THIS EMPLOYMENT AGREEMENT (the “Agreement”),
effective as of January 1, 2007, is entered into this 12
th day of
December 2007 by and between Enrique de Vilmorin
(“Employee”), and Ethos Environmental, Inc., a Nevada
corporation (“Company”).
RECITALS
WHEREAS , the Employee has been serving as President and
Chief Executive Officer of the Company and the parties hereto
desire for the Employee to continue serving in such capacity;
and
WHEREAS , no formal document exists governing the
relationship between the Company and the Employee, and the Company
and Employee desire by the execution of this Agreement to create a
document memorializing the terms and conditions of the
Employee’s service with the Company; and
WHEREAS , the Company has granted Employee, by unanimous
written consent of the Board of Directors effective as of even date
herewith, 5,000,000 shares of the Company’s Common
Stock, $0.0001 par value per share, (the “Issued
Stock”) as bonus consideration for past services and for
services hereunder.
NOW, THEREFORE , in consideration of the mutual agreements
hereinafter set forth, Employee and the Company have agreed and do
hereby agree as follows:
AGREEMENT
1.
Duties. The Company hereby agrees to continue to employ and
engage Employee as President and Chief Executive Officer of
the Company, and Employee hereby accepts and agrees to such
hiring, engagement, and employment. Employee agrees to perform
any and all duties and to assume any and all responsibilities
that may be assigned to him from time to time by the Board of
Directors of the Company or as may be required by the Bylaws,
Articles of Incorporation or other governing documents of the
Company. During the duration of his employment, Employee will
devote his full time, energy, and skill to the performance of
his duties for the Company and for the benefit of the Company.
Employee shall render such services to the Company and perform
his duties at such place or places in as the Company shall
require in accordance with its best interests, needs, business
and opportunities. Employee will also exercise due diligence
and care in the performance of Employee’s duties to the
Company under this Agreement. During the term hereof, Employee
shall not enter into the services of or be employed in any
capacity or for any purposes whatsoever, whether directly or
indirectly, by any person, firm, corporation or entity other
than Company, and will not, during said period of time, be
engaged in any business, enterprise or undertaking other than
employment by the Company, except with the prior written
consent of the Company.
2.
Employment Period. Employee’s employment with the
Company shall be for an initial term of five (5) years (the
“Initial Term”), commencing on the date hereof and
shall continue thereafter until ended in accordance with this
Agreement. In the absence of a Notice of Termination, as
provided herein, this Agreement shall renew automatically on
the anniversary date hereof, on a year by year term, for each
of the successive ten (10) years (the “Extended
Term”) following the Effective
Date. Provided, however, after the Initial Term,
Employee’s employment will be “at will,”
meaning that either Employee or the Company will be entitled
to terminate the employment at any time and for any reason,
with or without cause prior to the expiration of this
Agreement. Any contrary representations which may
have been made to Employee are superseded by this Agreement.
The “at will” nature of the employment after the
Initial Term may only be changed in an express written
agreement signed by Employee and a duly authorized officer of
the Company.
3.
Compensation.
(a)
Base Salary. The Company shall pay Employee, and Employee
agrees to accept from the Company in full payment for
Employee’s services and promises to the Company
(specifically including the covenants set forth in Sections 5
and 9), a base salary at the rate of $30,000 per month during
the duration of Employee’s employment (“Base
Salary”), payable in equal monthly installments or
otherwise in accordance with the Company’s normal pay
practices as the same may be altered from time to time by
Company.
(b)
Bonus. At the discretion of the Board of Directors, and
subject to the satisfaction of such conditions or performance
criteria as may be established from time to time at the sole
discretion of the Board of Directors, Employee may, at any
time and from time to time, receive a bonus. This bonus may
consist of, without limitation, either equity interests of the
Company or cash.
(c)
Withholding Taxes. All forms of compensation paid or payable
to Employee whether set forth in this Agreement or otherwise
are subject to reduction to reflect applicable withholding and
payroll taxes.
(d)
Reimbursement for Business Expenses. Employee shall receive
reasonable and customary reimbursement for business expenses
incurred on behalf of the Company; provided, however, that
Employee shall provide appropriate receipts and documentation
for any such expenses.
(e)
Vacation. Employee shall be entitled to vacation on the terms
and subject to the conditions established by the Board of
Directors of the Company.
(f)
Health Care Benefits. In addition to Employee’s Base
Salary during the duration of the Employee’s employment,
when and if the Company adopts health care benefits and/or
life insurance benefits, Employee shall be eligible for
participation in any such plan(s) on the terms and subject to
the conditions established by the Board of Directors of the
Company.
4.
