter defined).
“Confidential
Information”
shall
mean any information, not generally known in the relevant trade or industry,
obtained from the Company or any of its subsidiaries, affiliates, customers
or
suppliers or which falls within any of the following general categories:
(a) information relating to the business of the Company or that of any of
its subsidiaries, affiliates, customers or suppliers, including but not limited
to, financial reports, income statements, balance sheets, annual and quarterly
reports, general ledger, accounts receivable, and other accounting reports,
non-public filings with government agencies, business forms, handbooks,
policies, and documents, business plans, business processes and procedures,
sales or marketing methods, methods of doing business, customer lists, customer
usages and/or requirements, and supplier information of the Company or any
of
its subsidiaries, affiliates, customers or suppliers; (b) information
relating to existing or contemplated products, services, technology, designs,
processes, formulae, computer systems, computer software, algorithms and
research or developments of the Company or any of its subsidiaries, affiliates,
customers or suppliers; (c) information relating to trade secrets of the
Company or any of its subsidiaries, affiliates, customers or suppliers; or
(d) information marked “Confidential” or “Proprietary” by or on behalf of
the Company or any of its subsidiaries, affiliates, customers or
suppliers.
7
Section
3.2 Enforcement;
Remedies.
The
Employee covenants, agrees, and recognizes that because the breach or threatened
breach of the covenants, or any of them, contained in Section 3.1 hereof will
result in immediate and irreparable injury to the Company, the Company shall
be
entitled to an injunction restraining the Employee from any violation of Section
3.1 to the fullest extent allowed by law. The Employee further covenants and
agrees that in the event of a violation of any of the respective covenants
and
agreements contained in Section 3.1 hereof, the Company shall be entitled to
an
accounting of all profits, compensation, commissions, remuneration or benefits
which the Employee directly or indirectly has realized and/or may realize as
a
result of, growing out of, or in connection with any such violation and shall
be
entitled to receive all such amounts to which the Company would be entitled
as
damages under law or at equity. The Employee further covenants, agrees and
recognizes that, notwithstanding anything to the contrary contained herein,
in
the event of a violation, breach or threatened breach of any of the respective
covenants and agreements contained in Section 3.1 hereof, the Company shall
be
excused from making any further payments to the Employee pursuant to any
provision of this Agreement until the Employee shall cease violating or
breaching his respective covenants and agreements contained in Section 3.1
hereof and shall have received reasonable assurances from the Employee that
he
will no longer engage in the same. Nothing herein shall be construed as
prohibiting the Company from pursuing any other legal or equitable remedies
that
may be available to it for any such violation or breach, including the recovery
of damages from the Employee. If either party files suit to enforce or enjoin
the enforcement of the covenants contained herein, the prevailing party shall
be
entitled to recover, in addition to all other damages or remedies provided
for
herein, its costs incurred in prosecuting or defending said suit, including
reasonable attorneys' fees.
Section
3.3 Construction.
The
Employee hereby expressly acknowledges and agrees as follows:
(a) That
the
covenants set forth in Section 3.1 above are reasonable in all respects and
are
necessary to protect the legitimate business and competitive interests of the
Company in connection with its business which the Employee agrees, pursuant
to
this Agreement, to assist the Company in maintaining and developing;
and
(b) That
each
of the covenants set forth in Section 3.1 above is separately and independently
given, and each such covenant is intended to be enforceable separately and
independently of the other such covenants, including without limitation,
enforcement by injunction; provided,
however,
that
the invalidity or unenforceability of any provision of this Agreement in any
respect shall not affect the validity or enforceability of this Agreement in
any
other respect. In the event that any provision of this Agreement shall be held
invalid or unenforceable by a court of competent jurisdiction by reason of
the
geographic or business scope or the duration thereof of any such covenant,
or
for any other reason, such invalidity or unenforceability shall attach only
to
the particular aspect of such provision found invalid or unenforceable as
applied and shall not affect or render invalid or unenforceable any other
provision of this Agreement or the enforcement of such provision in other
circumstances, and, to the fullest extent permitted by law, this Agreement
shall
be construed as if the geographic or business scope or the duration of such
provision or other basis on which such provisions has been challenged had been
more narrowly drafted so as not to be invalid or unenforceable.
