EXHIBIT 10.56
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Agreement") is made by and between
GelStat Corporation, a Minnesota corporation with its principal office at ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (the "Company"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") as of the 1st day of July, 2004 (the "Execution
Date").
WITNESSETH:
WHEREAS, the Company and ▇▇▇▇▇▇▇ are parties to a certain Employment Agreement
dated July 9, 2003 (the "Original Employment Agreement").
WHEREAS, the Company continues to find itself in a period of rapid growth, which
growth has created the need for ▇▇▇▇▇▇▇ to play an expanded role in operations
as an executive with strong operating capability, including global business
development experience; and,
WHEREAS, the Board of Directors of the Company (the "Board") has determined it
is in the best interest of the Company and its shareholders to further utilize
the services of ▇▇▇▇▇▇▇, to further incent him in accordance with additional
duties and obligations relating to his operating capability and global business
development experience and to more fully employ his assistance in the day to day
management of the Company; and,
WHEREAS, the Board expects to promote ▇▇▇▇▇▇▇ to the position of President, and
▇▇▇▇▇▇▇ desires to render services to the Company in that position, 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.
A. Notwithstanding that the parties have executed this Agreement as of
the Execution Date, this Agreement shall not be effective or binding
upon either of them until and unless it has been duly approved by
the Board at a meeting of the Board or by written action. If such
approval is obtained on or before September 30, 2004, then the
Execution Date shall become the Effective Date ("Effective Date").
If such approval does not occur on or before such date, then this
Agreement shall be null and void ab initio and the Original
Employment Agreement alone will apply to ▇▇▇▇▇▇▇'▇ employment by the
Company. In such latter case, ▇▇▇▇▇▇▇ acknowledges and agrees that
no compensation or other benefits described in this Agreement,
whether in the form of cash, options or any other benefits, will be
owed to him or payable to him.
B. If this Agreement is duly approved by the Board on or before
September 30, 2004, then as of the close of business on June 30,
2004, the Original Employment Agreement will end without further
obligation to either the Company or ▇▇▇▇▇▇▇ and this Agreement alone
will apply to ▇▇▇▇▇▇▇'▇ Employment, provided, however, that certain
Incentive Stock Option Agreement dated July 9, 2003 (the "2003
Option Agreement"), shall continue in full force and effect.
C. Subject to the provisions for Termination set forth below, the
Company employs ▇▇▇▇▇▇▇ as President, pursuant to the terms and
conditions of this Agreement effective on the Effective Date, and
▇▇▇▇▇▇▇ hereby accepts such employment by the Company upon such
terms and conditions (the "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 in this Agreement, 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. ▇▇▇▇▇▇▇ also understands and acknowledges that he
will not become President of the Company until the CEO appoints him
to that position and the approval of this Agreement alone shall not
constitute ▇▇▇▇▇▇▇'▇ election as President, but rather the CEO shall
appoint him as President immediately upon the demotion, departure or
other termination of ▇▇▇▇ ▇▇▇▇▇▇▇▇ as President.
2. Term. Unless earlier terminated pursuant to the provisions hereof,
▇▇▇▇▇▇▇'▇ employment under this Agreement shall be for a thirty six
consecutive month term commencing on the Effective Date and ending 36
months thereafter (the "Term").
3. Responsibilities and Duties. During the Term, and upon his election as
such, ▇▇▇▇▇▇▇ shall act as President, 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. ▇▇▇▇▇▇▇ 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 Board or Chief Executive Officer of the Company
("CEO"). ▇▇▇▇▇▇▇'▇ duties may be reasonably modified at the Board's or
CEO's discretion from time to time. ▇▇▇▇▇▇▇ shall report directly to the
CEO or to such other executive as the CEO or the Board may designate.
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. Notwithstanding anything to the
contrary, ▇▇▇▇▇▇▇ may devote that portion of his time and energy to the
business of any subsidiary of the Company or other related party as
expressly approved by the board or CEO. In such case where such
involvement with a related party is approved, nothing herein shall be
understood to prevent ▇▇▇▇▇▇▇ from receiving compensation specific to such
activity, either directly from the related entity or from the Company.
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 Section 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 reaffirm or 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 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; or,
(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. Termination for any other
reason whatsoever, including ▇▇▇▇▇▇▇'▇ death or Permanent Disability (as
hereinafter defined) 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 thirty (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, ▇▇▇▇▇▇▇
shall immediately receive: (i) prompt payment of any earned but unpaid
Base Salary or Amended Base Salary as then in effect, whichever is
greater; (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, except as otherwise specifically provided for hereby,
▇▇▇▇▇▇▇'▇ salary and benefits shall end and terminate immediately.
