1
EXECUTIVE'S CONFIDENTIALITY, NON COMPETE
AND EMPLOYMENT AT WILL AGREEMENT
TWIN LABORATORIES INC.
AGREEMENT, entered into this day of , 2000 between TWIN
LABORATORIES INC., a Utah corporation, having its principal offices at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, including without limitation all of its
current and future direct and indirect subsidiaries, divisions and businesses
such as Nature's Herbs, Alvita, Advanced Research Press, Inc., ▇▇▇▇▇▇▇
Laboratories Inc., PR*Nutrition, Changes International Inc. and Health Factors
International (hereinafter collectively referred to as "Twin" or "Company") and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ residing at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
hereinafter referred to as "Executive".
1. CONFIDENTIAL INFORMATION
A. Executive acknowledges that Executive may come into contact with or
have access to confidential matters and proprietary information and "know-how"
pertaining to Twin's business including without limitation Twin's product
formulas and recipes; research and development programs and concepts for future
products or changes to existing products; analytical and microbiological test
results; supplier, distributor and customer lists and information; sales,
distribution, production, product, purchasing and marketing information and
strategies; financial information and projections; computer programs and
technical information; methods of doing business (all of which are collectively
referred to as "Confidential Information"). Executive acknowledges that
Confidential Information may be in any form including without limitation in
writing, on computer tapes, disks, and in computer programs.
B. Executive acknowledges that the Confidential Information is not
under lock and key because of use by Twin and its employees and that because of
such access, Twin is relying upon the Executive's good faith to ensure that
Confidential Information is not used improperly or to the disadvantage of Twin.
C. Executive shall not, during Executive's employment by Twin or at any
time thereafter, divulge, furnish or make accessible to any person or entity or
make use of (other than in the regular course of Twin's business) any knowledge
or information with respect to any Confidential Information.
D. Executive will not disclose to Twin or induce Twin to use any
proprietary information, trade secrets, or confidential information of others.
Executive represents that Executive has returned all proprietary trade secrets
and confidential information belonging to any prior employer.
2. EMPLOYMENT AT WILL
The Employment provided for herein shall be deemed at will and the
Executive's employment With Twin may be terminated without cause at any time by
written notice given by the Executive to Twin or by Twin to the Executive. The
Executive acknowledges and agrees that the termination of his employment for any
reason whatsoever shall not release him from any of Executive's obligations,
agreements and understandings as set forth in this Agreement.
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Executive's Confidentiality and Employment at Will Agreement
Page 2
3. OTHER OBLIGATIONS
Executive represents that neither Executive's employment with Twin nor
Executive's obligations hereunder conflict with or violate or are otherwise
inconsistent with any other obligations, legal or otherwise, which Executive may
have.
4. TRANSFER OF PROPERTY BY EXECUTIVE
Executive hereby sells, transfer and assigns to Twin all of his right,
title and interest in and to all inventions, ideas, disclosures and improvements
(the "Inventions"), whether patented or unpatented, and copyrightable material
and all trademarks, trade names, all goodwill associated therewith and all
federal and state registrations or applications thereof, made, adopted or
conceived by Executive, in whole or in part (collectively, the "Transferred
Property"), prior to or during his employment with Twin which (i) relate to
methods, apparatus, designs, products, processes or devices sold, leased, used
or under development by Twin or (ii) otherwise relate to or pertain to the
business, products, services, functions or operations of Twin. Executive shall
make adequate written records of all inventions, which records shall be Twin's
property and shall disclose to Twin, in such form as Twin requests, all
information and data pertaining to the aforementioned Inventions. Whether during
his employment or thereafter, Executive shall execute and deliver to Twin such
formal transfer and assignments and such other papers and documents as may be
required of Executive to permit Twin, or any person or entity designated by
Twin, to file and prosecute the patent applications and, as to copyrightable
material, to obtain copyrights thereon, and as to trademarks, to record the
transfer of ownership of any federal or state registrations or applications.
5. NON-COMPETITION
During your employment by Twin, and for a period of two years
thereafter, Executive shall not, directly or indirectly, own, manage, operate,
join, control, participate in, invest in or otherwise be connected or associated
with, in any manner, including as a officer, director, employee, distributor,
independent contractor, independent representative, partner, consultant,
advisor, agent, proprietor, trustee or investor, any Competing Business located
in the United States of America or in any foreign nation or region where Twin
conducts business or is considering doing business; provided, however, that
ownership of 1% or less of the stock or other securities of a corporation, the
stock of which is listed on a national securities exchange or is quoted on The
Nasdaq Stock Market, shall not constitute a breach of this Section 5 so long as
Executive does not in fact have the power to control, or direct the management,
of, or is not
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Executive's Confidentiality and Employment at Will Agreement
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otherwise associated with, such corporation.