8
ARTICLE
IV
TERMINATION
Section
4.1 Termination.
(a) If,
during the term hereof, the Employee (i) violates in any material respect any
provision of Article III hereof; (ii) is convicted of a felony or a crime
involving moral depravity or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company or any of its
subsidiaries, customers or suppliers; (iii) engages in conduct tending to bring
the Company or any of its subsidiaries into substantial public disgrace or
disrepute as reasonably determined by a majority of the Board based upon
contemporary community standards for the New York Metropolitan Area, (iv)
substantially and repeatedly fails to perform the duties of the office held
by
the Employee which continues after written warnings to correct such deficiency;
(v) commits acts of willful misconduct, the Company may immediately, in writing,
terminate this Agreement without further obligation hereunder, except that
the
Company shall, within 30 days of termination, pay all compensation accrued
through the effective date of termination and reimburse Employee for all
expenses incurred before the termination of Employee’s employment.
(b) If,
during the term of this Agreement, the Employee is charged with any act referred
to in Section 4.1(a) above, the Company may, upon one (1) day’s notice, require
the Employee to take a leave of absence without pay for up to fifteen (15)
days,
the length of such leave of absence to be determined by the Company in the
Company’s sole discretion.
9
(c) Upon
the
Employee’s resignation from employment with the Company other than pursuant to
Section 4(f) and Section 4(g), the Company shall, within 30 days of termination,
pay all compensation accrued through the effective date of resignation and
reimburse Employee for all expenses incurred before the termination of
Employee’s employment, and Employee shall have no further right for any salary
or other benefits except as otherwise required by law.
(d) This
Agreement shall be terminated by the death of the Employee. If the death of
the
Employee occurs and this Agreement is thereby terminated, the Company shall,
within 30 days of termination, pay to the Employee's estate or legal
representative in complete settlement for relinquishment of his interest in
this
Agreement, compensation and benefits payable to him through the end of the
calendar month in which his death and the Agreement's termination occur, and
shall reimburse Employee’s estate or legal representative for all expenses
incurred before the Employee’s death.
(e) The
Company may terminate this Agreement by written notice to the Employee in the
event that during the term hereof the Employee shall become “permanently
disabled” as the term “permanently disabled” is hereinafter fixed and defined.
For purposes of this Agreement, “permanently disabled” shall mean (i) the
Employee is unable, by reason of accident, physical or mental infirmity or
other
causes beyond his control, to satisfactorily perform duties then assigned to
him
or such reduced duties which the Company is willing to assign to him for a
continuous period of one hundred eighty (180) days or for a total period of
one
hundred eighty (180) days, either consecutive or not, in any twelve month
period, or (ii) the Employee is unwilling for whatever reason to perform on
a
full-time basis the duties then assigned to him for a continuous period of
one
hundred eighty (180) days or for a total period of one hundred eighty (180)
days, either consecutive or not, in any twelve month period. For purposes of
this Agreement, the Company shall determine the existence of “permanent
disability”; provided,
however,
a
determination of “permanent disability” under subsection (i) above may be made
only upon receipt of a certificate of disability from a qualified physician,
selected by the Company, subject to the reasonable approval of Employee or
his
representative after examination by such physician of the disabled Employee;
provided,
further,
that in
the event the Employee has failed to substantially perform his duties for a
period of 30 consecutive days as a result of accident or injury and thereafter
refuses to submit to a medical examination at the request of the Company for
a
continuous period of one hundred eighty (180) days, the Employee shall be deemed
to be “permanently disabled.” Upon termination pursuant to this Section 4.1(e),
the Company shall, within 30 days of termination, pay to the Employee in
complete settlement for relinquishment of the Employee's interest in this
Agreement, compensation and benefits payable to the Company through the end
of
the calendar month in which termination of this Agreement occurs, and reimburse
Employee for all expenses incurred before the termination of Employee’s
employment.
