EXHIBIT 10.54
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 2nd day of July, 2004,
as if executed on the 1st day of July, 2004 ("Execution Date") by and between
GelStat Corporation, a Minnesota Company with its principal office at ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ("Company"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
an individual presently residing at _________________ ("▇▇▇▇▇").
WITNESSETH:
WHEREAS, the Company continues to find itself in a period of rapid growth, which
growth requires additional financial and operational management, including the
development and implementation of financial models, financial controls, and
management of the business on a day to day basis, and which growth has created
the need for an additional executive with strong operating capability, financial
expertise and management experience;
WHEREAS, the management and directors of the Company have determined that it is
in the best interest of the Company and its shareholders to retain the services
of an additional executive with strong operating capability, financial expertise
and management experience to assist in the day to day management of the Company;
and,
WHEREAS, the management and directors of the Company wish to engage ▇▇▇▇▇ as
Chief Financial Officer, and ▇▇▇▇▇ desires to render such services to the
Company beginning July 1, 2004 or at any such later date when and as formally
voted upon and approved by the Company's board of directors (the "Effective
Date"), provided however that the date of said formal approval by the Company's
board of directors, and hence the Effective Date, is not later than September
15, 2004, for a period of 36 months, or as otherwise specified herein, subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein, it is agreed as follows:
1. Employment. Subject to the provisions for termination set forth below the
Company hereby engages ▇▇▇▇▇ as Chief Financial Officer pursuant to the
terms and conditions of this Agreement effective as of the 1st day of
July, 2004, contingent on the formal, affirmative vote of the Company's
board of directors. Provided that the Company's board of directors
formally votes to approve this Agreement not later than September 15,
2004, then the Execution Date shall become the Effective Date ("Effective
Date") for purposes of this Agreement. ▇▇▇▇▇ hereby accepts such
employment by the Company upon such terms and conditions ("Employment").
▇▇▇▇▇ understands and acknowledges that, except as otherwise provided for
herein, his Employment with the Company is for an unspecified duration and
constitutes "at-will" Employment. ▇▇▇▇▇ acknowledges that, except as
otherwise provided for herein, this Employment relationship may be
terminated at any time, with or without good cause, at the option either
of the Company or himself, with or without notice. Notwithstanding
anything to the contrary, should the Company's board of directors fail to
formally vote upon and approve this Agreement on or before September 15,
2004, then this Agreement becomes null and void. ▇▇▇▇▇ hereby acknowledges
and agrees that no compensation whatsoever, whether in the form of cash,
options or any other benefits whatsoever, will be owed him or paid to him
in such a case where the Company's board of directors fail to formally
vote upon and approve this Agreement on or before September 15, 2004.
2. Term. Unless earlier terminated pursuant to the provisions hereof, ▇▇▇▇▇'▇
employment under this Agreement shall be for a three-year (thirty six
consecutive month) term commencing on the Effective Date and ending 36
months thereafter (the "Term"). Notwithstanding anything to the contrary,
the Company and ▇▇▇▇▇ hereby agree that ▇▇▇▇▇ may resign, or the Company
may terminate ▇▇▇▇▇, at the conclusion of the first year's service (June
30, 2005) or at the conclusion of the second year's service (June 30,
2006) and that on each date ▇▇▇▇▇'▇ employment by the Company shall
continue only by written agreement between ▇▇▇▇▇ and the Company whereby
each party affirms their desire and intention to continue the employment
relationship, said written affirmation being required to be executed by
each party hereto prior to the close of business on the respective dates
provided above for the continuance of the employment relationship. In any
case where such written affirmation is not executed by both parties prior
to such date, then the employment relationship shall cease as of that
date's close of business ("Termination By Failure To Renew").
3. Responsibilities and Duties. During the Term of this Agreement, ▇▇▇▇▇
shall act as Chief Financial Officer, or in such alternate capacity as may
be agreed between the parties in writing from time to time ("Position"),
and shall have such responsibilities and duties as are agreed upon and
determined from time to time by the Company. Notwithstanding anything to
the contrary, the Company may, without further affecting any of the terms
and conditions of this Agreement except as specifically pertains to
▇▇▇▇▇'▇ Position, elect to appoint ▇▇▇▇▇ as Chief Operating Officer or
President, in each case either as a position to be held in lieu of his
position as Chief Financial Officer or in addition to his position as
Chief Financial Officer, and that such new position shall become ▇▇▇▇'▇
Position. ▇▇▇▇▇ agrees to give his best efforts to carry out his duties in
an efficient, timely and professional manner and in the continuing best
interests of the Company. Subject to the supervision and pursuant to the
orders, advice, and direction of the Company, ▇▇▇▇▇ shall in his Position
perform such duties as are customarily performed by one holding such a
Position in other businesses or enterprises of the same or similar nature
as that engaged in by the Company. ▇▇▇▇▇ shall additionally render such
other and unrelated services and duties as may be reasonably assigned to
him from time to time by the Company. ▇▇▇▇▇'▇ duties may be reasonably
modified at the Company's discretion from time to time. ▇▇▇▇▇ shall report
directly to the Chief Executive Officer of the Corporation or to that
executive so designated by the Chief Executive Officer or, as the case may
be, by the board of directors.