If ▇▇▇▇▇▇▇ is Terminated for Good Cause then ▇▇▇▇▇▇▇ shall keep all
those Options that have become exercisable ("Vested") on the date of
Termination according to the schedule hereinafter provided and
defined, and shall have three hundred sixty-five (365) 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,
▇▇▇▇▇▇▇ shall, at a minimum, have Vested not less than one hundred
thousand (100,000) Options of the Options provided for according to
the schedule hereinafter provided and defined, and the Company
agrees to take whatever action is required to make such minimum
number of additional Options Vested to the extent, if any, that at
least 100,000 of said Options have not otherwise Vested. ▇▇▇▇▇▇▇
shall have 365 calendar days from Termination to exercise said
Options Vested according to this provision
B. Termination Without Good Cause. If ▇▇▇▇▇▇▇ is Terminated Without
Good Cause then ▇▇▇▇▇▇▇ shall keep all those Options that have on
the date of Termination Vested and shall in addition, provided
▇▇▇▇▇▇▇ first executes and does not rescind a reasonable full and
final release of claims agreement, excluding claims relating
directly to benefits on Termination as provided for in this
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 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. In addition, ▇▇▇▇▇▇▇
shall continue to receive his health benefits and then present
salary or Base Salary (whichever salary is greater) each for a
period of twenty four (24) months following Termination, the 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.
C. Voluntary Resignation. Should ▇▇▇▇▇▇▇ voluntarily resign and thus
terminate his employment then ▇▇▇▇▇▇▇ shall keep all those Options
that have on the date of Termination Vested and shall have thirty
(30) calendar days to exercise said Vested Options. Except as
otherwise provided for herein, those Options which would otherwise
have Vested on any future date shall immediately cease to exist as
issued options, having immediately reverted to the Company. Should
▇▇▇▇▇▇▇ voluntarily resign and thus terminate his employment then,
except as otherwise specifically provided for hereby, ▇▇▇▇▇▇▇'▇
salary and benefits shall end and terminate immediately.
D. 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 according to the schedule hereinafter provided
and defined, and shall in addition, provided ▇▇▇▇▇▇▇ first executes
and does not rescind a reasonable 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. ▇▇▇▇▇▇▇
shall have 365 calendar days from Termination resulting from
Resignation for Good Reason to exercise said Options Vested
according to this provision. In addition, ▇▇▇▇▇▇▇ shall continue to
receive his health benefits and then present salary or Base Salary
(whichever salary is greater) each for a period of twenty four (24)
months following Termination, the 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. Notwithstanding anything to the contrary in
this Agreement, if a Change in Control is the basis for Resignation
for Good Reason, ▇▇▇▇▇▇▇ may elect, at his sole option, to receive
such entire twenty four months continuing salary in a lump sum
payable within fourteen (14) days of his Resignation for Good Reason
becoming effective or, in the case of a merger or similar
transaction, a lump sum payable simultaneous with the closing of
such merger or similar transaction.
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
Without 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 in the
following manner:
A. Salary. The Company will pay ▇▇▇▇▇▇▇ a base salary at the annual
rate of one hundred fifty thousand ($150,000.00) dollars ("Initial
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. 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 ("Amended Base
Salary"). The Company shall provide a bonus plan whereupon by
performance according to reasonable measures and milestones
determined at the discretion of the Company's CEO, the Board or the
Compensation Committee of the Board, ▇▇▇▇▇▇▇ may earn a bonus of up
to fifty (50%) percent of his salary then in effect or, in the case
of extraordinary performance, up to one hundred (100%) percent of
his salary then in effect, and may similarly elect to include
▇▇▇▇▇▇▇ in any incentive plan subsequently approved and implemented.
Except as specifically provided for herein, nothing shall be
construed so as to obligate the Company to provide year-end bonuses
or incentive plan participation for ▇▇▇▇▇▇▇.
B. Stock Option. The Company will grant to ▇▇▇▇▇▇▇ as of the Effective
Date, options to purchase 180,000 shares ("Option" or "Options") of
the Company's $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 at the fair market value (mean of the high and low
price on the day immediately preceding the Effective 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 October 1, 2004
b. 20,000 on January 1, 2005
c. 20,000 on April 1, 2005
d. 20,000 on July 1, 2005
e. 20,000 on October 1, 2005
f. 20,000 on January 1, 2006
g. 20,000 on April 1, 2006
h. 20,000 on July 1, 2006
i. 20,000 on October 1, 2006
iii. Notwithstanding anything to the contrary the terms and
conditions of the Option shall be governed by the Plan and by
an "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
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
include a right to incentive compensation, bonus compensation or
profit sharing which shall be available to ▇▇▇▇▇▇▇ under additional
provisions to be determined by the Company.
D. Incentive and/or Bonus Compensation. Nothing herein shall be
understood to compel or prevent the Company from providing
additional, 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 Section
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 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 Company, 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.
This provision shall apply in every specificity to any action taken or
alleged to have been taken from the time of ▇▇▇▇▇▇▇'▇ first employment by
the Company through the entire Term of this Agreement. The provisions of
this Section shall survive the termination of this Agreement.
22. Directors and Officers Liability. The Company shall 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 THAT EACH 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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- --------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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.