Issued Stock; Transferability. The Issued Stock and the rights
and privileges conferred in whole or in part hereby may not be
transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Company
shall have no obligation to transfer such shares, unless
registered under the Securities Act of 1933, as amended (the
“Act”) or, in the opinion of counsel to the
Company, such transaction is in compliance with or exempt from
the registration and prospectus requirements of the Act. The
Employee shall pay all costs incurred by the Company in such a
transaction, including but not limited to legal fees and
costs. The Issued Stock shall not be subject to levy and
execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of
the Issued Stock, or any right or privilege conferred hereby,
contrary to the provisions of this Agreement, or upon the levy
or execution, attachment or similar process on the Issued
Stock or the rights and privileges conferred under this
Agreement, the Company shall have the right to buy back the
Issued Stock, in whole or in part, in the manner described in
Section 6. Each certificate or other documentation
evidencing the ownership of any shares of Issued Stock to be
imprinted with a legend in substantially the following
form:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE REOFFERED, SOLD,
TRANSFERRED, PLEDGED, OR ASSIGNED IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SAID ACT AND THE STATE SECURITIES ACT OR BLUE
SKY ACT OF ANY STATE HAVING JURISDICTION THEREOF, OR
(B) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY IN
FORM, SCOPE AND SUBSTANCE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR THE SECURITIES ACT OR BLUE SKY
ACT OF ANY STATE HAVING JURISDICTION WITH RESPECT THERETO.
ADDITIONALLY, THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
AN OPTION TO REPURCHASE IN FAVOR OF THE COMPANY AS DESCRIBED
IN THAT CERTAIN EMPLOYMENT AGREEMENT DATED JANUARY 1,
2007.
The
certificate may also bear additional inscriptions that the
Company, in its sole and absolute discretion, otherwise deems
are required by federal, state, foreign or local securities
laws. All shares of Issued Stock shall be subject to such
stop-transfer orders and other restrictions as the Company may
deem advisable under the rules, regulations, and other
requirements of the US Securities and Exchange Commission, any
stock exchange upon which the Common Stock is then listed, and
any applicable federal or state securities law, and the
Company may cause a legend or legends to be put on any
certificates evidencing such shares to make appropriate
reference to such restrictions.
5.
Restrictions on the Issued Stock. The Issued Stock is subject
to all restrictions in this Agreement. By acceptance of the
Issued Stock, the Employee agrees that the Issued Stock will
be held for investment and will not be held with a view to
their distribution, as that term is used in the Act, unless in
the opinion of counsel to the Company, such distribution is in
compliance with or exempt from the registration and prospectus
requirements of that Act. As a condition of this Agreement,
the Company may require the Employee to confirm any factual
matters reasonably requested by counsel for the
Company.
THE
EMPLOYEE UNDERSTANDS THAT THE ISSUED STOCK WILL NOT BE
REGISTERED AT THE TIME THIS AGREEMENT UNDER THE SECURITIES
ACT. THE EMPLOYEE REPRESENTS THAT IT IS EXPERIENCED IN
EVALUATING COMPANIES SUCH AS THE COMPANY, HAS SUCH KNOWLEDGE
AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS AS TO BE
CAPABLE OF EVALUATING THE MERITS AND RISKS OF ITS INVESTMENT,
AND HAS THE ABILITY TO SUFFER THE TOTAL LOSS OF THE
INVESTMENT. THE EMPLOYEE FURTHER REPRESENTS THAT IT HAS HAD
THE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM
THE COMPANY CONCERNING THE TERMS AND CONDITIONS OF THE ISSUED
STOCK, THE COMMON STOCK, AND THE BUSINESS OF THE COMPANY, AND
TO OBTAIN ADDITIONAL INFORMATION TO SUCH EMPLOYEE’S
SATISFACTION. THE EMPLOYEE FURTHER REPRESENTS THAT IT IS AN
“ACCREDITED INVESTOR” WITHIN THE MEANING OF
REGULATION D UNDER THE ACT, AS PRESENTLY IN
EFFECT.
6.
Resignation; Termination.
