Document:

Exhibit 4.1

 

FINANCING
AGREEMENT

 

This
Agreement (“Agreement”) is entered into by and between Horizon Financial
Services Group USA, Inc. (“Horizon”) and                                                 
(“Client”) on this                   ,
day of                       
2006.

 

A.                                   WHEREAS, Client has requested Horizon
facilitate the issuance of letters of credit or other acceptable payment
arrangements benefiting certain Client suppliers (“Suppliers”);

 

B.                                     WHEREAS, Client has agreed to assign certain
accounts to Horizon, subject to certain conditions;

 

C.                                     WHEREAS, Client has entered into or
anticipates entering into contracts (“Contracts”) with various Suppliers and
customers (“Customers”) under which Client has agreed, among other things, to
purchase from Suppliers and furnish to Customers certain products;

 

D.                                    WHEREAS, Client has requested that Horizon
provide a Maximum Revolving Credit Line of Five Million Dollars ($5,000,000.00)
to be drawn upon for the purpose of issuing letters of credit or other acceptable
payment arrangements benefiting certain Client Suppliers.  It is mutually understood Client will draw on
the Maximum Revolving Credit Line in traunches based on each transaction
request; and furthermore, are to be paid back primarily through Advances made
to Horizon by Client’s senior secured lender.

 

NOW THEREFORE, in consideration for the
representations, covenants and agreements set forth herein, as well as for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

1.                                       Notwithstanding any other provisions of this
Agreement, this Agreement does not commit Client or Horizon to participate in
any transactions other than those specifically agreed upon from time to time as
evidenced by this Agreement or an Addendum to this Agreement as defined below.

 

2.                                       Client shall have pre-sold products to
Customers in amounts, and on credit and delivery terms, acceptable to
Horizon.  Client shall provide to Horizon
for review and approval, as applicable, copies of letters of credit, purchase
orders, and sales contracts from Customers, as well as

 

 

outstanding order reports summarizing such orders
and contracts with respect to products for which Horizon anticipates providing
letters of credit or other acceptable payment arrangements (“Payment
Arrangements”).  Horizon shall have the
right to confirm all sales arrangements directly with Customers.  Client shall furnish Horizon, upon Horizon’s
request, credit information sufficient in Horizon’s opinion, for Horizon to
credit approve Client’s Customers. 
Client shall request Laurus Master Fund, Ltd. (“Laurus”) to acknowledge
and agree to the payment instructions indicated in each and every Distribution
Authorization Form (Exhibit A) executed by Client and submitted to
Laurus from time to time as appropriate for Horizon to receive payment of
certain obligations owed to Horizon by Client. Should such information not be
available to Horizon’s satisfaction, Client authorizes Horizon to use any and
all means available to obtain information which may allow Horizon to approve
Client’s Customer’s.  All expenses
associated with the costs associated with Horizon obtaining said information
shall be at Client’s expense.  Client
hereby agrees to hold harmless and release Horizon from any and all liability
for Customer credit losses due to defective product, slow or non-saleable
product, disputed Customer invoices, Customer payments less than gross amounts
that may be or becoming owed to Client. 
Client agrees to handle all product returns from Customers independent
from Horizon; and therefore, Client agrees and acknowledges it is solely
responsible for payment in full of all obligations owed to Horizon.  Furthermore, Client agrees it is solely
responsible for all product shipments to Customer’s that are refused by
Customer, or product orders cancelled by Customer prior to shipment by Client
to Customer for which Payment Arrangements were made by Horizon.

 

3.                                       Client shall provide to Horizon copies of
purchase orders to, and order confirmations from, Suppliers of products
associated with the Agreement.  Client
warrants and represent to Horizon that products delivered from Suppliers shall
conform in every respect, including but not limited to quantity, quality,
style, and packaging, with existing Customer purchase orders, and additionally,
any further specifications as have been or may be required by Client or Client’s
Customers.  Client grants to Horizon the
right to confirm all purchase arrangements directly with Suppliers.

 

4.                                       Upon acceptance by Horizon, in its sole and
absolute discretion, of the products, supplies and contracts and all other
terms and conditions related thereto and pursuant to the requirements of this
Agreement and the requirements of the addendum attached to this Agreement (“Addendum”),
Client shall present to Horizon a bill of sale which sells, assigns, and
transfers to Horizon the products referenced herein or by Addendum and all
purchase and sale documentation related thereto, together with a non-exclusive
right to, license for, and right to sublicense, any trademarks, tradenames, and
service marks used or useful, directly or indirectly, with respect to, or
inhering in, such products.  Horizon
shall have all rights, title and interest Client had in the Horizon
assets.  Upon Horizon’s acceptance of the
bill of sale Horizon shall arrange to have letters of credit issued

 

 

or other payment arrangements made in favor of
Suppliers.  Client hereby grants to
Horizon the full right and authority to take any action, which in Horizon’s
sole and absolute discretion, Horizon believes to be necessary to protect
Horizon’s interests.  This shall include
full right and authority to resolve any questions of non-compliance of
documents and to give any instructions as to acceptance or rejection of any
documents or products, all without any notice to, or any consent from
Client.  Horizon has not obligation to
accept any documentation submitted by Client, and Client acknowledges acceptance
by Horizon is at Horizon sole and absolute discretion, notwithstanding anything
to the contrary in this Agreement or any other Agreements, documents or other
communications between Horizon and Client.

