Document:

brne_ex101.htm

EXHIBIT 10.1

 

FIRST AMENDMENT TO THE COMMON STOCK PURCHASE WARRANT

 

This is the First Amendment (the “First Amendment”) to the Common Stock Purchase Warrant, for up to 5,000,000 shares, dated December 17, 2013 (the “Warrant”), by and between R. Scott Chaykin (the “Holder”) and Borneo Resource Investments Ltd. (the “Company”). The effective date of this First Amendment is June 6, 2014 (the “Effective Date”). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided to such terms in the Warrant.

 

W I T N E S S E T H :

 

WHEREAS, the parties wish to amend the Warrant to amend the Initial Exercise Date of the Warrant to December 17, 2016.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE ONE

 

AMENDMENT TO WARRANT

 

SECTION 1.1 Amendment to Warrant. By executing this First Amendment, the Company and Holder hereby agree and acknowledge that the defined term “Initial Exercise Date” in the Warrant is amended to mean December 17, 2016. Notwithstanding the amendment of the definition of Initial Exercise Date, the Initial Exercise Date shall be accelerated and the Warrant shall be immediately exercisable by the Holder on the date of (i) any termination of the Holder’s employment as Chief Financial Officer of the Company or (ii) any Change of Control. For purposes of this First Amendment, a Change of Control shall mean means (a) the acquisition of ownership, or tender offer or agreement to acquire, directly or indirectly, beneficially or of record, by any person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) shares representing more than fifty percent (50%) of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Company or (b) occupation of a majority of the seats (other than vacant seats) on the Company’s board of directors by persons who were neither (i) nominated by the Company’s board of directors nor (ii) appointed by directors so nominated.

SECTION 1.2 Consideration. As additional consideration for entering into this First Amendment, the Company shall pay the Holder $15,000 on the Effective Date.

 

  

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ARTICLE TWO

 

MISCELLANEOUS

 

SECTION 2.1 Counterparts. This First Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered (including delivery by way of facsimile) shall be an original, but all of which shall together constitute one and the same instrument.

 

SECTION 2.2 Governing Law. This First Amendment shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Washington, excluding conflict of law principles that would cause the application of laws of any other jurisdiction.

 

SECTION 3.3 Effective Date. This First Amendment shall become effective (the “Effective Date”) as of the date of this First Amendment.

 

SECTION 3.4 Effect of First Amendment. From and after the Effective Date, the Warrant and all references to the Warrant pursuant to the Warrant and the other documents referenced therein shall be deemed to be references to the Warrant as modified hereby. This First Amendment is limited as specified and shall not constitute a modification, amendment, acceptance or waiver of any other provision of the Warrant or any other document referenced therein or herein.

 

SECTION 3.5 Further Assurances. From and after the date of this First Amendment, upon the request of any party hereto, each party shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this First Amendment.

 

IN WITNESSES WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this First Amendment as of the date first above written.

 

	 	
BORNEO RESOURCE INVESTMENTS LTD.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Nils A. Ollquist	 
	 	Name: 	Nils A. Ollquist	 
	 	Title:	CEO	 
	 	 	 	 
	 	R. SCOTT CHAYKIN	 
	 	 	 	 
	 	By:	/s/ R. Scott Chaykin	 
	 	Name:	R. Scott Chaykin	 

 

  

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NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE SECURITIES ACT’S REGISTRATION REQUIREMENTS AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

BORNEO RESOURCE INVESTMENTS LTD.

 

 

	 
Warrant Shares: 5,000,000

	Initial Exercise Date: December 17, 2013

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Ronald Scott Chaykin or its assigns or successors in interest (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five-year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Borneo Resource Investments Ltd., a Nevada corporation (the “Company”), up to 5,000,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price (as defined in Section 2(b) hereof).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement (the “Subscription Agreement”).

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise form annexed hereto and within five (5) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased payable at the Holder’s election by certified or official bank check or by wire transfer to an account designated by the Company. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within five (5) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall use its commercially reasonable efforts to deliver any objection to any Notice of Exercise Form within two (2) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $0.60, subject to adjustment hereunder (the “Exercise Price”).

 

  

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c)  Mechanics of Exercise.

 

i. Delivery of Certificates Upon Exercise. (A) Certificates for shares purchased hereunder shall be transmitted by the Company’s transfer agent (the “Transfer Agent”), by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such Warrant Shares, having been paid.

