Document:

Unassociated Document

	

    Exhibit 10.1 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of June 17, 2004, by and between CQ ACQUISITION, INC., a Minnesota corporation with principal executive offices at 1981 Pine Hall Drive, State College PA 16801 (the “Company”), and RONALD BRANDT, residing at 10 Lord William Penn Drive, Morristown, New Jersey 07960 (the “Executive”
).

W I T N E S S E T H :

WHEREAS, prior to the date hereof, the Executive has been employed by Chiral Quest, Inc., a Minnesota corporation (“Parent”), which is the sole shareholder of the Company, as its Vice President of Business Development pursuant to that certain Employment Agreement between Executive and Parent dated October 9, 2003 (“Parent Employment Agreement”); and

 

WHEREAS, on or shortly after the date of this Agreement, Parent will assign to the Company all or substantially all of its assets relating to Parent’s existing business to the Company; and 

 

WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer, and the Executive desires to serve the Company in this capacity, upon the terms and subject to the conditions contained in this Agreement; and

 

WHEREAS, since April 15, 2004, Executive has also served as Chief Executive Officer of Parent on an interim basis, although Parent is currently searching for a successor to replace Executive as Parent’s Chief Executive Officer; and

 

WHEREAS, Executive has agreed to continue serving as Chief Executive Officer of Parent on an interim basis until Parent appoints his successor.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

1.                             Employment.

 

The Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, upon the terms and subject to the conditions of this Agreement.

 

2.                             Term.

 

The employment of the Executive by the Company as provided in Section 1 shall be for a period commencing on the date hereof and expiring on October 9, 2006, unless sooner terminated in accordance with the provisions of Section 8 below (the “Term”).

 

	 
	 	 	 
	

	 

 

3.                              Duties; Best Efforts; Place of Performance.

 

(a)    The Executive shall serve as Chief Executive Officer of the Company and shall perform, subject to the direction of the Company’s Board of Directors, such duties as are customarily performed by a Chief Executive Officer. The Executive shall also have such other powers and duties as may be from time to time prescribed by the Company’s Board of Directors, provided that the nature of the Executive’s powers and duties so prescribed shall not be inconsistent with the Executive’s position and duties hereunder. The Executive will also be appointed to the Board of Directors of Parent and nominated for directorship at each shareholder meeting as long as this Agreement is effective. 

 

(b)    The Executive shall devote all of his business time, attention and energies to the business and affairs of the Company, shall use his best efforts to advance the best interests of the Company and shall not during the Term be actively engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage, that will interfere with the performance by the Executive of his duties hereunder or the Executive’s availability to perform such duties or that will adversely affect, or negatively reflect upon, the Company. Executive’s service as Interim Chief Executive Officer of Parent shall not be deemed a violation of this Section 3(b).

 

(c)    The Executive understands that his duties will require a great deal of travel. When not traveling, the duties of the Executive hereunder will be performed by the Executive primarily at the office of the Company located in Monmouth Junction, NJ. Executive’s travel obligations will be subject to reasonable travel requirements of the Company.

 

4.                              Compensation.

 

As full compensation for the performance by the Executive of his duties under this Agreement, the Company shall pay the Executive as follows:

 

(a)    Base Salary. The Company shall pay the Executive a base salary (the “Base Salary”) at a rate of $200,000 per annum, in accordance with the Company’s regular payroll practices. The Base Salary shall be retroactive to April 15, 2004.

(b)    Discretionary Bonus. At the sole discretion of the Board of Directors, the Executive shall receive an additional annual bonus (the “Discretionary Bonus”) in an amount up to 20% of the Base Salary, based upon his performance on behalf of the Company during the prior year as determined in the sole discretion of the Board of Directors. The Discretionary Bonus, if any, shall be payable either as a lump-sum payment or in installments as determined by the Company in its sole discretion.

 

(c)    Incentive Bonus. The Company shall pay the Executive a periodic milestone based incentive bonuses (each an “Incentive Bonus”) as follows:

 

(i)     A one time payment of $50,000 upon the completion of the first two consecutive fiscal quarters in which the Company has gross revenue in excess of $1,000,000;

 

(ii)    A one time payment of $75,000 upon the completion of the first two consecutive fiscal quarters in which the Company has gross revenue in excess of $2,500,000;

 

	 
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(iii)    For each fiscal quarter in which the Company has gross revenue in excess of $2,500,000 following the first two consecutive fiscal quarters described in (ii) above, the Company will remit to the Executive a payment of $10,000.

 

(iv)    A one time payment of $100,000 upon the completion of the first two consecutive fiscal quarters in which the Company has gross revenue in excess of $5,000,000;

 

(v)     For each fiscal quarter in which the Company has gross revenue in excess of $5,000,000 following the first two consecutive fiscal quarters described in (iv) above, the Company will remit to the Executive a payment of $10,000 (in addition to the $10,000 payment in (iv) above);

 

(d)    Bonus on Sale. Executive shall be entitled to a cash payment of $100,000 upon such time as the Company’s sole shareholder, Parent completes the sale of the Company’s assets or stock that results in a Change of Control (as defined herein), provided such sale results in gross proceeds to Parent in an amount exceeding $40,000,000 (a “Company Sale Event”).

 

(e)    Withholding. The Company shall withhold all applicable federal, state and local taxes and social security and such other amounts as may be required by law from all amounts payable to the Executive under this Section 4.

 

(f)    Stock Option Grants. Promptly after the date hereof, and as additional compensation for the services to be rendered by the Executive pursuant to this Agreement, the Company shall cause Parent to grant to Executive non-qualified stock options pursuant to its 2003 Stock Option Plan to purchase shares of Parent common stock, as follows:

 

(i)    The Company shall cause Parent to grant to Executive a non-qualified stock option (“Parent Bonus Options”) under its 2003 Stock Option Plan to purchase an aggregate of 300,000 shares of Parent common stock, which shall vest and become exercisable as follows: (1) options to purchase 100,000 shares vest at such time as the closing bid price of Parent’s common stock exceeds $3.00 for ten consecutive trading days during the Term; (2) options to purchase 100,000 shares vest at such time as the closing bid price of Parent’s common stock exceeds $5.00 for ten consecutive trading days during the Term; and (3) options to purchase 100,000 shares vest at such time as the closing bid price of Parent’s common stock exceeds $7.00 for ten consecutive
trading days during the Term. The shares underlying the Bonus Stock Options shall be exercisable at a price equal to the closing price of Parent’s common stock on the date of this Agreement. The Bonus Stock Options shall be governed by the terms of a separate stock option agreement to be entered into between Executive and Parent.

 

(ii)    The Company shall cause Parent to grant to Executive a non-qualified stock option (“Parent Option,” and together with the Parent Bonus Options, the “Parent Stock Options”) under the 2003 Stock Option Plan to purchase an aggregate of 100,000 shares of Parent common stock, which shall vest in three equal installments on each anniversary of this Agreement. The shares underlying the Parent Options shall be exercisable at a price equal to the closing price of Parent’s common stock on the date of this Agreement. The Parent Options shall be governed by the terms of a separate stock option agreement to be entered into between Executive and Parent.

 

	 
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(iii)    Options granted to Executive prior to the date of this Agreement (175,000 options granted pursuant to the Parent Employment Agreement, 25,000 granted by the Board of Directors of Parent on or about April 14, 2004), shall survive termination of the Parent Employment Agreement and such options shall continue to vest according to their specified schedules as long as Executive remains a member of the Board of Directors of Parent.

 

Company Stock Options. In addition to the Parent Stock Options described above, the Company shall also grant to you an option to purchase 2.5 percent of the Company’s outstanding common stock (the “Company Stock Options,” and together with the Parent Stock Options, the “Options”). The Company Stock Options shall be exercisable at a price per share of $.01 and shall vest in three equal annual installments.

 

Acceleration of Options. Notwithstanding any provision contained herein to the contrary, the vesting of all the Options shall accelerate and become immediately exercisable upon the completion of a Company Sale Event. 