 

5.                                       Client agrees that if Horizon elects to issue
documentary letters of credit benefiting certain Client Suppliers as the method
of financing, certain terms and conditions are hereby established.    Letters of credit issued by Horizon and/or
Horizon’s correspondent banks are not transferable, conform in every aspect to
the terms and conditions of the purchase orders received by Client’s Customers,
must contain a concise description of product and proper inspection documents,
and must be accompanied by certain supporting documentation, as
applicable.  The required supporting
documentation includes, but is not limited to, the commercial invoice issued by
Client to Client’s Supplier, the invoice(s) issued by Client to Client’s
Customer(s), and a signed on-board ocean bill of lading.  In addition, Client will be required to
provide contact information for Client’s Supplier, including a letter of
introduction.  For certain transactions
in which Client will take possession of the product in the United States,
Client will be required to confirm that adequate marine insurance has been
secured and Horizon has been named as loss payee.  Client will provide confirmation of the party
responsible for all freight forwarding and shipping costs.  Horizon may elect to issue back-to-back
letters of credit whereas the original letter of credit issued to Client’s Supplier
would be used as collateral to issue documentary letters of credit to certain
other parties.  It is understood that
Horizon may amend the terms and conditions of this section at its sole and
absolute discretion.

 

6.                                       Client reaffirms its grant of a security
interest, junior in position to that of Laurus’ security position, in the
collateral referenced in this Agreement and grants to Horizon, to the extent
not previously granted, a security interest in all of the following Client
assets (“Collateral”) related to all Horizon transactions:

 

All inventory, accounts, accounts receivable,
chattel paper, documents, instruments, contract rights, deposit accounts,
insurance proceeds, trademarks, tradenames, and other general intangibles,
furniture, fixtures, equipment, and all proceeds thereof, now owned and
hereafter acquired.

 

 

7.                                       If applicable, Client shall be the importer
of record and products shall be cleared through Client’s U.S. Customs
bond.  Client shall arrange with all
customs house brokers to have the products cleared through U.S. Customs, and
thereafter held in trust for, and under the exclusive control of Horizon.  All customs house brokers bust be approved in
advance by Horizon.  Client hereby
recognizes and agrees that Horizon shall have sole authority to release the
products held in trust by customs house brokers, however, Horizon shall not
unreasonably withhold such release. 
Horizon shall have the right to confirm such arrangements directly with
all customs house brokers.

 

8.                                       If third party warehousing of the products is
necessary, Client shall arrange to have the products received and held in trust
for Horizon in warehouse facilities which have been approved in advance by
Horizon.  Such products shall be stored
there in Horizon’s name and under Horizon’s exclusive control.  Client shall arrange for Horizon personnel to
have unlimited access to the warehouse facilities and to the products at all
times during regular warehouse working hours. 
Client hereby recognized and agrees that Horizon shall have sole
authority to release the products from such warehouse facilities; however,
Horizon shall not unreasonably withhold such release.

 

9.                                       Should the products be delivered to Client’s
facility for redistribution or storage, Client shall, as applicable, receive,
organize for redistribution, and hold the products in trust for Horizon in:

 

o            A field warehouse established by an
independent warehouse company acceptable to Horizon;

 

o            Secured sections of Client’s facility, leased
to and under the exclusive control of Horizon, where products shall be separate
from and not co-mingled with the property of others, including the property of
Client;

 

o            Client’s facility under Trust Receipts.

 

Such products shall be stored there in Horizon’s
name and under Horizon’s exclusive control. 
Client shall arrange for Horizon’s personnel to have unlimited access to
the facilities and to the products at all times during regular Client working
hours.  Client hereby recognizes and
agrees that Horizon shall have sole authority to release the products from such
warehouse facilities; however, Horizon shall not unreasonably withhold such
release.

 

10.                                 Ocean/air cargo, storage, inland transit, and
product liability insurance for the products shall be arranged by Client and
such coverage shall have been pre-approved by Horizon and shall name Horizon as
an additional insured.  Client shall
provide to Horizon copies of such insurance policies evidencing Horizon’s
additional insured status.

 

 

11.                                 Regardless of the status or location of the
products, Client hereby agrees to re-purchase and take delivery of the products
from Horizon without recourse to Horizon for defects, mispackaging,
mislabeling, damage caused in transit or storage, customer returns, customer
claims, product liability, or for any other reason, and shall pay for such
products upon demand or in accordance with the terms of the addendum to the
Agreement.  Unless otherwise instructed
in writing by Horizon, Client shall arrange for payments to be wire transferred
to a Horizon account as specified by Horizon.

 

12.                                 If applicable, and if excluded from Client’s
borrowing certificate by Laurus, Horizon may agree to accept an assignment of
Client’s accounts receivable whether now existing or hereafter arising without
any further act or instrument to secure Client’s obligations to Horizon.  For all purposes hereof, the term “Receivables”
shall mean and include all accounts, invoices, contract rights, general
intangibles, chattel papers, instruments, documents and all forms of obligations
owing to Client arising from or out of the sale of product or rendition of
services, and all proceeds thereof.

 

13.                                 Laurus is obligated to make advances
otherwise owed to Client to Horizon per the instructions of each Disbursement
Authorization Form for Accounts created by the sale of inventory financed
by Horizon.  The advances will be applied
to any outstanding obligations of Client owed to Horizon; including, but not
limited to: all fees, interest and principal obligations owed by Client to
Horizon.  If applicable, any amount
remaining following payment in full of all Horizon obligations shall be
forwarded to Client within five (5) business days.