 

(B) The Holder may elect by written notice to the Company on the Notice of Exercise duly executed by the Holder, to receive a number of Warrant Shares, determined in accordance with the formula set forth below (the “Election”), in which event the Company shall issue to the Holder a number of Warrant Shares computed using the following formula:

 

	 	X=	 	Y(A-B)	 
	 	 	A	 

 

Where X = The number of Warrant Shares to be issued to the Holder upon an Election.

 

Y = The number of Warrant Shares in respect of which this Warrant is being exercised as adjusted to the date of the Election.

 

A = The Fair Market Value of one Warrant Share on the date that the relevant Notice of Exercise is received by the Company.

 

B = The Exercise Price (as adjusted to the date of the Election) in accordance with Section 3 hereof

 

“Fair Market Value” of a share of Common Stock as of a particular date shall mean:

 

(a) If traded on a national securities exchange, the Fair Market Value shall be deemed to be the average of the closing prices of the Common Stock of the Company on such exchange or market over the five (5) business days ending immediately prior to the applicable date of valuation;

 

(b) If actively traded on an over-the-counter bulletin board, the Fair Market Value shall be deemed to be the average of the closing prices over the ten (10)-day period ending immediately prior to the applicable date of valuation; and

 

(c) If there is no active public market, the Fair Market Value shall be the value as determined in good faith by the Company’s Board of Directors upon a review of relevant factors.

 

  

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

Section 3. Certain Adjustments.

 

a) Adjustments for Stock Splits, Combinations, Certain Dividends and Distributions. If the Company shall, at any time or from time to time after the Initial Exercise Date, effect a split of the outstanding Common Stock (or any other subdivision of its shares of Common Stock into a larger number of shares of Common Stock), combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, in each event (i) the number of shares of Common Stock for which this Warrant shall be exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock that a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Exercise Price then in effect shall be adjusted to equal (A) the Exercise Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment.

 

b) Adjustment for Other Dividends and Distributions. If the Company shall, at any time or from time to time after the Initial Exercise Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in (i) cash, (ii) any evidences of indebtedness, or any other securities of the Company or any property of any nature whatsoever, other than, in each case, shares of Common Stock; or (iii) any warrants or other rights to subscribe for or purchase any evidences of indebtedness, or any other securities of the Company or any property of any nature whatsoever, other than, in each case, shares of Common Stock, then, and in each event, (A) the number of shares of Common Stock for which this Warrant shall be exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (1) the numerator of which shall be the last closing bid price per share of the Common Stock at the date of taking such record and (2) the denominator of which shall be such last closing bid price per share of the Common Stock minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (B) the Exercise Price then in effect shall be adjusted to equal (1) the Exercise Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 3(b) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 3(a).

 

  

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c) ­Adjustments for Reclassification, Exchange or Substitution. If the Common Stock for which this Warrant is exercisable at any time or from time to time after the Initial Exercise Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Section 3(a), Section 3(b), or a reorganization, merger, consolidation, or sale of assets provided for in Section 3(d)), then, and in each event, an appropriate revision to the Exercise Price shall be made and provisions shall be made (by adjustments of the Exercise Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock for which this Warrant was exercisable immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

 

d) ­Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Initial Exercise Date there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3(a), and Section 3(b), or a reclassification, exchange or substitution of shares provided for in Section 3(c)), or a merger or consolidation of the Company with or into another corporation where the holders of the Company’s outstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or substantially all of the Company’s properties or assets to any other person (an “Organic Change”), then as a part of such Organic Change an appropriate revision to the Exercise Price shall be made if necessary and provision shall be made if necessary (by adjustments of the Exercise Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from the Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(d) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3(d) (including any adjustment in the Exercise Price then in effect and the number of shares of stock or other securities deliverable upon exercise of this Warrant) shall be applied after that event in as nearly an equivalent manner as may be practicable.

 

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

f) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

  

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Section 4. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations reasonably requested in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be substantially identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of applicable securities laws.

 

e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

  

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Section 5. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation in any material respect of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be reasonably necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, reasonably necessary to enable the Company to perform its obligations under this Warrant.

 

  

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be reasonably necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of this Warrant and the Subscription Agreement.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Subscription Agreement.