4. Manner of Performance. ▇▇▇▇▇ shall at all times faithfully, industriously,
and to the best of his ability, experience, and talent, perform all duties
that may be required of and from him pursuant to the express and implicit
terms hereof, to the reasonable satisfaction of the Company. Such duties
shall be rendered at the abovementioned premises and at such other place
or places as the Company shall in good faith require or as the interests,
needs, business, and opportunities of the Company shall require or make
advisable, except as otherwise specifically provided for herein.
5. Loyalty to Company's Interests. ▇▇▇▇▇ shall devote all of his working
time, attention, knowledge, and skill solely and exclusively to the
business and interests of the Company, and the Company shall be entitled
to all benefits, emoluments, profits, or other issues arising from or
incident to any and all work, services, and advice of ▇▇▇▇▇. ▇▇▇▇▇
expressly agrees that during the term hereof he will not be interested,
directly or indirectly, in any form, fashion, or manner, as partner,
officer, director, stockholder, advisor, employee, or in any other form or
capacity, in any other business similar to employer's business or any
allied trade, except that nothing herein contained shall be deemed to
prevent or limit the right of ▇▇▇▇▇ to invest any of his surplus funds in
the capital stock or other securities of any corporation whose stock or
securities are publicly owned or which are regularly traded on any public
exchange, provided however that ▇▇▇▇▇ shall not acquire a five percent
(5%) or greater stake in any such company. Notwithstanding anything to the
contrary, ▇▇▇▇▇ agrees hereby that he will not accept a position as a
board member or advisor to more than one (1) outside entity without the
express written consent of the Company and furthermore that such consent,
even once having been given, may be revoked by the Company on ninety (90)
calendar days written notice. In the case of any such revocation of
consent, ▇▇▇▇▇ agrees to terminate his previously authorized association
within ninety (90) calendar days.
6. Confidentiality of Proprietary Information. ▇▇▇▇▇ agrees, during and after
the Term of his Employment, not to reveal confidential information, or
trade secrets to any person, firm, corporation, or entity. Should ▇▇▇▇▇
reveal or threaten to reveal this information, the Company shall be
entitled to an injunction restraining ▇▇▇▇▇ from disclosing same, or from
rendering any services to any entity to whom said information has been or
is threatened to be disclosed, the right to secure an injunction is not
exclusive, and the Company may pursue any other remedies it has against
▇▇▇▇▇ for a breach or threatened breach of this condition, including the
recovery of damages from ▇▇▇▇▇. In addition, ▇▇▇▇▇ agrees that at his
termination for any reason, or at the expiration or Termination of his
Employment according to this Agreement, he will promptly deliver to the
Company or, at its written instruction, destroy, all documents, data,
drawings, manuals, letters, notes, reports, electronic mail, recordings,
and copies thereof, in his possession or control. The provisions of this
paragraph shall survive the termination of this Agreement.
7. Confidentiality, Invention and Non-Compete Agreement. At or prior to the
Effective Date, as a condition of this Agreement, in order to induce the
Company to enter this Agreement and in return for the benefits conveyed
hereby, ▇▇▇▇▇ shall enter into a separate agreement with the Company, in
such form as is reasonably satisfactory to the Company, which separate
agreement, (i) restricts ▇▇▇▇▇ from engaging in competition with the
Company in regard to products then marketed, owned or under development by
the Company, for a period of two years following the Termination of
employment; (ii) requires that ▇▇▇▇▇ maintain in confidentiality all
confidential information, and that; (iii) subject to Minnesota Statute
ss.181.78 provides that all inventions, original works of authorship,
developments, improvements and trade secrets which he makes, conceives,
learns or reduces to practice, either alone or jointly with others, during
the period of Employment and which are related to or useful in the
Company's business, or which result from tasks assigned by the Company or
from use of Company confidential information or facilities, are the sole
property of the Company, and that he will assist the Company in obtaining
and enforcing any copyrights, patents, or other intellectual property
rights relating thereto in any and all countries both during his
Employment and beyond the Termination thereof. Pursuant to Minnesota
Statute ss.181.78 the foregoing assignment does not apply to an invention
for which no equipment, supplies, facility or trade secret information of
the Company was used and which was developed entirely on ▇▇▇▇▇'▇ own time,
and (1) which does not relate (a) directly to the business of the Company
or (b) to the Company's actual or demonstrably anticipated research or
development, or (2) which does not result from any work performed by ▇▇▇▇▇
for the Company.