 

Expenses. All travel and other expenses reasonably incurred by Executive incidental to the rendering of services to the Company hereunder shall be paid by the Company or reimbursed to he Executive after review and approval of expense reports on Company forms supported by appropriate documentation. The Company will provide a car allowance of $500 per month to cover the Executive’s automobile costs related to the upkeep and maintenance, gas, oil and automobile insurance. From time to time, Executive shall submit, and obtain approval for, proposed expense budgets. All unbudgeted expenses in excess of $2,000.00 (individually, or collectively if in connection with a single, related subject or project within a given month) shall require advance approval. The Company will reimburse Executive, or pay in advance, for reasona
ble itemized travel and other expenses incurred incidental to rendering services to the Company prior to the Effective Date.

 

Other Benefits. The Executive shall be entitled to all rights and benefits for which he shall be eligible under any benefit or other plans (including, without limitation, dental, medical, medical reimbursement and hospital plans, pension plans, employee stock purchase plans, profit sharing plans, bonus plans and other so-called "fringe" benefits) as the Company shall make available to its senior executives from time to time.

 

Vacation. The Executive shall, during the Term, be entitled to a vacation of three (3) non-consecutive weeks per annum. The Executive shall not be entitled to carry any vacation forward to the next year of employment and shall not receive any compensation for unused vacation days.

 

5.                             Confidential Information and Inventions

 

(a)    The Executive recognizes and acknowledges that in the course of his duties he is likely to receive confidential or proprietary information owned by the Company, its affiliates or third parties with whom the Company or any such affiliates has an obligation of confidentiality. Accordingly, during and after the Term, the Executive agrees to keep confidential and not disclose or make accessible to any other person or use for any other purpose other than in connection with the fulfillment of his duties under this Agreement, any Confidential and Proprietary Information (as defined below) owned by, or received by or on behalf of, the Company or any of its affiliates. “Confidential and Proprietary Information” shall include, but shall not be limited to, confidential or proprietary scientific or technical information, data, formulas and relate
d concepts, business plans (both current and under development), client lists, promotion and marketing programs, trade secrets, or any other confidential or proprietary business information relating to development programs, costs, revenues, marketing, investments, sales activities, promotions, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of the Company or of any affiliate or client of the Company. The Executive expressly acknowledges the trade secret status of the Confidential and Proprietary Information and that the Confidential and Proprietary Information constitutes a protectable business interest of the Company. The Executive agrees: (i) not to use any such Confidential and Proprietary Information for himself or others; and (ii) not to take any Company material or reproductions (including but not limited to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof from the Co
mpany’s offices at any time during his employment by the Company, except as required in the execution of the Executive’s duties to the Company. The Executive agrees to return immediately all Company material and reproductions (including but not limited, to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof in his possession to the Company upon request and in any event immediately upon termination of employment.

 

	 
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(b)    Except with prior written authorization by the Company, the Executive agrees not to disclose or publish any of the Confidential and Proprietary Information, or any confidential, scientific, technical or business information of any other party to whom the Company or any of its affiliates owes an obligation of confidence, at any time during or after his employment with the Company.

 

(c)    The Executive agrees that all inventions, discoveries, improvements and patentable or copyrightable works (“Inventions”) initiated, conceived or made by him, either alone or in conjunction with others, during the Term shall be the sole property of the Company to the maximum extent permitted by applicable law and, to the extent permitted by law, shall be “works made for hire” as that term is defined in the United States Copyright Act (17 U.S.C.A., Section 101). The Company shall be the sole owner of all patents, copyrights, trade secret rights, and other intellectual property or other rights in connection therewith. The Executive hereby assigns to the Company all right, title and interest he may have or acquire in all such Inventions. The Exe
cutive further agrees to assist the Company in every proper way (but at the Company’s expense) to obtain and from time to time enforce patents, copyrights or other rights on such Inventions in any and all countries, and to that end the Executive will execute all documents necessary:

 

(i)    to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

 

(ii)    to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.

 

(d)    The Executive acknowledges that while performing the services under this Agreement the Executive may locate, identify and/or evaluate patented or patentable inventions having commercial potential in the fields of pharmacy, pharmaceutical, biotechnology, healthcare, technology and other fields which may be of potential interest to the Company or one of its affiliates (the “Third Party Inventions”). The Executive understands, acknowledges and agrees that all rights to, interests in or opportunities regarding, all Third-Party Inventions identified by the Company, any of its affiliates or either of the foregoing persons’ officers, Vice Presidents, employees (including the Executive), agents or Executives during the Employment Term shall be and remain
 the sole and exclusive property of the Company or such affiliate and the Executive shall have no rights whatsoever to such Third-Party Inventions and will not pursue for himself or for others any transaction relating to the Third-Party Inventions which is not on behalf of the Company.

	 
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(e)    The provisions of this Section 5 shall survive any termination of this Agreement.

6.                             Non-Competition, Non-Solicitation and Non-Disparagement

 

(a)    The Executive understands and recognizes that his services to the Company are special and unique and that in the course of performing such services the Executive will have access to and knowledge of Confidential and Proprietary Information (as defined in Section 5) and the Executive agrees that, during the Executive’s employment with the Company and for a period of one year thereafter (the “Restricted Period”), he shall not in any manner, directly or indirectly, on behalf of himself or any person, firm, partnership, joint venture, corporation or other business entity (“Person”), enter into or engage in any business which is engaged in any business competitive with the business of t
he Company, either as an individual for his own account, or as a partner, joint venturer, owner, executive, employee, independent contractor, principal, agent, Executive, salesperson, officer, Vice President or shareholder of a Person in a business competitive with the Company within the geographic area of the Company’s business, which is deemed by the parties hereto to be worldwide. The Executive acknowledges that, due to the unique nature of the Company’s business, the loss of any of its clients or business flow or the improper use of its Confidential and Proprietary Information could create significant instability and cause substantial damage to the Company and its affiliates and therefore the Company has a strong legitimate business interest in protecting the continuity of its business interests and the restriction herein agreed to by the Executive narrowly and fairly serves such an important and critical business interest of the Company. For purposes of this Agreement, the Company shall be dee
med to be actively engaged in the business of chiral chemistry, including the development, application, and manufacturing of catalysts used to develop and manufacture chiral molecules, intermediates, and building blocks and providing consulting services in connection therewith, and in the future, in any other business in which the Company devotes substantive resources to study, develop or pursue during the Restricted Period. Notwithstanding the foregoing, nothing contained in this Section 6(a) shall be deemed to prohibit the Executive from acquiring or holding, solely for investment, publicly traded securities of any corporation, some or all of the activities of which are competitive with the business of the Company so long as such securities do not, in the aggregate, constitute more than three percent (3%) of any class or series of outstanding securities of such corporation.

 

(b)    During the Restricted Period, the Executive shall not, directly or indirectly, without the prior written consent of the Company:

 

(i)    solicit or induce any employee of the Company or any individual or entity directly or indirectly controlling, controlled by or under common control of the Company, including without limitation, any subsidiary of the Company (each an “Affiliate”) to leave the employ of the Company or any Affiliate; or hire for any purpose any employee of the Company or any Affiliate or any employee who has left the employment of the Company or any Affiliate within one year of the termination of such employee’s employment with the Company or any Affiliate or at any time in violation of such employee’s non-competition agreement with the Company or any such Affiliate; or

 

	 
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(ii)    solicit or accept employment or be retained by any Person who, at any time during the term of this Agreement, was an agent, competitor, client or customer of the Company or any Affiliates where his position will be related to the business of the Company or any such Affiliate; or

 

(iii)    solicit or accept the business of any agent, client or customer of the Company or any of its affiliates with respect to products, services or investments similar to those provided or supplied by the Company or any of its affiliates.

 

(iv)    compete with the Company in the business of the Company, either individually or in conjunction with any person, firm, association, syndicate, partnership, company or corporation, directly or indirectly (as principal, agent, employee, Vice President, officer, shareholder, partner, independent contractor, Executive, individual proprietor, or as an investor who has made advances, loans, or contributions of capital, or in any other manner whatsoever).

 

(c)    The Executive agrees that both during the Term and at all times thereafter, he shall not directly or indirectly disparage, whether or not true, the name or reputation of the Company or any of its affiliates, including but not limited to, any officer, Vice President, employee or shareholder of the Company or any of its affiliates.

