EMPLOYMENT AGREEMENT
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AGREEMENT dated October 8, 1999 between RICHARD KANDEL, residing at 65
Coves Road, Syosset, NY 11791 ("Executive"), and B2BSTORES.COM INC., a Delaware
corporation having its principal office at 249 East Ocean Boulevard, Long Beach,
California 90802("Company").
WHEREAS, Executive possesses expertise in the areas of corporate
management, product and services sales and e-commerce;
WHEREAS, the Company desires to avail itself of Executive's expertise;
and
WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by Company, commencing November 1, 1999 (the "Start Date"), on
the terms set forth in this Agreement.
IT IS AGREED:
1. Employment, Duties and Acceptance.
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1.1 Commencing on the Start Date, the Company shall employ
Executive as its Chairman of the Board ("Chairman"). All of Executive's powers
and authority in any capacity shall at all times be subject to the direction
and control of the Company's Board of Directors.
1.2 The Board may assign to Executive such management and
supervisory responsibilities and executive duties for the Company or any
subsidiary of the Company as are consistent with Executive's status as
Chairman. The Company and Executive acknowledge that Executive's primary
functions and duties as Chairman shall be the general supervision of the
creation, expansion and operation of the Company and its subsidiaries and
divisions. Commencing on the Start Date and through the term of this Agreement,
Executive also shall be nominated for election as a director of the Company
and, if so elected by the stockholders of the Company, Executive shall be
obligated to serve as a director.
1.3 Executive accepts such employment and agrees to devote at
least 50% of his business time, energy and attention to the performance of his
duties hereunder beginning on the Start Date. Nothing herein shall be construed
as preventing Executive from (a) devoting 50% or less of his business time to
the operations of Enviro-Clean of America, Inc. ("Enviro-Clean") or (b) making
and supervising personal investments, provided they will not (i) except in
connection with Enviro-Clean, require any substantial services on his part in
the operation of the affairs of the companies in which such investments are
made, (ii) interfere with the performance of Executive's duties hereunder or (c)
violate the provisions of paragraph 5.4 hereof.
2. Compensation and Benefits.
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2.1 Commencing on the Start Date, the Company shall pay to
Executive a salary at the annual rate of $150,000 through the first anniversary
of the Start Date, $200,000 through the second anniversary of the Start Date
and $250,000 through the third anniversary of the Start Date. Executive's
compensation shall be paid in equal, periodic installments in accordance with
the Company's normal payroll procedures.
2.2 Commencing on the Start Date, Executive shall be entitled
to such medical, life, disability and other benefits as are generally afforded
to other senior executives of the Company, subject to applicable waiting
periods and other conditions.
2.3 Executive shall be entitled to two weeks of vacation in
each calendar year and to a reasonable number of other days off for religious
and personal reasons.
2.4 Commencing on the Start Date, the Company will pay or
reimburse Executive for all transportation, hotel and other expenses reasonably
incurred by Executive on business trips and for all other ordinary and
reasonable out-of-pocket expenses actually incurred by him in the conduct of
the business of the Company against itemized vouchers submitted with respect to
any such expenses and approved in accordance with customary procedures.
2.5 Executive acknowledges that he will be obligated to
render services hereunder wherever such services are reasonably required by the
Company, which will necessitate substantial travel by Executive, primarily in
North America.
3. Term and Termination.
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3.1 The term of Executive's employment shall commence on the
Start Date and shall continue through the third anniversary of the Start Date,
unless sooner terminated as herein provided.
3.2 Executive's employment hereunder shall terminate on the
date of his death, in which case the Company shall pay to the legal
representative of Executive's estate (i) the base salary due Executive pursuant
to paragraph 2.1 hereof through the date of Executive's death, (ii) all earned
and previously approved but unpaid bonuses, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, and (iv)
all accrued but unused vacation pay.
3.3 The Company, by notice to Executive, may terminate
Executive's employment hereunder if Executive shall fail because of illness or
incapacity to render, for six consecutive months, services of the character
contemplated by this Agreement. Notwithstanding such termination, the Company
shall pay to Executive (i) the base
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salary due Executive pursuant to paragraph 2.1 hereof through the date of such
notice, less any amount Executive receives for such period from any
Company-sponsored or Company-paid source of insurance, disability compensation
or government program, (ii) all earned and previously approved but unpaid
bonuses, (iii) all valid expense reimbursements through the date of the
termination of this Agreement, and (iv) all accrued but unused vacation pay.