The parties agree that such provisions as set forth in a separate
agreement shall survive termination of this Agreement and termination of
▇▇▇▇▇'▇ employment for any reason. If ▇▇▇▇▇'▇ assistance is needed when he
is not employed by the Company, the Company shall compensate ▇▇▇▇▇ for his
assistance at a rate of seventy five ($75) dollars per hour, and shall, in
addition, reimburse ▇▇▇▇▇ for any direct expenses he incurs in connection
with providing such assistance.
8. Termination of Employment. Employment is effective and commences on the
Effective Date and shall continue for three years (thirty six consecutive
months) or until otherwise terminated hereunder ("Termination"). With or
without good cause, the Company may terminate ▇▇▇▇▇'▇ Employment at any
time, without prior notice, which Termination becomes effective
immediately upon written notice to ▇▇▇▇▇. For purposes of this Agreement,
good cause ("Good Cause") shall be understood to be any of the following:
(i) ▇▇▇▇▇'▇ willful refusal to or failure to follow directives of the
Board of Directors or Chief Executive Officer which are lawful,
reasonable, and consistent with ▇▇▇▇▇'▇ Position, and which is not cured
within fifteen (15) business days after written notice from the Company
and which results in or causes a material adverse effect on the Company;
(ii) conviction or plea of nolo contendere to a felony; (iii) a formal
criminal charge or arrest for a crime involving moral turpitude which
could result in substantial damage or embarrassment to the Company; (iv)
▇▇▇▇▇ has engaged in conduct that constitutes willful gross misconduct
with regard to his employment duties, such gross misconduct resulting in
economic harm or loss to the Company, provided that (1) for purposes of
determining whether conduct constitutes willful gross misconduct, no act
on ▇▇▇▇▇'▇ part shall be considered "willful" unless done by ▇▇▇▇▇ in bad
faith or without reasonable belief that such action was in the best
interests of the Company and (2) ▇▇▇▇▇ has been given written notice by
the Company of said violation of this Section and a reasonable opportunity
to cure said violation; (v) ▇▇▇▇▇'▇ death; or, (vi) separation as a result
of ▇▇▇▇▇'▇ Permanent Disability (as hereinafter defined). Termination for
any other reason whatsoever, shall be considered termination without good
cause ("Without Good Cause"). ▇▇▇▇▇ may voluntarily elect to terminate his
Employment ("Voluntary Resignation") at any time, which Termination
becomes effective immediately upon written notice to the Company. ▇▇▇▇▇
may also resign and terminate his employment for good reason ("Resignation
for Good Reason") where good reason ("Good Reason") shall be understood to
be any of the following: (i) a demotion such that ▇▇▇▇▇'▇ job duties are
substantially diminished, provided however that a reduction in the number
of hours worked shall not by itself be considered a demotion; (ii) ▇▇▇▇▇'▇
base salary ("Base Salary"), as provided for hereby, is reduced by more
than 10%, provided however that a change in value of any stock options
granted or vested, which change in value results from open market changes
in the price or value of the underlying security (the common stock) shall
not by itself constitute such a reduction in compensation; (iii) the
Company materially breaches this Agreement; (iv) the Company relocates
▇▇▇▇▇ to an office more than sixty (30) miles from the office location
initially given herein, which relocation is for a period greater than
seven (7) calendar days or which relocation is for a period greater than
thirty (30) calendar days in any 365 calendar day period, except in the
case where such relocation is with ▇▇▇▇▇'▇ express, written and prior
approval; (v) the Company officially notifies ▇▇▇▇▇ that the Company will
take any of the actions listed above; or, (vi) there is a "Change in
Control" as defined in "Appendix A" attached hereto. Notwithstanding
anything to the contrary, any event that would otherwise be considered to
constitute reason for Resignation for Good Reason shall cease to be
considered such if: (i) ▇▇▇▇▇ does not Terminate employment within sixty
(60) calendar days after such event occurs; or (ii) the Company reverses
the action or cures the default or condition that constitutes Good Reason
within fifteen (15) business days after having received written notice by
▇▇▇▇▇ of his belief that Good Reason exists and of his intention to
Terminate his employment by Resignation for Good Reason, which fifteen
(15) business day notice shall be required in the case of Resignation for
Good Reason.