(a)
Resignation. Employee shall have the right to terminate this
Agreement at any time upon thirty (30) days prior written
notice to the Company of any such termination (“Employee
Notice of Termination”). In the event that such
resignation is for Good Reason (as that term is defined
below), all of Employee’s rights and all of the
Company’s obligations hereunder shall terminate
effective on the date of Employee’s resignation and
Employee shall be entitled to receive the unpaid portion of
the Base Salary earned up to the date of such termination and
all benefits payable to Employee as a result of such
termination under the terms of the Company’s employee
benefit plans. In the event Employee shall resign for other
than Good Reason, Employee’s obligations and the
Company’s rights under Sections 5, 6, 7, 8, 9 and 10
shall survive the termination of this Agreement for a period
of one (1) year, and the Issued Stock will be subject to
the Option to Repurchase as set forth below. The Employee may
terminate the Employee’s employment with the Company at
any time for “Good Reason”, if any of the
following have occurred without the Employees
consent:
(i)
the material reduction of the Employee’s authority,
duties and responsibilities, or the assignment to the Employee
of duties materially inconsistent with the Employee’s
position or positions with the Company and its subsidiaries,
except that the Company shall have thirty (30) days from
the date on which the Employee gives the notice thereof to
cure such event or condition and, if the Company does so, such
event or condition shall not constitute Good Reason
hereunder;
(ii)
a reduction of the Annual Salary of the Employee, except that
a reduction of the Employee’s Base Salary shall not
constitute Good Reason for termination if (i) the Company
cures such reduction no later than thirty (30) days from
the date on which the Employee gives the Company notice that
the reduction constitutes Good Reason for termination
hereunder; or (ii) such reduction is made in connection
with a reduction in compensation of not more than ten percent
(10%) of the Employee’s Base Salary and such
reduction is made generally applicable to all senior
management employees of the Company;
(iii)
the failure by the Company to obtain an agreement in form and
substance reasonably satisfactory to the Employee from any
successor to the business of the Company to assume and agree
to perform this Agreement;
(iv)
the Company’s material and willful breach of this
Agreement, except that the Company shall have thirty
(30) days from the date on which the Employee gives the
notice thereof to cure such event or condition and, if the
Company does so, such event or condition shall not constitute
Good Reason hereunder;
(v)
a requirement by the Company that Employee’s work
location be moved more than fifty (50) miles of the
Company’s principal place of business in San Diego,
California; or
(vi)
Change of Control: "Change of Control" means the
occurrence of any of the following events:
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(a)
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Any
"person" or group (as such terms and used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended)
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the
Company representing 20% or more of the total voting power
represented by the Company's then outstanding
voting securities; or
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(b)
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A
change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of
the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the
Company as of the date hereof; or (B) are elected, or
nominated for election, to the Board with the affirmative votes
of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an
individual whose election or nomination is in connection with
an actual or threatened proxy contest relating to the election
of directors for the Company); or
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(c)
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The
stockholders of the Company approve any transaction which would be
a reorganization under Nevada or California law and result in
the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) less than fifty percent (50%) of the
total voting power represented by the voting securities of the
surviving entity outstanding immediately after such merger or
consolidation; or
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(d)
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The
stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's
assets.
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(b)
Termination for Cause. The Company may terminate
Employee’s employment at any time for Cause (as defined
below) with thirty (30) days written notice and
opportunity to cure the violation “Employer Notice of
Termination”). Such opportunity to cure will only be
available if the violation is contained in one of the
following paragraphs (contained below in this Subsection
6(b)): (iv), (viii), (ix), (x) (xi). If Employee’s
employment is terminated pursuant to this Subsection 6(b), all
of Employee’s rights and all of the Company’s
obligations hereunder shall immediately terminate. As used in
this section, “for Cause” shall mean any of the
following:
(i)
Willfully damaging the Company’s property, business,
reputation or goodwill;
(ii)
Committing a felony;
(iii)
Death, theft, dishonesty, fraud or embezzlement;
(iv)
Using alcohol, narcotics or other controlled substances to the
extent that it prevents the Employee from efficiently
performing services for the Company;
(v)
Willfully injuring any other employee of the
Company;
(vi)
Willfully injuring any person in the course of performance of
services for the Company;
(vii)
Disclosing to a competitor or other unauthorized persons
confidential or proprietary information or secrets of the
Company;
(viii)
Soliciting business on behalf of a competitor or a potential
competitor;
(ix)
Sexually harassing any other employee of the Company or
committing any act which otherwise creates an offensive work
environment for other employees of the Company;
(x)
Failing to comply with any provision of the Company’s
policy manual as it applies to Employee; or
(xi)
Breaching this Agreement.
(c)
Termination of Employment Prior to a Change of Control: The
following provisions shall apply with respect to
termination of Employee's employment prior to a Change of
Control:
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(i)
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Termination
without Cause:
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(a)
|
General: If,
prior to the end of the Initial Term and prior to a Change of
Control Employee's employment is terminated by the Company without
Cause, then the Company shall:
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(A)
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Cash
Severance Payments: Pay to Employee severance payments
of one month's Base Salary for a period of 36 months following the
date of termination; (the "Severance Period"). Such severance
payments shall be paid at regular payroll intervals, or in one
lump sum within 30 days of the Termination Date, as determined
by Company.
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(B)
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Accelerated
Vesting Option: Give Employee (or his legal
representative if he is Disabled) 30 days to elect to
accelerate the vesting of 80% all unvested equity compensation
(forfeiting the 20% balance of unvested equity compensation)
to the same extent as if it would have vested if Employee
remained employed through the required vesting period.
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(C)
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Continued
Group Health and Insurance Benefits: Continue to make available to
the Employee and the covered dependents, and to pay directly
or indirectly for, to the same extent as paid prior to the
Termination Date, all group health plan, life and other
similar insurance plans or Company-sponsored arrangements
providing comparable benefits in which Employee or such
covered dependents participate on the Termination Date through
the Severance Period.
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(b)
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Death: In
the event of Employee's death while he is receiving benefits
pursuant to Section 6(c)(i)(a) hereof, the Company
shall continue providing and paying severance and for group
health plan, life and similar insurance coverage or
Company-sponsored arrangements providing comparable benefits
for the covered dependents through the Severance
Period.
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(c)
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All
vested options or other equity compensation must be exercised
within 12 months of the Termination Date.
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(d)
Termin