10
(f) In
the
event that the Employee’s employment hereunder is terminated (i) at any time by
the Company without cause or (ii) by the resignation of Employee as a result
of
(A) a breach by the Company of any provision of this Agreement, including,
without limitation, the failure of the Company to pay any amount hereunder
when
the same shall be due and payable, (B) the Company requiring Employee to move
to
a location outside of New York City, or (C) a material change in Employee’s
duties, including, without limitation, a material diminution in Employee’s
title, position, duties or responsibilities, or the assignment to Employee
of
duties that are inconsistent, in a material respect, with the scope of duties
and responsibilities associated with the positions specified in the Agreement,
the Company shall (x) within 30 days of termination, pay Employee all
compensation accrued through the effective date of resignation and reimburse
Employee for all expenses incurred before the termination of Employee’s
employment, (y) within 30 days of termination, pay Employee in a lump sum an
amount equal to one times Employee’s annual guaranteed salary in effect on the
date of termination and the prior year’s bonus as determined by the Board of
Directors and (z) provide to Employee, at the Company’s expense, for the first
year after Employee’s termination, continued coverage under all benefit plans in
which Employee participated immediately prior to Employee’s termination (or if
the Company was paying Employee for obtaining such coverage on his own, the
Company will pay Employee in a lump sum on termination, the amount required
to
continue such coverage for a period of one year), and Employee shall have no
further right for any salary or other benefits except as otherwise required
by
law. In addition, upon termination of Employee’s employment pursuant to this
Section 4(f), all options granted to Employee shall immediately vest and become
exercisable.
11
(g) In
the
event that the Employee’s employment hereunder is terminated by Employee for any
reason during the 90-day period subsequent to a Change in Control (as
hereinafter defined), the Company shall (x) within 30 days of termination,
pay
Employee all compensation accrued through the effective date of resignation
and
reimburse Employee for all expenses incurred before the termination of
Employee’s employment, (y) within 30 days of termination, pay Employee in a lump
sum an amount equal to 2.99 times Employee’s annual guaranteed salary in effect
on the date of termination and (z) provide to Employee, at the Company’s
expense, for the first year after Employee’s termination, continued coverage
under all benefit plans in which Employee participated immediately prior to
Employee’s termination (or if the Company was paying Employee for obtaining such
coverage on his own, the Company will pay Employee in a lump sum on termination,
the amount required to continue such coverage for a period of one year), and
Employee shall have no further right for any salary or other benefits except as
otherwise required by law. In addition, upon termination of Employee’s
employment pursuant to this Section 4(g), all options granted to Employee shall
immediately vest and become exercisable.
For
purposes of this Agreement, “Change in 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”),
other
than the current principal stockholders of the Company, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more of either (A) the then outstanding shares of the Company’s
Common Stock (the “Outstanding
Company Common Stock”)
or (B)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of members of the Board
or
board of any corporate successor to the business of the Company (the
“Outstanding
Company Voting Securities”);
provided,
however,
that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition by the Company, or (2)
any
acquisition by any Person pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (c) below; or
12
(ii)
Individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason within any period of 18 consecutive months to constitute
at
least a majority of such Incumbent Board; provided,
however,
that
any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election, by the Company’s stockholders, was
approved by a vote of at least a majority of the members then comprising the
Incumbent Board shall be considered as though such individual were a member
of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a
Person other than the Incumbent Board; or
(iii)
Consummation
after the Effective Date of a reorganization, merger or consolidation or sale
or
other disposition of all or substantially all of the assets of the Company
or
the acquisition of assets of another corporation (a “Business Combination”), in
each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Securities and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than fifty percent (50%) of, respectively,
the
then Outstanding Company Securities and the Outstanding Company Voting
Securities, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Securities and Outstanding Company Voting Securities, as the case may be, (B)
no
Person (excluding any employee benefit plan (or related trust) of the Company
or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, fifty percent (50%) or more of, respectively, the then
Outstanding Company Securities and the Outstanding Company Voting Securities
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that
such Person had an ownership position in excess of such fifty percent (50%)
of
the Outstanding Company Voting Securities prior to the Business Combination
or
(C) at least a majority of the members of the board of the entity resulting
from
such Business Combination were members of the Incumbent Board or Persons who
replaced such Incumbent Board without causing a Change in Control pursuant
to
Section (b) above at the time of the execution of the initial agreement, or
of
the action of the Incumbent Board, providing for such Business Combination;
or
13
(iv) Approval
by the security holders of the Company of a complete liquidation or dissolution
of the Company.