 

(d)    In the event that the Executive breaches any provisions of Section 5 or this Section 6 or there is a threatened breach, then, in addition to any other rights which the Company may have, the Company shall (i) be entitled, without the posting of a bond or other security, to injunctive relief to enforce the restrictions contained in such Sections and (ii) have the right to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments and other benefits (collectively “Benefits”) derived or received by the Executive as a result of any transaction constituting a breach of any of the provisions of Sections 5 or 6 and the Executive hereby agrees to account for and pay over such Benefits to the Comp
any. The Executive agrees that in such action, if the Company makes a prima facie showing that Executive has violated or apparently intends to violate any of the provisions of this Section 6, the Company need not prove either damage or irreparable injury in order to obtain injunctive relief. 

 

(e)    Each of the rights and remedies enumerated in Section 6(d) shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to the Company at law or in equity. If any of the provisions contained in this Section 6, or any part of any of them, is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of the provisions or covenants or rights or remedies which shall be given full effect without regard to the invalid portions. If any of the provisions contained in this Section 6 is held to be invalid or unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and in its reduced for
m such provision shall then be enforceable. No such holding of invalidity or unenforceability in one jurisdiction shall bar or in any way affect the Company’s right to the relief provided in this Section 6 or otherwise in the courts of any other state or jurisdiction within the geographical scope of such provision as to breaches of such covenants in such other respective states or jurisdictions, such provisions being, for this purpose, severable into diverse and independent provisions.

 

	 
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(f)    In the event that an actual proceeding is brought in equity to enforce the provisions of Section 5 or this Section 6, the Executive shall not urge as a defense that there is an adequate remedy at law nor shall the Company be prevented from seeking any other remedies which may be available. The Executive agrees that he shall not raise in any proceeding brought to enforce the provisions of Section 5 or this Section 6 that the covenants contained in such Sections limit his ability to earn a living.

 

(g)    The provisions of this Section 6 shall survive any termination of this Agreement.

7.                             Representations and Warranties by the Executive

The Executive hereby represents and warrants to the Company as follows:

 

Neither the execution or delivery of this Agreement nor the performance by the Executive of his duties and other obligations hereunder violate or will violate any statute, law, determination or award, or conflict with or constitute a default or breach of any covenant or obligation under (whether immediately, upon the giving of notice or lapse of time or both) any prior employment agreement, contract, or other instrument to which the Executive is a party or by which he is bound.

 

The Executive has the full right, power and legal capacity to enter and deliver this Agreement and to perform his duties and other obligations hereunder. This Agreement constitutes the legal, valid and binding obligation of the Executive enforceable against him in accordance with its terms. No approvals or consents of any persons or entities are required for the Executive to execute and deliver this Agreement or perform his duties and other obligations hereunder.

 

8.                             Termination.

The Executive’s employment hereunder shall terminate upon the Executive’s death and may be terminated as follows:

 

(a)    The Executive’s employment hereunder may be terminated by the Board of Directors or the Chief Executive Officer of the Company for Cause. Any of the following actions by the Executive shall constitute “Cause”:

 

(i)    The willful failure, disregard or refusal by the Executive to perform his duties hereunder;

 

(ii)    Any willful, intentional or grossly negligent act by the Executive having the effect of injuring, in a material way (whether financial or otherwise and as determined in good-faith by the Company), the business or reputation of the Company or any of its affiliates, including but not limited to, any officer, executive or shareholder of the Company or any of its affiliates; 

 

	 
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(iii)    Willful misconduct by the Executive, including insubordination, in respect of the duties or obligations of the Executive under this Agreement;

 

(iv)    The Executive’s indictment of any felony or a misdemeanor involving moral turpitude (including entry of a nolo contendere plea);

 

(v)    The determination by the Company, after a reasonable and good-faith investigation by the Company following a written allegation by another employee of the Company, that the Executive engaged in some form of discrimination or harassment protected by law (including, without limitation, age, sex or race discrimination);

 

(vi)    Any misappropriation or embezzlement of the property of the Company or its affiliates (whether or not a misdemeanor or felony);

 

(vii)   Breach by the Executive of any of the provisions of Section 5 or Section 6 of this Agreement; and

 

(viii)  Breach by the Executive of any provision of this Agreement other than those contained in Section 5 or Section 6 which is not cured by the Executive within thirty (30) days after notice thereof is given to the Executive by the Company.

 

(b)    The Executive’s employment hereunder may be terminated by the Company due to the Executive’s Disability. For purposes of this Agreement, a termination for “Disability” shall occur (i) when the Company has provided a written termination notice to the Executive supported by a written statement from a reputable independent physician to the effect that the Executive shall have become so physically or mentally incapacitated as to be unable to resume, within the ensuing six (6) months, his employment hereunder by reason of physical or mental illness or injury, or (ii) upon rendering of a written termination notice by the Company after the Executive has been unable to substantially perform his duties hereunder for 90 or more consecutive days, or
 more than 120 days in any consecutive twelve month period, by reason of any physical or mental illness or injury. For purposes of this Section 8(b), the Executive agrees to be available and to cooperate in any reasonable examination by a reputable independent physician retained by the Company.

 

(c)    The Executive’s employment hereunder may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” means the termination of employment by Executive due to (i) a material breach of this Agreement by the Company, (ii) an adverse change in Executive’s status or position as the Chief Executive Officer of the Company, including, without limitation, any adverse change in Executive’s status or position as Chief Executive Officer as a result of a material diminution in Executive’s duties, responsibilities or authority as of the date of this Agreement or any removal of Executive from or any failure to reappoint or reelect Executive to such position (except in connection with the termination of Executiv
e’s employment for Cause, Disability or death in accordance with this Section 8), and (iii) relocation of Executive from a 25-mile radius of the Princeton, New Jersey area; provided, however, that an event described in this paragraph (c) shall not constitute Good Reason unless it is communicated by Executive to the Company in writing within thirty (30) days of the date Executive knew of such an event and is not corrected by the Company to the Employee’s reasonable satisfaction within thirty (30) days of the date of Executive’s delivery of such written notice to the Company. The parties acknowledge and understand that Executive is also serving as president and chief executive officer of Parent on an interim basis until such time as Parent identifies and appoints a successor, at which time Executive will no longer serve as Paren
t’s president and chief executive officer. Notwithstanding anything to the contrary contained herein, Parent’s replacement of Executive as president and chief executive officer of Parent shall not be deemed to constitute either of the events described in clauses (i) or (ii) in this Paragraph (c).

 

	 
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(d)    The Executive’s employment hereunder may be terminated by the Company (or its successors) upon the occurrence of a Change of Control. For purposes of this Agreement, “Change of Control” means (i) the acquisition, directly or indirectly, following the date hereof by any person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), in one transaction or a series of related transactions, of securities of the Company representing in excess of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities if such person or his or its affiliate(s) do not own in excess of 50% of such voting power on the date of this Agreement, or (ii) the future dispositi
on by the Company (whether direct or indirect, by sale of assets or stock, merger, consolidation or otherwise) of all or substantially all of its business and/or assets in one transaction or series of related transactions (other than a merger effected exclusively for the purpose of changing the domicile of the Company).

 

(e)    The Executive’s employment hereunder may be terminated by the Company at any time and for any reason or no reason. Upon Executive’s termination of employment from the Company for any reason, or upon expiration of this Agreement, the Executive agrees that he shall be deemed to have resigned from the Board of Directors of Parent, effective as of the date of such termination.

 

9.                             Compensation upon Termination.

 

(a)    If the Executive’s employment is terminated as a result of his death or Disability, the Company shall (i) pay to the Executive or to the Executive’s estate, as applicable, his Base Salary and any accrued and unpaid Bonus and expense reimbursement amounts through the date of his death or Disability, and (ii) for a period of twelve months thereafter provide continuation coverage to the members of the Executive’s family and, in the case of termination for Disability, the Executive under all major medical and other health, accident, life or other disability plans and programs in which such family members and, in the case of termination for Disability, the Executive participated immediately prior to his death or Disability. In the case of Executive’s death, the Company will continue to pay the Executive’s Salary to his es
tate for 12 months. Any Options that have not vested as of the date of the Executive’s death or Disability shall be deemed to have expired as of such date; provided, however, that any vested Options shall remain exercisable for a period of 90 days.