9. Benefits Upon Termination. In each and every case of Termination, except
as specifically provided for hereby, ▇▇▇▇▇'▇ salary and benefits shall end
and terminate immediately upon his Termination. In each and every case of
Termination, ▇▇▇▇▇ shall immediately receive: (i) prompt payment of any
earned but unpaid Base Salary; (ii) a prorata amount of any bonus and/or
incentive plan compensation due ▇▇▇▇▇ based on his or the Company's
performance up until and at the date of Termination pursuant to any bonus
and/or incentive compensation plan in effect at the time of Termination;
(iii) any outstanding expense reimbursements then owed; and, (iv) any
other unpaid vested amounts or benefits then due ▇▇▇▇▇ under any Company
benefit plan. ▇▇▇▇▇ shall, in addition, be entitled to the following:
A. Termination for Good Cause. If ▇▇▇▇▇ is Terminated for Good Cause
then ▇▇▇▇▇ shall keep all those Options that have on the date of
Termination vested (as hereinafter defined) and shall have thirty
(30) calendar days to exercise said vested Options. Those Options
which would otherwise have vested and become exercisable on any
future date shall immediately cease to exist as issued options,
having immediately reverted to the Company. Notwithstanding anything
to the contrary, upon Termination for Good Cause, ▇▇▇▇▇ shall, at a
minimum, have vested one hundred thousand (100,000) Options, the
Company agreeing hereby to take whatever action is required to make
said Options vested and retained by ▇▇▇▇▇.
B. Termination By Failure To Renew. If ▇▇▇▇▇'▇ employment is terminated
on either June 30, 2005 or June 30, 2006, as a result of there being
no written agreement between ▇▇▇▇▇ and the Company whereby each
party affirms their desire and intention to continue the employment
relationship, said written affirmation being required to be executed
by each party hereto prior to the close of business on the
respective dates provided above for the continuance of the
employment relationship, then ▇▇▇▇▇ shall at the close of business
on such date cease to be an employee of GelStat and shall be
entitled only to those options which have vested and shall have
three hundred sixty five (365) calendar days to exercise said vested
Options. In any case where such written affirmation is not executed
by both parties prior to such date, then the employment relationship
shall cease as of that date's close of business and ▇▇▇▇▇ shall be
entitled to only those options that have become exercisable prior to
that date. Those Options which would otherwise have vested and
become exercisable on any future date shall immediately cease to
exist as issued options, having immediately reverted to the Company.
For purposes of clarity, it is expressly agreed and understood that,
should ▇▇▇▇▇ cease to be an employee at the close of business on
June 30, 2005 by way of Termination By Failure To Renew then he
shall have 365 days to exercise his then exercisable 40,000 options,
the remainder of his otherwise granted options immediately reverting
to the Company and ceasing to exist as issued options. Should ▇▇▇▇▇
cease to be an employee at the close of business on June 30, 2006 by
way of Termination By Failure To Renew then he shall have 365 days
to exercise his then exercisable 180,000 options, the remainder of
his otherwise granted options immediately reverting to the Company
and ceasing to exist as issued options.
C. Termination Without Good Cause. If ▇▇▇▇▇ is Terminated Without Good
Cause then ▇▇▇▇▇ shall keep all those Options that have on the date
of Termination vested (as hereinafter defined) and shall in
addition, provided ▇▇▇▇▇ first executes and does not rescind a full
and final release of claims agreement in favor of the Company (the
form of which will be provided by the Company), receive as vested
Options all those Options which would otherwise have vested over the
course of the twenty four (24) months immediately following said
Termination had ▇▇▇▇▇ remained an employee during that twenty four
(24) month period. ▇▇▇▇▇ shall have 365 calendar days from
Termination to exercise said Options vested according to this
provision. Those Options which would otherwise have vested and
become exercisable on any future date beyond twenty four (24) months
immediately following Termination Without Good Cause shall
immediately cease to exist as issued options, having immediately
reverted to the Company.