For the purpose hereof, the term, "Competing Business" shall mean any
business or venture which is engaged, directly or indirectly, in (i) the
business of developing, manufacturing, marketing (including catalogue and mail
order marketing), selling and/or distributing (including wholesale distributing)
of vitamins, minerals, nutritional supplements (including, without limitation,
amino acids and proteins), herbal products, phytonutrients, herb teas or food
bars, (ii) the publication of related health, fitness or body-building
publications, (iii) any other business engaged in or being developed by Twin, or
being actively considered by management of Twin, or (iv) any other business
which is substantially similar to the whole or any significant part of the
business conducted by Twin.
As additional consideration for the obligations of Executive set forth
in paragraphs 5 and 6 hereof, the Company shall pay Executive, commencing with
the day following Executive's last day of employment by the Company and
continuing for a period of twelve months thereafter, the Base Salary rate being
paid to Executive immediately preceding the termination of employment, such Base
Salary to be paid to Executive in accordance with the Company's standard payroll
practices.
6. NO SOLICITATION
During Executive's employment by Twin, and for a period of two years
thereafter, Executive shall not, directly or indirectly, including on behalf of,
for the benefit of, or in conjunction with, any other person or entity, (i)
solicit, assist, advise, influence, induce, or otherwise encourage in any way,
any employee of the Company to terminate its relationship with the Company for
any reason, nor assist any person or entity in doing so, or employ, engage or
otherwise contract with any employee or former employee of the Company in a
Competing Business or any other business unless such former employee shall not
have been employed by the Company for a period of at least one year, (ii)
interfere in any manner with the relationship between any employee and the
Company or (iii) contact, service or solicit any existing clients, customers, or
account of the Company on behalf of a Competing Business, either as an
individual on his own account, or as an investor, or as an officer, director,
partner, joint venture, consultant, employee, agent or salesperson, of any other
person or entity.
During the Executive's employment with the Company and for a period of
two years thereafter, Executive shall not, directly or indirectly, including on
behalf of, for the benefit of, or in conjunction with, any other person or
entity, (i) solicit, assist, influence, induce or otherwise encourage in any
way, any Distributor to terminate its relationship with the Company for any
reason, not assist any person or entity in doing so, or employ, engage or
otherwise contract with any Distributor in a Competing Business or any other
business; or (ii) interfere in any manner with the relationship between any
Distributor and the Company. The term "Distributor" shall mean (i) distributor,
independent contractor, independent representative or other person or entity
which sells and/or distributes the Company's products, and (iii) any former
distributor, independent contractor, independent representative or other person
or entity which sold and/or distributed the Company's products, unless such
person or entity shall not have sold and/or distributed the Company's products
or been employed
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Executive's Confidentiality and Employment at Will Agreement
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or engaged by, or otherwise been under contract with, the Company for a period
of at least one year.
7. REASONABLENESS OF RESTRICTIONS
Executive agrees and acknowledges that (i) the provisions of Sections 5
and 6 hereof may limit his ability to earn a livelihood in a business similar to
the business of Twin's but nevertheless agrees that such provisions are
reasonable and necessary for the protection of Twin and do not impose a greater
restraint than is necessary to protect the goodwill or other important business
interests of Twin; (ii) such provisions contain reasonable limitations as to the
time and scope of activity to be restrained; and (iii) the consideration
provided to Executive concurrently with this Agreement in connection with his
employment relationship with Twin including the compensation and other benefits
and perquisites is sufficient to compensate Executive for the restrictions
imposed in Sections 5 and 6 hereof. In consideration of the foregoing and in
light of Executive's education, skills and abilities, Executive agrees that any
defense by Executive to the strict enforcement of such provisions are hereby
waived by Executive and Executive agrees that he will not assert that such
provisions are void, voidable, or unenforceable.
8. ENFORCEMENT
Executive expressly agrees, that in addition to any other remedies
which may be available to Twin, Twin shall be entitled to injunctive and/or
other equitable relief to prevent or remedy a breach or threatened breach of any
of the provisions this Agreement and to secure their enforcement. For such
purposes, and for the purpose of resolving any dispute or conflict arising from
or out of this Agreement, the parties agree to submit exclusively to the
jurisdiction and venue of either 1) the Supreme Court of the State of New York,
County of Suffolk and/or Nassau, or 2) the United States District Court for the
Eastern District of New York located in the County of Suffolk or Nassau, and the
parties agree to abide by and comply with the terms and provisions of any order
or judgement which may be entered by said court in connection with the
enforcement of the rights of the parties hereto. The parties consent to the
service of process in any such action or proceeding in a manner pursuant to that
set forth in paragraph 14 "Miscellaneous" hereinafter for the giving of notices.
9. REMEDIES CUMULATIVE
The remedies provided for herein are cumulative and not exclusive. Twin
may exercise the remedies set forth in paragraph 8 hereof, as well as any other
remedies which it may have at any time. No failure or delay by Twin in
exercising any right or remedy hereunder shall operate as a waiver of such right
or remedy, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof.
10. SEVERABILITY
If any term, provision or covenant of the Agreement or part thereof, or
the application thereof to any person, place or circumstances, shall be held to
be invalid, unenforceable or void by a court of competent jurisdiction, the
remainder of this Agreement and such term, provision or covenant shall remain in
full force and effect, and any such invalid, unenforceable or void term,
provision or covenant shall be deemed, without further action on the part of the
parties hereto, modified, amended and limited, and the court shall have the
power to modify, amend and limit any such term, provision or covenant, to the
extent necessary to render the same and the remainder of this Agreement valid,
enforceable and lawful.