 

(b)    If the Executive’s employment is terminated by the Company for Cause, the Company shall pay to the Executive his Base Salary through the date of his termination and the Executive shall have no further entitlement to any other compensation or benefits from the Company. All Options that have not vested as of the date of any such termination shall be deemed to have expired as of such date and, in addition, the Executive’s right to exercise any vested Options shall terminate as of such date.If the Executive’s employment is terminated by the Company (or its successor) upon the occurrence of a Change of Control, the Company (or its successor, as applicable) shall (i) continue to pay to the Executive his Base Salary for a period of six months following such termination, and (ii) pay the Executiv
e any accrued and unpaid Bonus and expense reimbursement amounts through the date of termination. The Company’s obligation under clause (i) in the preceding sentence shall be reduced, however, by any amounts otherwise actually earned by the Executive during the 6-month period following the termination of his employment. All Options that have not vested as of the date of such termination shall be accelerated and deemed to have vested as of such date.

 

	 
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(c)    If (i) the Executive’s employment is terminated by the Company other than as a result of the Executive’s death or Disability and other than for reasons specified in Sections 9(b) or (c), or (ii) the Executive’s employment is terminated by the Executive for Good Reason, the Company shall (i) continue to pay to the Executive his Base Salary for a period of six months following such termination and (ii) pay the Executive any accrued and unpaid Bonus and expense reimbursement amounts through the date of termination. The Company’s obligation under clause (i) in the preceding sentence shall be reduced, however, by any amounts otherwise actually earned by the Executive from other employment during the six-month period following the termination of his employment. All Options that have not vested as of the date of termination shal
l be deemed to have expired as of such date; provided, however, that and vested Options shall remain exercisable for a period of 90 days.

 

(d)    The continuation coverage under any major medical and other health, accident, life or other disability plans and programs for the periods provided in Section 9(a) shall be provided (i) at the expense of the Company and (ii) in satisfaction of the Company’s obligation under Section 4980B of the Internal Revenue Code of 1986 (and any similar state law) with respect to the period of time such benefits are continued hereunder. Notwithstanding anything to the contrary contained herein, the Company’s obligation to provide such continuation coverage under such Sections shall cease immediately upon the date any covered individual becomes eligible for similar benefits under the plans or policies of another employer.

 

(e)    This Section 9 sets forth the only obligations of the Company with respect to the termination of the Executive’s employment with the Company, and the Executive acknowledges that, upon the termination of his employment, he shall not be entitled to any payments or benefits which are not explicitly provided in this Section 9.

 

(f)    The provisions of this Section 9 shall survive any termination of this Agreement.

 

10.                             Miscellaneous.

 

(a)    The Parent Employment Agreement is hereby terminated and shall have no further force or effect. Neither Executive nor Parent shall have any further obligation to the other under such agreement.

 

(b)    This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New Jersey, without giving effect to its principles of conflicts of laws.

 

	 
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(c)    Any dispute arising out of, or relating to, this Agreement or the breach thereof (other than Sections 5 or 6 hereof), or regarding the interpretation thereof, shall be finally settled by arbitration conducted in New Jersey in accordance with the rules of the American Arbitration Association then in effect before a single arbitrator appointed in accordance with such rules. Judgment upon any award rendered therein may be entered and enforcement obtained thereon in any court having jurisdiction. The arbitrator shall have authority to grant any form of appropriate relief, whether legal or equitable in nature, including specific performance. For the purpose of any judicial proceeding to enforce such award or incidental to such arbitration or to compel arbitration and for purposes of Sections 5 and 6 hereof, the parties hereby submit to the non-ex
clusive jurisdiction of the Supreme Court of the State of New Jersey, Bergen County, or the United States District Court for the District of New Jersey, and agree that service of process in such arbitration or court proceedings shall be satisfactorily made upon it if sent by registered mail addressed to it at the address referred to in paragraph (g) below.

 

(d)    This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, legal representatives, successors and assigns.

 

(e)    This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive. The Company may assign its rights, together with its obligations, hereunder in connection with any sale, transfer or other disposition of all or substantially all of its business or assets.

 

(f)    This Agreement cannot be amended orally, or by any course of conduct or dealing, but only by a written agreement signed by the parties hereto.

 

(g)    The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and such terms, conditions and provisions shall remain in full force and effect. No waiver of any term or condition of this Agreement on the part of either party shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.

 

(h)    All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be delivered personally or by an overnight courier service or sent by registered or certified mail, postage prepaid, return receipt requested, to the parties at the addresses set forth on the first page of this Agreement, and shall be deemed given when so delivered personally or by overnight courier, or, if mailed, five days after the date of deposit in the United States mails. Either party may designate another address, for receipt of notices hereunder by giving notice to the other party in accordance with this paragraph (g).

 

(i)    This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

 

	 
	 	-12-	 
	

	 

 

(j)    As used in this Agreement, “affiliate” of a specified Person shall mean and include any Person controlling, controlled by or under common control with the specified Person.

 

(k)    The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

(l)    This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	 	 	 
	 	CQ ACQUISITION, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Stephen Rocamboli
	 	

	 	Its:Authorized Officer and Director

 

	 	 	 
	 	EXECUTIVE
	 
 	 
 	 
 
	 	By:  	/s/ Ronald Brandt
	 	

	 	Its:President and CEO

	 	 	 
	 	CHIRAL QUEST, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Stephen Rocamboli
	 	

	 	Its:Interim Chairman of the Board

	

	 	-13-Exhibit 10.1

           FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT TO CONVERT DEBT

      THIS FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT TO CONVERT DEBT (this
"Amendment") is entered into as of July 22, 2004 (the "Effective Date"), by and
between SBS INTERACTIVE, CO., a Florida corporation (the "Company"), and ARTHUR
COHN (the "Stockholder" or the "Assignee").

      WHEREAS, the Stockholder, through Karlgar Limited (the "Assignor"), loaned
an aggregate  of $441,750 to the Company and its  wholly-owned  subsidiary,  SBS
Interactive,  Inc., a Nevada  corporation  (the  "Subsidiary")  on the terms and
conditions set forth in the following  documents:  $72,000  Convertible  Secured
Debenture dated October 30, 2002,  $30,000  Convertible  Secured Debenture dated
March 14,  2003,  $52,000  Secured  Promissory  Note  dated  July 23,  2003,  6%
Convertible  Secured  Debenture  dated  September 10, 2003,  and Amendment No. 1
dated September 10, 2003 to the 6% Convertible Secured Debenture dated September
10, 2003 (collectively, the "Prior Loan Documents");

      WHEREAS,  the  Stockholder,  through the  Assignor,  loaned an  additional
$400,000 to the Company and the  Subsidiary,  which loan was  combined  with the
aggregate amount  outstanding on the loans under the Prior Loan Documents on the
terms and  conditions  set forth in that  certain  First  Amended  and  Restated
Convertible  Secured  Debenture  dated as of January 6, 2004 (the  "Debenture"),
which provided, at the sole option of the Stockholder, through the Assignor, for
the  conversion  of  the  aggregate  amount  of  $841,750  (excluding  interest)
outstanding  under the Debenture  into shares of common stock,  par value $0.001
per share of the Company (the "Common Stock") at a conversion price of $0.04 per
share;

      WHEREAS, at the request of the Company and the Subsidiary, the Stockholder
and the Assignor agreed to convert the aggregate amount of $841,750  outstanding
under the Debenture into shares of Common Stock at a conversion  price of $0.225
per  share  in lieu of the  conversion  price  of  $0.04  per  share  under  the
Debenture,  on the terms and conditions set forth in that certain Assignment and
Agreement  to  Convert  Debt  dated  as  of  March  17,  2004  (the  "Conversion
Agreement");