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the prior written consent of the Company and the holders of a majority of the then outstanding warrants issued pursuant to the Subscription Agreement.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

	 	
BORNEO RESOURCE INVESTMENTS LTD.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Nils A. Ollquist	 
	 	Name: 	Nils A. Ollquist	 
	 	Title: 	Chief Executive Officer	 

 

  

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NOTICE OF EXERCISE

 

TO: BORNEO RESOURCE INVESTMENTS LTD.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________________________________________________________

 

(3) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: __________________________________________________

 

Name of Authorized Signatory: ____________________________________________________________________

 

Title of Authorized Signatory: _____________________________________________________________________

 

Date: ________________________________________________________________________________________

 

  

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

__________________________________________________ whose address is

 

_______________________________________________________________.

 

_______________________________________________________________

 

Dated: ______________, ________

 

Holder’s Signature: ____________________________

 

Holder’s Address:  ____________________________

 

   ____________________________

 

Signature Guaranteed: ______________________________________________

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

Page 12phrx_ex101.htm

EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into effective June 9, 2014, (the “Effective Date”) by and between Pharmagen, Inc., a Nevada corporation (the “Company”), and Russell Skibsted, an individual (the “Executive”).

NOW, THEREFORE, in consideration of the mutual covenants set forth below, the parties agree as follows:

ARTICLE 1. DUTIES AND SCOPE OF EMPLOYMENT

Section 1.1. Employment. Executive shall be employed by the Company on an “at-will” basis subject to the terms of this Agreement, beginning on the Effective Date and ending as provided in Article 3 (the “Employment Term”). The date on which Executive’s employment under this Agreement terminates is referred to herein as the “Termination Date.”

 

Section 1.2 Duties and Services. During the Employment Term, Executive shall serve as the Company’s Executive Vice President, Chief Financial Officer, reporting directly to the Chief Operating Officer and the Company’s Board of Directions (the “Board”). Executive’s duties and services will be consistent with Executive’s title, position and stature with the Company, subject to the direction of the Board, or a committee thereof. Executive will devote his reasonable best efforts and substantially all of his business time and attention (except for vacation periods and reasonable periods of illness or other incapacity) to the provision of duties and services under this Agreement and shall perform such duties and services to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. Executive agrees, during the Employment Term, not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without prior approval of the Board; provided, however, that Executive shall be permitted to serve in any capacity with any civic, educational or charitable organization.

ARTICLE 2. SALARY AND BENEFITS

Section 2.1 Compensation.

2.1.1 Base Salary and Triggering Event. During the Employment Term, the Company will pay Executive as compensation for his services a base salary at the rate of $250,000 per annum, of which $175,000 shall be paid in cash, and the balance of $6,250 per month shall be accrued monthly, but deferred until the earlier of: (i) Company’s receipt of financing of at least $5,000,000 from a single source or consolidated group, or (ii) January 1, 2015 (either the “Triggering Event”), subject to applicable withholding and other taxes (the “Base Salary”). Upon the Triggering Event, the accrual will be paid in cash or stock options at the employee’s election, unless there is not enough cash available (in the Company’s discretion), and remainder of accrual will be paid in stock options at an exercise price of $0.30. Upon the Triggering Event, there shall be no further accrual and the Executive’s Base Salary shall be $250,000 per annum, payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.

 

  

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2.1.2 Initial Revenue Goal. Upon the Company attaining the earlier of: (i) fiscal quarter revenue in the amount no less than $15,000,000, or (ii) fiscal year revenue in the amount no less than $50,000,000 (either the “Initial Revenue Goal”), Executive’s Base Salary will increase to $275,000 per annum, payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.

2.1.3 Second Revenue Goal. Upon the Company attaining 20% revenue growth above the Initial Revenue Goal (the “Second Revenue Goal”), Executive’s Base Salary will increase to $300,000 per annum, payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.

2.1.4 Third Revenue Goal. Upon the Company attaining 20% revenue growth above the Second Revenue Goal (the “Third Revenue Goal”), Executive’s Base Salary will increase to $350,000 per annum, payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.

2.1.5 Fourth Revenue Goal. Upon the Company attaining 20% revenue growth above the Third Revenue Goal (the “Fourth Revenue Goal”), Executive’s Base Salary will increase to $400,000 per annum, payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.