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Executive's Confidentiality and Employment at Will Agreement
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11. ENTIRE AGREEMENT
This Agreement contains the entire agreement and understanding between
the parties hereto in respect of the subject matter hereof and except as is
specifically set forth herein supersedes, cancels and annuls any prior or
contemporaneous written (including without limitation the Employment Agreement
dated as of May 7, 1996 between Company and Executive) or oral agreements,
understandings, representations, commitments and practices between them
respecting the subject matter hereof. However, the provision of the
Non-Competition Agreement between the Executive and Twin Laboratories Inc. dated
May 6, 1996 is expressly reaffirmed and shall remain in full force and effect
until such agreement expires in accordance with its term.
12. AMENDMENT
This Agreement may be amended only by a writing which makes express
reference to this Agreement as the subject of such amendment and which is signed
by Executive and, on behalf of the company, by its duly authorized officer.
13. NON-WAIVER
Neither any course of dealing nor any failure or neglect of either
party hereto in any instance to exercise any right, power or privilege hereunder
or under law shall constitute a waiver of any other right, power or privilege or
of the same right, power or privilege in any other instance. All waivers by
either party hereto must be contained in a written instrument signed by the
party to be charged and, in the case of the Company, by its duly authorized
officer.
14. MISCELLANEOUS
This Agreement shall be deemed to be executed in New York State and
shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of choice law. Any notices hereunder by
either party shall be in writing and delivered in person by hand or sent by
nationally recognized express carrier or by certified or registered mail,
postage prepaid addressed to the parties at the addresses set forth in this
Agreement or to such other address as may be furnished to a party in like manner
or if to Executive, to the last address of Executive as listed in the records of
the Company. All notices to Twin shall be addressed to the attention of ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇, President. In case any one or more of the provisions of this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
IN WITNESS HEREOF, the parties have executed this Agreement as of the day first
hereinabove set forth.
TWIN LABORATORIES, INC.
__________________________________
Executive Signature
By:________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_________________________________
Type or Print Name
Title: President and CEO
Date:_____________________________ __________________________
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Executive's Confidentiality and Employment at Will Agreement
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I have received a countersigned copy of this Agreement:
______________________________
Executive Signature
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EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made in New York, New York
as of the 7th day of May 1999, between Twin Laboratories Inc. ("Company"),
having its executive offices and principal place of business in Hauppauge, New
York, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the undersigned individual ("Executive").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and
agreements hereinafter set forth, the Company and Executive agree as follows:
1. Agreement Term.
The term of this Agreement shall be the approximate
three-year period commencing as of May 7, 1999 and ending on May 6, 2002 (the
"Agreement Term"); provided, however, that the Agreement Term shall be renewed
automatically for successive additional two-year periods ("Renewal Period") at
the end of such three-year period and at the end of each such two-year Renewal
Period, unless, no later than 180 days prior to any such renewal date, either
the President of the Company or the Executive gives written notice to the other
that the Agreement shall not be so renewed.
2. Employment.
(a) Employment by the Company. Executive agrees to be
employed by the Company for the Agreement Term upon the terms and subject to the
conditions set forth in this Agreement.
(b) Performance of Duties. Throughout the Agreement
Term, Executive shall serve as President of the Health and Natural Food Store
Division of the Company and shall have such duties, powers and responsibilities
that are commensurate with his position or as may be assigned by the Board of
Directors ("Board") of Company or the President of Company from time to time
provided such assigned duties are commensurate with his position. In addition,
Executive agrees that he will serve in any similar capacity on behalf of any
existing or future subsidiary or division as is reasonably requested by the
Company. Executive shall faithfully and diligently perform Executive's duties in
conformity with the directions of the Company and serve the Company to the best
of Executive's ability. Executive shall devote Executive's entire working time
to the business and affairs of the Company, subject to vacations and sick leave
in accordance with Company policy.
(c) Place of Performance. During the Agreement Term,
Executive shall be based at American Fork, Utah. Executive understands and
acknowledges that his duties will require reasonable business travel from time
to time. Executive shall report to ▇▇▇▇ ▇▇▇▇▇▇▇▇, President of the Company or
such other executive as may be designated by the Company from time to time.
3. Compensation and Benefits.
(a) Base Salary. For the period of May 6, 1999
through May 6, 2002 the Company agrees to pay to Executive for employment
hereunder a base salary ("Base
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Salary") at the annual rate of $ 265,000. Beginning January 1, 2000 and on
January 1 of each successive year of this Agreement, the Base Salary shall be
increased by a percentage equal to the percentage increase, if any, in the
Consumer Price Index for All Urban Consumers, All Items ("CPI") for the most
recent twelve month period for which such figures are then available as
promulgated by the Department of Labor Bureau of Statistics; provided however
that the Compensation Committee of the Board of Directors ("Board") of the
Company may, in its sole discretion, increase the Base Salary from time to time
by a sum greater than the CPI proportional increase.
