Exhibit 10.10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT
(“Agreement”) is made as of September 9, 2008, by and
between Baywood International, Inc., a Nevada corporation (the
“Company”), and Eric Skae, an individual residing at
c/o 60 Dutch Hill Road, #9 Orangeburg, NY 10962
(“Employee”).
W I T N E S S E T H:
WHEREAS, Baywood New Leaf Acquisition,
Inc., a Nevada corporation and a wholly-owned subsidiary of the
Company (“Buyer”), intends to purchase certain assets
(the “Purchased Assets”) of Skae Beverage
International, LLC, a Delaware limited liability company,
(“SBI”), pursuant to an Asset Purchase Agreement, of
even date herewith, by and among the Company, Buyer, SBI and
Employee (the “Asset Purchase Agreement”);
WHEREAS, immediately prior to the closing
of the transactions contemplated in the Asset Purchase Agreement
(the “Closing”), Employee is employed as President of
SBI;
WHEREAS, this Agreement is to be
effective upon the Closing;
WHEREAS, the Company wishes to ensure
that it will continue to have the benefits of Employee’s
services after the Closing on the terms and conditions hereinafter
set forth; and
WHEREAS, Employee desires to work for the
Company on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the
mutual covenants and agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1.
Employment; Term
. The Company hereby employs
Employee, and Employee hereby accepts employment with the Company,
in accordance with and subject to the terms and conditions set
forth herein. The term of employment shall commence upon the
Closing and shall continue for a period of five (5) years (the
“Term”), unless earlier terminated in accordance with
Section 5 hereof.
2.
Employment .
(a)
The Company hereby agrees to employ
Employee as a Vice President of the Company and as President of
Buyer for the Term. Employee agrees to serve in such capacity
and shall have primary responsibility for the operation of the
business formerly conducted by SBI, including the responsibility
for recruiting and managing the management team and other employees
of such business, preparing and implementing the budget for such
business, and such other duties, responsibilities and authority,
commensurate with such position as shall be assigned to him by the
Board of Directors (the “Board”) or the Chief Executive
Officer of the Company (the “CEO”) subject, in each
case, to the direction of the CEO and/or the Board, as
applicable.
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(b)
Except as expressly set forth in Section
7(b) hereof with respect to Employee’s permitted duties as a
consultant for Iceland Springs, Employee shall devote
Employee’s full business time and attention to
Employee’s duties on the Company’s behalf.
(c)
As set forth in the Asset Purchase
Agreement, within thirty (30) days of Closing, Company shall cause
its board of directors to appoint Employee as a director of Baywood
and to maintain such appointment, subject to approval by the
shareholders of Company in accordance with the Articles of
Incorporation and the by-laws of the Company, for the longer of (i)
such period as Employee is owed an amount exceeding One Hundred and
Fifty Thousand Dollars ($150,000) by Baywood in connection with the
sale and purchase of the Purchased Assets (as defined in the Asset
Purchase Agreement) or (ii) Employee is employed by Buyer in the
office of President (or such other office where the duties are
materially similar to those duties of Employee as President).
Employee’s reasonable expenses as a member of
Company’s board of directors shall be reimbursed by Company
in accordance with the Company’s policy as it may be amended
from time to time.
3.
Compensation .
(a)
The Company shall pay Employee a base
salary of One Hundred Seventy-Five Thousand Dollars ($175,000) per
annum (the “Base Salary”), payable bi-weekly, in
accordance with the Company’s then existing payroll practices
and subject to all legally required or customary withholdings and
other applicable taxes. Executive shall be entitled to an
increase in Base Salary of five percent (5%) per annum upon meeting
performance standards reasonably established by the Board or
otherwise based on performance as reasonably determined by the
Board.
(b)
Employee shall be entitled to receive an
annual bonus award (“Annual Bonus”) based on the
achievement of established financial goals as set forth below.
Employee’s Annual Bonus shall equal 4% of the net
profit for the business formerly know as SBI as defined under
U.S.GAAP. Net profits under U.S. GAAP shall include all
direct revenues and direct cost of the business and allocations of
those shared common costs with the Company. By means of
example share cost would include such items as Product and General
Liability Insurance, Employer portion Health Insurance and similar
such shared cost. The Employee’s Annual Bonus shall be
for each fiscal year upon meeting performance standards reasonably
established by the Board or otherwise based on performance as
reasonably determined by the Board, commencing twelve months from
date of Closing. Employee’s Annual Bonus shall be
subject to review and approval each year by the Board.