3.4 The Company, by notice to Executive, may terminate
Executive's employment hereunder for cause. As used herein, "Cause" shall mean:
(a) the refusal or failure by Executive to carry out specific directions of the
Board which are of a material nature and consistent with his status as
Chairman, or the refusal or failure by Executive to perform a material part of
Executive's duties hereunder; (b) the commission by Executive of a material
breach of any of the provisions of this Agreement; (c) fraud or dishonest
action by Executive in his relations with the Company or any of its
subsidiaries or affiliates, or with any customer or business contact of the
Company or any of its subsidiaries or affiliates ("dishonest" for these
purposes shall mean Executive's knowingly or recklessly making of a material
misstatement or omission for his personal benefit); or (d) the conviction of
Executive of any crime involving an act of moral turpitude. Notwithstanding the
foregoing, no "Cause" for termination shall be deemed to exist with respect to
Executive's acts described in clauses (a) or (b) above, unless the Company
shall have given written notice to Executive specifying the "Cause" with
reasonable particularity and, within thirty calendar days after such notice,
Executive shall not have cured or eliminated the problem or thing giving rise
to such "Cause;" provided, however, that a repeated breach after notice and
cure of any provision of clauses (a) or (b) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
"Cause" without any additional notice from the Company.
3.5 If Executive's employment hereunder is terminated for any
reason, then Executive shall, at the Company's request, resign as a director of
the Company and all of its subsidiaries, effective upon the occurrence of such
termination.
3.6 The Executive, by notice to the Company, may terminate
Executive's employment hereunder if a "Good Reason" exists. For purposes of
this Agreement, "Good Reason" shall mean the occurrence of any of the following
circumstances without the Executive's prior consent (either written or
demonstrated through his affirmative vote as a member of the Board of Directors
or any of the following): (a) a substantial and material adverse change in the
nature of Executive's title, duties or responsibilities with the Company that
represents a demotion from his title, duties or responsibilities as in effect
immediately prior to such change; (b) the commission by the Company of a
material breach of any of the provisions of this Agreement, and (c) a
transaction or related series of transactions that have not been approved by
the Company's Board of Directors resulting in any person or group of persons
acquiring more than 35% of the outstanding voting stock of the Company.
Notwithstanding the foregoing, no Good Reason shall be deemed to exist with
respect to the Company's acts described in clauses (a) or (b) above, unless the
Executive shall have given written notice to the Company specifying the Good
Reason with reasonable particularity and, within thirty calendar days after such
notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such Good Reason; provided, however, that a repeated breach after
notice and cure of any provision of clauses (a) or (b) above involving
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the same or substantially similar actions or conduct, shall be grounds for
termination for Good Reason without any additional notice from the Executive.
3.7 In the event that Executive terminates his employment
hereunder for Good Reason, pursuant to the provisions of paragraph 3.6, or the
Company terminates his employment hereunder without "Cause," as defined in
paragraph 3.4, the Company shall make a lump sum payment to Executive (or in
the case of his death, the legal representative of Executive's estate or such
other person or persons as Executive shall have designated by written notice to
the Company), equal to the then present value of all payments required under
paragraph 2.1 hereof through the longer of (a) a period of 12 months and (b)
the then remaining term of this Agreement; provided, however, that Executive's
insurance coverage shall terminate upon the Executive becoming covered under a
similar program by reason of employment elsewhere.
4. Executive Indemnity
4.1 The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which
the Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with
any claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with the Company or Executive's service as a director of the
Company; provided, however, that the Company shall not be required to indemnify
Executive for Losses incurred as a result of Executive's intentional misconduct
or gross negligence (other than matters where Executive acted in good faith and
in a manner he reasonably believed to be in and not opposed to the Company's
best interests). Executive shall promptly notify the Company of any claim,
action, proceeding or investigation under this paragraph and the Company shall
be entitled to participate in the defense of any such claim, action, proceeding
or investigation and, if it so chooses, to assume the defense with counsel
selected by the Company; provided that Executive shall have the right to employ
counsel to represent him (at the Company's expense) if Company counsel would
have a "conflict of interest" in representing both the Company and Executive.