D. Voluntary Resignation. Should ▇▇▇▇▇ voluntarily resign and thus
Terminate his employment then ▇▇▇▇▇ shall keep all those Options
that have on the date of Termination vested (as hereinafter defined)
and shall have thirty (30) calendar days to exercise said vested
Options. Those Options which would otherwise have vested and become
exercisable on any future date shall immediately cease to exist as
issued options, having immediately reverted to the Company.
E. Resignation for Good Reason. Should ▇▇▇▇▇ Terminate his employment
as a result of Resignation for Good Reason (as defined herein) then
▇▇▇▇▇ shall keep all those Options that have on the date of
Termination vested (as hereinafter defined) and shall in addition,
provided ▇▇▇▇▇ first executes and does not rescind a full and final
release of claims agreement in favor of the Company (the form of
which will be provided by the Company), receive as vested Options
all those Options which would otherwise have vested over the Term of
this Agreement. ▇▇▇▇▇ shall have 365 calendar days from Termination
resulting from Resignation for Good Reason to exercise said Options
vested according to this provision.
10. Additional Option to Terminate Employment on Permanent Disability or Death
of ▇▇▇▇▇. Notwithstanding anything to the contrary, the Company is hereby
granted the option to immediately Terminate ▇▇▇▇▇'▇ Employment in the
event that ▇▇▇▇▇ shall become Permanently Disabled, as the term
"Permanently Disabled" is hereinafter defined. For purposes of this
Agreement, ▇▇▇▇▇ shall be deemed to have become permanently disabled if,
even with any available reasonable accommodation, during any year of the
term hereof, because of ill health, physical or mental disability, or for
other causes beyond his control, he shall have been continuously unable or
unwilling or have failed to perform his essential job duties hereunder for
sixty (60) consecutive calendar days, or if, during any year of the term
hereof, even with any available reasonable accommodation, he shall have
been unable or unwilling or have failed to perform his essential job
duties for a total period of sixty (60) business days, whether consecutive
or not. For the purposes hereof, the term "any year of the term hereof" is
defined to mean any period of 12 consecutive calendar months. ▇▇▇▇▇'▇
employment will immediately terminate upon and in the case of his death.
Termination upon death or Permanent Disability shall be Termination for
Good Cause for all purposes of this Agreement.
11. Life Insurance. The Company may elect, at its sole discretion, to obtain
"key man" or other life insurance or disability insurance on ▇▇▇▇▇ and
may, at its sole discretion, designate the Company as either the sole or
partial (in any percentage) beneficiary on said policy. ▇▇▇▇▇ agrees to
cooperate with the Company in obtaining said insurance policy and further
agrees to waive any physician/patient confidentiality privilege as may be
required or arise as a result of said cooperation to the furtherance of
this provision.
12. Compensation. The Company shall compensate ▇▇▇▇▇ during the Term of this
Agreement in the following manner:
A. Salary. The Company will initially pay ▇▇▇▇▇ a base salary at the
annual rate of twenty four thousand ($24,000.00) dollars ("Base
Salary"), payable periodically but no less often than monthly, in
substantially equal amounts, in accordance with the Company's
payroll practices from time to time in effect, and shall be subject
to withholdings required by federal, state and local laws. Beginning
January 1, 2005, the Company will increase ▇▇▇▇▇'▇ salary to an
annual rate of one hundred fifty thousand ($150,000.00) dollars. The
Company will review ▇▇▇▇▇'▇ salary at least once each year and may,
at its sole discretion, increase ▇▇▇▇▇'▇ salary by providing
additional salary above and beyond the Base Salary. The Company may
elect to pay ▇▇▇▇▇ a year-end bonus in an amount determined at the
discretion of the Company's CEO, the Board or the Compensation
Committee of the Board, as the case may be, and may similarly elect
to include ▇▇▇▇▇ in any incentive plan subsequently approved and
implemented. Nothing herein shall be construed so as to obligate the
Company to provide year-end bonuses or incentive plan participation
for ▇▇▇▇▇.