 

14.                                 Any and all checks, cash, notes, wire
transfers or other instruments or property received by Client with respect to
obligations owed to Horizon will be immediately forwarded by Client to Horizon
within three (3) business days of receipt. 
Failure to comply will constitute an Event of Default under this
Agreement and may result in Horizon enforcing additional charges on Client.

 

15.                                 Until Horizon advises Client to the contrary,
Client, in their name and at their expense but for Horizon’s benefit and on
Horizon’s behalf, enforce, collect and direct all amounts owing for the Horizon
transactions to Horizon.

 

16.                                 Horizon shall calculate the financing cost of
each Horizon financing instrument under this Agreement based on the gross
amount or face value of each financing instrument issued by Horizon to certain
Chinese suppliers as directed by Client. 
It is mutually understood all commercial related short payments related
to the repayment of referenced financing instruments will be the sole
responsibility of Client, and any Customer returns, allowances, discounts
taken, or

 

 

any other short payments made by Customer will be
the sole responsibility of Client. 
Furthermore, any and all commercial related issues related to the
payment of Horizon financing instruments will be handled by and between Client
and Customer and/or Laurus outside of this Agreement, and in no way will
Horizon be involved in, or responsible for, the settlement of any disputes that
may arise from product received by Customer. 
Accordingly, it is mutually understood that Client is solely responsible
for the repayment of all Horizon financing instruments and all Horizon fees
earned through the issuance of the referenced financing instruments.

 

17.                                 The financing costs shall be payable to
Horizon by Client as follows:  (i) upon
confirmation that the financing instrument issued by Horizon for certain Client
product has been issued to the Chinese supplier as directed by Client, and (ii) will
be paid by advances made by Laurus Master Fund Ltd. or through the collection
of certain Accounts Receivable not financed by Laurus Master Fund Ltd. which
represent Horizon financed product. 
After all Horizon obligations have been extinguished for which
Collateral was pledged and assigned to Horizon for the purpose of serving as
the primary source of repayment for letter of credit obligations and/or other
acceptable payment arrangements, Horizon will refund to Client any and all
remaining monies provided (iii) Client’s account balance is not in a
negative position, and (iv) Horizon is not obligated to make payments to
other parties or to settle other claims against Client the balance of the
collected funds will be remitted to Client five (5) business days after
collection.

 

18.                                 Collected payments on Collateral pledged to
or owned by Horizon as additional collateral shall be paid to Client five (5) business
days after collection.

 

19.                                 With respect to Collateral which there exists
no claim or dispute but which remains unpaid after One Hundred Twenty (120)
Days (“Maturity Date”) from the original Payment Arrangement date, Client will
pay Horizon the full amount of the face value of the financing instrument plus
all accrued interest and fees upon demand, but no later than One Hundred Thirty
(130) days from the original date of the Payment Arrangement.

 

20.                                 Horizon will not make advances against Client’s
domestic Accounts; therefore, funds will only be advanced to Client upon
collection of advances made by Laurus Master Fund Ltd. or from the collection
of Receivables not financed by Laurus Master Fund Ltd.

 

21.                                 For
its services hereunder, Horizon shall receive a Financing Fee equal to Four and
One Half Percent (4.50%) of the gross amount or face value of each Horizon
financing instrument for the first forty-five (45) day period or part thereof
that the financing instrument remains outstanding.  An additional charge of fifty basis points
(0.50%) for each additional period of 15 days, or part

 

 

thereof, during which the
Horizon financing instrument remains outstanding will be charged to Client by
Horizon.  Said fees will be earned by
Horizon until the total amount of the financing instrument and all owed fees is
received by Horizon.  Any financing
instrument outstanding ninety-one (91) days to one hundred twenty (120) days
from the original invoice date will incur a One Percent (1.00%) surcharge.  Any invoice or financing instrument that
remains outstanding after one hundred twenty (120) days will be charged a Two
Percent (2.00%) surcharge for each thirty (30) day period or part thereof that
the respective invoice remains outstanding. 
The minimum Financing Fee per transaction is Five Thousand Dollars
($5,000.00).

 

22.                                 Client agrees to pay an Origination Fee
equaling Twenty Five Thousand Dollars ($25,000.00).  Said fee will be collected on a
transaction-by-transaction basis (at the time a Letter of Credit is opened for
the benefit of SWK).  The amount
collected will be equal to Fifty Basis Points (0.50%) of the face amount of
each Letter of Credit until the referenced Origination Fee is collected in
full.

 

23.                                 Horizon will charge, and SWK will be
responsible for, a Minimum Fee assessment over the first Eighteen Month term of
the Agreement equaling Ninety Thousand Dollars ($90,000.00).  In the event Horizon earns more than the
Minimum Fee, said Fee will be voided. 
The collection of the Minimum Fee shall be in six-month increments.  Horizon will accrue any owed fees during
months 1 through 6, 7 through 12, and 13 through 18.  Any outstanding accrued Minimum Fees at the
end of months 6,12, and 18 will be due and payable to Horizon upon Horizon’s
demand and may be deducted from advances received by Horizon from Laurus.

 

24.                                 The term of this original Agreement shall be
for a period of Eighteen (18) months from the execution date entered on this
Agreement.  In the event Client
terminates this Agreement prior to the end of such period, an Early Termination
Fee of the greater of Two Percent (2.00%) of the Maximum Credit Line or the
Monthly Minimum multiplied by the number of months left in the Agreement will
be assessed to Client by Horizon. 
Horizon shall have the right to terminate this Agreement if, after
thirty (30) days, Client has not cured any Events of Default.