The Company shall not settle or compromise any claim, action, proceeding or
investigation without Executive's consent, which consent shall not be
unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available.
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5. Protection of Confidential Information; Non-Competition.
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5.1 Executive acknowledges that:
(a) As a result of Executive's employment with the Company,
he has obtained and will obtain secret and confidential information concerning
the business of the Company and its subsidiaries and affiliates (referred to
collectively in Sections 5 and 6 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which will be
difficult to compute if, during the term of this Agreement or thereafter,
Executive should enter a business competitive with the Company, or divulge
Confidential Information, or breach his obligations under Section 6.
Notwithstanding the foregoing, the business of Enviro-Clean as currently
conducted (including its operation of the site at b2bgoods.com as currently
structured and operated) shall not be deemed a competitive business.
(c) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or
entity any Confidential Information obtained or learned by him as a result of
his role as consultant to or employment with the Company, except (i) in the
course of performing his duties hereunder, (ii) with the Company's express
written consent; (iii) to the extent that any such information is in the public
domain other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to
intervene and participate with counsel of its choice in any proceeding relating
to the enforcement thereof.
5.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, that Executive shall be entitled to retain copies of such documents
reasonably necessary to document his financial relationship (both past and
future) with the Company.
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5.4 During the period commencing on the date hereof and
ending on the Non-Competition Termination Date (as hereafter defined),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation, other than EnviroClean, engaged in any business
which is directly or indirectly in competition with the Company in the
businesses described on Schedule 5.4 ("Competitive Business"); (ii) engage in
any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company while Executive was employed
by the Company; or (v) solicit, interfere with, or endeavor to entice away from
the Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship.
Notwithstanding the foregoing, this provision shall not preclude Executive from
investing his personal assets in the securities of any corporation or other
business entity which is engaged in a Competitive Business if such ownership is
in compliance with the requirements set forth in the last sentence of Section
1.3 hereof, such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than 1% of the publicly-traded equity
securities of such Competitive Business. The "Non-Competition Termination Date"
shall be the fourth anniversary of the Start Date; provided, however, that (a)
if this Agreement is terminated for "Good Reason" by Executive or the Company
without "Cause," the Non-Competition Termination Date shall be the later of the
one-year anniversary of such termination and the third anniversary of the Start
Date, and (b) if Executive's employment is terminated with "Cause" or Executive
terminates his employment without "Good Reason," the Non-Competition
Termination Date shall be the fifth anniversary of the Start Date.
5.5 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.2, 5.4 or 6, the Company shall
have the right and remedy:
(a) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach
or threatened breach will cause irreparable injury to the Company and that
money damages will not provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2,
5.4 or 6, and Executive hereby agrees to account for and pay over such damages
to the Company.
Each of the rights and remedies enumerated in this Section
5.5 shall be independent of the other, and shall be severally enforceable, and
such rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
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In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 If Executive violates any covenant contained in Section
5.4, the duration of such covenant so violated shall be automatically extended
for a period of time equal to the period of such violation.
5.7 If any provision of Sections 5.2 or 5.4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
5.8 The provisions of this paragraph 5 shall survive the
termination of this Agreement for any reason.
6. Inventions, Patents and Copyrights.
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(a) All inventions and other creative works, including any
patent, copyright, trade secret, trademark or other intellectual property
rights developed or produced by Executive either alone or jointly with others
during Executive's employment with the Company and which relate to the
Company's business or technology or which are derived in the context of the
Company's business or operations (collectively, the "Intellectual Property")
shall be considered to have been prepared for the Company as a part of and in
the course of Executive's employment with the Company. Any such Intellectual
Property shall be owned by the Company regardless of whether it would otherwise
be considered a work made for hire. Such Intellectual Property shall include,
among other things, software and documentation therefor.