(b) Benefits and Perquisites. Executive shall be
entitled to receive such benefits and perquisites as the Company and the
Executive shall mutually agree from time to time. Nothing in this Agreement
shall preclude the Company from terminating or amending from time to time any
employee benefit plan or program.
(c) Bonus. The Executive shall be entitled to receive
a cash bonus with respect to each calendar year of the Agreement of up to 100%
of Base Salary based on the Bonus Plan attached hereto as Exhibit A.
(d) Stock Options. Company shall cause Executive to
be granted options for 50,000 shares in the Company's common stock. The terms
and conditions of the stock option grant are set forth in the Company stock
option plan, a copy of which has been provided to Executive.
(e) Vacation. Executive shall be entitled to paid
vacation in accordance with the vacation policy of the Company.
(f) Automobile. The Company shall reimburse the
Executive for all reasonable expenses (including lease payment, liability
insurance, maintenance, repair and fuel costs) up to One Thousand Two Hundred
dollars ($1,200) per month incurred in operating an automobile for the
Executive's use in the performance of his duties hereunder and in the conduct of
the affairs of the Company, which automobile shall also be available to the
Executive for personal use.
(g) Standard Benefits. Medical Insurance; Dental
Insurance; Life Insurance; and Long Term Disability Insurance shall be provided
in accordance with the standard policies in effect for full time Company
employees, including all applicable eligibility and contribution requirements.
Company will reimburse Executive for any COBRA payment incurred prior to
eligibility in the Company Medical Insurance or Dental Insurance program.
(h) 401k Program. Executive shall be eligible for
participation in the Company's 401k plan, including the employer contribution
thereto, subject to the terms and conditions of the plan including the waiting
periods contained in the plan.
(i) Travel and Business Expenses. Upon submission of
itemized expense statements consistent with Company procedure, Executive shall
be entitled to reimbursement for reasonable travel and other reasonable business
expenses incurred by Executive in the performance of Executive's duties under
this Agreement in accordance with the policies and procedures established by the
Company from time to time for executives of a substantially similar level as
Executive.
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(j) Payment. Payment of all compensation and benefits
to Executive hereunder shall be made in accordance with Company policies in
effect from time to time, including normal payroll practices, and shall be
subject to all applicable employment and withholding taxes.
(k) Cessation of Employment. In the event Executive
shall cease to be employed by the Company for any reason, then Executive's
compensation and benefits shall cease on the date of such event, except as
otherwise provided herein or in any applicable employee benefit plan or program.
4. Indemnification. The Executive shall be indemnified by
Company against reasonable expenses, including attorney's fees, actually and
necessarily incurred by him in connection with the defense of any action, suit,
investigation or proceeding or similar legal activity, regardless of whether
criminal, civil, administrative or investigative in nature, to which he is made
a party by reason of his then being or having been an officer or director of the
Company on or subsequent to the date hereof, to the full extent permitted by
applicable law. Company shall (upon receipt by Company of an undertaking by or
on behalf of the Executive to repay the expenses described in this Section 4, if
it shall ultimately be determined that he is not entitled to be indemnified by
Company against such expenses) pay reasonable expenses, including attorney's
fees, incurred by the Executive in defending any threatened, pending or
completed action, suit or proceeding, or appearing as a witness at a time when
he has not been named as a defendant or respondent with respect thereto, in
advance of the final deposition of any such action, suit or proceeding. The
foregoing right of indemnification will not be deemed exclusive of any other
rights to which the Executive may be entitled under Company's or any of its
subsidiaries' respective Articles or Certificate of Incorporation or By-laws, as
in effect from time to time, or any agreement or otherwise.
5. Non-competition. During the Agreement Term, including any
unexpired portion thereof and any applicable Renewal Period, and, for a period
of twelve months, thereafter (provided, however, that if Executive is terminated
by the Company for any reason other than "Cause" as defined in paragraph 7(b)
hereinafter or if Executive resigns for Good Reason as defined in paragraph 7(d)
hereafter, than the provisions of this non-competition paragraph shall be for a
period of twelve months commencing with the date of termination or resignation,
whichever is applicable.) Executive shall not, directly or indirectly, own,
manage, operate, join, control, participate in, invest in or otherwise be
connected or associated with, in any manner, including as an officer, director,
employee, distribution, independent contractor, independent representative,
partner, consultant, advisor, agent, proprietor, trustee or investor, any
Competing Business located in any state or region (including foreign
jurisdictions) where the Company conducts business or is considering doing
business; provided, however, that ownership of 1% or less of the stock or other
securities of a corporation, the stock of which is listed on a national
securities exchange or is quoted on The Nasdaq Stock Market, shall not
constitute a breach of this Section 5, so long as Executive does not in fact
have the power to control, or direct the management of, or is not otherwise
associated with, such corporation.