 

25.                                 Client agrees to pay a Due Diligence Fee of
Five Thousand Dollars ($5,000.00) due upon acceptance of the financing
proposal. Said fee will cover the costs associated with Horizon’s out of pocket
expenses associated with its due diligence. 
In the event Horizon incurs expenses in excess of Five Thousand Dollars
($5,000) SWK will be required to deposit an additional Five Thousand Dollars
($5,000).  Any monies remaining after
accounting for Horizon’s expenses will be applied to the Origination Fee.

 

26.                                 Client agrees that its primary officers will
discuss providing Validity (Anti-Fraud) Guarantees. Primary officers will be
determined at the sole discretion of Horizon, but will include individuals

 

 

active in the company on a day-to-day basis and whom
Horizon relies on to provide it with critical information related to Horizon’s
Collateral, Client’s financial performance, and certain information related to
Client’s senior secured domestic lending relationship with Laurus Master Fund,
Ltd.

 

27.                                 Client warrant and represents that each and
every Receivable now or hereafter assigned to Horizon represents (a) a
bona fide sale and delivery of merchandise or rendition of services in the
ordinary course of its business; (b) represents merchandise or services
which have been received and accepted by Client’s Customers without dispute or
claim of any kind and shall be free and clear of any offset, deduction,
counterclaim, lien, encumbrance or any other claim or dispute (real or
claimed), including, without limitation, claims or disputes as to price, terms,
delivery, quantity or quality and claims of release from liability or because
of any act of God, or a public enemy, or war, or because of the requirements of
law or of rules, orders or regulations having the force of law; (c) will
be for an amount certain payable in United States funds in accordance with the
terms of the invoice covering said sale, which shall not be changed without
Horizon’s written approval; (d) except for Horizon’s security interest
therein, there are no security interests, liens or encumbrances thereon and it
will at all times be kept free and clear of same except in Horizon’s favor; (e) Client
has title thereto and Client has the legal rights to sell, assign, transfer and
set over the same to Horizon; (f) all documents, financial statements,
financial projections, sales projections to be delivered to Horizon in
connection therewith will be genuine and be enforceable as applicable; (g) Client
will be solely financially responsible for all obligations to Horizon
regardless of product defects, Customer short payments of any kind for any
reason, cancellation of orders by Client Customers; and furthermore, agrees to
handle all disputes and warranty related issues with Client Suppliers outside
of this Agreement.  Client agrees to
indemnify Horizon against any liability, loss or expense incurred by Horizon.  Client further represents and warrants that
its legal name is exactly as set forth on the signature page of this
Agreement, and all parties authorized as signers by Client are duly authorized
to enter into this Agreement and make certain requests of Horizon under this
Agreement, and Client is in good standing with the State of California and the
State of Nevada and all tax obligations are current and Client will remain in
good standing with the State of California and the State of Nevada and continue
to make all tax payments in a timely manner as required by the various taxing
authorities.  Client agrees to promptly
notify Horizon of any name change, ownership change, or new or additional
addresses from which Client transacts business.

 

28.                                 Client warrants and represents that it will
notify Horizon immediately of any matter affecting the value, enforceability or
collectability of any Receivable and all Customer claims.  Client agrees that Horizon for accounts which
may be assigned to Horizon, Horizon may at any time adjust Client’s account by
the amount of any Receivable which is not paid in full when due for any

 

 

reason other than credit risk, expenses, collection
agency fees and attorney’s fees incurred by Horizon in collecting or attempting
to collect any Receivable or obligation owed to Horizon, and Horizon fees as
outlined above.  Client furthermore
acknowledges and agrees that Horizon has the right to (a) bring suit, or
otherwise enforce collection, in Client’s name or Horizon’s, (b) modify
the terms of payment, (c) settle, compromise or release, in whole or in
part, any amounts owing, and (d) issue credits in Client’s name or Horizon’s
name.

 

29.                                 Client warrants and represents that it will
maintain its Books and Records concerning the Receivables and Inventory as we
may reasonably request and to reflect our ownership of all assigned Receivables
and Inventory.  Furthermore, upon written
request from Horizon, Client agrees to furnish financial statements, accounts
receivable and accounts payable aging reports, inventory reports, and any other
reasonable information required by Horizon in a timely manner.  Client also agrees to contract with an
accounting firm for the purpose of preparing and publishing annually reviewed
financial statements which are published as per SEC guidelines as Client is a
public entity.

 

30.                                 Notwithstanding the foregoing, Horizon may
terminate this Agreement without notice and all obligations shall, unless and
to the extent that Horizon otherwise elects, become immediately due and payable
without notice or demand upon the occurrence and during the continuance of any
one or more of the following events (each an “Event of Default”): (a) Client
fails to pay any Obligation when due; (b) Client commits any breach of or
default in the performance of its representations, warranties or covenants
whether contained herein or in any instrument or document delivered pursuant
hereto or any other Agreement, instrument, or document under which it is
obligated to Horizon; (c) Client makes any false or untrue representation
to Horizon in connection with this Agreement or any transaction relating
thereto; (d) becomes unable to pay its debts as they mature, makes a
general assignment for the benefit of creditors, files for protection under the
Federal Bankruptcy Code or a custodian or receiver is appointed for or takes possession
of Client’s assets; (e) or there shall be issued or filed against Client
any attachment, injunction, execution, or judgment which is not removed within
thirty (30) days after same was issued or filed.