      WHEREAS,  for  the  Stockholder  and  Assignor  agreed  to the  Conversion
Agreement,  and the reduction in the conversion  price from that effective under
the  Debenture,  which had the effect of reducing the number of shares of Common
Stock issued to the Stockholder on conversion  from  21,043,750  shares of fully
paid Common Stock to 3,741,111 shares of fully paid Common Stock and warrants to
purchase   4,741,111   shares  of  Common  Stock  upon  payment  of   additional
consideration,  in reliance upon the agreement of the Company and the Subsidiary
that the Company and the Subsidiary would raise  sufficient  additional funds to
meet their future  financing  needs by issuing Common Stock at a per share price
of at least $.75 per share with warrants (at an exercise price of at least $1.00
per share) for a number of shares  equal to or less than the number of shares of
Common Stock purchased in any such future financings (the "Financing Agreement")
and the  continued  accuracy as of the date of the  Conversion  Agreement of the
Company's  disclosure  regarding the number of shares of Common Stock issued and
outstanding  as set forth in the Company's  Quarterly  Report on Form 10-QSB for
the quarter ended September 30, 2003;

      WHEREAS,  the  Company did not  complete a  financing  on the terms of the
Financing  Agreement and, as a result,  the Stockholder has loaned an additional
$100,000 to the Company and the Subsidiary, which loan is comprised of a $45,000
loan to the  Company  on the  terms  and  conditions  set  forth in the  $45,000
Promissory Note (Unsecured) dated May 7, 2004 (the "$45,000  Promissory  Note"),
and a $55,000  additional  loan (the  "Additional  Loan") to the Company and the
Subsidiary  which, as of June 7, 2004, was combined with the amount  outstanding
under the $45,000 Promissory Note on terms and conditions,  including conversion
rights, warrants and security interests, set forth in the Master Loan Agreement,
Promissory Note and Pledge and Security Agreement each dated as of July 22, 2004
between the Company, the Subsidiary and the Stockholder (collectively, the "Loan
Documents")

<PAGE>

      WHEREAS,  without direct or indirect  disclosure to the Stockholder or the
Assignor,  the Company  issued  4,250,000  shares of Common Stock to  employees,
including officers of the Company,  and service providers during the month prior
to the execution of the Conversion Agreement for no cash consideration and, also
without disclosure to the Stockholder or the Assignor,  at the time of execution
of  the  Conversion  Agreement,  the  Company  planned  to  issue  over  200,000
additional shares of Common Stock to service providers for no cash consideration
shortly  after  execution  of  the  Conversion  Agreement   (collectively,   the
"Additional Issuances"); and

      WHEREAS, in accordance with Section 8(a) of the Conversion Agreement,  the
Company and the Stockholder wish to amend the Conversion Agreement to settle any
claims  of the  Stockholder  and  the  Assignor  arising  out of the  Additional
Issuances and the Financing Agreement, and the Stockholder, on behalf of himself
and the other  "Stockholder  Affiliates" (as defined herein),  wishes to release
the Company and the "Company  Affiliates"  (as defined herein) from liability in
connection  with the Additional  Issuances and the Financing  Agreement,  on the
terms and conditions set forth in this Amendment.

      NOW,  THEREFORE,  in  consideration of the foregoing  recitals,  which are
hereby incorporated into, and made a part of this Amendment,  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:

            1. Capitalized  Terms. All capitalized  terms not otherwise  defined
herein shall have the respective meanings set forth in the Conversion Agreement.

            2. Amendment. The Conversion Agreement is hereby amended as follows:

<PAGE>

                  (i) By  deleting  the  reference  to  "3,741,111"  in  Section
2(a)(i) thereof, and substituting, in lieu thereof, "11,054,444";

                  (ii) By deleting the  reference to "Schedule  13G and the Form
3" in Section 2(c) thereof and  substituting,  in lieu thereof,  "Schedule  13D,
Form 3 and Form 4 and any amendments thereto."

                  (iii) By deleting the  reference to "December 31, 2004" in the
second sentence of Section 3(a) thereof and substituting, in lieu thereof, "that
date which is four months  following  the date of the written  request  from the
Assignee"

                  (iv) By deleting  Section  3(b)  thereof in its  entirety  and
including the following in lieu thereof:

                  (b)  Piggyback  Registration.   If  the  Company  proposes  to
register (including for this purpose a registration  effected by the Company for
a stockholder  or  stockholders  of the Company other than the Assignee  ("Other
Stockholders"))  securities  under the  Securities  Act on Form S-1, S-2, S-3 or
SB-2 (or any replacement or successor forms) (a "Piggyback  Registration"),  the
Company  shall  cause to be  included  in such  registration  statement  and use
reasonable efforts to be registered under the Securities Act all the Registrable
Securities that the Assignee shall request to be registered;  provided, however,
that, unless the registration statement includes Other Stockholders,  such right
of  inclusion  shall  not  apply  to  any  registration  statement  covering  an
underwritten  offering  unless the underwriter or its agent agrees in writing to
the inclusion of the Registrable Securities. The Company shall have the absolute
right to withdraw or cease to prepare or file any registration statement for any
offering  referred to in this Section 3 without any  obligation  or liability to
the Assignee.

                  (v) By deleting  the  reference  to "Form 3 and a Form 13G" in
Section 3(c) thereof and  substituting,  in lieu thereof,  "Schedule 13D, Form 3
and Form 4 and any amendments thereto."

                  (vi) By  renumbering  Section  8  thereof  as  Section  9, and
inserting the following as new Section 8:

                  "8. Company's Covenants.

                  The  parties   acknowledge   that  the  Assignee   resides  in
Switzerland and has substantial other business  interests and, as a result,  the
Assignee  is not in a position  to  supervise  his  investment  in the  Company.
Accordingly,  the Company agrees that the following covenants are reasonable and
necessary to provide the Assignee the ability to protect his  investment  in the
Company. Accordingly, the Company makes the following covenants:

                  (a) Affirmative  Covenants.  As long as the Assignee holds ten
percent  (10%) or more of the issued and  outstanding  shares of Common Stock of
the Company, the Company shall ensure that:

<PAGE>

                  (1) The Company's periodic reports to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Periodic Reports"),  comply in
all material  respects  with the  provisions of the  Securities  Exchange Act of
1934, as amended (the "Exchange Act"), and the rules promulgated  thereunder and
do not  contain  any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein  (in  light  of the  circumstances  under  which  they  were  made)  not
misleading.

                  (2)  The  Periodic  Reports  include  all  certifications  and
statements  required,  if any, by (i) the Commission's Order dated June 27, 2002
pursuant to Section  21(a)(1) of the  Exchange Act (File No.  4-460),  (ii) Rule
13a-14 or 15d-14 under the Exchange  Act, and (iii) 18 U.S.C.  ss. 1350 (Section
906 of the  Sarbanes-Oxley  Act of 2002),  and each of such  certifications  and
statements  contain no  qualifications  or exceptions  to the matters  certified
therein other than a knowledge qualification, permitted under such provision.

                  (3) The Company and the  Subsidiary  complies  with all of the
provisions of the Sarbanes-Oxley Act of 2002, and the provisions of the Exchange
Act and the Securities Act of 1933, as amended, relating thereto,  applicable to
the Company and the Subsidiary.

                  (4) The financial statements (including related notes, if any)
contained  in the  Periodic  Reports:  (i)  comply  as to form  in all  material
respects with the published rules and  regulations of the Commission  applicable
thereto;  (ii) are prepared in accordance with United States generally  accepted
accounting  principles  applied on a  consistent  basis  throughout  the periods
covered;  and (iii)  fairly  present in all material  respects the  consolidated
financial  position of the Company and the Subsidiary as of the respective dates
thereof and the consolidated results of operations and cash flows of the Company
and the Subsidiary for the periods covered thereby.

                  (5) The  Company  keeps,  and causes the  Subsidiary  to keep,
adequate  records and books of account with  respect to its business  activities
and  properties,  in which proper entries are made in accordance  with customary
accounting practices reflecting all financial transactions.

                  (6) Promptly after the sending or filing thereof,  as the case
may be, of copies of any  Periodic  Reports,  proxy or  information  statements,
registration   statements  or  other   documents  with  the  Commission  or  any
governmental  authority  which may be  substituted  therefor,  the Company shall
provide such documents to the Assignee.

