EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT made as December 1, 2002, by and between SINOFRESH
HEALTHCARE, INC., a Delaware corporation ("Employer" or the "Company"), and
Xxxxxxx X. Xxxx ("Executive").
WHEREAS, Executive wishes to be employed by Employer with the duties
and responsibilities as hereinafter described, and Employer desires to assure
itself of the availability of Executive's services in such capacity.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Employer and Executive hereby agree as follows:
1. EMPLOYMENT. Employer hereby agrees to employ Executive, and
Executive hereby agrees to serve Employer, upon the terms and conditions
hereinafter set forth.
2. TERM AND TERMINATION. The Initial Term of this Agreement (the
"Service Period") shall commence on December 1, 2002 and it shall continue in
effect for a period of five (5) years. Thereafter, the Agreement shall be
renewed upon the mutual agreement of Executive and Company. This Agreement and
Executive's employment may be terminated at Company's discretion during the
Initial Term, provided that Company shall pay to Executive an amount equal to
payment at Executive's base salary rate for the remaining period of Initial
Term, plus an amount equal to one hundred and fifty percent (150%) of
Executive's base salary for the remaining period of the Initial Term as
severance. In the event of such termination, Executive shall not be entitled to
any Incentive Compensation payment or any other compensation then in effect,
prorated or otherwise.
(a). This Agreement and Executive's employment may be terminated by
Company at its discretion at any time after the Initial Term, provided that in
such case, Executive shall be paid as severance an amount equal to 2 months of
Executive's then applicable base salary or each year of service including
Executive's service to the predecessor companies SinoFresh Laboratories, Inc.
and SinoFresh Laboratories, LLC. In the event of such a discretionary
termination, Executive shall not be entitled to receive any Incentive
Compensation payment or any other compensation then in effect, prorated or
otherwise.
(b). This Agreement may be terminated by Executive at Executive's
discretion by providing at ninety (90) days prior written notice to Company. In
the event of termination Initials:
by Executive pursuant to this subsection, Company may immediately relieve
Executive of all duties and immediately terminate this Agreement, provided that
Company shall pay Executive at the applicable base salary rate to the
termination date included in Executive's original termination notice.
(c). In the event that Executive is in breach of any material
obligation owed Company in this Agreement, which in the opinion of 75% of the
members of the Board: habitually neglects the duties to be performed under this
Agreement, engages in any conduct which is dishonest, damages the reputation or
standing of the Company, or is convicted of any criminal act or engages in any
act of moral turpitude, then Company may terminate this Agreement upon five (5)
days notice to Executive. In event of termination of the Agreement pursuant to
this subsection, Executive shall be paid only at the then applicable base salary
rate up to and including the date of termination Executive shall not be paid any
incentive salary payments or other compensation, prorated or otherwise.
(d). In the event company is acquired, or is the non-surviving party
in a merger, or sells all or substantially all of its assets, this Agreement
shall not be terminated and Company agrees to us its best efforts to ensure that
the transferee or surviving company is bound by the provisions of this
Agreement. In the event that the Company is unable or unwilling to secure such a
continuation of Executive's compensation and benefits, Executive shall receive a
royalty equal to three percent (3%) of the net revenues of the company derived
from the sale of SinoFresh products in effect at the time of the signing of this
Agreement or produced during the Service Period of Executive's employment, as
such revenues are determined by the independent accountants engaged by the
Company. The royalty payment shall be made within thirty (30) days after the
Company's independent accounting firm has concluded its audit. If the final
audit is not prepared within ninety (90) days after the end of the fiscal year,
then Company shall make a preliminary payment equal to fifty percent (50%) of
the amount due based upon the adjusted net profits preliminary determined by the
independent accounting firm, subject to payment of the balance, if any, promptly
following completion of the audit by the Company's independent accounting firm.
(e) This Agreement shall terminate in the event (i) the death of the
Executive, (ii) disability, where the Executive by reason of accident or illness
in unable to perform his duties for a period of six consecutive months or for a
period of seven months in a period of 12 consecutive months or (iii) in the
event the Employer ceases operation.