(h) If
either
party is prevented or delayed or anticipates being prevented or delayed in
the
performance of any of its obligations under this Agreement as a result of a
force majeure event, to include but not limited to strikes, lockouts, civil
commotion, embargo, governmental legislation or regulation, riot, invasion,
acts
or threats of terrorism, war, threat of or preparation for war, fire, explosion,
storm, flood, earthquake, subsidence, epidemic or other natural physical
disaster it shall immediately notify the other party, in writing, of the same,
and, where reasonably possible, specifying the period for which such prevention
or delay can reasonably be expected to continue. If a party shall have fully
complied with its obligations under this clause 4.1(h) it shall be excused
from
performance of its unfulfilled obligations under this Agreement from the date
of
such notice until such force majeure event no longer pertains, provided,
however, if such obligations related to “deferred compensation” within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), such obligation shall only be permitted to remain unfulfilled to the
extent permitted by Section 409A of the Code.
ARTICLE
V
MISCELLANEOUS
PROVISIONS
Section
5.1 Governing
Law.
The
validity, construction, interpretation and enforceability of this Agreement
shall be determined and governed by the laws of the State of
Delaware.
Section
5.2 Assignment.
This
Agreement shall inure to the benefit of and shall be binding upon the heirs
and
legal representatives of the Employee and upon the successors and assigns of
the
Company. This Agreement is a personal service contract and it may not be
assigned by the Employee; the Agreement is, however, expressly assignable by
the
Company to an affiliate of the Company.
14
Section
5.3 Remedies.
(a) Termination
of this Agreement shall not constitute a waiver of the Company's or the
Employee’s rights under this Agreement or otherwise, nor a release of the
Company or the Employee from its or his obligations under Article III hereof.
The parties hereto agree that monetary damages are not adequate relief for
breaches under Article III hereof and that injunctive relief may be sought
and
enforced by the Company against the Employee for enforcement of the duties
and
obligations contained therein.
(b) The
rights and remedies provided each of the parties herein shall be cumulative
and
in addition to any other rights and remedies provided by law or otherwise.
Any
failure in the exercise by either party of his or its right to terminate this
Agreement or to enforce any provision of this Agreement for default or violation
by the other party shall not prejudice such party's right of termination or
enforcement for any further or other default or violation.
Section
5.4 Entire
Agreement; Amendment.
This
Agreement constitutes the entire agreement between the parties respecting the
Employee's employment, and there are no representations, warranties or
commitments, except as set forth herein. This Agreement may be amended only
by
an instrument in writing executed by the parties hereto.
Section
5.5 Notices.
Any
notice, request, demand or other communication hereunder shall be in writing
and
shall be deemed to be duly given when personally delivered to an officer of
the
Company or to the Employee, as the case may be, or when delivered by mail at
the
addresses set forth below or such other address as may be subsequently
designated in writing:
The
Employee:
Xxxxxx
Xxxxxxx
000
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
XX 00000
With
copy
to:
Xxxxxx
Xxxxxx Rosenman LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn.:
Xxxx X. Xxxxxxx, Esq.
The
Company:
SweetskinZ,
Inc.
0000
Xxxxxxx Xx.
Xxxxxxxxxxxx,
XX 00000
15
With
copy
to: Rubin,
Bailin, Ortoli, LLP
000
Xxxx
Xxx –
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxxx
X. Xxxxxxxxxx, Esq.
Section
5.6 Severability.
The
provisions of this Agreement and any exhibits are severable and, if any one
or
more provisions may be determined to be illegal or otherwise unenforceable,
the
remaining provisions shall be enforceable. Any partially enforceable provisions
shall be enforceable to the extent enforceable.
Section
5.7 Gender.
Throughout this Agreement, the masculine gender shall be deemed to include
the
feminine and neuter, and vice versa, and the singular the plural, and vice
versa, unless the context clearly requires otherwise.