            (b) Negative  Covenants.  As long as the Assignee  holds ten percent
(10%) or more of the  issued  and  outstanding  shares  of  Common  Stock of the
Company,  the Company shall not, unless otherwise consented to in writing by the
Assignee:

<PAGE>

            (1) Issue, or permit the Subsidiary to issue,  any shares of capital
stock, or rights,  options or warrants to purchase  capital stock, or securities
convertible into capital stock;  provided,  however, that, without such consent,
the Company shall be permitted to issue, in the aggregate,  up to  three-hundred
and fifty thousand  (350,000)  shares of Common Stock (subject to adjustment for
stock splits, combinations and similar transactions).

            (2) Merge or  consolidate,  or  permit  the  Subsidiary  to merge or
consolidate,  with any person or entity; nor acquire,  nor permit the Subsidiary
to  acquire,  all or any  substantial  part of the  properties  of any person or
entity;  nor sell,  lease or otherwise  dispose of, nor permit the Subsidiary to
sell, lease or otherwise dispose of, any of its properties,  except for sales of
inventory in the ordinary course of business.

            (3)  Make,  or permit  the  Subsidiary  to make,  any loans or other
advances of money to any person or entity,  other than (a) advances of salary to
employees,   (b)  extensions  of  trade  credit,  (c)  deposits  with  financial
institutions,  and (d) prepaid expenses, in each case, in the ordinary course of
business.

            (4)  Create,  incur,  assume,  or  suffer to  exist,  or permit  the
Subsidiary  to create,  incur,  assume,  or suffer to exist,  any  indebtedness,
except for trade credit in the ordinary course of business.

            (5) Declare or make,  or permit the  Subsidiary  to declare or make,
any dividends or other distributions with respect to capital stock, or redeem or
repurchase any capital stock.

            (6) Enter into, or be a party to, or permit the  Subsidiary to enter
into or be a party to, any transaction  with any affiliate of the Company or the
Subsidiary or any holder of any capital stock of the Company or the Subsidiary.

            (7)  Create  or  acquire,  or  permit  the  Subsidiary  to create or
acquire, any subsidiary or joint venture arrangement.

            (8) Agree to, or permit  to  occur,  any  amendment,  supplement  or
addition to the Company's or the Subsidiary's  charter,  articles or certificate
of incorporation, bylaws or other organizational documents.

            (c) Preemptive Rights.

            (1) As long as the Assignee  holds ten percent  (10%) or more of the
issued and outstanding shares of Common Stock of the Company,  prior to any sale
or  issuance by the Company of any shares of capital  stock of the  Company,  or
rights,  options or warrants to purchase such shares, or securities  convertible
into such shares (collectively, "New Securities"), the Company shall first offer
to sell the New  Securities  to the  Assignee by  delivering  a notice (the "New
Issuance  Notice") to the Assignee stating the number and type of New Securities
which the Company  desires to sell,  and the price (the "Offer Price") and other
material  terms and  conditions  upon which the Company  desires to sell the New
Securities.

<PAGE>

            (2) The Assignee shall have the option,  exercisable in writing (the
"Reply  Notice") for a period of fifteen (15) days after the  effective  date of
the New  Issuance  Notice,  to elect to purchase  (at the Offer Price and on the
terms and conditions  specified in the New Issuance Notice) up to the Assignee's
"Pro-Rata Share" (as defined herein) of the New Securities. For purposes hereof,
"Pro-Rata  Share"  shall  be the  product  of (A) the  aggregate  number  of New
Securities set forth in the New Issuance Notice,  multiplied by (B) the quotient
of (x) the number of issued and outstanding  shares of Common Stock owned by the
Assignee as of the effective date of the New Issuance Notice, divided by (y) the
aggregate  number of issued and outstanding  shares of Common Stock owned by all
stockholders as of such date.

            (3)  If  the  Assignee  elects  not  to  purchase  any  of  the  New
Securities, the Company shall have sixty (60) days to sell any or all of the New
Securities on terms and  conditions  no more  favorable to the  purchasers  than
those set forth in the New Issuance Notice.  Upon termination of such sixty (60)
day period,  the Company shall not thereafter  sell any New  Securities  without
first  offering  such New  Securities  to the  Assignee  in the manner set forth
herein.

            (d)  Indemnification.  The Company shall indemnify and hold harmless
the  Assignee,  his  heirs,  executors,  personal  representatives,  affiliates,
successors  and  assigns,  from and  against  any and all  losses,  liabilities,
damages,   penalties,  costs,  fees  and  expenses  (including  legal  fees  and
disbursements)  which may result,  directly or  indirectly,  from the  Company's
misrepresentations  or  misstatements  contained  in this  Agreement or breaches
hereof."

            (vii) By  deleting  the  references  in  Section  8(d)  thereof  (as
renumbered as Section 9(d)) to "Greg Suess, 10250 Constellation Boulevard,  19th
Floor, Los Angeles,  California 90067, facsimile number (310) 556-2920" and "Los
Angeles  time,"  and  substituting  in  lieu  thereof,   "Michael  Conron,  1800
Mercantile Bank & Trust Building,  Baltimore,  Maryland 21201,  facsimile number
(410)  244-7742,  or such other address or facsimile  number as the Assignee may
specify for such purposes by notice to the Company  delivered in accordance with
this Section" and "Baltimore Maryland time" respectively.

                  (viii) By  deleting  the last  sentence  of  paragraph  (e) of
Section 8 and  substituting,  in lieu  thereof,  "The  Assignee  may  assign its
respective rights hereunder."

<PAGE>

            (ix) By adding new paragraph (i) to Section 8 thereof (as renumbered
as Section 9) as follows:

                  (i) Time is of the  Essence.  Time is of the  essence  in this
Agreement.

                  3.  Representations by Company.  The Company hereby represents
and warrants to the Stockholder as follows, as of the Effective Date:

                  (i) Each of the  representations  and  warranties set forth in
Section 5 of the  Conversion  Agreement are true and correct as of the Effective
Date as though made on such date. For purposes hereof,  the term "Agreement," as
used in such Section 5, shall mean and include each of the Conversion  Agreement
and this Amendment.

                  (ii) The authorized capital stock of the Company,  immediately
prior to the Effective Date consists of 50,000,000  shares of Common Stock,  par
value $0.001 per share,  20,279,557  shares of which are issued and outstanding.
The  authorized  capital  stock of the  Company  on and  immediately  after  the
Effective  Date  (taking  into  account the  transactions  contemplated  in this
Agreement) shall consist of 50,000,000  shares of Common Stock, par value $0.001
per share, 27,592,890 shares of which will be issued and outstanding. Except for
the  Subsidiary,  the  Company  has  no  subsidiaries.  The  Subsidiary  has  no
subsidiaries.  The Subsidiary is duly  organized,  validly  existing and in good
standing  under the laws of the State of  Nevada.  The  Company  owns all of the
issued and outstanding shares of capital stock of the Subsidiary and such shares
are duly authorized, validly issued fully paid and nonassessible and free of any
liens or  encumbrances.  Except as set forth on  Schedule 1 hereof,  neither the
Company nor the Subsidiary:  (a) has any authorized or outstanding subscription,
warrant,  option,  convertible security or other right (contingent or otherwise)
to  purchase  or  acquire  any  shares of  capital  stock of the  Company or the
Subsidiary;  (b) is  committed  to  issue  any  subscription,  warrant,  option,
convertible security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of  indebtedness  or assets of the
Company  or the  Subsidiary;  and/or  (c)  has  any  obligation  (contingent  or
otherwise)  to purchase,  redeem or otherwise  acquire any shares of its capital
stock  or any  interest  therein  or to pay  any  dividend  or  make  any  other
distribution in respect thereof. Except as provided in this Amendment, no person
or entity is entitled to any  preemptive  or similar  right with  respect to the
issuance of any  capital  stock of the  Company or the  Subsidiary.  Each of the
Company and the  Subsidiary has provided  copies of its  respective  Articles of
Incorporation and Bylaws, in each case as amended through, and in effect on, the
date of this Amendment.