2.1.6 Fifth Revenue Goal. Upon the Company attaining 20% revenue growth above the Fourth Revenue Goal, Executive’s Base Salary will increase to $500,000 per annum, payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.

2.1.7. Review. Notwithstanding the foregoing in Section 2.1 and its subparts, Executive’s Base Salary is subject to increase or decrease in the sole discretion of the Board in connection with each annual performance review cycle.

 

Section 2.2 Annual Bonus. The Company will pay Executive, in addition to the salary for services described in Section 2.1 above, a bonus (the “Bonus”) in an annual amount up to 100% of Base Salary based on the achievement of management by objectives as determined from time to time in writing by the Company’s Board or committee thereof. For 2014, the performance year will be pro-rated based on Executive’s term of service The Bonus, if any, will be paid in cash or stock options at the Executive’s election, unless, in the Company’s discretion, there is not enough cash available.

 

  

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Section 2.3 Signing Bonus. The Company shall grant to Executive 750,000 (pre-split) shares of Company stock contemporaneous with the execution of this Agreement.

 

Section 2.4 Stock Options. The Company shall grant to Executive a stock option (the “Option”) under the Company’s equity incentive plan to purchase an aggregate of 550,000 shares (after giving effect to a pending 1-for-30 reverse stock split, referred to as “post-split” shares) of the Company’s common stock, in two separate grants of 300,000 and 250,000, respectively. Such Option shall be granted as soon as reasonably practicable after the date of this Agreement. The term of such option shall be ten (10) years, subject to earlier expiration in the event of the termination of the Executive’s employment for any reason. Such option shall be immediately exercisable, but the purchase shares shall be subject to repurchase by the Company at the exercise price in the event that the Executive’s employment terminates before he vests in the option shares. The Executive shall vest (i) 300,000 shares on the earlier to occur of December 31, 2014 or a Change of Control, and (ii) 250,000 shares on the earlier to occur of two years of service or a Change in Control. The exercise price on the Option will be $0.30 per share. The vesting may accelerate upon certain events as described in Section 3.1.5.

 

Section 2.5 Listing Bonus. In the event the Company becomes a NASDAQ-listed public company (or listed on an equivalent exchange), then Executive will be paid a one-time bonus in the amount of $200,000, subject to applicable withholding and other taxes.

 

Section 2.6 Change of Control Bonus. In the event there is a Change of Control, as defined below, with a minimum enterprise valuation on the Company of $100,000,000, then Executive will be paid a one-time bonus in the amount of $200,000, subject to applicable withholding and other taxes.

 

Section 2.7 Vehicle Allowance. During the Employment Term, the Company agrees to pay to Executive the sum of $800 per month, accrued monthly, but deferred until the Triggering Event, as a vehicle allowance to be used to purchase, lease, or own, operate, insure, and maintain a vehicle. Upon the Triggering Event, each month’s accrual will be paid in cash or stock options at the employee’s election, unless, in the Company’s discretion, there is not enough cash available, and remainder of accrual will be paid in stock options at an exercise price of $0.30. The Executive shall be responsible for paying for liability, property damage, and comprehensive insurance coverage upon such vehicle and shall further be responsible for all expenses related to the purchase, operation, maintenance, repair, and regular replacement of such vehicle.

 

Section 2.8 Benefits. During the Employment Term, Executive will be entitled to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other executives of the Company. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time. In addition to the foregoing, the Company agrees to pay to Executive the sum of $1,200 per month, as a medical and dental insurance coverage allowance from the month following the Effective Date until December 31, 2014. Commencing January 1, 2015 until the Termination Date, the Company agrees to pay 100% of the medical and dental insurance premiums for Executive and his spouse and/or dependents.

 

  

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Section 2.4 Paid Time Off. Executive will be entitled to paid time off of twenty (20) days per calendar year to be taken in such amounts and at such times as approved in advance by the Chief Operating Officer.

 

Section 2.5 Expenses. The Company will reimburse Executive for reasonable travel, lodging, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.

ARTICLE 3. TERM; TERMINATION

Section 3.1 Definitions

 

3.1.1. Cause. For purposes of this Agreement, “Cause” shall mean (i) an act of dishonesty by Executive in connection with Executive’s responsibilities as an employee; (ii) Executive’s conviction of, or plea of nolo contendere to, a felony; (iii) Executive’s gross misconduct or gross negligence related to the Company; or (iv) Executive’s substantial violation of his employment duties after Executive has received a written demand for performance from the Company that specifically sets forth the factual basis for the Company’s belief that Executive has not substantially performed his duties and Executive’s failure to reasonably cure within twenty (20) days after receiving such demand.