 

31.                                 Upon the occurrence of any of the Events of
Default specified in Section 30 hereof, Horizon shall have all the rights
and remedies of a secured party under the Uniform Commercial Code and other
applicable laws with respect to all collateral in which it has a security
interest, such rights and remedies being in addition to all of its other rights
and remedies provided for herein. 
Horizon may sell or cause to be sold any or all of such collateral at
such prices and upon such terms as it may deem best, and for cash or on credit
or for future delivery, without its assumption of any credit risk, and at a
public or private sale as it may deem appropriate.  Horizon may, at its sole discretion,

 

 

allow Client a cure period to rectify the occurrence
of an Event of Default.  In addition,
Horizon may elect to charge a Default Rate or Fee that is commercially
reasonable.

 

32.                                 Notwithstanding any termination of this
Agreement Client shall continue to deliver Receivables information to Horizon
and turn over all collections to Horizon as herein provided until all
obligations to Horizon shall have been fully paid and satisfied, and until then
this Agreement shall remain in full force and effect as to and be binding upon
Client, and Laurus shall be entitled to retain its security interest in all
existing and future Receivables and Inventory and other security and
collateral.

 

33.                                 The occurrence of
any of the events contained in this Section herein shall constitute an
Event of Default under this Agreement, including but not limited to; the
failure of Client in the payment or performance of any obligation, covenant,
agreement, or liability created by this Agreement; any representation,
warranty, or financial statement made by or on behalf of Client in this
Agreement, or on behalf of any guarantor of this Agreement, proves to be false
or materially misleading when made or furnished; any default or event which,
with the giving of notice or the passage of time or both constitute an Event of
Default, occurs on ay indebtedness of Client or any such guarantor or others;
Client or any such guarantor becomes dissolved or terminated, or experiences a
business failure; a receiver, trustee, or custodian is appointed for any part
of Client’s or any such guarantor’s property, or any part of Client’s or any
such guarantor’s property is assigned for the benefit of creditors; any
proceeding is commenced or petition filed under any bankruptcy or insolvency
law by or against Client or any such guarantor; any judgment is entered against
Client or any such guarantor which may materially affect Client’s or any such
guarantor’s financial condition; Client or any such guarantor becomes insolvent
or unable to pay its debts as they mature; or any Accounts assigned to Horizon
or any financing instrument issued by Horizon on behalf of Client becomes, for
any reason whatsoever, substantially delinquent or uncollectible..  Waiver of any Event of Default shall not
constitute a waiver of any subsequent Event of Default.  Upon occurrence of any Event of Default and
at any time thereafter, at the election of Horizon and without notice of such
election, Horizon may terminate the right of Client to receive financing and
all obligations of Client to Horizon shall become immediately due and payable.
..  Upon the occurrence of an Event of
Default, Horizon shall have the right to enter upon any premises to inspect the
books and records pertaining to the collateral and Horizon shall have all
rights and remedies available under the Uniform Commercial Code.

 

34.                                 Upon occurrence of
an Event of Default, Client agrees to pay all reasonable costs and expenses,
including reasonable attorney’s fees and legal expenses incurred by Horizon in
enforcing or exercising any remedies under this Agreement or any other rights
or remedies.  Client further agrees to
pay all reasonable expenses, including reasonable attorney’s fees and legal
expenses,

 

 

incurred by Horizon in any
bankruptcy proceedings of any type involving Client, this Agreement, or the
Collateral, including without limitation, expenses incurred in modifying or
lifting the automatic stay, determining adequate protection, use of cash
collateral, or relating to any plan of reorganization.

 

35.                               To the extent permitted by
applicable law, both Client and Horizon hereby waive any right to a trial by
jury in any action or proceeding arising directly or indirectly out of this
Agreement, or any other agreement or transaction between us or to which we are
parties.

 

36.                                 No failure or delay by Horizon in exercising
any of its powers or rights hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such power or right preclude other
or further exercise thereof or the exercise of any other right or power.  Horizon’s rights, remedies and benefits
hereunder are cumulative and not exclusive of any other rights, remedies or
benefits which Horizon may have.  This
Agreement may only be modified in writing and no waiver by Horizon will be
effective unless in writing and then only to the extent specifically stated.

 

37.                                 All notices and other communications by
either party hereto shall be in writing and shall be sent to the other party at
the address specified herein.

 

38.                                 This Agreement is not assignable or
transferable by Client and any such purported assignment or transfer is
void.  This Agreement shall be binding
upon the successors of Client.  Client
acknowledges and agrees that Horizon may assign all or any portion of this
Agreement, including, without limitation, assignment of the rights, benefits
and remedies of Horizon hereunder without any assignment of the duties,
obligations or liabilities of Horizon hereunder, and may sell participations in
this Agreement.

 

39.                                 If the foregoing is in accordance with your
understanding, please so indicate by signing and returning to us the original
and one copy of the Agreement.  This
Agreement will take effect as of the date set forth above but only after being
accepted below by our parent company, Horizon Structured Solutions Ltd. in Hong
Kong, after which we shall forward a fully executed copy to you for your files.

 

THIS SPACE INTENTIONALLY LEFT
BLANK

 

 

	
  Dated March           ,
  2006

  
	
   

  
	
   

  
	
  HORIZON FINANCIAL SERVICES GROUP USA, INC.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Theodore Dalessi

  
	
  President

  
	
   

  
	
   

  
	
  READ, ACKNOWLEDGED AND AGREED TO THIS
             DAY, MARCH 2006

  
	
   

  
	
   

  
	
  SMALL WORLD KIDS, INC.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Robert Rankin, Chief Financial Officer

  
	
  Small World Kids, Inc.