Section
5.8 Freedom
To Contract.
The
Employee represents and warrants that he has the right to enter into this
Agreement and that no other agreements exist, whether written or oral, which
would be in conflict with any of the terms and conditions of this Agreement.
During the first year hereof only, notice must be provided to the Company in
writing of any agreements, written or oral, whereby the Employee is to provide
services for compensation entered into by the Employee during the term of this
Agreement. Such written notice must describe in detail the proposed
relationship, as evidenced by such agreement, and specify whether compensation
has been received or will be received under the terms of such agreement. The
Employee represents and warrants that he will not enter into any agreement,
which is in conflict with the terms and conditions of this
Agreement.
Section
5.9 Waiver
of Breach.
Either
party’s waiver of a breach of any provision of this Agreement by the other shall
not operate or be construed as a waiver of any subsequent breach by such other
party. No waiver shall be valid unless in writing and, in the case of Company,
signed by an authorized officer of the Company.
Section
5.10 Headings.
Headings in this Agreement are for convenience only and shall not be used to
interpret or construe its provisions.
Section
5.11 Waiver
of Jury Trial.
The
Parties hereto waive the right to a jury with respect to the resolution of
any
dispute brought in connection with this Agreement.
16
Section
5.12. Successors;
Binding Effect; Third Party Beneficiaries.
In the
event of a future disposition by the Company (whether direct or indirect, by
sale of assets or stock, merger, consolidation or otherwise) of all or
substantially all of its business and/or assets, the Company will require any
successor, by agreement in form and substance reasonably satisfactory to
Employee or by operation of law, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform if no such disposition had taken place. The foregoing
includes the acquisition of the Company by a public shell in a reverse merger
or
exchange transaction, in which case this Agreement shall be assumed by the
parent holding company and Employee’s duties shall include those of the Chief
Executive Officer of the parent holding company as well as any subsidiaries
thereof, including the Company. As used
in
this Agreement, “the Company” shall mean the Company as herein before defined
and any successor to its business and/or assets as aforesaid
which assumes and agrees to
perform this
Agreement by operation
of law, or otherwise.
Section
5.13. Indemnification;
Insurance.
Subject
to and in accordance with the provisions of the Certificate of Incorporation
of
the Company, which shall not as to the following, except as required by
applicable law, be amended in this regard without Employee’s consent, the
Company shall indemnify Employee to the fullest extent permitted by the Delaware
General Corporation Law, as amended from time to time, for all amounts
(including, without limitation, judgments, fines, settlement payments, expenses
and attorney’s fees) incurred or paid by Employee in connection with any action,
suit, investigation or proceeding arising out of or relating to the performance
by Employee of services for, or the acting by Employee as a manager, officer
or
employee of, the Company, or any other person or enterprise at the Company’s
request. The Company shall use its commercially reasonable efforts to purchase
and maintain during the Interim Period and the Term directors’ and officers’
insurance with a liability limit of not less than $10,000,000,
provided that the Board shall have the right to reduce the amount of insurance
coverage if, in its opinion, coverage in such amount is available only on
unreasonable terms but in no event shall such coverage be less than
$5,000,000.
17
IN
WITNESS WHEREOF,
with
due authorization the parties have executed this Agreement as of the day and
year first above written.
| THE COMPANY | ||
| Sweetskinz, Inc. | ||
| a Pennsylvania corporation | ||
| |
|
|
| /s/ Xxxx Xxxxxx | ||
|
By:
|
Xxxx Xxxxxx |
|
| Its: | Chief Executive Officer | |
| EMPLOYEE | ||
| |
|
|
| /s/ Xxxxxx Xxxxxxx | ||
|
Xxxxxx Xxxxxxx |
||
18
EXHIBIT
A
Compensation
| A. |
Salary
|
Upon
the
Effective Date, the Company shall pay Employee a signing bonus of $30,000.
During the first year of the Initial Term of this Agreement, the Company shall
provide Employee a guaranteed salary of $185,000.00 per annum, payable monthly
in accordance with the Company’s normal payroll practices (the “First Year
Salary”).