(b) The Company shall have full ownership of the Intellectual
Property, with no rights of ownership vested in Executive. Executive agrees
that in the event any Intellectual Property is determined by a court of
competent jurisdiction not to be a work for hire under the federal copyright
laws, this Agreement shall operate as an irrevocable assignment by him to the
Company of the copyright in the works, including all rights thereunder in
perpetuity. Under this irrevocable assignment, Executive hereby assigns to the
Company the sole and exclusive right, title, and interest in and to the
Intellectual Property, without further consideration, and agrees to assist the
Company in registering and from time to time enforcing all copyrights and other
rights and protections relating to the Intellectual Property in any and all
countries. Executive agrees that in the event of any dispute arising out of or
concerning this section, no actions by the Company or Executive undertaken for
the purpose of securing, maintaining, or preserving the copyright in the works,
including but not limited to recordation of this section with the United States
Copyright Office, shall be considered by any finder of fact or determiner of law
in determining the character of the work as work made for hire, unless expressly
authorized by the Company.
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(c) Executive shall communicate to the Company promptly and
fully in writing, in such format as the Company may deem appropriate, all
Intellectual Property made or conceived by Executive whether alone or jointly
with others from the date hereof until the date this Agreement is terminated
and to assign to the Company all Intellectual Property.
(d) Executive shall make and maintain adequate permanent
records of all Intellectual Property, in the form of memoranda, notebook
entries, drawings, printouts, or reports relating thereto, in keeping with then
current Company procedures. Executive agrees that these records, as well as the
Intellectual Property, shall be and remain the property of the Company at all
times.
(e) Executive shall cooperate with and assist the Company and
its nominees, at their sole expense, during the term of this Agreement and
thereafter, in securing and protecting patent, copyright or other similar
rights in the United States and foreign countries in the Intellectual Property.
In this connection, Executive specifically agrees to execute all papers which
the Company deems necessary to protect its interests including the execution of
assignments of invention and copyrights and to give evidence and testimony, as
may be necessary, to secure and enforce the Company's rights in the
Intellectual Property. Executive hereby appoints the Company as his agent and
attorney-in-fact to act for and in Executive's behalf and stead to execute,
register, and file any applications, and to do all other lawfully permitted
acts to further the registration, prosecution, issuance, renewals, and
extensions of patents, copyrights or other protections with the same legal
force and effect as if personally executed by Executive.
(f) The provisions of this Section 6 shall survive termination
of this Agreement for any reason.
7. Miscellaneous Provisions.
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7.1 All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally or by nationally
recognized overnight courier, by certified mail or facsimile to the parties at
the following addresses and numbers (or at such other address or number for a
party as shall be specified by like notice, except that notices of changes of
address or number shall be effective upon receipt):
If to Executive:
Richard Kandel
65 Coves Road
Syosset, NY 11791
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If to the Company:
b2bstores.com Inc.
249 East Ocean Boulevard
Long Beach, California 90802
Attn: Chief Executive Officer
With a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attn: David Alan Miller, Esq.
7.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and is intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against
whom such waiver or change is sought to be enforced. The failure of any party
to require performance of any provision hereof or thereof shall in no manner
affect the right at a later time to enforce such provision.
7.3 This Agreement shall be governed by and construed under
the law of the State of New York, disregarding any principles of conflicts of
law that would otherwise provide for the application of the substantive law of
another jurisdiction. Each of the parties (i) agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and
the right to assert that such forum is not a convenient forum, and (iii)
irrevocably consents to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each of the
parties further agrees to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the New York
State Supreme Court, County of New York, or in the United States District Court
for the Southern District of New York and agrees that service of process upon
it mailed by certified mail to its address shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding.
7.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall
not be assignable by Executive, but shall inure to the benefit of and be
binding upon Executive's heirs and legal representatives.
7.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
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7.6 If, during the term hereof, Executive is nominated to
serve as a director of the Company but fails to be elected, he shall
nonetheless be invited to attend each meeting of the Board of Directors of the
Company through the remainder of the term hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
B2BSTORES.COM INC.
/s/ Woo Jin Kim
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By: Woo Jin Kim, Chief Executive Officer
/s/ Richard Kandel
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RICHARD KANDEL
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