  
	
   

  
	
   

  
	
  ACCEPTED
  AT HONG KONG

  
	
   

  
	
  HORIZON
  STRUCTURED SOLUTIONS LTD. HONG KONG

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Theodore
  Cheng

  
	
  President
  and CEO

  
	
  March        ,
  2006Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT is made on the 20th day of March, 2006, between VITA FOOD
PRODUCTS, INC., a Nevada corporation (the “Company”)
and CLIFFORD BOLEN (the “Employee”).

 

RECITALS

 

A.            The Company is engaged in the business
of processing and manufacturing cured and smoked herring and salmon products
and distributing other related products (the “Business”).

 

B.            The Company has determined that in
view of the Employee’s past experience with and services to the Company and his
knowledge, expertise and experience in finance and accounting, the Employee’s
services as an executive officer of the Company will be of great continued
value to the Company, and accordingly, the Company desires to enter into this
Agreement with the Employee as set forth herein in order to secure such
continued services.

 

C.            The Employee desires to continue to
serve as an executive officer of the Company on the terms set forth herein.

 

CLAUSES

 

NOW,
THEREFORE, for and in consideration of the Employee’s employment by the
Company, the above premises and the mutual agreements hereinafter set forth,
the Employee and the Company agree as follows:

 

1.             DEFINITIONS.

 

(a)           “Board” means the Board of Directors of the
Company.

 

(b)           “Cause” means the Employee’s (i) commission
of any act of fraud or dishonesty relating to the business affairs of the
Company; (ii) conviction of any felony in connection with employment by the
Company; or (iii) material failure, after written notice specifying such
failure and a reasonable opportunity to cure such failure, to perform his
material duties or responsibilities hereunder.

 

(c)           “Sale” means (i) a sale of substantially
all of the assets of the Company or (ii) the sale or other transfer of
beneficial ownership in one or a series of transactions of the capital stock of
the Company to a person or entity or group of persons or entities (who are
treated as a group under the federal securities laws) and that are not owners
of at least 10% of the outstanding capital stock of the Company at the time of
the transfer, such that any such transferee (or transferees) owns more than 50%
of such voting capital stock after such transfer.

 

(d)           “Total Disability” means the Employee’s
inability, through physical or mental illness or accident, to perform the
majority of his usual duties and responsibilities hereunder (as such duties are
constituted on the date of the commencement of such

 

 

disability)
in the manner and to the extent required under this Agreement for a period of
at least one hundred eighty (180) consecutive days. Total Disability shall be
deemed to have occurred on the first day following the expiration of such one
hundred eighty (180) day period.

 

2.             EMPLOYMENT;
DUTIES.

 

(a)           The Company agrees
to employ the Employee as Chief Operating Officer of its Vita Seafood Division
and Chief Financial Officer of the Company with the duties and responsibilities
generally associated with such positions and currently performed by the
Employee and such other reasonable additional responsibilities and positions as
may be added to the Employee’s duties from time to time by the Board consistent
with the Employee’s position. The Company reserves the right to change the
Employee’s position with the Company provided that such new position is an
executive position with the Company with executive duties.

 

(b)           During the Term,
Employee shall (i) diligently follow and implement all lawful management
policies and decisions communicated by the Board; and (ii) timely prepare and
forward to the Board all reports and accountings as may be requested.

 

3.             TERM. The term of Employee’s employment (the “Term”) shall have commenced on January 1,
2006 (the “Effective Date”) and
shall continue for a period of three (3) years (the “Initial Term”), unless sooner terminated pursuant to the
terms of the Agreement. Thereafter, the Term
will automatically renew for successive one (1) year renewal terms (“Renewal
Terms”) unless and until the Company gives the Employee written
notice of its nonrenewal of this Agreement on or before the date nine (9)
months prior to the expiration of the then current Initial Term or Renewal
Term; provided the foregoing to the contrary notwithstanding, upon the
occurrence of a Sale after December 31, 2006, the Term shall be for a period of
two (2) years from the date of such Sale.

 

4.             COMPENSATION.

 

(a)(i)        For the Initial
Term, Employee shall be paid a base salary of Two Hundred Thirty Thousand
Dollars and 00/100 ($230,000) per year (the “Base
Salary”). The Base Salary shall increase on January 1, 2007 and on
January 1 of each subsequent year during the Term (each an “Anniversary Date”) by the same percentage
as the increase from the previous such Anniversary Date, based on in the
Consumer Price Index, Urban Wage Earners and Clerical Workers, All Items, (Current
Series) for the metropolitan statistical area that includes Chicago, Illinois,
as published by the U.S. Department of Labor, Bureau of Labor Statistics. The
Base Salary shall accrue and be due and payable in equal, or as nearly equal as
practicable, weekly installments or in the manner and on the timetable which
the Company’s payroll is customarily handled or at such intervals as Company
and the Employee may hereafter agree to from time to time.

 

(ii)     The Base Salary may be
increased (in addition to the cost of living increases provided under Section
4(a)(i)) from time to time and at any time by the

 

2

 

Compensation
Committee, if approved by the Board, but shall in no event be reduced or
decreased.

 

(iii)    If the Term shall
terminate on other than the last day of a calendar month, Employee’s
compensation for such month shall be prorated according to the number of days
during such month that occur within the Term.