3. DUTIES. Executive shall, subject to the legal authority vested in the Board
of Directors (the "Board"), serve as, and have all power and authority inherent
in the offices of, Chairman of the Board of Directors and Chief Executive
Officer of Employer, and shall be responsible for those areas in the conduct of
the business assigned to him by the Board, including, without Iimitation, (i)
providing overall management, strategic guidance and section to the Company and
its subsidiaries, (ii) participating in the Company's
capital raising efforts; (ii) managing the identification of and negotiation
with acquisition candidates; (iv) involvement in the Company's public relations
and investor relations efforts; (v) management authority over executives and key
employees of the Company and all of its divisions and subsidiaries, and (vi) and
such other duties and responsibilities as may from time to time be assigned by
the Board. Executive shall devote substantially all his business time and
efforts to the business of Employer. Executive shall report directly to the
Board of Directors.
4. EXECUTIVE' S LOYAL TO EMPLOYER'S INTERESTS. Executive shall devote
all of his time, attention, knowledge and skill solely and exclusively to the
business and interests of Employer, and Executive shall be entitled to all
benefits, emoluments, profits and other issues arising from or incident to any
and all work, services and advice of Executive. Executive expressly agrees that
during the term hereof he will not be interested, directly or indirectly, in any
form, fashion, or manner, as partner, officer, director, stockholder, advisor,
employee, or in any other form or capacity, in any other business similar to
Employer's business or any allied trade, except that nothing herein contained
shall be deemed to prevent or limit the right of Executive to invest any or his
surplus funds in the capital stock or other securities of any corporation whose
stock or securities are publicly owned or are regularly traded on any public
exchange, nor shall anything herein contained by deemed to prevent or limit
Executive from investing his surplus funds in real estate.
5. CONFIDENTIAIITY NON-COMPETE, NON-SOLICITATION AND INVESTMENTS. The
Executive recognizes and agrees that all copyrights, trademarks, or other
intellectual property rights to created works arising in any way from, or
related to, the Executive's employment by the Company are the sole and exclusive
property of the Company, agrees to not assert any rights to those works against
the Company or any third-parties and agrees to assist the Company in any way
requested to procure or protect the Company's rights to those works. This
Agreement does not include any copyrights, trademarks, or other intelIectual
property rights to created works arising in any way from, or related to, the
Executive's association with SinoFresh Research Laboratories, LLC. Upon
cancellation of this Agreement by either party for any reason, or if requested
by the Board at any time, the Executive will return to the Company all
documents, books, manuals, lists, records, publications or other materials,
whether in written, electronic or other form, passwords, keys, credit cards,
equipment, or other articles that came into the Executive's possession in
connection with the Executive's employment by the Company and to maintain no
copies or duplicates without the prior written approval of the Bard of Directors
of the Company. The Executive will maintain in confidence during an subsequent
to the Executive's employment any information about the Company or its members
which is confidential information or which might reasonably be expected by the
Executive to be regarded by the Company as confidential and will not use that
information except for the benefit of the Company. Upon cancellation of this
Agreement by either party for any reason, the Executive will refrain for three
(3) years from (a) undertaking employment or any compensated duties on behalf of
any com any or firm that provides services or products to clients in competition
with the Company, or (b) soliciting any individual who is then or was at anytime
within the preceding six months an employee of the Company to leave the
Company's employment, in either case unless the Board of Directors of the
Company provides prior written approval of the employment, duties or
solicitation. The Executive will not make or direct any personal investments in
the pharmaceutical field based substantially upon information conveyed to the
Executive as an employee of the Company where the information is conveyed with a
request for, or in the expectation of, confidentiality. The provisions of this
paragraph will survive cancellation of this Agreement.
6. COMPENSATION AND OTHER PROVISIONS. Executive shall be entitled to
the compensation and benefits hereinafter described in subsections (a) through
(g) (such compensation and benefits being hereinafter referred to as
"Compensation Benefits").
(a) BASE SALARY. Employer shall pay to Executive a base salary of
$150,000 per annum for the period commencing December 1, 2002 through the
remainder of the Service Period (such amount, as it may be increased from time
to time, may sometimes hereinafter be referred to as "Base Salary"). However,
Executive's base salary shall be review each year by the Board and the
Compensation Committee during the Service Period and may be increased (but not
decreased) as the Board may determine. In the event that Employer for reasons of
cash flow is unable to make full salary payment to Executive, and without regard
to IRS rules governing the income tax treatment of such compensation, any unpaid
amounts shall accrue, without interest, and shall be paid to Executive when the
Board determines that such amount could reasonably be paid. Such unpaid amounts
shall remain obligations of the Employer until paid in full.