3.1.2 Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of one or more of the following events arising without the express written consent of Executive, but only if Executive notifies the Company in writing of the event within sixty (60) days following the occurrence of the event, the event remains uncured after the expiration of twenty (20) days from receipt of such notice, and Executive voluntarily resigns effective no later than thirty (30) days following the Company’s failure to cure the event: (i) a material reduction in the duties, authority, or responsibilities of Executive, relative to the duties, authority, or responsibilities of Executive as in effect immediately prior to such reduction; (ii) a material reduction in Executive’s annualized Base Salary other than a reduction which is part of, and generally consistent with, a general reduction of executive salaries, provided such reduction is not in excess of twenty-five percent (25%) of Executive’s Base Salary; (iii) requirement that Executive relocate more than one hundred (100) miles from Executive’s home of record as of the Effective Date; or (iv) the failure of the Company to obtain the assumption of this Agreement by any successors.

 

  

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3.1.3 Voluntary Termination. A “Voluntary Termination” shall mean the voluntary resignation by the Executive without Good Reason. Executive agrees to provide the Company with at least thirty (30) days’ prior written notice of Voluntary Termination.

 

3.1.4 Disability. A “Disability” shall mean the Executive’s incapacity due to physical or mental illness as determined by a qualified physician or incapacity for a period of 180 days, consecutive or otherwise, in any 360-day period.

 

3.1.5 Change of Control. A “Change of Control” shall mean (i) the acquisition of the Company by another entity by means of any transaction or series of transactions (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction retain, immediately after such transaction or series of transactions, as a result of shares in the Company held by such holders prior to such transaction, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity (or if the Company or such other surviving or resulting entity is a wholly owned subsidiary immediately following such acquisition, its parent); or (ii) a sale, exclusive license or other disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole (including, without limitation, the sale, exclusive license or transfer of all or substantially all of the core technology of the Company) by means of any transaction or series of related transactions, except where such sale, exclusive license or other disposition is to a wholly owned subsidiary of the Company.

 

Section 3.2 Termination Without Cause; Termination for Good Reason. During the Employment Term, in the event that either (i) Executive terminates his employment with the Company for Good Reason, or (ii) Executive is terminated by the Company without Cause, and Executive signs and does not revoke a release of claims in the reasonable form provided to Executive by the Company, then, subject to Executive’s compliance with Section 4 below, Executive shall be entitled to receive severance benefits for either (y) a period of 6 months from the Termination Date if the Termination Date is prior to the Triggering Event, or (z) a period of 12 months from the Termination Date, if the Termination Date is on or after the Triggering Event (the “Severance Period”), as follows:

 

3.2.1. Base Salary. Executive shall receive continued payment of his Base Salary (at the then current level) for the Severance Period, paid in accordance with the Company’s customary payroll practice as if Executive were then an employee of the Company.

 

  

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3.2.2. Earned But Unpaid Bonuses. The Company shall pay to Executive any earned but unpaid bonuses from the previous year, in accordance with the Company’s normal payroll practices.

 

3.2.3. Company Benefits. If Executive received health benefits immediately prior to the Termination Date, the Company shall pay Employee cash payments equal to the cost that Employee would incur if Employee continued medical and dental coverage under section 4980B of the Internal Revenue Code (“COBRA”) for Employee and dependents, if covered immediately prior to the Termination Date, for the Severance Period (the “COBRA Amount”). The COBRA Amount shall include a tax gross up to cover Employee’s income and FICA taxes imposed on the payment under this subsection (b). Payment of the COBRA Amount shall be paid in equal installments on the Company’s customary payroll dates during the Severance Period. Employee may elect COBRA continuation coverage according to the terms of the Company’s applicable benefit plans, for the period permitted under such plans. Other than as set forth in this Section 3.2.3, all COBRA costs shall be the sole responsibility of Executive.