B. Stock Option. The Company hereby grants to ▇▇▇▇▇, on the Execution
Date, an option to purchase 400,000 shares ("Option" or "Options")
of the Company's fully paid, non-assessable $0.01 par value common
stock ("Common Stock").
i. The Option shall be for a term of five (5) years, adjusted if
necessary as to quantity and price to account for any stock
splits, recombinations, stock dividends or similar and shall
be subject to the terms and conditions of the qualified stock
option plan approved at the Company's annual meeting on July
14, 2003 (the "Plan"). The exercise price of the Option shall
be set and is hereby set at the fair market value (mean of the
high and low price on the day immediately preceding the
Execution Date, rounded up to the nearest whole increment of
$0.05) of the Common Stock as reported on the OTC Bulletin
Board, namely five and 05/100 ($5.05) dollars per share of
Common Stock.
ii. Provided that ▇▇▇▇▇ remains an employee of the Company, the
Option shall become exercisable as follows:
a. 20,000 on January 1, 2005
b. 20,000 on April 1, 2005
c. 80,000 on July 1, 2005
d. 20,000 on October 1, 2005
e. 20,000 on January 1, 2006
f. 20,000 on April 1, 2006
g. 80,000 on July 1, 2006
h. 20,000 on October 1, 2006
i. 20,000 on January 1, 2007
j. 20,000 on April 1, 2007
k. 80,000 on July 1, 2007
iii. Notwithstanding anything to the contrary the terms and
conditions of the Option shall be governed by the Plan and by
the "Incentive Stock Option Agreement" to be executed between
the Company and ▇▇▇▇▇ on or prior to the Effective Date.
C. Executive-Level Employee Benefits. ▇▇▇▇▇ will be entitled to
participate in all medical, dental, life, short-term disability,
long-term disability, 401k plan, paid time off, and other such
benefit plans as are from time to time made available to other
executive-level employees of the Company, subject to the provisions
of those programs. Without limiting the generality of the foregoing,
and notwithstanding anything to the contrary, the Company will,
beginning fourteen (14) months after the Execution Date, but not
before, provide ▇▇▇▇▇ and his dependents with basic health and
medical benefits on the terms that such benefits are provided to
other executive-level employees of the Company. ▇▇▇▇▇ will also be
entitled to holidays, sick leave and vacation in accordance with the
Company's policies as then in effect, but in no event shall ▇▇▇▇▇ be
entitled to less than three (3) weeks paid vacation per year.
Executive-level employee benefits under this Section 12(D) shall not
include a right to incentive compensation, bonus compensation or
profit sharing which shall be available to ▇▇▇▇▇ only if so agreed
to by the Company.
D. Incentive and/or Bonus Compensation. Nothing herein shall be
understood to compel or prevent the Company from providing specific
incentive and/or bonus compensation to ▇▇▇▇▇ based on performance as
may be agreed between the parties in writing from time to time.
13. Expenses. The Company will promptly reimburse ▇▇▇▇▇, in accordance with
the Company's policies and practices in effect from time to time, for all
expenses reasonably incurred by ▇▇▇▇▇ in performance of ▇▇▇▇▇'▇ duties
under this Agreement, including reimbursement for miles driven by ▇▇▇▇▇ in
furtherance of the Company's business ("Business Mileage"). Reimbursement
for Business Mileage shall be at the standard mileage rate allowed by the
Internal Revenue Service ("IRS") as set forth in the appropriate IRS
publication. Business mileage does not include commuting from ▇▇▇▇▇'▇
residence to ▇▇▇▇▇'▇ primary place of work. ▇▇▇▇▇ is responsible for
proper substantiation and reporting of Business Mileage and/or actual
expenses.
14. Golden Parachute Gross-Up Upon Change In Control.
In the case where ▇▇▇▇▇'▇ option vesting accelerates as a result of a
Change In Control (as defined in Appendix A), then:
A. If ▇▇▇▇▇'▇ aggregate payments and benefits under this Agreement and
all other contracts, arrangements, or programs would constitute an
excess parachute payment under Section 280G of the Internal Revenue
Code and the regulations there under, as determined in good faith by
the Company's independent auditors, ▇▇▇▇▇ will receive a gross-up
payment. The gross-up amount will be an amount that, after payment
by ▇▇▇▇▇ of all income, payroll, and excise taxes on the gross-up
payment, equals any excise taxes ▇▇▇▇▇ must pay under Internal
Revenue Code Section 4999.
B. All determinations needed to apply this Section shall be made in
good faith by the Company's independent auditors. The independent
auditors will assume that ▇▇▇▇▇ pays federal, state, and local
income taxes at the highest marginal tax rate in the calendar year
in which the gross-up payment is to be made, net of the maximum
reduction in federal income taxes that could be obtained from
deduction of those state and local taxes.
