EMPLOYMENT
AGREEMENT
This EMPLOYMENT
AGREEMENT (“Agreement”), is made effective as of August
24, 2009 (the “Effective Date”), by and between
Who’s Your Daddy Inc., a corporation organized under the laws
of the State of Nevada (“Employer”), and Robert E.
Crowson, Jr. (“Executive”).
WHEREAS,
Executive has worked with Employer as a financial consultant since
May 15, 2009; and
WHEREAS,
Employer desires assurance of the continued association and
services of the Executive’s experience, skills, abilities,
background and knowledge, and is willing to engage the
Executive’s services on the terms and conditions set forth in
this Agreement; and
WHEREAS,
Executive desires to be in the employ of Employer, and is willing
to accept such employment on the terms and conditions set forth in
this Agreement.
Therefore
Employer and Executive hereby agree as follows:
1.
EMPLOYMENT
.
1.1
General. Employer hereby employs Executive in the capacities
of Controller commencing as of the Effective
Date. Executive hereby agrees to be employed on the
terms and subject to the conditions herein contained.
1.2
Duties. During Executive’s employment with Employer as
Controller, Executive shall report directly to the Chief Executive
Officer and shall be responsible for performing those duties
consistent with the positions of Controller as may from time to
time be reasonably assigned to, or requested of, Executive by the
Chief Executive Officer. Executive shall use his best
efforts to perform faithfully and effectively such
responsibilities. Executive shall conduct all of his activities in
a manner so as to maintain and promote the business and reputation
of Employer.
1.3
Full-Time Position. Executive, during his employment with
Employer, shall devote substantially all of his professional time,
attention and skills to the business and affairs of Employer and
perform services for Employer no less than forty (40) hours per
week during Employer’s business
hours. Notwithstanding the foregoing, Executive may also
serve as director, finder or consultant to other companies that are
not directly competitive with Employer and to the extent such
activities do not interfere with Executive’s performance of
services for Employer; provided that Executive shall first advise
the Board in writing of all such positions and the compensation of
any nature that Executive shall be entitled to in connection with
such other engagements.
1.4
Location of Employment. In the event that Employer shall
change the location of Executive’s principal place of
employment from its current location at 26381 Crown Valley Parkway,
Mission Viejo, California, 92691 to a location that results in a
commute of ten (10) or more additional miles to Executive’s
current commute, and Executive does not terminate his employment
pursuant to section 3.1.5 hereof, but instead relocates to be
closer to the Employer’s new office location, then Executive
shall be entitled to be reimbursed for reasonable documented
relocation expenses, including moving costs, temporary housing
(acceptable to Employer) for up to thirty (30) days, commuting
expenses and other relocation costs.
1.5
Term. The term of this Agreement shall commence on the
Effective Date. The initial term of this Agreement (the
“Initial Term”) shall continue from the Effective Date
through August 31, 2011 (approximately two years from the date
hereof), unless sooner terminated as provided in Section
3.1. Thereafter, this Agreement shall automatically
renew for successive one year terms unless either party shall have
given written notice to the other party not less than 90 days prior
to the expiration of the Initial Term or any successive term of its
intent not to renew this Agreement (the Initial Term, together with
any subsequent employment period or periods, being referred to
herein as the “Term”).
2. COMPENSATION
AND BENEFITS.
2.1
Salary . Employer shall pay to Executive, and Executive
shall accept, as full compensation for any and all services
rendered and to be rendered by him to Employer in all capacities
during the term of his employment under this Agreement, (a) a base
salary at an annual rate of $120,000 (“Base Salary”),
payable in accordance with the regular payroll practices of
Employer, and (b) the additional benefits hereinafter set forth in
this Section 2. On January 1 st of each
year, the Base Salary shall be increased automatically by five
percent (5%) with the resulting adjusted salary becoming the new
Base Salary.
2.2
Stock Options. At the sole discretion of the Board,
Executive may be granted an option to purchase additional shares of
Employer’s common stock. Employer agrees that immediately
after it becomes qualified to register its securities on a Form S-8
under the Securities Act of 1933 (the “Act”) it shall
register the underlying option shares granted to the Executive, if
any.
