EMPLOYMENT AGREEMENT
EFFECTIVE DATE: September 1, 1996
EMPLOYER: GUMTECH INTERNATIONAL, INC.
a Utah corporation
EMPLOYEE: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, PH.D.
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 a Vice President of Operations 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:
1. Employment; Duties.
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1.1 Subject to and in accordance with this Agreement, Employer employs
Employee as the Vice President of Operations of Employer and Employee accepts
employment with Employer subject to the general supervision and pursuant to the
orders, advice and direction of Employer. In such capacity, Employee shall be
responsible for evaluating operations and assisting the President in the
implementation of changes necessary to achieve cost efficient, optimal
operations.
1.2 Employee shall use his best efforts and devote his frill time to
the performance of all the duties that may be required of and from him pursuant
to the express and implicit terms of this Agreement. Such duties shall be
rendered in Phoenix, Arizona; and at such other places as Employer and Employee
shall mutually agree upon.
1.3 Employee represents and warrants that there are no agreements or
arrangements, written or oral, in effect which would prevent Employee from
rendering services to Employer during the term of this Agreement.
1.4 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 date first written
above and, unless terminated sooner pursuant to Section 5, continue through
December 31, 1997 (the "Initial Term"). Employer shall have the right and
option, but not the obligation, to extend the Initial Term through December 31,
1998 (the "Extension Term"), subject to the termination provisions of Section 5
below and the other terms and provisions of this Agreement, by giving Employee
written notice of the extension to Employee on or before November 1, 1997.
3. Compensation and Other Benefits.
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, a salary during the Initial Term of
$10,000 per month and a salary during the Extension Term shall be $12,085. The
base salary will be payable monthly, in arrears in two equal monthly
installments.
3.2 Incentive Bonus. During the Initial Term, an annual incentive
bonus for the calendar year 1996 and, during the Extension Term, an annual
incentive bonus for the calendar year 1997, equal to 1% of the "Income After
Provision For Income Taxes" for each such calendar year, as determined by
Employer's independent public accountant. The annual incentive bonus shall be
calculated on an annualized basis and 80% of the bonus is paid quarterly (within
15 days after the end of each calendar quarter) with any holdback to be paid
within 45 days following the end of the calendar year. In the event that the
bonus paid to Employee exceeds that which was payable to Employee, Employee
agrees to reimburse Employer for such excess within 10 business days following
Employer's demand for the same. In the event that this Agreement is terminated
at any time other than the end of a calendar year, quarterly payments will cease
and any bonus will payable within 45 days following the end of the calendar
year, which bonus will be prorated based upon a fraction, the numerator of which
is the number of days this Agreement was in effect during the subject calendar
year and the numerator of which is 360.
3.3 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.
3.4 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.
3.5 Automobile Allowance. Employer shall pay to Employee, on a monthly
basis, an automobile allowance of $500 per month.
4. Facilities. Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, offices, secretarial help, and other
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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.
5. Termination.
5.1 This Agreement and Employee's employment hereunder may be
terminated at any time:
(a) By either party upon thirty days prior written notice to the other
party.
(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 be 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 frilly 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
Employer, 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.
6.1 Solicitation.
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.
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 Obligor 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").
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.
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6.3 Acknowledgment.
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 Employee 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.
7. Miscellaneous.
7.1 Notice. Notices required or permitted to be 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.
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7.3 Entire Agreement. This Agreement contains the entire agreement and
understanding by and between Employer arid 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 be 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. In 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 15 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
Court, 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
conducted in the utmost secrecy. In such case, all documents, 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 attorneys' 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 solely for convenience and shall not affect or be used in connection
with the interpretation of this Agreement.
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7.7 Severability. The provisions of this Agreement shall be 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 be effective
the date first above written.
EMPLOYEE: EMPLOYER:
GUM TECH INTERNATIONAL, INC.,
A Utah corporation
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, PH.D. ▇▇▇▇▇▇ ▇▇▇▇, President
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