(b) INCENTIVE COMPENSATION. Executive shall be entitled to
incentive cash compensation equal to 5% of the adjusted net profits (hereinafter
defined) of the Company beginning with the Company's year-end of and each fiscal
year thereafter during the term of this Agreement. "Adjusted net profit" shall
be the net profit of the Company before federal and state income taxes,
determined in accordance with generally accepted accounting practices by the
Company's independent accounting firm and adjusted to exclude: (i) any Incentive
Compensation payments paid pursuant to this Agreement; (ii) any contributions to
pension and/or profit sharing plans; (iii) any extraordinary gains or loses
(including, but not limited to, gains or losses on disposition of assets); (iv)
any refund or deficiency of federal and state income taxes paid in a prior year;
and (v) any provision for federal or state income taxes made in prior years
which is subsequently determined to be unnecessary. The determination of the
adjusted net profits made by the independent accounting firm employed by the
Company shall be final binding upon Executive and Company. The Incentive
Compensation payment be made within thirty (3 ) days after the Company's
independent accounting firm has concluded its audit. If the final audit is not
prepared within ninety (90) days after the end of the fiscal year, then Company
shall make a preliminary payment equal to fifty percent (50%) of the amount due
based upon the adjusted net profits preliminary determined by the independent
accounting firm, subject to payment of the balance, if any, promptly following
completion of he audit by the Company's independent accounting firm. The maximum
incentive cash compensation payable for anyone year shall not exceed three
hundred percent (300%) f the then applicable base salary of Executive.
(c) PARTICIPATION IN BENEFIT PLANS. During the Service Period,
Executive shall be eligible to participate in all employee benefit plans and
arrangements now in effect or which m y hereafter be established, including,
without limitation, all life, group insurance and medical care plans and all
disability, incentive stock option plans, 401 (k) plans, pension plans, profit
sharing plans, retirement and other employee benefit plans of Employer
consistent with such benefits provided to executive management of Employer.
Employer shaII in all events provide and pay the full costs of all medical and
insurances for Executive as noted above or as may be added throughout the
Service Period.
(d) AUTOMOBILE ALLOWANCE. During the Service Period, Executive
shall be paid an automobile alIowance of approximately $1,000 per month
throughout the Service Period, which shalI all be utilized for an automobile
lease, insurance, gasoline, maintenance and related expenses.
(e) EXPENSE REIMBURSEMENT. Employer will promptly reimburse
Executive for all reasonabIe out-of-pocket business expenses incurred in
connection with the performance of Executive's services hereunder, including,
without limitation, all travel, telephone, entertainment and similar business
expenses.
(f) CLUB MEMBERSHIP. Executive shall have paid his annual and
monthly membership due in a social club that the executive regularly uses for
business purposes.
(g) TAX AND ESTATE PLANNING ALLOWANCE. Executive shall receive
an annual grant, in the amount to be determined by the Board, for tax and estate
planning.
(h) KEYMAN INSURANCE. The Company shall have the option to
maintain and be the owner and beneficiary If a term life insurance policy
payable upon the Executive's death within minimum policy limit of $5 million,
and Executive agrees to submit to any physical examination, and to otherwise
cooperate in any other procedures required to obtain such policy,
(i) DISABILITY INSURANCE POLICY. The Company shall have the
option to maintain and be the owner of a disability insurance policy on the
Executive's life with a minimum limit of $25,000 per month, and Executive agrees
to submit to any physical examination, and to otherwise cooperate in any other
procedures required to obtain such policy.
7. STOCK OPTIONS. Concurrent herewith, Employer and Executive shall
enter into a certain Stock Option Agreement ("Stock Option Agreement") providing
for certain anti-dilution rights to Executive, participation in the Employer's
qualified incentive stock option plan, and cashless exercise. The terms of the
anti-dilution rights shall provide that:
If the Company issues additional shares, whether in the course
of further acquisition, capital raising activity or any other activity, the
Executive shall receive options for the purchase of shares of the Employer such
that the Executive shall maintain no less than 1 % (fifteen percent) ownership
of Employer. This right shall be valid as long as the total outstanding shares
on a fully diluted basis are less than 100,000,000 shares. When the total shares
on a fully diluted basis is greater than 100,000,000 shares, the Executive shall
have no further anti dilution rights. In the case of a stock split,
recapitalization or other similar share reissuance program, this anti-dilution
right will be proportionately adjusted. The stock options granted should have an
exercise price that is equal to the average market price during the 60 days
prior to the distribution to Executive and shall be exercisable for a period of
five years from the date of grant.