                  (iii) The Company,  the Board of Directors and the  Subsidiary
have  taken  all  necessary   steps  to  render  any   "business   combination,"
"moratorium," "control share" or other state anti-takeover statute or regulation
applicable to the Company  inapplicable to the Stockholder,  the Debenture,  the
$45,000 Promissory Note, the Prior Loan Documents,  the Shares, the Warrants and
the  transactions  contemplated  therein,  including  the  issuance of shares of
Common Stock on the terms and conditions set forth therein.

<PAGE>

                  (iv) The execution,  delivery and performance of the Agreement
and this  Amendment  do not and will not (with or without the passage of time or
the  giving  of  notice):   (a)  violate  or  conflict   with  the  articles  of
incorporation  or  bylaws of the  Company  or the  Subsidiary;  (b)  violate  or
conflict with any law,  regulation,  judgment or order applicable to the Company
or the  Subsidiary;  (c)  violate any rule of any  self-regulatory  organization
applicable  to the Company or the  Subsidiary;  (d)  violate or  conflict  with,
result in a breach  of,  constitute  a default  or  otherwise  cause any loss of
benefit under any material  agreement or other material  obligation to which the
Company  and/or  the  Subsidiary  is a  party,  or by  which  the  Company,  the
Subsidiary  and/or any of their  respective  properties are otherwise bound; (e)
result  in the  creation  of any  encumbrance  pursuant  to, or give rise to any
penalty,  acceleration of remedies,  right of termination or otherwise cause any
alteration of any rights or obligations of any party under any contract to which
the  Company  and/or  the  Subsidiary  is a party or by which the  Company,  the
Subsidiary and/or any of their respective properties are otherwise bound; or (f)
require  any  consent,  notice,  authorization,  waiver  by or  filing  with any
governmental  agency,  administrative  body or other third party, other than the
filing  of  a  Form  D  with  the  Securities  and  Exchange   Commission   (the
"Commission") and any state securities commission.

                  (v) The  Company's  periodic  reports  filed  pursuant  to the
Exchange Act (the "Past Periodic Reports"), comply in all material respects with
the provisions of the Exchange Act of 1934 and the rules promulgated  thereunder
and do not contain any untrue  statement of a material fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein  (in  light  of the  circumstances  under  which  they  were  made)  not
misleading.  The Past Periodic Reports include all certifications and statements
required,  if any, by (A) the Commission's Order dated June 27, 2002 pursuant to
Section 21(a)(1) of the Exchange Act (File No. 4-460), (B) Rule 13a-14 or 15d-14
under  the  Exchange  Act,  and  (C) 18  U.S.C.  ss.  1350  (Section  906 of the
Sarbanes-Oxley  Act of 2002),  and each of such  certifications  and  statements
contain no  qualifications  or exceptions to the matters certified therein other
than a knowledge  qualification,  permitted under such  provision,  and have not
been modified or withdrawn,  and neither the Company nor any of its officers has
received  any  notice  from  the  Commission  or  any  other  governmental  body
questioning or challenging the accuracy,  completeness, form or manner of filing
or submission of such  certifications or statements.  The Company is in material
compliance with all of the provisions of the Sarbanes-Oxley Act of 2002, and the
provisions  of such  Exchange Act and the  Securities  Act of 1933,  as amended,
relating thereto, applicable to the Company. The financial statements (including
related notes, if any) contained in the Past Periodic  Reports:  (i) complied as
to form in all material respects with the published rules and regulations of the
Commission  applicable  thereto;  (ii) were prepared in  accordance  with United
States generally  accepted  accounting  principles applied on a consistent basis
throughout  the periods  covered;  and (iii)  fairly  presented  in all material
respects the consolidated  financial  position of the Company and the Subsidiary
as of the respective  dates thereof and the  consolidated  results of operations
and  cash  flows of the  Company  and the  Subsidiary  for the  periods  covered
thereby.

                  (vi) As of the date of this  Amendment,  and as a condition of
the execution and delivery of this Amendment by the Stockholder, the officers of
the  Company   have   delivered  an  officers'   certificate   (the   "Officers'
Certificate") to the Stockholder certifying certain documents and actions of the
Board of Directors and the officer of the  Subsidiary has delivered an officer's
certificate  (the  "Subsidiary   Officers'   Certificate")  to  the  Stockholder
certifying  certain  documents  and  actions  of the board of  directors  of the
Subsidiary.

<PAGE>

                  (vii)  The  Company  has all  requisite  power  and  authority
(corporate or otherwise) to execute,  deliver and perform this Amendment and the
transactions contemplated hereby, and the execution, delivery and performance by
the Company of this Amendment has been duly  authorized by all requisite  action
by the  Company,  including  approval by each  Disinterested  Director  and this
Amendment,  when executed and delivered by the Company,  will constitute a valid
and  binding  obligation  of the  Company,  enforceable  against  the Company in
accordance  with  its  terms,  subject  to  applicable  bankruptcy,  insolvency,
reorganization, fraudulent conveyance or other similar laws affecting creditors'
rights and remedies  generally,  and subject,  as to enforceability,  to general
principles  of  equity  (regardless  of  whether  enforcement  is  sought  in  a
proceeding at law or in equity).

                  (viii)   The   Stockholder   may  be  deemed  an   "interested
shareholder" of the  Corporation as such term is defined in Section  607.0901 of
the Florida  Business  Corporation  Act;  Todd  Gotlieb has been a member of the
Board of Directors  since  October 29, 2002 and Sam Ash has been a member of the
Board of Directors since September 30, 2003 and was elected to fill a vacancy on
the Board of Directors by Todd Gotlieb,  who, at the time of the election of Sam
Ash to the Board of  Directors,  was the sole  member of the Board;  and each of
Todd Gotlieb and Sam Ash is a "disinterested  director," as such term is defined
in  Section  607.0901  of  the  Florida   Business   Corporation  Act  (each,  a
"Disinterested Director"), with respect to the Stockholder.

                  (ix)  At the  time  each  of  the  Conversion  Agreement,  the
Debenture,  the $45,000 Promissory Note, each of the Prior Loan Documents,  each
of the Loan  Documents  and the  transactions  included  therein,  including the
issuance  of  shares  of Common  Stock on the  terms  and  conditions  set forth
therein,  was  authorized,  executed  and  delivered  by the  Company  (and  the
Subsidiary,   where  applicable),   the  Company  (and  the  Subsidiary,   where
applicable)  had all requisite  power and authority  (corporate or otherwise) to
execute, deliver and perform each of the Debenture, the $45,000 Promissory Note,
each  of  the  Prior  Loan  Documents,  each  of  the  Loan  Documents  and  the
transactions  included  therein,  including  the issuance of Common Stock on the
terms and conditions set forth therein,  respectively,  the execution,  delivery
and performance by the Company (and the Subsidiary, where applicable) of each of
the Conversion  Agreement,  the Debenture,  the $45,000 Promissory Note, each of
the  Prior  Loan  Documents,  each  of  the  Loan  Documents  and  each  of  the
transactions included therein,  including the issuance of shares of Common Stock
on the terms and conditions set forth therein,  have been duly authorized by all
requisite  action  by  the  Company  (and  the  Subsidiary,  where  applicable),
including,  in each case,  approval by each Disinterested  Director prior to the
date of each of the Conversion Agreement,  the Debenture, the $45,000 Promissory
Note, each of the Prior Loan  Documents,  each of the Loan Documents and each of
the transactions  included  therein,  including the issuance of shares of Common
Stock on the terms and conditions set forth therein,  respectively,  and each of
the Conversion  Agreement,  the Debenture,  the $45,000 Promissory Note, each of
the Prior Loan  Documents and each of the Loan  Documents have been executed and
delivered by the Company (and the Subsidiary,  where applicable), and constitute
a valid  and  binding  obligation  of the  Company  (and the  Subsidiary,  where
applicable),   enforceable  against  the  Company  (and  the  Subsidiary,  where
applicable)  in accordance  with its terms,  subject to  applicable  bankruptcy,
insolvency,  reorganization,   fraudulent  conveyance,  or  other  similar  laws
affecting  creditors'  rights  and  remedies  generally,   and  subject,  as  to
enforceability,   to  general   principles  of  equity  (regardless  of  whether
enforcement  is sought in a proceeding at law or in equity) except to the extent
that the  Debenture,  the 45,000  Promissory  Note  and/or any of the Prior Loan
Documents has been superceded by the Debenture, any of the Prior Loan Documents,
any of the Loan Documents, the Conversion Agreement and/or this Amendment.