2.3
Stock Award . As further consideration for
Executive entering into and performing his obligations under this
Agreement and the provisions of Section 2.5 hereto, Employer hereby
awards Executive a grant of Employer’s Common Stock in the
amount of 3,000,000 shares (the “Stock Grant”). Up to
600,000 of such shares may immediately be sold, transferred,
assigned, or encumbered by Executive and the remaining shares shall
not be sold, transferred, assigned, or encumbered by Executive
during the 6 months following the Effective Date and shall be
“restricted stock” as that term is defined under the
provision of the Securities Act of 1933 and the regulations
thereto, and shall contain a legend in substantially the following
form:
“The
securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant
to an effective registration statement or the written opinion of
counsel to Who’s Your Daddy, Inc. that such registration is
not required.”
2.4
Executive Benefits.
2.4.1
Expenses. Employer shall promptly reimburse Executive for
expenses reasonably incurred and approved by Employer in connection
with the performance of his duties (including business travel and
entertainment expenses) during the Term, all in accordance with
Employer’s policies, practices and procedures with respect
thereto.
2.4.2
Vacation. Executive shall be entitled to three
weeks of paid vacation per twelve-month period of employment
(accruing evenly throughout each year and prorated for each partial
year), with such vacation to be scheduled and taken in accordance
with Employer’s standard vacation policy.
2.4.3
Cellular Telephone. Employer shall reimburse Executive for
the use of a cellular telephone in an amount up to $200 per
month. Employer shall have the right to deduct from
Executive’s pay check reimbursement for non-business
telephone calls made to or from such telephone within 30 days after
receipt of telephone bills.
2.4.4
Fringe Benefits . During the Term of this Agreement,
Executive shall be entitled to participate in any and all fringe
benefit plans and programs generally available to all other senior
executives of Employer, subject to any restrictions specified in
such plans, programs, and the policies of Employer then in
effect. Employer will pay all premiums under its group
insurance plans (medical, dental, vision, etc.) for Executive and
his dependents, including COBRA payments resulting from
Executive’s coverage under a previous employer’s
plans.
2.5
Payment in Stock.
2.5.1
Provision for Penalties. Employer shall pay
Executive’s Base Salary in a timely manner as required by
this Agreement. If a Base Salary payment, or any
fraction thereof, is not paid within fifteen (15) days of the date
it is due, Executive will have the option of leaving the amount as
an unpaid but payable obligation of Employer or accepting payment
in the form of shares of Employer’s common stock (the
“Payment Shares”), subject to applicable securities
laws. The number of Payment Shares will be calculated at
an amount equal to 150% of the amount of the unpaid obligation
using the closing price of Employer’s common stock on the
date the unpaid obligation was due to have been
paid. Executive’s acceptance of the Payment Shares
will be deemed an acceptance in lieu of and a waiver of the right
to the amount of Base Salary on which the Payment Share calculation
was based.
3.
TERMINATION OF
EMPLOYMENT
3.1
Events of Termination. Executive’s employment with
Employer shall terminate upon the occurrence of any one or more of
the following events:
3.1.1
Death. In the event of Executive’s death,
Executive’s employment shall terminate on the date of
death.
3.1.2
Disability . In the event of Executive’s Disability
(as hereinafter defined), Employer shall have the option to
terminate Executive’s employment by giving a notice of
termination to Executive. The notice of termination shall specify
the date of termination which date shall not be earlier than 30
days after the notice of termination is given. For
purposes of this Agreement, “Disability” shall mean a
physical or mental impairment which substantially limits a major
life activity of Executive and which renders Executive unable to
perform the essential functions of his position, even with
reasonable accommodation which does not impose an undue hardship on
Employer, which condition continues for more than 30 consecutive
days or more than 45 days out of 365 consecutive
days. The Board shall have the right in good faith, to
make the determination of Disability under this Agreement based
upon its own judgment or information supplied by Executive and/or
his medical personnel, as well as information from medical
personnel (or others) selected by Employer or its
insurers.