8. REGISTRATION RIGHTS AGREEMENT. Concurrent herewith, Employer and
Executive have entered into a certain Registration Rights Agreement pursuant to
which Employer has granted to Executive certain "piggy-back" rights to register
securities of Employer, including, without limitation, common stock granted
hereunder and underlying stock options granted or to be granted in connection
with the Stock Option Agreement.
9. REPRESENTATIONS AND WARRANTIES. Executive hereby represents and
warrants to the Employer that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which Executive is bound, and (ii)
Executive is not a party to or bound by any employment agreement,
non-competition agreement or confidentiality agreement with any other person or
entity which in any way may restrict, impair or limit the performance of his
duties hereunder.
10. DISCLOSURE AND PROTECTION OF CONFIDENTIAL INFORMATION.
(a) For purposes of this Agreement, "Confidential Information"
means knowledge, information and material which is proprietary to Employer, of
which Executive may obtain knowledge or access through or as a result of his
employment by Employer (including information conceived, originated, discovered
or developed in whole or in part by Executive). Confidential Information
includes, but is not limited to, (i) technical knowledge, information find
material such as trade secrets, processes, formulas, data, know-how,
improvements, inventions, computer programs, drawings, patents and experimental
and development work techniques, and (ii) marketing and other information, such
as supplier lists, customer lists, marketing and business plans, business or
technical needs of customers, Consultants, licensees or suppliers and their
methods of doing business, arrangements with customers, consultants, licensees
or suppliers, manuals and personnel records or data. Confidential Information
also includes any information described above which employer obtains from
another party and which Employer treats as proprietary or designates as
confidential, whether or not owned or developed by Employer. Notwithstanding the
foregoing, any information which is or becomes generally available to the
general public otherwise than by breach of this Section 11 shall not constitute
Confidential Information for purposes of this Agreement.
(b) During the term of this Agreement and thereafter,
Executive agrees, to hold in confidence all Confidential Information and not to
use such information for Executive's own benefit or to reveal, report, publish,
disclose or transfer, directly or indirectly, any confidential Information to
any person or entity, or to utilize any Confidential Information or any purpose,
except in the course of Executive's work for Employer.
(c) Executive will abide by any and all security rules and
regulations, whether formal or informal, that may from time to time be imposed
by Employer for the protection of Confidential Information, and will inform
Employer of any defects in, or improvements that could be made to, such rules
and regulations.
(d) Executive agrees that all inventions, innovations,
improvements, developments, methods, designs, analysis, drawings, reports, and
all similar or related information which relate to Employer's actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by Executive at any time
while employed by Employer, or made thereafter as a result of any invention
conceived or work done at any time during employment with Employer (hereinafter
referred to as "Work Product"), and all Executive's right, title and interest in
and to Work Product, shall be regarded as made and held by Executive in a
fiduciary capacity solely for the benefit of Employer and shall exclusively
belong to Employer. Executive will promptly disclose such Work Product to the
Board of Directors of Employer and perform all actions reasonably requested by
the
Board of Directors of Employer (whether during or after the term of Executive's
employment with Employer) to establish and confirm such ownership (including,
without limitation, execution of any and all assignments, conveyances, consents,
powers of attorney and other instruments). This Agreement does not include
inventions, innovations, improvements, developments, methods, designs, analysis,
drawings, reports, and all similar or relate information which relates to
Employer's actual or anticipated business, research and development or existing
or future products or services and which are conceived, developed or made by
Executive for SinoFresh Research Laboratories, LLC.
(e) Executive will notify Employer in writing immediately upon
receipt of any subpoena, notice to produce, or other compulsory order or process
of any court of law or government agency if such document requires or may
require disclosure or other transfer of Confidential Information.