C. If ▇▇▇▇▇'▇ ▇▇▇▇▇-up payment turns out to have been insufficient (for
example, because ▇▇▇▇▇ receives payments that were not expected when
the gross-up payment was calculated), the Company will pay ▇▇▇▇▇ an
additional gross-up payment that, on an after tax basis, is
sufficient to cover both the extra Internal Revenue Code Section
4999 excise taxes owed by ▇▇▇▇▇ and any interest, penalties, or
additions he must pay because of the miscalculation of his excise
tax liability. If ▇▇▇▇▇ receives a gross-up payment that turns out
to have been excessive, ▇▇▇▇▇ shall pay the Company the excise tax
included in the gross-up that he did not, in fact, have to pay, the
federal, state and local income and payroll tax gross-up he received
with respect to that excise tax amount (to the extent that he is
allowed a federal, state, or local income tax deduction with respect
to the repayment), and interest on the amount he must repay at the
rate provided in Internal Revenue Code Section 1274(b)(2)(B).
▇. ▇▇▇▇▇ and the Company agree to cooperate with each other to resolve
any administrative or judicial proceedings concerning the existence
or amount of excess parachute payments with respect to payments or
benefits ▇▇▇▇▇ receives.
E. Notwithstanding anything to the contrary, the Company's total
obligation to ▇▇▇▇▇ under this Section 12 and any provision thereof
shall not exceed five hundred thousand ($500,000) dollars.
15. Assistance in Litigation. ▇▇▇▇▇ shall, upon reasonable notice, furnish
such information and proper assistance to the Company as it may reasonably
require in connection with any litigation in which it is, or may become, a
party either during or after Employment. The provisions of this paragraph
shall survive the termination of this Agreement. If ▇▇▇▇▇'▇ assistance is
needed when he is not otherwise Employed by the Company, the Company shall
compensate ▇▇▇▇▇ for his assistance at a rate of seventy five ($75)
dollars per hour, and shall, in addition, reimburse ▇▇▇▇▇ for any direct
expenses he incurs in connection with providing such assistance.
16. Successors; Binding Agreement; Assignment. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or assets of the
Company to expressly assume and agree in writing to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place, provided
that ▇▇▇▇▇ must be given a position with the same authority, powers and
responsibilities set forth herein with respect to the subsidiary or
subdivision which operates the business of the Company as it exists on the
date of such business combination. The Company may not assign this
Agreement, (i) except in connection with, and to the acquirer of, all or
substantially all of the business or assets of the Company, provided such
acquirer expressly assumes and agrees in writing to perform this Agreement
as provided in this Section. ▇▇▇▇▇ may not assign his rights or delegate
his duties or obligations under this Agreement.
17. Waiver Or Discharge. No provisions of this Agreement may be modified,
waived or discharged orally, but only by a waiver, modification or
discharge in writing signed by ▇▇▇▇▇ and such officer as may be designated
by the Board of Directors of the Company to execute such a waiver,
modification or discharge. No waiver by either party hereto at any time of
any breach by the other party hereto of, or failure to be in compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the time or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.
18. Representations and Warranties.
▇. ▇▇▇▇▇ warrants and represents to the Company that the execution,
delivery and performance of this Agreement by ▇▇▇▇▇ will not result
in or constitute a breach of or conflict with any term, covenant,
condition or provision of any commitment, contract or other
agreement or instrument, including without limitation, any other
employment agreement to which ▇▇▇▇▇ is or has been a party.
B. The Company warrants and represents to ▇▇▇▇▇ that the execution,
delivery and performance of this Agreement have been duly and
validly authorized and approved by all necessary corporate action;
and this Agreement constitutes the legal, valid and binding
obligation of the Corporation, enforceable in accordance with its
terms.
16. Binding Agreement. This Agreement shall be binding upon the Company and
its successors and assigns and shall inure to the benefit of ▇▇▇▇▇ and
▇▇▇▇▇'▇ heirs, executors and administrators.
17. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever.
A. The validity, legality and enforce ability of the remaining
provisions of this Agreement (including without limitation, each
portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable) shall not in
any way be effective or impaired thereby; and,
B. To the fullest extent possible, the provisions of this Agreement
(including, without limitation, each provision of any section of
this Agreement containing any such provision held to be invalid,
illegal or unenforceable) the portion so held invalid, unenforceable
or void shall, if possible, be deemed amended or reduced in scope,
or otherwise be stricken from this Agreement to the extent required
for the purposes of validity and enforcement thereof and so as to
give effect to the intent manifested by the provisions held invalid,
illegal or unenforceable.
18. Headings. The headings of this Agreement are inserted for convenience only
and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof.
19. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together
shall constitute the same instrument.
