EMPLOYMENT AGREEMENT
EFFECTIVE DATE: August 14, 1996
EMPLOYMENT DATE: The date on which Xxxxxx Xxxx can assume on a full time
basis, responsibility for the overall and day-to-day
operations of Employer, but in no event later than September
l, 1996.
TRANSITION PERIOD: Commencing August 14, 1996 and continuing through a
transition period to expire at the discretion of Employer,
but in no event later than December 31, 1996.
EMPLOYER: GUMTECH INTERNATIONAL, INC.
a Utah corporation
EMPLOYEE: XXXXXXX XXXXXXXX
PURPOSE:
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Employer is in the business of manufacturing, marketing and selling value
added gum products to wholesalers and distributors and in the retail and private
label markets (collectively, the "Business"). Employer desires to employ
Employee as the Chairman of the Board of Directors of Employer, effective on the
Effective Date, and as the Senior Vice President of Employer, effective on the
Employment Date, and Employee desires to accept such employment, on the terms,
covenants and conditions set forth in this Employment Agreement (this
"Agreement").
AGREEMENTS:
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For the reasons set forth above, and in consideration of the mutual
promises and agreements set forth in this Agreement, Employer and Employee agree
as follows:
l. Employment Duties.
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l.l Subject to and in accordance with this Agreement, Employer
employs Employee as the Chairman of the Board of Directors of Employer,
effective on the Effective Date, and as the Senior Vice President of Employer,
effective on the Employment Date, and Employee accepts employment with Employer
subject to the general supervision and pursuant to the orders, advice and
direction of Employer. In his capacity as Chairman of the Board, Employee shall,
commencing on the Effective Date, preside at all meetings of the shareholders
and of the Board of Directors and shall assist in long range planning and
policy-making decisions of Employer and shall in general perform such other
duties as shall be designated by the Board of Directors from time to time. In
his capacity as the Senior Vice President, he will generally assist the
President and perform such other duties from time to time agreed upon by
Employer and Employee.
1.2 Commencing on the Employment Date, Employee shall use his
reasonable efforts in the performance of all the duties that may be required of
and from him pursuant to the express and implicit terms of this Agreement but
shall not be required to devote his full time thereto. Such duties shall be
rendered in Phoenix, Arizona, and at such other places as Employer and Employee
shall mutually agree upon.
1.3 Nothing herein contained shall be construed to create a
partnership or joint venture between Employer and Employee. Neither party hereto
shall be liable for the debts or obligations of the other unless expressly
assumed in writing and signed by the parties hereto.
2. Term. This Agreement shall become effective on the Effective Date and,
unless terminated sooner pursuant to Section 5, continue through December 31,
1997.
3. Compensation and Other Benefits.
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3.1 Compensation. For services rendered to Employer hereunder, in
whatever capacity rendered, Employee shall have and receive, subject to
withholding and other applicable taxes, compensation as follows:
3.1.1 During the Transition Period, a monthly salary of
$5,000 per month, payable monthly commencing on the
Effective Date, in arrears in two equal monthly
installments.
3.1.2 On the expiration of the Transition Period through the
expiration of the term of this Agreement, a monthly
salary of $2,000 per month, payable monthly, in arrears
in two equal monthly installments; provided, however,
that in the event that Employee is required to expend
in excess of 80 hours per month fulfilling his duties
hereunder, then Employer and Employee shall renegotiate
the monthly salary to be commensurate with the duties
hereunder.
3.2 Business Expenses. Upon submission of proper documentation,
Employer shall pay or reimburse Employee for all reasonable and necessary
office, telephone, travel and other expenses incurred by him in the pursuit of
his duties on behalf of Employer.
3.3 Employee Benefits. Employee shall be entitled to participate in
any other bonus, stock option, incentive compensation, deferred compensation,
group medical and dental insurance plans or other plans or programs and to
receive any other benefits for which he is eligible and which Employer may
provide its employees generally or its officers specifically.
4. Facilities. Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, offices, secretarial help, and other
services and supplies as it deems necessary for Employee's performance of his
duties under this Agreement, as established from time to time by Employer.
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5. Termination.
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5.1 This Agreement and Employee's employment hereunder may be
terminated at any time:
(a) Upon mutual agreement in writing.
(b) By Employee upon the material breach by Employer of any
of the material provisions of this Agreement.
(c) By Employer for Cause. For purposes of this Agreement,
the term "Cause" shall mean: (i) conduct on the part of
Employee which is intended to result directly or
indirectly in substantial gain or personal enrichment
at the expense of Employer; (ii) the material breach by
Employee of any of the provisions of this Agreement: or
(iii) the failure by Employee to substantially perform
his duties hereunder.