Notwithstanding the foregoing, the Annual Bonus for each
fiscal year completed during the Term shall be no less than Fifty
Thousand Dollars ($50,000) pro-rated with respect to any partial
fiscal year during the Term. The Annual Bonus shall be paid
out as follows: Twenty Five Thousand Dollars ($25,000) (or such
lesser pro-rated amount with respect to any partial year during the
Term) within fifteen (15) days of the end of the completion of the
applicable year of the Term, with the balance paid out calculated
and paid within thirty (30) days of the end of the applicable
fiscal year end; provided, however, that in the event of the
expiration of the Term on September 7, 2013 (i.e., such expiration
other than by an event of early termination under Section 6 hereof)
Employee shall receive any accrued but unpaid Annual Bonus to the
date of such expiration, calculated and paid within thirty (30)
days of such expiration.
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(c)
At Closing, the Company shall grant to
Employee from the Company’s executive option pool, pursuant
to the Company’s 2008 Stock Option Plan (the
“Plan”), options (the “Options”) to
purchase 250,000 shares of Common Stock, par value $0.001 per
share, of the Company (the “Common Stock”) at an
exercise price equal to the Current Market Price (as hereinafter
defined) on the date of grant. The Options will vest as to
20% on the date of grant and as to an additional 20% on each
anniversary date of the date of grant. The Options will
expire as to each vested portion if not exercised within five (5)
years after the date of vesting. Subject to the foregoing,
the terms and provision of the Options shall be consistent with the
Plan and all exhibits thereto.
For purposes of this Agreement,
“Current Market Price” on any day of determination
means the closing price of a share of Common Stock on the
over-the-counter bulletin board as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as
furnished by any Nasdaq member firm of the National Association of
Securities Dealers, Inc. selected from time to time by the Board
for that purpose, or if not so available, a price determined in
good faith by the Board as being equal to the fair market value
thereof, as the case may be.
4.
Benefits .
(a)
The Company agrees to reimburse Employee
for all reasonable out-of-pocket business expenses incurred by
Employee in the normal course of business in connection with the
performance of Employee’s duties under this Agreement in
accordance with the Company’s policy as it may be amended
from time to time. The Company shall make such reimbursements
within a reasonable amount of time after submission by Employee of
vouchers, receipts, credit card bills or other documentation in
accordance with the Company’s then applicable policies and
procedures. The Company shall provide Employee with a
corporate credit card solely for use in charging such business
expenses as set forth above.
(b)
Employee shall be entitled to participate
in any and all medical insurance, group health care programs,
disability insurance, pension and other benefit plans which are
made generally available by the Company to other similarly situated
senior level employees of the Company performing similar functions
as Employee. The Company, in its sole discretion, may at any
time amend or terminate its benefit plans or programs; provided,
however, that the Company shall not do so except to the extent that
such amendment or termination is in good faith and applies
generally to the employees of the Company.
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(c)
The Company shall maintain, at its
expense, key man life insurance (the “Policy”) on the
life of Employee for the benefit of the Company with a benefit of
Two Million Five Hundred Thousand Dollars ($2,500,000).
Employee’s signature to this Agreement constitutes
Employee’s written consent to being insured under the Policy
and that the Company may continue such life insurance coverage
after Employee’s employment with the Company terminates,
regardless of the cause of such termination. Employee shall
make all necessary applications, submit to physical examinations
and otherwise cooperate with the Company with respect to the
purchase of the Policy.
(d)
The Company shall match Employee’s
contributions, if any, made to the Company’s 401(k) plan,
dollar for dollar, up to 4% per annum of the Employee compensation
subject to the limits imposed by the Internal Revenue Service
regulations.
(e)
Employee shall be entitled to four (4)
weeks paid vacation per annum, at a time or times to be determined
in consultation with the Chief Executive Officer of the Company.
Vacation not taken or used shall be deferred or paid in cash
to the extent, if at all, consistent with the Company’s
employment polices in effect from time to time.
(f)
Employee shall be entitled to such other
benefits as are generally available to other similarly situated
senior level employees of the Company performing similar functions
as Employee.
(g)
Company shall pay Employee a monthly
automobile allowance in the amount of Seven Hundred and Fifty
($750) Dollars per month, payable within ten (10) days of the first
of each calendar month starting September 10, 2008.
5.
Termination . Employee’s employment hereunder may be
terminated under the following circumstances:
(a)
Death . Employee’s employment hereunder shall
terminate immediately upon Employee’s death.