For purposes hereof, the term "Competing Business" shall mean
any business or venture which is engaged, directly or indirectly, in (i) the
business of developing, manufacturing, marketing (including multi-level
marketing), selling and/or distributing (including wholesale distributing) of
vitamins, minerals, nutritional supplements (including, without limitation,
amino
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acids and proteins), herbal products, phytonutrients, herb teas or food bars,
(ii) the publication of related health, fitness or body-building publications,
(iii) any other business engaged in or being developed by the Company, or being
actively considered by management of the Company, or (iv) any other business
which is substantially similar to the whole or any significant part of the
business conducted by the Company.
6. No Solicitation.
(a) During the Agreement Term, including any
unexpired portion thereof and any applicable Renewal Period, and for a period of
one year thereafter, Executive shall not, directly or indirectly, including on
behalf of, for the benefit of, or in conjunction with, any other person or
entity, (i) solicit, assist, advise, influence, induce or otherwise encourage in
any way, any employee of the Company to terminate its relationship with the
Company for any reason, nor assist any person or entity in doing so, or employ,
engage or otherwise contract with any employee or former employee of the Company
in a Competing Business or any other business unless such former employee shall
not have been employed by the Company for a period of at least one year, (ii)
interfere in any manner with the relationship between any employee and the
Company or (iii) contact, service or solicit any existing clients, customers or
accounts of the Company on behalf of a Competing Business, either as an
individual on his own account, as an investor, or as an officer, director,
partner, joint venturer, consultant, employee, agent or salesman of any other
person or entity.
7. Termination of Employment.
(a) Termination or Resignation. The Company may
terminate Executive's employment for Cause (as hereinafter defined), in which
case the provisions of Section 7(b) shall apply. The Company may also terminate
Executive's employment in the event of Executive's Disability (as hereinafter
defined), in which case the provisions of Section 7(c) shall apply. The Company
may also terminate the Executive's employment for any other reason by written
notice to Executive, in which case the provisions of Section 7(e) shall apply.
If Executive's employment is terminated by reason of Executive's death or
retirement, the provisions of Section 7(b) shall apply. Executive may resign for
Good Reason (as hereinafter defined) in which case the provisions of Section
7(e) shall apply. No termination of this Agreement or resignation shall relieve
any party from liability for any breach of this Agreement or defeat or impair
the right of any party to pursue such relief as may otherwise be available to it
as a result of any breach of this Agreement or any term, provision or covenant
contained herein.
(b) Termination for Cause; Termination by Reason of
Death or Retirement. The Executive may be terminated for Cause, upon at least
thirty (30) days' prior written notice from the Board to the Executive for a
termination for Cause pursuant to clause (iv), (v) or (vii) of this paragraph,
and upon at least ten (10) days' prior written notice from the Board to the
Executive for a termination for Cause pursuant to Clause (i), (ii), (iii), (vi),
or (viii), by a vote of the Board, (provided that Executive shall have had the
opportunity (together with Executive's legal counsel) during such period to be
heard at a meeting of the Board with respect to such determination).
Notwithstanding anything to the contrary contained herein, in the event that
Executive's employment hereunder is terminated during the Agreement Term (x) by
the Company for Cause or (y) by reason of Executive's death or retirement, then
the Company shall pay to Executive, within thirty (30) days of the date of such
termination, only the
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Base Salary through such date of termination. For purposes of this Agreement,
"Cause" shall mean (i) conviction of, or plea of nolo contendere (no contest)
to, any crime (whether or not involving the Company) constituting a felony in
the jurisdiction involved; (ii) conduct involving moral turpitude; (iii) conduct
related to Executive's employment for which either criminal or civil penalties
against Executive or the Company may be sought; (iv) gross neglect or misconduct
in the performance of Executive's duties hereunder; (v) willful failure or
refusal to perform such duties as may be delegated to Executive commensurate
with Executive's position; (vi) material violation of the Company's policies,
including, without limitation, those relating to sexual harassment, the
disclosure or misuse of Confidential Information (as hereinafter defined), or
those set forth in Company manuals or statements of policy; (vii) conduct which
is materially injurious or materially damaging to the Company or the reputation
of the Company; or (viii) material breach of any provision of this Agreement by
Executive.
(c) Disability. If, as a result of Executive's
incapacity due to physical or mental illness, Executive shall have been absent
from Executive's duties hereunder for either (i) one hundred twenty (120) days
within any three hundred sixty-five (365) day period, or (ii) ninety (90)
consecutive days, and within thirty (30) days after written notice of
termination is given shall not have returned to the performance of Executive's
duties hereunder on a full time basis, the Company may terminate Executive's
employment hereunder for "Disability." In that event, the Company shall pay to
Executive, within thirty (30) days, of the date of such termination, only the
Base Salary through such date of termination. During any period that Executive
fails to perform Executive's duties hereunder as a result of incapacity due to
physical or mental illness (a "Disability Period"), Executive shall continue to
receive the compensation and benefits provided by Section 3 hereof (other than
Section 3(c) hereof) until Executive's employment hereunder is terminated;
provided, however, that the amount of compensation and benefits received by
Executive during the Disability Period shall be reduced by the aggregate
amounts, if any, payable to Executive pursuant to Section 3(b) hereof or under
the Social Security or state disability insurance programs.