3.1.3
Termination by Employer for Cause . Employer may, at its
option and at any time, terminate Executive’s employment for
Cause (as defined below). Executive’s employment
shall terminate on the date of Executive’s receipt of the
notice of termination. As used in this Agreement,
“Cause” shall mean (a) Executive’s conviction of,
guilty or “no contest” plea to, or confession of guilt
of a felony, (b) a willful act by Executive which constitutes gross
misconduct and which is materially injurious to Employer,
including, but not limited to, theft, fraud, embezzlement or other
similar illegal conduct, (c) refusal or unwillingness of Executive
to perform his duties, or (d) substandard performance of
Executive’s duty, provided Executive has received a minimum
of two (2) prior written notices of substandard performance from
the Chief Executive Officer or other designated
supervisor.
3.1.4
Termination by Employer Without Cause . Employer may, at its
option, terminate Executive’s employment for any reason
whatsoever (other than for the reasons set forth above in Sections
3.1.1 through 3.1.3) by giving written notice of termination to
Executive, and Executive’s employment shall terminate on the
later of (a) the date the notice of termination is given or (b) the
date set forth in such notice of termination.
3.1.5
Termination by Executive for Material Breach by Employer.
Executive may, at his option, terminate Executive’s
employment upon Employer’s “Material Breach” of
this Agreement by giving employer written notice of such breach
(which notice shall identify the manner in which Employer has
materially breached this Agreement) and, if such breach is not
cured within 30 days of Employer’s receiving such written
notice, Executive’s employment shall terminate at the end of
such 30-day period. Employer’s “Material Breach”
of this Agreement shall mean (a) the failure of Employer to pay the
Base Salary in accordance with this Agreement, (b) the assignment
to Executive without Executive’s consent of duties
substantially inconsistent with his duties, as set forth in Section
1.2 hereof, (c) the relocation of Executive’s principal place
of employment to a geographic location further than 30 miles from
its existing location in Southern California, and (d) for any
reason following a Change in Control after September 1, 2009 as
defined below, in each case without cure by Employer within 30 days
of Executive’s notice of such alleged Material Breach to the
Chief Executive Officer.
For all
purposes under this Agreement, “Change in Control”
shall mean:
(a) Except
as provided by subsection (b) hereof, the acquisition by any
person, entity or “group” within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities and Exchange Act of 1934 ,
as amended (the “Exchange Act”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of the combined voting power of the then
outstanding securities entitled to vote generally in the election
of directors of Employer; or
(b) Approval
by the Board of a reorganization, merger or consolidation of the
Company with any other person, entity or corporation, other
than:
(i) a
merger or consolidation which would result in the voting securities
of the Employer immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of another entity) more than 50% of the combined voting
power of the securities entitled to vote generally in the election
of directors of Employer or such other entity outstanding
immediately after such merger or consolidation; or
(ii) a
merger or consolidation effected to implement a recapitalization of
Employer or similar transaction in which no person, entity or group
acquires beneficial ownership of 50% or more of the combined voting
power of the securities entitled to vote generally in the election
of directors of Employer outstanding immediately after such merger
or consolidation.
3.1.6
Termination by Executive Without Material Breach. Executive
may terminate Executive’s employment for any reason
whatsoever by giving written notice of termination to Employer.
Executive’s employment shall terminate on the earlier of (a)
the date, following the date of the notice of termination, upon
which a suitable replacement for Executive is hired by Employer or
(b) 30 days after the date of receipt by Employer of the notice of
termination.
3.2
Certain Obligations of Employer Following Termination of
Executive’s Employment. Following the termination of
Executive’s employment under the circumstances described
below, Employer shall pay to Executive in accordance with its
regular payroll practices, unless otherwise required below, the
following compensation and provide the following
benefits:
3.2.1
Death; Disability. In the event that Executive’s
employment i