 

Section 3.3 Termination for Cause; Voluntary Termination; Death; Disability. If Executive’s employment with the Company is terminated for Cause by the Company, by Voluntary Termination, or due to Executive’s death or Disability, then the Company shall only be obligated to pay to the Executive, on or within a reasonable time after the effective date of such termination, the Executive’s earned portion of the Base Salary (at the then current level on the date of termination) through the effective date of such termination.

 

Section 3.4 Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s benefits under this Agreement shall be either (A) delivered in full, or (B) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code; provided that, in connection with the reduction of payments that would otherwise constitute parachute payments, Executive may choose the amounts, types and priority of such reductions (e.g., whether cash, stock or otherwise) in Executive’s sole discretion. Unless the Company and Executive otherwise agree in writing, any determination required under this Section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

  

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ARTICLE 4. COVENANTS

 

Section 4.1 Nondisclosure. During the Employment Term and following the Termination Date, Executive (i) will hold all Proprietary Information (defined hereafter) in trust and in strict confidence; (ii) will not disclose, and will use commercially reasonable efforts to protect, the Proprietary Information; (iii) will not, directly or indirectly, use or assist others to use Proprietary Information; and (iv) will not, directly or indirectly, use, disseminate or otherwise disclose any Proprietary Information to any third party, except in the case of each of (i) through (iv) above, as required by Executive’s duties in the course of his employment by the Company or as required by applicable law. “Proprietary Information” includes, but is not limited to, the Company’s internal information, trade secrets, customer information, customer lists, marketing information, sales information, cost information, financial information, technical data, know-how, methods, patentable or unpatentable ideas, technical business operations information, business practices, methods, products, processes, equipment or any confidential or secret aspect of the business of the Company that is or has been disclosed to Executive or of which Executive became aware as a consequence of or through his employment with the Company. Notwithstanding the foregoing, the Executive is not obligated to keep Proprietary Information confidential if it (x) is or becomes available to the public, other than because of disclosure by Executive in breach of this Agreement; (y) was or becomes available to Executive from a source other than the Company, but only if such source is not known to Executive to be bound by an obligation of secrecy to the Company with respect to the information disclosed; or (z) has been independently developed by Executive without breaching an of his obligations under this Agreement.

 

Section 4.2 Books and Records. All books, records, reports, writings, notes, notebooks, computer programs, sketches, drawings, blueprints, prototypes, formulas, photographs, negatives, models, equipment, chemicals, reproductions, proposals, flow sheets, supply contracts, customer lists and other documents and/or things relating to the business of the Company, whether prepared by Executive or otherwise coming into Executive’s possession in the course of Executive’s performance of his duties, shall be the exclusive property of the Company, as the case may be, and shall not be copied, duplicated, replicated, transformed, modified or removed from the premises of the Company except pursuant to and in furtherance of the business of the Company and shall be returned immediately to the Company on the Termination Date or on the Company’s request at any time.

 

  

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Section 4.3 Inventions and Patents. All inventions, innovations or improvements related to the Company’s methods of conducting its business (including new contributions, improvements, ideas and discoveries, whether patentable or not), conceived or made by Executive during his employment with the Company belong to the Company, and Executive hereby will assign and assigns all of such inventions, innovations and improvements, contributions, ideas and discoveries to the Company. Executive will cooperate and perform all actions reasonably requested to establish and confirm such ownership in the Company. To the extent Executive’s assistance is so requested following the end of the Employment Term, Executive will be compensated at the rate of $100.00 per hour for his services, and Executive shall be entitled to reimbursement of all reasonable and documented out-of-pocket expenses incurred by Executive in the course of providing such services.

 

Section 4.4 Noncompetition. During the Employment Term and for a period of six (6) months from and after the end of the Employment Term, Executive will not, directly or indirectly, engage in, or have any interest in any other, Person (defined hereafter), whether as a debt or equity holder, employee, officer, director, member, manager, partner, agent, security holder, consultant or otherwise, that, directly or indirectly is engaged in (i) providing hard-to-find and specialty drugs to the healthcare provider market; (ii) providing compounded pharmaceutical products; and/or (iii) manufacturing and distributing over-the-counter branded health supplements (collectively the “Restricted Business”) in the United States and its territories, and any other geographic area in which the Company, directly or indirectly, is engaged in (the “Restricted Area”). Nothing in this Section 4.4 shall be deemed to prevent Executive from acquiring and owning, solely as a passive investment, equity securities (including options to purchase equity securities) that aggregate to less than two percent (2%) in the aggregate of the equity securities of any class of any issuer that are registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (or successor provisions). “Person” shall mean an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture, other entity, or a governmental body.