During
each subsequent year of the Term, the Company shall provide Employee a salary
at
least equal to the First Year Salary but shall endeavor in good faith to raise
Employee’s annual salary to such level commensurate with Employee’s performance
over the prior 12 months, the progression and growth of the Company’s business
over the prior 12 months, then prevailing industry salary scales and other
relevant factors. In no event shall Employee’s guaranteed salary be less than
the First Year Salary.
B. Stock
Options
Upon
the
Effective Date, Employee shall receive stock options for 500,000 shares of
common stock (representing approximately three and one-third percent (3.3333%)
on a fully-diluted basis exclusive of any warrants issued pursuant to the
Capital Raise but with the assumption that the Capital Raise equals $5,000,000)
of the Company or SweetskinZ Holdings, Inc. or any other publicly listed parent
corporation of the Company, as the case may be, at an exercise price equal
to
the fair market value of the shares on the date of grant and an exercise term
of
10 years; provided,
however,
that if
the Company sells shares of its common stock or any other securities convertible
into its common stock at a price which is less than $1.00 per share on or before
the Effective Date, the exercise price for the options shall be the lowest
price
paid for the Company’s common stock or the lowest price into which such other
securities are then convertible. Employee shall be forwarded a Plan and Stock
Option Agreement for such shares upon the execution of this Agreement. Such
options shall vest in 8.33% increments each quarter with 100% of the options
being vested upon completion of the Initial Term, provided that the vesting
of
such options shall be accelerated upon a Change in Control, the termination
of
Employee without Cause or by the Employee pursuant to Section 4(f) or 4(g).
The
Company shall file a registration statement on Form S-8 covering the shares
issuable upon exercise of the options as soon as the Company is eligible to
file
such registration statement.
19
B. Bonus
Within
60
following the Effective Date, the Board shall adopt a bonus plan pursuant to
which all executives, including Employee, shall be able to receive an annual
bonus. Any bonus shall be paid before January 31st of the year following the
end
of the year in which the annual bonus was earned. Any bonus plan or payments
thereunder shall comply with Section 409A of the Internal Revue Code of 1986
so
that no liability results under Section 409A as a result of the bonus plan
or
any payment thereunder.
20
EXHIBIT
B
Benefits
The
Employee shall be provided with benefits now or in the future provided by the
Company to its employees and executives, including but not limited to
comprehensive family health insurance and disability insurance. In the event
that the Company does not offer health and disability insurance to its
employees, the Company shall reimburse Employee for the costs of obtaining
such
coverage in an amount which shall not be less than $13,200 per annum, payable
in
12 monthly installments., plus
(a) The
Employee shall receive a non-accountable automobile and monthly parking
allowance of $12,000.00 per year ($1000.00 per month) (increased by cost of
living index for the New York City metropolitan area annually with January
1,
2006 as the base and the January 1 preceding the adjustment date as the
comparison date) and taxed in accordance with IRS guidelines for such
plans.
(b) The
Employee shall be promptly reimbursed for the following business expenses:
(i)
gasoline, tolls, parking (exclusive of monthly), meals/entertainment, airfare,
hotel, cellular phone fees and other business-related charges and expenses
necessary for the Employee to fully perform his functions as the Chief Executive
Officer of the Company, provided that Employee submits proper expense reports
and receipts for such permitted business expenses in accordance with Company
policy, and (ii) gifts and contributions approved by the Board.
(c) The
Employee shall be entitled to four (4) weeks paid vacation in each year. No
vacation may be carried over from one year to the next, unless the Employee
receives a written extension from the Company’s Board of Directors. The
Employee
shall
also be entitled to all paid holidays given by the Company to its employees
and
key management personnel.
(d) The
Employee shall be provided, at Company’s expense, with remote computer access
from home, as available. The Company agrees to provide such access promptly
pursuant to the estimate provided to the Company.
1
(e) The
Company shall pay all fees and expenses up to an aggregate of $10,000 incurred
by Employee in the negotiation of this Agreement and any due diligence related
thereto. Such expenses shall include legal fees and travel
expenses.
2