20. Disputes. Any dispute arising under or relating to this Agreement shall be
settled by binding arbitration in accordance with the rules of the
American Arbitration Association. Such arbitration proceedings shall be
conducted in the State of Minnesota in Hennepin County and judgment upon
the award rendered may be entered in any court of competent jurisdiction.
21. Indemnification. The Company agrees to fully indemnify ▇▇▇▇▇ for any
costs, legal expenses, fees, fines, judgments or other expenses of any
kind that he may incur as a result of any actions he rightfully takes (or
is alleged to have taken) in the course and scope of his employment with
the Company subject to the limitations of Minnesota Statutes 302A.521.
22. Directors and Officers Liability. The Company shall use reasonable efforts
obtain and maintain a Directors and Officers liability insurance policy,
providing coverage in such amount as the Board determines to be fiscally
prudent, which policy shall cover ▇▇▇▇▇ during the entire term of his
employment and which coverage is not less than that provided to any other
Director or Officer at a cost to the Company acceptable to the Board. Such
liability coverage shall effectively cover acts that occur during ▇▇▇▇▇'▇
employment and following the Termination thereof.
23. Notice. Any notice to be given hereunder shall be given in writing. Notice
shall be deemed to be given when delivered by hand, or 5 calendar days
after being mailed, postage prepaid, registered with return receipt
requested, addressed to the address set forth below or the then current
address of ▇▇▇▇▇ or the principal office of the Company:
If to the Company:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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24. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Minnesota, without regard to
conflicts of law provisions.
25. Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the Employment of ▇▇▇▇▇ by the Company and
supersedes any and all prior understandings, agreements or correspondence
between the parties.
EACH PARTY ACKNOWLEDGES THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE
COMPANY AND ▇▇▇▇▇ RELATING TO THE SUBJECTS COVERED IN THIS AGREEMENT ARE
CONTAINED IN IT AND THATEACH PARTY HAS ENTERED INTO THIS AGREEMENT VOLUNTARILY
AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OR ▇▇▇▇▇
OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.
EACH PARTY FURTHER ACKNOWLEDGES THAT THEY HAVE CAREFULLY READ THIS AGREEMENT,
THAT THEY UNDERSTAND ALL OF IT, AND THAT EACH HAS BEEN GIVEN THE OPPORTUNITY TO
DISCUSS THIS AGREEMENT WITH LEGAL COUNSEL AND HAVE AVAILED THEMSELVES OF THAT
OPPORTUNITY TO THE EXTENT EACH WISHED TO DO SO.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Execution
Date first written above.
GELSTAT CORPORATION ▇▇▇▇▇
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
Appendix A
Change in Control
1. "Change in Control" means one of the following events, except as
provided in Section 2 of this Appendix:
(a) Acquisition of Controlling Interest. Any Person becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing 51% or
more of the combined voting power of the Company's then outstanding securities
in connection with a merger or otherwise; provided, however, this shall not
apply to securities issued in connection with, or pursuant to, securities of the
Company outstanding as of the date hereof.
(b) Merger Approved. The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation unless the voting
securities of the Company outstanding immediately before the merger or
consolidation would continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 51% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation.
(c) Sale of Assets. The stockholders of the Company approve an agreement
or series of agreements for the Company's sale or disposition to one or more
Persons of at least 70% of the Company's tangible assets provided, however, this
shall not apply to the sale or transfer of assets to any Person in which the
Corporation or existing shareholders of the Corporation control at least 51% of
the combined voting power of the voting securities of said Person immediately
following such transfer or sale of assets.
(e) Liquidation or Dissolution. The stockholders of the Company approve a
plan or proposal for liquidation or dissolution of the Company.
2. "Change in Control" shall not include: any acquisition of the Company
by ▇▇▇▇▇ or a group of which ▇▇▇▇▇ is a member.
3. As used in this Appendix A,
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Securities Exchange Act.
"Person" has the meaning given in Securities Exchange Act Section 3(a)(9),
as modified and used in Securities Exchange Act Section 13(d), and shall
include a "group," as defined in Rule 13d-5 promulgated thereunder.
However, a "person" shall not include: (i) the Company or its Affiliates
(as that term is defined in Rule 405 of Regulation C under the Securities
Act); (ii) a trustee or other fiduciary holding securities under any
employee benefit plan of the Company, or its Affiliates (iii) an
underwriter temporarily holding securities pursuant to an offering; or
(iv) a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
shares of the Company.
"Securities Act" means the Securities Act of 1933.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