(d) Resignation For Good Reason. The Executive may
resign for Good Reason, upon at least thirty (30) days' prior written notice
from the Executive to the Board of his intent to resign for Good Reason pursuant
to Clause (iii) of this subparagraph, and upon at least 10 days' prior written
notice from the Executive to the Board of his intent to resign for Good Reason
pursuant to Clause (i), (ii), (iv) or (v) of this subparagraph, provided that
the Executive (together with Executive's legal counsel) shall meet with the
Board, if requested by the Board during such period with respect to his intent
to resign. " Good Reason" shall mean any (i) reduction in the Executive's Base
Salary or opportunity to participate in the Bonus Plan, as set forth herein,
(ii) relocation of the Executive's principal place of business to a location
which is more than 10 miles from its current location in American Fork, Utah
(without the Executive's consent), (iii) material diminution in the Executive's
duties, responsibilities or reporting position with the Company, which
diminution continues after written notice thereof is given to the Board by the
Executive, (iv) failure by the Company to continue in effect any material
benefit or compensation plan, life insurance plan, health and accident plan,
disability plan (or plan providing the Executive with substantially similar
benefits) in which the Executive is participating or the material reduction of
the Executive's benefits under any such plans or (v) failure by Company to
obtain the agreement to assume and perform this Agreement by any successor of
Company.
(e) Termination By The Company For Any Other Reason
or
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Resignation For Good Reason. In the event that Executive's employment hereunder
is terminated by the Company during the Agreement Term for any reason other than
as provided in Sections 7(b) or 7(c) hereof or in the event that Executive
resigns for Good Reason, then the Company shall pay to Executive, within thirty
(30) days of the date of such termination or resignation, only the Base Salary
through such date of termination and, in lieu of any further compensation and
benefits for the balance of the Agreement Term, severance pay equal only to the
Base Salary that Executive would have otherwise received during the period
beginning on such date of termination or resignation and ending on the last day
of the twelfth month following such date of termination or resignation, which
severance pay shall be paid commencing with such date of termination or
resignation at the times and in the amounts such Base Salary would have been
paid if Executive had not been terminated or resigned. Executive shall also
receive his bonus on a pro-rated basis through his last day of employment.
Except as set forth below, during such] twelve month period, Executive shall
also continue to participate in and receive the benefits and perquisites
provided for in Section 3(g) hereof to the same extent as if Executive's
employment hereunder had not been terminated or resigned; provided, however,
that in the event that Executive shall breach Sections 5, 6 or 9 hereof, in
addition to any other remedies the Company may have, the Company' obligation
pursuant to this Section 7(e) to pay severance, bonus, and to continue benefits
and perquisites shall cease and Executive's rights thereto shall terminate and
shall be forfeited and Executive shall reimburse and repay to Company any
severance or bonus paid by Company to Executive between the date of termination
and the date such payments by the Company ceased.
(f) No Further Liability; Release. Payment made and
performance by the Company in accordance with this Section 7 shall operate to
fully discharge and release the Company and its directors, officers, employees,
subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives from any further obligation or liability with respect to
Executive's employment and termination of employment. Other than paying
Executive's Base Salary through the date of termination of Executive's
employment and making any severance payment and continuing benefits and
perquisites pursuant to and in accordance with this Section 7 (as applicable),
the Company and its directors, officers, employees, subsidiaries, affiliates,
stockholders, successors, assigns, agents and representatives shall have no
further obligation or liability to Executive or any other person or entity under
this Agreement. The Company shall have the right to condition the payment of any
severance or other amounts pursuant to this Section 7 upon the delivery by
Executive to the Company of a release (in form and substance satisfactory to the
Company) of any and all claims Executive may have against the Company and its
directors, officers, employees, subsidiaries, affiliates, stockholders,
successors, assigns, agents and representatives arising out of or related to
Executive's employment by the Company and termination of such employment.
8. Change of Control.
If subsequent to the date hereof, there is an Acquisition of
Control, as defined hereafter, of the Company, and any time within one year
thereafter, (i) Executive's employment with the Company is terminated by the
Company without Cause or (ii) Executive resigns for Good Reason, as defined
hereinabove, then in either case Executive shall be entitled to receive a
severance equal to one year base salary at the time of termination, which
severance pay shall be paid commencing with such date of termination or
resignation at the time and in the amounts such Base Salary would have been paid
if Executive had not been terminated or resigned and
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13
the Company shall continue all benefits coverage of you and your dependents
under the Company's medical and other benefits plans or policies (or under other
benefits plans or policies that provide substantially equivalent coverage) for a
period of one year. Subject to the immediately following sentences, the stock
option agreements (the "Stock Option Agreement"), covering the options granted
to you in connection with your employment (the "Options"), will be amended to
provide for an acceleration of the vesting of such options upon the
circumstances described above. Notwithstanding anything to the contrary
contained in this Agreement or the Stock Option Agreements, there shall be no
acceleration of the vesting of any Options to the extent that the Board of
Directors determines that either the amendment of the Stock Option agreements or
the acceleration of the vesting of any of the Options as contemplated in the
immediately preceding sentence could adversely affect the Company or any of its
affiliates' ability to account for any transaction or contemplated transaction
as a pooling of interests.