 

(b)           The Employee shall
be entitled to receive an annual bonus (“Bonus”)
based on the Company’s Bonus Plan, as amended from time to time, only as
approved by the Compensation Committee and by the Board. The Bonus, if any,
shall be paid on or before the 15th day of March following the calendar year
for which such Bonus is earned.

 

(c)           While Employee is
performing the services described herein, the Company shall, upon request,
reimburse Employee for all reasonable and necessary expenses incurred by
Employee in connection with the performance of duties of employment hereunder.

 

(d)           If the Company now
maintains or, while Employee renders services to the Company, establishes an
incentive or other compensation plan (however described or denominated) for the
corporate, operating or executive officers or other management of the Company,
or if the Company now maintains or, while Employee renders services to the
Company, establishes any other benefit program(s) (however described or
denominated) for corporate, operating or executive officers or other management
employees of the Company, Employee shall be eligible to fully participate in
each such plan or benefit program.

 

(e)           During the Term, the
Company shall provide health, medical, disability and term life insurance to
Employee in accordance with any group plan which it now maintains or which may
hereafter be established by the Company and in which executive officers
participate.

 

(f)            Employee shall
receive not less than four (4) weeks paid vacation during each twelve (12)
month period of the Term. Such vacation period may be increased from time to
time and at any time by the Board but shall in no event be shortened to less
than the longest period attained by Employee at any time during his employment.

 

5.             TERMINATION.

 

(a)           Employee’s
employment may be terminated only as follows:

 

(1)           At any time after
December 31, 2006, the Company may terminate the employment of the Employee for
any reason, effective upon at least 30 days notice;

 

(2)           The Company may
terminate the employment of the Employee for Cause, in which case the
termination shall be effective immediately upon notice to the Employee;

 

3

 

(3)           The Employee may
terminate his employment if the Company materially breaches this Agreement, and
the Company fails to cure such breach within thirty (30) days after the Company
receives written notice specifying the reasons for the breach;

 

(4)           The employment of
the Employee will terminate upon the death of the Employee effective on the
date of death;

 

(5)           The employment of
the Employee will terminate upon the Total Disability of the Employee effective
upon the expiration of the 180 days as provided in Section 1(c) of this
Agreement; or

 

(6)           The Employee may
terminate his employment for any reason, upon notice to the Company; provided,
however, the Company shall have a right to set the effective date of
termination to any date no later than 60 days after receipt of the notice.

 

(b)           If the Company
terminates the employment of the Employee prior to December 31, 2006 without
Cause, the Company will be obligated to pay to the Employee all of the
compensation and benefits provided under Section 4 for the unexpired duration
of the Initial Term.

 

(c)           In the event that
the Employee’s employment is terminated due to the Employee’s death or Total
Disability, the Company will be obligated to pay to the Employee the full
amount of Base Salary earned by Employee through the effective date of
termination, and any Bonus that may have been earned but not yet paid.

 

(d)           In the event that the
Employee’s employment is terminated by the Company for Cause, or by the
Employee pursuant to Section 5(a)(6) the Company will have no obligations to
pay any amount beyond the effective date of such termination whether as Base
Salary, Bonus or otherwise or to provide any benefits arising hereunder except
as required by law.

 

(e)           In the event that
(i) Employee’s employment is terminated either: 
(A) by the Company other than for Cause, or (B) by the Employee as a
result of the company’s breach pursuant to Section 5(a)(3); or (ii) the Term
expires and is not renewed by the Company at the expiration of the Initial Term
or any Renewal Term, then the Employee’s employment shall terminate, and upon
either such termination under clause (i) or (ii), the Company shall continue to
pay Employee his then current Base Salary and shall continue to provide
Employee health insurance at active employee premium rates as provided in
Section 4(e), as a severance benefit, for a period of twelve (12) months from
the occurrence of any of the foregoing events (“Severance Period”), payable in accordance with the Company’s
payroll practices, provided, however, if the Employee’s employment is
terminated by the Company without Cause within ninety (90) days prior to a Sale
or within nine (9) months after the Sale, the Severance Period shall be
extended to eighteen (18) months.

 

4

 

6.             CONFIDENTIAL
INFORMATION. Employee
acknowledges that the nature of his engagement by the Company is such that
Employee shall have access to information of a confidential and/or trade secret
nature which has great value to the Company. Such information includes
financial, manufacturing and marketing data, business plans and methods,
processes, product formulas, developmental work, work in process, methods,
trade secrets (including, without limitation, customer lists, supplier lists
and lists of customer, supplier and food broker sources), and any other
information relating to the products, services, customers, sales or business
affairs of the Company, which has value and is treated as secret and/or
confidential by the Company (the “Confidential
Information”). The Company and Employee have and will also have
access to Confidential Information of its suppliers (“Suppliers” means any persons with whom the Company has a
co-packing or joint venture relationship with or who supplies any products or
materials to the Company). Confidential Information includes not only
information disclosed by the Company or its Suppliers to Employee in the course
of employment, but also information developed or learned by Employee during the
course of employment with the Company. Confidential Information is to be
broadly defined. Confidential Information includes all information that has or
could have commercial value or other utility in the business in which the
Company or Suppliers are engaged or in which they contemplate engaging.
Confidential Information also includes all information of which the
unauthorized disclosure could be detrimental to the interests of the Company or
Suppliers, whether or not such information is identified as Confidential
Information by the Company or Suppliers. Employee agrees to keep all
Confidential Information that could be materially detrimental to the interests
of the Company or Suppliers in confidence during the term of this Agreement and
at any time thereafter and shall not use, disclose, publish or otherwise
disseminate any of such Confidential Information to any other person, except to
the extent such disclosure is (i) necessary to the performance of this
Agreement and in furtherance of the Company’s best interests, (ii) required by
applicable law, (iii) lawfully obtainable from other sources,
(iv) authorized in writing by the Company, or (v) no longer qualifies as a
trade secret or Confidential Information under applicable law. Upon termination
of employment with the Company, Employee shall deliver to the Company all
documents, records, notebooks, work papers, and all similar material containing
Confidential Information, whether prepared by Employee, the Company or anyone
else.