<PAGE>

                  (x) At the  time  the  Additional  Loan  and the  transactions
included  therein,  including  the  issuance  of  Common  Stock on the terms and
conditions set forth therein, was authorized and entered into by the Company and
the  Subsidiary,  the Company and the  Subsidiary  had all  requisite  power and
authority (corporate or otherwise) to enter into and perform the Additional Loan
and the transactions included therein, including the issuance of Common Stock on
the terms and conditions set forth  therein,  the entry into and  performance by
the Company and the Subsidiary of Additional Loan and the transactions  included
therein,  including the issuance of Common Stock on the terms and conditions set
forth therein,  have been duly authorized by all requisite action by the Company
and the Subsidiary,  including approval by each Disinterested  Director prior to
the date of the Additional Loan and each of the transactions  included  therein,
including  the  issuance of Common Stock on the terms and  conditions  set forth
therein,  the  Additional  Loan was validly  entered into by the Company and the
Subsidiary,  and  constitutes a valid and binding  obligation of the Company and
the Subsidiary  enforceable against the Company and the Subsidiary in accordance
with its terms, subject to applicable  bankruptcy,  insolvency,  reorganization,
fraudulent  conveyance or other  similar laws  affecting  creditors'  rights and
remedies generally, and subject, as to enforceability,  to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity) except to the extent that the Additional Loan has been superceded by the
Loan  Documents  and the  Loan  Documents  fairly  and  accurately  reflect  the
agreement of the Company,  the  Subsidiary  and the  Stockholder at the time the
Additional Loan was made.

                  (xi) No representation or warranty by the Company contained in
the  Agreement  and/or  this  Amendment  or any  information  in  any  schedule,
instrument,  or  document  furnished  or to be  furnished  by the  Company,  the
Subsidiary, or any of their respective officers, directors, employees, agents or
representatives  pursuant hereto  (including,  but not limited to, the Officers'
Certificate  and the  Subsidiary  Officer's  Certificate),  contains  any untrue
statement  of a  material  fact or omits or fails  to state  any  material  fact
necessary in order to make the  statements  contained  therein,  in light of the
circumstances in which made, not misleading.

                  4. Release. The Stockholder, for himself and his past, present
and future heirs, executors,  personal representatives,  affiliates,  successors
and assigns (separately and collectively,  the "Stockholder  Affiliates"),  does
hereby irrevocably and unconditionally  release,  acquit, remise,  exonerate and
forever discharge the Company, the Subsidiary and their respective past, present
and  future  officers,  directors,  successors  and  assignors  (separately  and
collective,  the "Company Affiliates"),  of and from any and all actions, causes
of  action,  suits,  debts,  dues,  sums of money,  accounts,  claims,  demands,
grievances,   allegations,   covenants,  contracts,   controversies,   promises,
agreements,   damages,   costs  and  expenses,   attorneys  fees,   obligations,
liabilities  and judgments,  of whatever kind or nature,  known or unknown,  now
existing or which may develop in the  future,  in law or in equity or  otherwise
(collective,  "Claims"), which the Stockholder or Stockholder Affiliates (or any
of them) ever had, now has, or can, shall or may have in the future, against the
Company or the Company  Affiliates (or any of them),  from the beginning of time
through the  Effective  Date with  respect to the  Financing  Agreement  and the
Additional  Issuances,  except  for any and all  Claims  by the  Stockholder  or
Stockholder Affiliates (or any of them) relating to this Amendment.

<PAGE>

                  5.  Reimbursement  of  Stockholder's  Fees and  Expenses.  The
Company shall be  responsible  for, and shall pay or reimburse  the  Stockholder
for, all the fees and expenses of the  Stockholder's  legal counsel  relating to
the preparation and negotiation of the Conversion  Agreement and this Amendment,
the  consummation  of the  transactions  contemplated  thereby and  hereby,  all
filings related thereto and hereto with the Commission or any other governmental
agency, and any and all disputes arising out of the Conversion  Agreement,  this
Amendment  and/or such  transactions.  The  provisions  of this Section 5 are in
addition to and not in limitation of any provisions of the Conversion  Agreement
governing the same subject matter.

                  6. Ratification.  The parties hereto expressly ratify,  affirm
and adopt the  Agreement  as amended  herein,  and agree that the  Agreement  as
amended shall continue in full force and effect in accordance with its terms. In
the event there are any  conflicts  between the terms of the  Agreement and this
Amendment, this Amendment shall control.

                  7.  Remedies.   The  Company   acknowledges  and  agrees  that
irreparable  damage to the Stockholder  would result in the event the Conversion
Agreement  and this  Amendment are not  specifically  enforced.  Therefore,  the
rights and  obligations of the parties herein shall be enforceable in a court by
a decree of  specific  performance,  and  appropriate  injunctive  relief may be
applied for and granted in connection  therewith.  Such remedies,  and all other
remedies provided for in the Agreement and/or in this Amendment, shall, however,
be cumulative  and not exclusive and shall be in addition to any other  remedies
which the Stockholder may have under the Agreement, this Amendment or otherwise.

                  8.  Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the successors  and permitted  assigns of each of
the  parties.  The  Company may not assign its rights or  obligations  hereunder
without the prior written consent of the Stockholder. The Stockholder may assign
its respective rights hereunder.

                  9.  Entire   Agreement.The   Agreement   and  this   Amendment
constitute the entire  agreement  between the parties  pertaining to the subject
matter  hereof,  and  supercede  all  prior  and   contemporaneous   agreements,
understandings,  negotiations  and  discussions  of the parties  whether oral or
written.

<PAGE>

                  10.  Governing Law;  Jurisdiction;  Waiver of Jury Trial.  All
questions concerning the construction,  validity, enforcement and interpretation
of this  Amendment  and/or the Agreement  shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York,  without
regard to the principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the
transactions  contemplated  by this  Amendment  and/or  the  Agreement  shall be
commenced  in the United  States  District  Court for the  Northern  District of
Maryland or any state court  located in  Baltimore,  Maryland  (the  "Applicable
Courts").  Each  party  hereto  hereby  irrevocably  submits  to  the  exclusive
jurisdiction of the Applicable  Courts for the  adjudication of any dispute this
under this Amendment  and/or the Agreement or in connection  with this Amendment
and/or the  Agreement or with any  transaction  contemplated  by this  Amendment
and/or the Agreement or discussed in this Amendment  and/or the  Agreement,  and
hereby  irrevocably  waives,  and  agrees  not to assert in any suit,  action or
proceeding,  any claim that it is not personally  subject to the jurisdiction of
any such court, or such Applicable Courts are improper or inconvenient venue for
such  proceeding.  Each party  hereby  irrevocably  waives  personal  service of
process  and  consents  to  process  being  served in any such  suit,  action or
proceeding  by  mailing a copy  thereof  via  registered  or  certified  mail or
overnight  delivery  (with evidence of delivery) to such party at the address in
effect for notices to it under this Amendment and agrees that such service shall
constitute good and sufficient  service of process and notice  thereof.  Nothing
contained  herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably  waives, to
the fullest  extent  permitted by applicable  law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Amendment and/or
the Agreement.

                  11. Counterparts. This Amendment may be executed in any number
of  counterparts,  each of  which  when so  executed  shall be  deemed  to be an
original  and all of which  taken  together  shall  constitute  one and the same
Agreement.   In  the  event  that  any   signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

      IN WITNESS  WHEREOF,  each party hereto has executed  this  Amendment,  or
caused this Amendment to be executed by its duly authorized  officer,  as of the
Effective Date.

WITNESS                                              COMPANY:

                                                     SBS INTERACTIVE, CO.

                                                  By: /s/ Todd Gotlieb    (SEAL)
                                                      --------------------------
                                                      Name:  Todd Gotlieb
                                                      Title:  President

                                                     STOCKHOLDER:

                                                      /s/ Arthur Cohn
                                                      --------------------------
                                                      Arthur Cohn

   [Signature Page to First Amendment to Assignment and Agreement to Convert]

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