"Acquisition of Control" shall mean:
(i) a person, including a group, becoming the beneficial owner
of, or acquiring the power to direct the exercise of voting power with
respect to, directly or indirectly securities which represent fifty
percent (50%) or more of the combined voting power of the Company's
outstanding securities thereafter (and "Acquiring Person"); or (ii) the
Incumbent Directors cease at any time to constitute a majority of the
Board of Directors of the Company.
"Cause" shall mean as defined in paragraph 7(b) hereinabove.
"Incumbent Director" shall mean:
any director of the Company serving at May 6, 1999, or one
elected thereafter if nominated by at least two-thirds of the then
Incumbent Directors.
9. Confidential Information.
(a) Confidential Information. "Confidential
Information" shall mean confidential records and information, including, but not
limited to, development, marketing, purchasing, organizational, strategic,
financial, managerial, administrative, manufacturing, production, distribution
and sales information, distribution methods, data, specifications and processes
(including the Transferred Property as hereinafter defined) presently owned or
at any time hereafter developed by the Company or its agents or consultants or
used presently or at any time hereafter in the course of the business of the
Company, that are not otherwise part of the public domain.
(b) Transfer of Property by Executive. Executive
hereby sells, transfers and assigns to the Company, or to any person or entity
designated by the Company, all of his entire right, title and interest in and to
all inventions, ideas, disclosures and improvements (the "Inventions"), whether
patented or unpatented, and copyrightable material and all trademarks, trade
names, all goodwill associated therewith and all federal and state registrations
or applications thereof, made, adopted or conceived by Executive solely or
jointly, in whole or in part (collectively, the "Transferred Property"), prior
to or during the Agreement Term which (i) relate to methods, apparatus, designs,
products, processes or devices sold,
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14
leased, used or under construction or development by the Company or (ii)
otherwise relate to or pertain to the business, products, services, functions or
operations of the Company. Executive shall make adequate written records of all
Inventions, which records shall be the Company's property and shall communicate
promptly and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned Inventions.
Whether during the Agreement Term or thereafter, Executive shall execute and
deliver to the Company such formal transfers and assignments and such other
papers and documents as may be required of Executive to permit the Company, or
any person or entity designated by the Company, to file and prosecute the patent
applications and, as to copyrightable material, to obtain copyrights thereon,
and as to trademarks, to record the transfer of ownership of any federal or
state registrations or applications.
(c) Protection of Confidential Information. All such
Confidential Information is considered secret and will be disclosed to the
Executive in confidence, and the Executive acknowledges that, as a consequence
of his employment and position with the Company, the Executive may have access
to and become acquainted with Confidential Information. Except in the
performance of his duties as an employee of the Company, the Executive shall
not, during the Agreement Term and at all times thereafter, directly or
indirectly for any reason whatsoever, disclose or use any such Confidential
Information. All records, files, drawings, documents, equipment and other
tangible items, wherever located, relating in any way to or containing
Confidential Information, which the Executive has prepared, used or encountered
or shall in the future prepare, use or encounter, shall be and remain the
Company's sole and exclusive property and shall be included in the Confidential
Information. Upon termination of this Agreement, or whenever requested by the
Company, the Executive shall promptly deliver to the Company any and all of the
Confidential Information and copies thereof, not previously delivered to the
Company, that may be in the possession or under the control of the Executive.
The foregoing restrictions shall not apply to the use, divulgence, disclosure or
grant of access to Confidential Information to the extent, but only to the
extent, (i) expressly permitted or required pursuant to any other written
agreement between the Executive and the Company, (ii) such Confidential
Information has been publicly disclosed (not due to a breach by the Executive of
his obligations hereunder, or by breach of any other person, of a fiduciary or
confidential obligation to the Company) or (iii) the Executive is required to
disclose Confidential Information by or to any court of competent jurisdiction
or any governmental or quasi-governmental agency, authority or instrumentality
of competent jurisdiction, provided, however, that the Executive shall, prior to
any such disclosure, immediately notify the Company of such requirement and
provided further, however, that the Company shall have the right, at its
expense, to object to such disclosures and to seek confidential treatment of any
Confidential Information to be so disclosed on such terms as it shall determine.
10. Assignment and Transfer.
(a) Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the heirs and representatives of the Executive
and the successors and assigns of Company. Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of assets or stock, liquidation, or otherwise), by agreement in form
and substance reasonably satisfactory to the Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
Company would be required to perform this Agreement if no such succession had
taken place. Regardless of whether such agreement is executed, this Agreement
shall be binding upon any
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15
successor of Company in accordance with the operation of law, and such successor
shall be deemed to be the "Company", as appropriate, for purposes of this
Agreement.
(b) Executive. Executive's rights and obligations under this
Agreement shall not be transferable by Executive by assignment, by operation of
law or otherwise, and any purported assignment, transfer or delegation thereof
shall be void; provided, however, that if Executive shall die, all amounts then
payable to Executive hereunder shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee or other designee or, if there be
no such designee, to Executive's estate.