 

7.             NON-COMPETITION.
In order to protect
the Confidential Information, Employee agrees that during the term of
employment, and for a period of one (1) year thereafter, Employee will not,
directly or indirectly, whether as an owner, partner, shareholder, agent,
employee, creditor, or otherwise, promote, participate or engage in any
activity or other business directly competitive with the Company’s then
existing Business, if such activity or other business involves any use of any
of the Confidential Information by Employee.

 

8.             NON-SOLICITATION
OF CUSTOMERS OR SUPPLIERS. Employee agrees that for a period of one (1) year after the termination
of employment with the Company, Employee will not, on his own behalf or on
behalf of any other individual, association or entity, call on any of the
customers of the Company (who are customers on the date of termination of
employment) for the purpose of soliciting or inducing any of such customers to
acquire (or providing to any of such customers) any product or service provided
by or to the Company, nor will Employee in any way, directly or indirectly, as
agent or otherwise, in any other manner solicit, influence or encourage such
customers or any Suppliers (who are Suppliers on the date of

 

5

 

termination of employment) to take away or to divert or direct their
business away from the Company to Employee or to any other person or entity
with which Employee is employed, associated, affiliated or otherwise related.

 

9.             NONINTERFERENCE
WITH EMPLOYEES. In
order to protect the Confidential Information and as a consideration for this
Agreement, Employee agrees that during the term hereof and for a period of one
(1) year thereafter, Employee will not, directly or indirectly, induce or
entice any employee of the Company to leave such employment or cause anyone
else to leave such employment.

 

10.          REMEDIES. The parties hereto agree that the services to
be rendered by Employee pursuant to this Agreement, and the rights and
privileges granted to the Company pursuant to this Agreement, are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law, and that a breach by Employee of any of the terms
of this Agreement will cause the Company great and irreparable injury and
damage. Employee hereby expressly agrees that the Company shall be entitled to
the remedies of injunction, specific performance and other equitable relief to
prevent a breach of this Agreement by Employee. This Section 10 shall not be
construed as a waiver of any other rights or remedies which the Company may
have for damages or otherwise.

 

11.          SEVERABILITY.
In case any one or
more of the provisions of this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not affect any
other provision of this Agreement, but this Agreement shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein.

 

12.          ASSIGNMENT.
This Agreement and
the rights and obligations of the parties hereunder may not be assigned by
either party hereto without the prior written consent of the other party
hereto.

 

13.          NOTICES. Except as otherwise specifically provided
herein, any notice required or permitted to be given to Employee pursuant to
this Agreement shall be given in writing, and personally delivered or mailed to
Employee by certified mail, return receipt requested, at the address set forth
below Employee’s signature on this Agreement or at such other address as
Employee shall designate by written notice to the Company given in accordance
with this Section 13, and any notice required or permitted to be given to the
Company shall be given in writing, and personally delivered or mailed to the
Company by certified mail, return receipt requested, addressed to the Company
at the address set forth under the signature of the President of the Company or
his designee on this Agreement or at such other address as the Company shall
designate by written notice to Employee given in accordance with this Section
13. Any notice complying with this Section 13 shall be deemed received upon
actual receipt by the addressee.

 

14.          WAIVER. The waiver by either party hereto of any
breach of this Agreement by the other party hereto shall not be effective
unless in writing, and no such waiver shall operate or be construed as the waiver
of the same or another breach on a subsequent occasion.

 

6

 

15.          GOVERNING
LAW. This Agreement
and the rights of the parties hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois.

 

16.          BENEFICIARY.
All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors,
heirs, executors, administrators and permitted assigns.

 

17.          ENTIRE
AGREEMENT. This
Agreement embodies the entire agreement of the parties hereto relating to
Employee’s employment by the Company in the capacity herein stated and, except
as specifically provided herein, no provisions of any employee manual,
personnel policies, Company directives or other agreement or document shall be
deemed to modify the terms of this Agreement unless the parties specifically
agree otherwise in writing by citing to this Agreement. No amendment or
modification of this Agreement shall be valid or binding upon Employee or the
Company unless made in writing and signed by the parties hereto. All prior
understandings and agreements relating to Employee’s employment by the Company,
in whatever capacity, are hereby expressly terminated.

 

18.          CONFIDENTIALITY.
The terms, conditions
and existence of this Agreement shall be confidential.

 

IN
WITNESS WHEREOF, Employee and the Company have executed and delivered this
agreement as of the date first shown above.

 

	
  EMPLOYEE:

  	
   

  	
  THE COMPANY:

  
	
   

  	
   

  	
   

  
	
  CLIFFORD BOLEN

  	
   

  	
  VITA FOOD PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
  /s/ Clifford Bolen

  	
   

  	
  By:

  	
  /s/ Stephen Rubin

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Printed Name:

  	
   Stephen Rubin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  2222 West Lake Street

  
	
   

  	
   

  	
   

  	
   

  	
  Chicago, IL 60612

  
											

 

7

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