(f) Upon termination of employment, Executive will deliver to
Employer any and all records and tangible property that contain Confidential
Information that are in his possession or under his control. The provisions of
this Section 11 shall survive the termination of Executive's employment with
Employer.
11. BOARD OF DIRECTORS. The Company agrees to nominate Executive for
election to its Board of Directors and to otherwise exercise its best efforts to
cause Executive to be elected or appointed Chairman of the Board of Directors at
each such Election of Officers by the Shareholders. Such election shall be in
addition to Executive's appointment as Chief Executive Officer of the Company.
12. AVAILABILITY OF INJUNCTIVE RELIEF. Executive acknowledges and
agrees that any breach by him of the provisions of Section 10 hereof will cause
Employer irreparable injury and damage for which it cannot be adequately
compensated in damages. Executive therefore expressly agrees that Employer shall
be entitled to seek injunctive and/or other equitable relief, on a temporary or
permanent basis to prevent any anticipatory or continuing breach of this
Agreement or any part hereof, and is secured as enforcement. Nothing h rein
shall be construed as a waiver by Employer of any right it may have or hereafter
acquired to monetary damages by reason of any injury to its property, business
or reputation or otherwise arising out of any wrongful act or omission of it.
13. INDEMNIFICATION. Employer hereby releases and agrees to
unconditionally indemnify and hold Executive harmless from and against all
losses, liabilities, claims, actions, judgments, demands, costs, expenses,
fines, penalties, fees, and damages, of any kind or nature, including, without
limitation, attorney's fees and costs and whether or not suit is instituted,
that are suffered or incurred by Executive, directly or indirectly, relating to,
arising out of or in connection with any events, occurrences or circumstances
of or involving Employer prior to the effective date of this Agreement,
irrespective of whether or not Executive is now aware or shall hereafter become
aware of such events, occurrences or circumstances or additional facts relating
thereto.
14. DIRECTORS AND OFFICERS LIABILITY INSURANCE. Company agrees to
obtain Directors and Officers Liability Insurance in such amounts and under such
terms as the Board of Directors may agree, and to provide such Directors and
Officers Liability Insurance coverage to Executive during the term of his
employment with the Company.
15. SURVIVAL. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive Executive's
termination of employment, irrespective of any investigation made by or on
behalf of any party.
16. ENTIRE AGREEMENT; MODIFICATION. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
17. NOTICES. Any notice required or permitted hereunder shall be
deemed validly given if delivered by hand, verified overnight delivery, or by
first class, certified mail to the following address of Executive (or to such
other address as Executive may notify in writing to Employer):
SinoFresh HealthCare, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxx
0000 Xxx Xxxx
Xxxxxxxxx, XX 00000
With a copy to:
(Name and address of Xxxxxxx' personal Attorney)
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18. WAIVER. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of
such provision or of any (reach of any other provision of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. All waivers must be in writing.
19. BINDING EFFECT. The provisions of this Agreement shall be binding
upon the Executive and his heirs and personal representatives, and shall be
binding upon and inure to the benefit of Employer, its successors and assigns.
21. NO ASSIGNMENT. Neither this Agreement nor any or interest in this
Agreement may be assigned by Executive without the prior express written
approval of Company, which may be withheld by Company at Company's absolute
discretion.
22. SEVERABILITY. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining terms, will remain in full force and effect as if
such invalid or unenforceable term had ever been included.
23. HEADINGS. The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
24. GOVERNING LAW; VENUE. This Agreement will be governed and construed
under the laws of the State of Florida, without giving effect to rules governing
conflicts of law, with proper venue with respect to all disputes related to this
Agreement being Dade County, Florida.
25. INVALIDITY. The invalidity or unenforceability of any term of this
Agreement shall not invalidate, make unenforceable or otherwise affect any other
term of this Agreement, which shall remain in full force and effect.
26. ATTORNEYS' FEES. In the event any dispute or litigation arises
hereunder between any of the parties hereto, the prevailing party shall be
entitled to all reasonable costs and expenses incurred by it in connection
therewith (including, without limitation, all reasonable attorneys' fees and
costs incurred before and at any trial or other proceeding and at all tribunal
levels), as well as all other relief granted in any suit or other proceeding.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first hereinabove written.
EMPLOYER:
SinoFresh HealthCare,
corporation
/s/ illegible
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Director President
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Inc., a Delaware
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