 

Section 4.5 Non-Solicitation of Employees. During the Employment Term and for a period of twelve (12) months from and after the Termination Date, Executive will not, directly or indirectly, (i) solicit for employment or employ (or attempt to solicit for employment or employ), for Executive or on behalf of any other Person (other than the Company) (provided that nothing herein shall prevent Executive from making a general solicitation not targeted at the Company’s employees), any employee of the Company or any Person who was such an employee during the Employment Period; or (ii) otherwise encourage any such employee to leave his or her employment with the Company.

 

Section 4.6 Non-Solicitation of Others. During the Employment Term and for a period of twelve (12) months from and after the Termination Date, Executive will not, directly or indirectly, (i) solicit, call on or transact or engage in the Restricted Business with (or attempt to do any of the foregoing with respect to) any customer, distributor, vendor, supplier or agent with whom the Company shall have dealt, or that the shall have actively sought to deal, at any time during the Employment Term for or on behalf of Executive or any other Person (other than the Company) in connection with a Restricted Business; or (ii) encourage any such customer, distributor, vendor, supplier or agent to cease, in whole or in part, its business relationship with the Company.

 

  

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Section 4.7 Reserved.

 

Section 4.8 Covenants Reasonable; Court Modification. Executive acknowledges and agrees that the covenants provided for in this Agreement are reasonable and necessary in terms of scope, duration, area, line of business and all other matters to protect the Company’s legitimate business interests, prevent the future misuse of trade secrets and Proprietary Information, or present solicitation of customers. To the extent that any of the provisions contained in this Agreement may later be adjudicated by a court of competent jurisdiction to be too broad to be enforced with respect to such provision’s scope, duration, area, line of business or any other matter, such provision shall be deemed amended by limiting and reducing such provision, scope, duration, area, line of business or other matter, as the case may be, so as to be valid and enforceable to the maximum extent compatible with the applicable laws of such jurisdiction and this Agreement as drafted. Any such deemed amendment shall only apply with respect to the operation of such provision in the applicable jurisdiction in which such adjudication is made.

 

Section 4.9 Uniqueness of Executive’s Services; Specific Performance. Executive hereby represents and agrees that the services to be performed by Executive under this agreement are of a special, unique, unusual, extraordinary and intellectual character that gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law. Executive acknowledges that any breach by him of the provisions of this Article 4 shall cause irreparable harm to the Company and that a remedy at law for any breach or attempted breach of Article 4 of this Agreement will be inadequate. Executive agrees that, notwithstanding any other provision contained in this Agreement, the Company shall be entitled to exercise all remedies available to it, including specific performance and injunctive and other equitable relief, in the case of any such breach or attempted breach.

 

Section 4.10 Trade Secrets

 

4.10.1 Definition. The parties acknowledge and agree that during Executive’s employment and in the course of the discharge of his duties hereunder, Executive shall have access to and become acquainted with information concerning the operation and processes of the Company, including without limitation, financial, personnel, sales, intellectual property, and other information that is owned by the Company’s business, and that such information constitutes the Company’s trade secrets (“Trade Secrets”). Notwithstanding the foregoing, Trade Secrets do not include: (i) information that is or becomes available to the public, other than because of disclosure by Executive in breach of this Agreement; or (ii) information that subsequently becomes part of public knowledge or literature through a deliberate act of the Company as of the date of its becoming public.

 

  

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4.10.2 Covenant. Executive specifically agrees that he shall not misuse, misappropriate, or disclose any such Trade Secrets, directly or indirectly to any other Person or use them in any way, either during the term of this Agreement or at any other time thereafter, except as is required in the course of his employment hereunder.

 

4.10.3 Trade Secret Misappropriation. Executive acknowledges and agrees that the sale or unauthorized use or disclosure of any Company’s Trade Secrets obtained by Executive during the course of his employment with the Company, including information concerning the Company’s current or any future and proposed work, services, or products, the facts that any such work production, as well as any descriptions thereof, would constitute unfair trade practices and unauthorized use of the Company’s Trade Secrets, whether such information is used during the Employment Term or at any other time thereafter.