(b)
Disability . The Company may terminate Employee’s
employment hereunder at any time after Employee becomes
“Disabled.” For purposes of this Agreement,
Employee shall be “Disabled” upon the earlier of (i)
the date Employee becomes entitled to receive disability benefits
under the Company’s long-term disability plan or (ii)
Employee’s inability to perform the essential functions of
the duties and responsibilities contemplated under this Agreement
for a period of more than ninety (90) consecutive days or for more
than one hundred twenty (120) days in any 270-day period due to
physical or mental incapacity or impairment, as determined in the
reasonable judgment of a physician licensed in the State of New
York, selected by the Company. Such termination shall become
effective five (5) business days after the Company gives written
notice of such termination to Employee or to his legal
representative, in accordance with Section 9 hereof.
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(c)
Termination by the Company without
Cause . The Company may
terminate Employee’s employment hereunder without Cause (as
hereinafter defined) at any time after providing written notice to
Employee.
(d)
Termination by the Company for
Cause . The Company may
terminate Employee’s employment hereunder for Cause at any
time after providing written notice to Employee, which notice shall
provide in reasonable detail the reason(s) for such termination.
For purposes of this Agreement, “Cause” shall
mean any of the following: (i) Employee’s willful or
intentional failure or refusal to perform or observe
Employee’s significant duties, responsibilities or
obligations set forth in, or as contemplated under (by virtue of
Employee’s office), this Agreement where such failure or
refusal shall not have ceased or been remedied within thirty (30)
days following written warning from the Company, provided that such
obligation to provide written warning and the related right to cure
shall not apply to (x) such matters as are not curable, or (y)
repeated violations of this clause (i); (ii) acts or omissions by
Employee involving Employee’s gross negligence related to the
discharge of Employee’s duties; (iii) any act or failure to
act by Employee constituting fraud or involving a knowing, willful
or intentional misrepresentation, theft, embezzlement, dishonesty
or moral turpitude (collectively, “Fraud”); (iv)
conviction of (or a plea of nolo contendere to) an
offense which is a felony in the jurisdiction involved or which is
a misdemeanor in the jurisdiction involved but which involves
Fraud; (v) any willful or intentional act or omission by Employee
which is intended to or which materially injures the reputation,
business or business relationships of the Company, or
Employee’s reputation or business relationships; (vi)
alcoholism, drug abuse or other substance abuse having a material
adverse effect on the performance of Employee’s duties
hereunder; or (vii) Employee’s willful or intentional failure
or refusal to comply with any reasonable and lawful request or
direction of the Company not contrary to the provisions of this
Agreement, where such failure or refusal shall not have ceased or
been remedied within thirty (30) days following written warning
from the Company, provided that such obligation to provide written
warning and the related right to cure shall not apply to (x) such
matters as are not curable, or (y) repeated violations of this
clause (vii).
(e)
Termination by Employee for Good
Reason . Employee may
terminate Employee’s employment hereunder at any time for
either of the following reasons (a termination for “Good
Reason”): (i) the Company’s breach of any
material provision of this Agreement or the Asset Purchase
Agreement, which shall continue unremedied for thirty (30) days
after written notice by Employee to the Company, (ii) Company
defaults with respect to any of its obligations under the
Promissory Notes (Skae Creditors) and such default or defaults
remain unremedied for thirty (30) days, (iii) if Employee is
relieved by the Company of primary responsibility for the
operations of the business formerly conducted by SBI, except
(x) for Cause, or (y) if Employee is given other duties of
substantially the same responsibility and importance to the Company
or (iv) if Buyer and/or Company causes SBI’s Orangeburg, New
York sales and marketing office to be closed down at any time prior
to the date which is six (6) months from the Closing
Date.
(f)
Other Termination by
Employee . Employee may
terminate Employee’s employment hereunder at any time, other
than for Good Reason, after providing thirty (30) days-prior
written notice to the Company.
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6.
Compensation Following Termination
Prior to the End of the Term .
In the event that Employee’s employment hereunder is
terminated prior to the end of the Term, Employee shall be entitled
only to the following compensation and benefits upon such
termination:
(a)
Termination by Reason of Death or
Disability . In the
event that Employee’s employment is terminated by reason of
Employee’s death or Disability, respectively, the Company
shall pay the following amounts to Employee (or Employee’s
spouse or estate, as applicable):
(i)
Any accrued but unpaid Base Salary (as
determined pursuant to Section 3(a) hereof) for services rendered
to the date of termination; provided, however, that in the case of
Death, and only to the extent that Baywood, in its sole discretion,
has a “key-man” life insurance policy in place with
respect to the life of Employee in the amount of