11. Miscellaneous.
(a) Other Obligations. Executive represents and
warrants that neither Executive's employment with the Company nor Executive's
performance of Executive's obligations hereunder will conflict with or violate
or otherwise be inconsistent with any other obligations, legal or otherwise,
which Executive may have.
(b) Nondisclosure; Other Employers. Executive will
not disclose to the Company, or use or induce the Company to use, any
proprietary information, trade secrets or confidential business information of
others. Executive represents and warrants that Executive has returned all
property, proprietary information, trade secrets and confidential business
information belonging to all prior employers.
(c) Cooperation. Following notice of termination of
employment with the Company, Executive shall cooperate with the Company, as
requested by the Company, to affect a transition of Executive's responsibilities
and to ensure that the Company is aware of all matters being handled by
Executive.
(d) Protection of Reputation. During the Agreement
Term and thereafter, Executive agrees that he will not take action which is
intended or would reasonably be expected to harm the Company or its reputation
or which would reasonably be expected to lead to unwanted or unfavorable
publicity to the Company.
(e) Governing Law/Jurisdiction/Process. This
Agreement, including the validity, interpretation, construction and performance
of this Agreement, shall be governed by and construed in accordance with the
internal laws of the State of New York, without regard to principles of
conflicts of law. All actions and proceedings relating to or arising out of this
Agreement shall be litigated solely in any New York state court or United States
federal court located in Suffolk County, New York. The parties hereto expressly
consent to the jurisdiction of any such court and to venue therein and consent
to the service of process in any such action or proceeding in a manner pursuant
to that set forth in paragraph (m) hereafter for the giving of notices.
(f) Entire Agreement. This Agreement, contains the
entire agreement and understanding between the parties hereto in respect of the
subject matter hereof and supersedes, cancels and annuls any prior or
contemporaneous written or oral agreements, understandings, commitments and
practices between them respecting the subject matter hereof.
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16
(g) Amendment. This Agreement may be amended only by
a writing which makes express reference to this Agreement as the subject of such
amendment and which is signed by Executive and, on behalf of the Company, by its
duly authorized officer.
(h) Severability. If any of the provisions of this
Agreement shall otherwise contravene or be invalid under the laws of any state
or other jurisdiction where it is applicable but for such contravention or
invalidity, such contravention or invalidity shall not invalidate all of the
provisions of this Agreement, but rather the Agreement shall be reformed and
construed, insofar as the laws of that state or jurisdiction are concerned, as
not containing the provisions or provisions but only to the extent that they are
contravening or are invalid under the laws of that state or jurisdiction, and
the rights and obligations created hereby shall be reformed and construed and
enforced accordingly. In particular, if any of the covenants or provisions set
forth in paragraphs 5, 6, or 9 hereunder or any part hereof is held to be
unenforceable because of the duration of such provision or the areas covered
thereby, or otherwise, the parties hereby expressly agree that the court making
such determination shall have the power to reduce the duration and/or the areas
of such provision or otherwise limit any such provision, and, in its reduced
form, such provision shall then be enforceable.
(i) Construction. The headings and captions of this
Agreement are provided for convenience only and shall have no effect in
construing or interpreting this Agreement. The use herein of the word
"including," when following any general provision, sentence, clause, statement,
term or matter, shall be deemed to mean "including, without limitation". As used
herein, the words "day" or "days" shall mean a calendar day or days.
(j) Non-waiver. Neither any course of dealing nor any
failure or neglect of either party hereto in any instance to exercise any right,
power or privilege hereunder or under law shall constitute a waiver of any other
right, power or privilege or of the same right, power or privilege in any other
instance. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged and, in the case of the Company, by
its duly authorized officer.
(k) Remedies for Breach. The parties hereto agree
that Executive is obligated under this Agreement to render personal services
during the Agreement Term of a special, unique, unusual, extraordinary and
intellectual character, thereby giving this Agreement peculiar value, and, in
the event of a breach or threatened breach of any provision of this Agreement by
Executive, the injury or imminent injury to the value and the goodwill of the
Company's business could not be reasonably or adequately compensated in damages
in an action at law. Accordingly, Executive expressly acknowledges that the
Company shall be entitled to specific performance, injunctive relief or any
other equitable remedy against Executive, without the posting of a bond, in the
event of any breach or threatened breach of any provision of this Agreement by
Executive (including Sections 5, 6 and 9 hereof). Without limiting the
generality of the foregoing, if Executive breaches or threatens to breach
Sections 5, 6 or 9 hereof, such breach or threatened breach will entitle the
Company to an Order of the Court enjoining Executive from breaching any of the
provisions of Section 5, 6 or 9, as is appropriate. The rights and remedies of
the parties hereto are cumulative and shall not be exclusive, and each such
party shall be entitled to pursue all legal and equitable rights and remedies
and to secure performance of the obligations and duties of the other under this
Agreement, and the enforcement of one or more of such rights and remedies by a
party shall in no way preclude such party from pursuing, at the same time or
subsequently, any and all other
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