 

4.10.4 Company Property. Executive further agrees that all files, records, documents, drawings, specifications, equipment, and similar items relating to the Company’s business, whether prepared by Executive or others, are also considered Trade Secrets and that they are and shall remain exclusively the property of the Company and that they shall not be copied, duplicated, replicated, transformed, modified or removed from the premises of the Company except pursuant to and in furtherance of the business of the Company and shall be returned immediately to the Company on the Termination Date or on the Company’s request at any time.

ARTICLE 5. GENERAL PROVISIONS.

 

Section 5.1 Executive’s Representations. Executive hereby represents and warrants to the Company 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 he is bound; (ii) Executive is not a party to or bound by any employment agreement, non-compete agreement or confidentiality agreement with any other person or entity; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he has had the opportunity to seek independent legal counsel regarding his rights and obligations under this Agreement, and has done so or decided not to do so, at Executive’s choosing, and that he fully understands the terms and conditions contained herein.

 

  

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Section 5.2 Notices. All notices and other communications under this Agreement shall be in writing and delivered personally, sent by reputable, overnight courier service (charges paid by sender), or by facsimile, at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision). Such notices and other communications shall be deemed given: at the time delivered by hand, if personally delivered; one business day after being sent, if sent by reputable, over-night courier service; and at the time when confirmation of successful transmission is received by the sending facsimile machine, if sent by facsimile.

If to Company:

Pharmagen, Inc.

9337 Fraser Avenue

Silver Springs, MD 20910

Facsimile: ( ) _______________

Attn: Chief Operating Officer

If to Executive:

Russell Skibsted

15 Tranquility Place

Ladera Ranch, CA 92694

(or current address in Company’s file)

 

Section 5.3 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any, jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or such application in any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein; provided, that if any of the provisions of this Agreement are held to be invalid, illegal or unenforceable, then such provisions shall be deemed amended in the manner and to the extent provided for in Section 4.8 above.

 

Section 5.4 Complete Agreement. This Agreement embodies the complete agreement and understanding among the parties relating to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

Section 5.5 Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Any signature delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall be deemed a manually executed and delivered original.

 

  

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Section 5.6 Successors and Assigns. Executive may not delegate any of his obligations hereunder. Further, this Agreement may not be assigned by either the Company or Executive, except that the Company may assign this Agreement to a Person who purchases or succeeds to all or substantially all of the assets of the Company, by operation of law, asset purchase or otherwise. Subject to the two immediately preceding sentences, this Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company and their respective successors and assigns (and, in the case of Executive, heirs and personal representatives).

 

Section 5.7 Attorney’s Fees and Costs. If any action at law or in equity is necessary to enforce or interpret the terms of this agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any other relief to which that party may be entitled. This provision shall be construed as applicable to the entire Agreement.

 

Section 5.8 Choice of Law; Jurisdiction and Venue. This Agreement shall be governed and construed in accordance with the laws of the State of Maryland without regard to conflicts of laws principles thereof and all questions concerning the validity and construction hereof shall he determined in accordance with the laws of said State. Each party irrevocably submits to the personal and exclusive jurisdiction of any federal or state court of competent jurisdiction located in Montgomery County, State of Maryland, in any action or proceeding arising out of or relating to this Agreement and hereby irrevocably agrees on behalf of himself, herself or itself and on behalf of such party’s heirs, personal representatives, successors and assigns that all claims in respect of such action or proceeding may be heard and determined in any such court.

 

Section 5.9 Waiver of Jury Trial. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.

 

Section 5.10 Amendments and Waivers. No provision of this Agreement may be amended or waived without the prior written consent of the parties hereto. The waiver by either party to this Agreement of a breach of any provision of this Agreement shall not be construed or operate as a waiver of any preceding or succeeding breach of the same, or any other term or provision, or as a waiver of any contemporaneous breach of any other term, or provision or as a continuing waiver of the same or any other term or provision.

 

[signature page to follow]

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

	
“Company”

	 	
“Executive”

	 
	 	 	 	 
	
Pharmagen, Inc.

	 	
Russell Skibsted

	 
	 	 	 	 
	
/s/ Boyd P. Relac 

	 	
/s/ Russell Skibsted 

	 
	
By: Boyd P. Relac

	 	
By: Russell Skibsted

	 
	
Its: Chief Operating Officer

	 	 	 

 

  

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