Further, this Agreement and Employee's employment hereunder shall automatically
terminate upon the death, disability or insanity of Employee or the bankruptcy
of Employer or the discontinuance of Employer's Business.
5.2 Notwithstanding the termination of this Agreement or of Employee's
employment hereunder, the parties hereto shall he required to carry out any
provision hereof which contemplate performance by them subsequent to such
termination, nor shall such termination affect any liability or obligation which
has accrued prior to such termination, including but not limited to, accrued but
unpaid compensation and any liability for loss or damage on account of default.
5.3 Following any termination of employment hereunder, or notice
thereof, Employee shall fully cooperate with Employer in all matters relating to
the winding up of his pending work on behalf of Employer and the orderly
transfer of any such pending work to other employees of Employer as may be
designated by Employer. In consideration thereof, Employer shall pay Employee
for any services rendered post-termination at a rate equivalent to the hourly
rate payable to Employee during the Initial Term or the Extension Term, as
applicable, during which the termination occurred.
5.4 Upon termination of this Agreement, or whenever requested by
Employee, Employee shall immediately turn over to Employer all of Employer's
property, including all items used by Employee in rendering services hereunder,
that may be in Employee's possession or under his control.
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6. Covenant Not to Compete: Disclosure of Information.
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6.1 Solicitation.
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6.1.1 For a period of six months after the date of
termination of this Agreement, Employee shall not,
whether alone or as a partner, officer, director,
employee or shareholder (or other holder of an equity
interest) of, or consultant, advisor or lender to, any
other corporation, partnership or other entity, or as a
trustee, fiduciary or other representative, solicit
Employer's customers with respect to, engage in or have
any interest, including, as a creditor, in any person,
partnership, corporation, association,or other business
entity, whether as employee, officer, director, agent,
consultant, stockholder or holder of any right to any
form of equity ownership, or otherwise, that engages in
the Business.
6.1.2 Employee shall not, during, or for a period of six (6)
months after the term of this Agreement, solicit any
employee, sales representative or independent
contractor of Employer for employment by any person,
firm, partnership, corporation, association or other
entity for any reason or purpose allied or related to
the Business whatsoever.
6.2 Non Disclosure.
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6.2.1 Employee hereby recognizes and acknowledges that: (i)
Employee will be making use of, acquiring, and/or
adding to proprietary information of a special and
unique nature and value relating to and including but
not limited to, such matters Employer's trade secrets,
systems, procedures, manuals, confidential reports.
lists of suppliers, research and development projects,
policies, processes, formulas, techniques, know-how and
facts relating to sales, advertising, mailing,
promotions, financial matters, customers, customer
lists, purchases or requirements or other methods used
and preferred by Employer in its operations, (ii) the
Company will disclose certain proprietary information
to Obligator including, but not limited to, the
details of any statistical or financial data, the
operations and structure of the business of Employer,
and manuals, forms, techniques, methods or procedures
of Employer used by or made available to Employee in
the course of Employee's employment (the information
referenced to in paragraphs 6.2.1 (i) and (ii) above
are hereinafter collectively referred to as the
"Proprietary Information").
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6.2.2 Employee hereby recognizes and acknowledges that the
Proprietary Information is a valuable, special and
unique asset of Employer's business.
6.2.3 Employee will not at any time directly or indirectly
make use of, divulge or disclose any,of the Proprietary
Information or any part thereof for any purpose
whatsoever to any person, firm, corporation,
association or other entity for any reason or purpose
whatsoever that has been obtained by, or disclosed to,
him as a result of his relationship with Employer.
Immediately upon request by Employer, Employee shall
return to Employer any and all materials relating to
Proprietary Information.
6.3 Acknowledgement.
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6.3.1 Employee acknowledges that the covenants contained in
this Section 6 are a material inducement for Employer
to enter into this Agreement and to perform its
obligations hereunder and that the services Employer is
to render to Employer hereunder are of a special and
unusual character with a unique value to Employer.
Employee acknowledges that it would take at least six
(6) months for Employer to retain and train personnel
to replace Employee. Accordingly, Employee acknowledges
that the restrictions contained in this Section 6 are
reasonably necessary for the protection of Employer's
business and that a breach of any such restrictions
could not adequately be compensated by damages in an
action at law.
6.3.2 In the event of a breach or threatened breach by
Employee of any provision contained in this Section 6,
Employer shall be entitled to obtain, by posting an
appropriate bond, an injunction (preliminary or
permanent, or a temporary restraining order)restraining
Employee from the activity or threatened activity
constituting or that would constitute a breach.
6.3.3 In the event of a breach by Employee of any provision
contained under this Section 6, Employer shall be
entitled to an accounting and repayment of all profits,
compensation, commissions, remunerations or other
benefits that Employee, directly or indirectly, has
realized and/or may realize as a result of, arising out
of or in connection of any such breach.
6.3.4 The remedies provided in this Section 6 shall be in
addition to, and not in lieu of, any and all other
remedies of Employer at law or in equity.
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7. Miscellaneous.
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7.1 Notice. Notices required or permitted to he given hereunder shall
be sufficient if in writing and delivered or deposited in the mail, postage
prepaid, certified mail, return receipt requested (or the equivalent in a
foreign country), addressed, if to Employer, at its principal place of business
and, if to Employee, at the address set forth in Employer's employee records or
to such other address as may be designated in writing hereafter by either party
hereto. All notices hereunder shall be effective: (a) five (5) days after
deposit in the mail; or (b) upon delivery, if delivered in person or by
commercial express service.
7.2 Burden Except as otherwise provided herein, this Agreement shall
be binding upon and inure to the benefit of any successor of Employer and any
such successor shall be deemed substituted for Employer under the terms of this
Agreement. As used in this Agreement, the term "successor" shall mean any
person, firm, corporation or other business entity which at any time, whether by
merger, purchase or otherwise acquires all or substantially all of the assets or
business of Employer.
7.3 Entire Agreement. This Agreement contains the entire agreement and
understanding by and between Employer and Employee with respect to the
employment of Employee and no representations, promises, agreements or
understandings, written or oral, not contained herein shall be of any force or
effect. No change or modification of this Agreement shall be valid or binding
unless it is in writing and signed by the parties intended to be bound. No
waiver of any provision of this Agreement shall be valid unless it is in writing
and signed by the parties against whom the waiver is sought to he enforced. No
valid waiver of any provision of this Agreement at any time shall be deemed a
waiver of any other provision of this Agreement at such time or any other time.
7.4 Arbitration. ln the event any dispute or controversy arising out
of this Agreement cannot be settled by Employer and Employee, such controversy
or dispute, at the election of either Employer or Employee, by written notice to
the other, may be submitted to arbitration in Phoenix, Arizona, and for this
purpose Employer and Employee each hereby expressly consent to such arbitration
and such place. In the event Employer and Employee cannot, within l5 days
following the election to submit the dispute or controversy to arbitration,
mutually agree upon an arbitrator to settle their dispute or controversy, then
Employer and Employee shall each select one arbitrator and the two arbitrators
shall select a third arbitrator. The decision of the majority of said
arbitrators shall be binding upon Employer and Employee for all purposes, and
judgment to enforce any such binding decision may be entered in the Superior
Count, Maricopa County, Arizona (and for this purpose Employer and Employee
hereby irrevocably consent to the jurisdiction of said court). If either
Employer or Employee fails to select an arbitrator within fifteen (15) days
after written demand from the other party to do so, then the Chief Judge in the
United States District Court of the District of Arizona shall select such other
arbitrator. At the election of either Employer or Employee, all arbitrators
shall be selected pursuant to the then existing rules and regulations of the
American Arbitration Association governing commercial transactions. At the
request of either Employer or Employee, arbitration proceedings shall be
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conducted in the utmost secrecy. In such case, all document, testimony and
records shall be available for inspection only for purposes of the arbitration
and only by either party and their respective attorneys and experts who shall
agree, in advance and in writing, to receive all such information in secrecy. In
all other respects, the arbitrators shall conduct all proceedings pursuant to
the Uniform Arbitration Act as adopted by the State of Arizona and the then
existing rules and regulations of the American Arbitration Association
governing commercial transactions. The costs of the arbitration and the
arbitrators shall be borne by the non-prevailing party, as determined by the
arbitrators, and each party shall bear their own attorney's fees.
7.5 Prohibition Against Assignment. This Agreement is personal to
Employee and Employee shall not assign or delegate any of his rights or
obligations hereunder without first obtaining the written consent of Employer.
7.6 Governing Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise by the
laws of the State of Arizona. The section headings used in this Agreement are
included so]xxx for convenience and shall not affect or be used in connection
with the interpretation of this Agreement.
7.7 Severability. The provisions of this Agreement shall he deemed
severable and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity and enforceability of
the other provisions.
IN WITNESS WHEREOF, the parties have executed this document to he effective
the date first above written.
GUM TECH INTERNATIONAL, INC.,
a Utah corporation
By: /S/ XXXX XXXXX
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Xxxx Xxxxx, President
(EMPLOYER)
/S/ XXXXXXX XXXXXXXX
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(EMPLOYEE)
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