This NonCompetition Agreement involves
Title: EMPLOYMENT, NON-COMPETITION AND PROPRIETARY RIGHTS AGREEMENT
Governing Law: Illinois Date: 9/18/2015
Law Firm: Taft Stettinius
AND PROPRIETARY RIGHTS AGREEMENT
THIS EMPLOYMENT NON-COMPETITION AND PROPRIETARY RIGHTS AGREEMENT (the “Agreement”) is effective as of the 17th day of June, 2015 (the “Effective Date”), by and between Emergent Health Corp, a Nevada corporation (the “Company”), and Chris Swenson (the “Employee”).
A. The Company is engaged in the sale of nutraceutical products.
B. The Company is desirous of employing Employee as the President and Chief Executive Officer.
C. NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants and conditions set forth herein, the Employee and the Company hereby agree as follows:
1.1 Employment . The Company hereby employs, engages and hires Employee, and Employee hereby accepts employment, upon the terms and conditions set forth in this Agreement. Employee is employed as President and Chief Executive Officer. Employee shall report to the Board of Directors of the Company and all members of the management team will report to the Employee. During the term of Employee’s employment, the Company shall not incur any liabilities or spend any cash (save for liabilities individually or which in the aggregate do not exceed $1,000) without the prior consent of Employee.
1.2 Activities and Duties During Employment . Employee represents and warrants to the Company that Employee is free to accept employment with the Company and that Employee has no prior or other commitments or obligations of any kind to anyone else which would hinder or interfere with the acceptance and performance of the obligations under this Agreement.
Employee accepts the employment described in Article I of this Agreement and agrees to devote his good faith efforts to the faithful and diligent performance of the services described herein, including the performance of such other services and responsibilities as the Company may, from time to time, stipulate. Notwithstanding the foregoing, Employee may: (i) serve on the board of directors of other entities or serve in any capacity with any hobby, avocation, civic, educational, religious, professional or charitable activity or organization provided that such service does not materially interfere or conflict with his duties hereunder; and (ii) make and manage personal investments of his choice and (iii) serve as a consultant to third parties including Beneffect, LLC (marketers of a Liquid Oxygen product) on a less than full time basis. Employee shall comply with and be bound by the Company’s operating policies, procedures and practices in effect from time to time during the terms of his employment.
1.3 Scheduled Work Week . Employee’s regularly scheduled work week shall consist of approximately 40 hours per week (including one hour for lunch per day), subject to such additional time if necessary to fulfill duties reasonably assigned to Employee. The parties acknowledge and agree that Employee shall perform such work primarily during regular business hours, but shall have the right to perform the services referenced in Section 1.2(i), (ii) and (iii) from time to time at convenient times, provided they do not materially interfere with Executive’s duties hereunder (which shall be deemed not to interfere absent delivery of written notice from the Company and failure of Executive to make good faith efforts to accommodate reasonable requests by the Company).
2.1 Term . The term of employment under this Agreement shall be three (3) year, commencing as of the date of the Agreement (such term of employment, as it may be extended or terminated, is herein referred to as the “Employment Term”), which Employment Term shall automatically renew for additional three (3) year periods unless terminated by Employee.
2.2 Termination . The Employment Term and Employment of Employee may be terminated as follows:
(a) Automatically, without the action of either party, upon the death of the Employee.
(b) By either party upon the Total Disability of the Employee. The Employee shall be considered to have a Total Disability for purposes of this Agreement if he is unable, by reason of accident or illness or mental disability, to substantially perform his employment duties for a period of three (3) months during any period of twelve (12) consecutive months. The determination of whether a Total Disability has occurred shall be based on the determination of a physician selected by the Company. Nothing herein shall limit the Employee’s right to receive any payments to which Employee may be entitled under any disability or employee benefit plan of the Company or under any disability or insurance policy or plan. During a period of Total Disability prior to termination hereunder, Employee shall continue to receive his full compensation (including base salary and bonus) and benefits.
(c) By the Employee upon thirty (30) days’ written notice to the Company.
(d) Upon expiration of the Employment Term should Employee not elect to continue in the employment of the Company for the next successive renewal term.
(e) By the Company “Without Cause,” and without notice which shall mean a termination of the Employee’s employment by the Company other than pursuant to the provisions of Section 2.2(a) , Section 2.2(b) and Section 2.2(f) hereof or by virtue of the Company not renewing the term of this Agreement at a time where Employee is ready, willing and able to renew the term of this Agreement. Any termination of Employee which occurs within six months of a “Change in Control” of Company and other than for “Cause,” shall be deemed a termination Without Cause. For purposes of this Agreement, a “Change in Control” occurs when there is: (a) a sale of substantially all of the assets of the Company; (by any person
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or entity that is not a shareholder of the Company as of the date of this Agreement, becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the Company’s outstanding securities; (c) the approval of a merger, sale or consolidation of the Company with any other company, other than a merger or consolidation which would result in the voting securities of Company outstanding immediately prior thereto continuing to represent more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger consolidation; or (d) the shareholders and/or board of directors of the Company approve a plan of liquidation, dissolution or winding up of the Company.
(f) By the Company for “Cause” (as defined below).
2.3 Cessation of Rights and Obligations: Survival of Certain Provisions . On the date of expiration or earlier termination of the Employment Term for any reason, all of the respective rights, duties, obligations and covenants of the parties, as set forth herein, shall except as specifically provided herein to the contrary, cease and become of no further force or effect as of the date of said termination, and shall only survive as expressly provided for herein.
2.4 Cessation of Compensation . In lieu of any severance under any severance plan that the Company may then have in effect, and subject to: (i) the receipt of a full and unconditional release from Employee; and (ii) any amounts owed by the Employee to the Company under any contract, agreement or loan document entered into after the date hereof (including, but not limited to, loans made by the Company to the Employee), the Company shall pay to the Employee, and the Employee shall be entitled to receive, the following amounts within thirty (30) days of the date of termination of his employment in full satisfaction of any obligation to Employee for termination of this Agreement:
(a) Voluntary Termination/Termination For Cause . Upon: (i) termination of the Employee’s employment for “Cause” pursuant to Sections 2.2(f) ; or (ii) Employee’s resignation; or (iii) the expiration of the Employment Term, because the Employee elects not to extend the Employment Term, Employee shall be entitled to receive his base salary, bonus, benefits and expense reimbursements solely through the date of his remaining term of his entire employment agreement duration.
(b) Death/Total Disability . Subject to the terms of Section 2.4(d) below, upon the termination of the Employment Term by reason of the death or Total Disability of the Employee, pursuant to Sections 2.2(a) or (b) , the Employee (or, in the case of death, his estate) shall be entitled to receive his base salary through the date of death or determination of Total Disability and to the end of his employment agreement. If there is less than 12 months remaining on the agreement the continuation of full compensation for the greater of the duration of the remaining entire employment agreement or 12 months.
(c) Without Cause . Subject to the terms of Section 2.4(d) below, if Employee’s employment is terminated Without Cause, pursuant to Section 2.2(e) , Employee will be entitled to receive his base salary through the date of termination plus the greater of the remaining entire employment agreement or eighteen (18) months additional salary to be paid out over the ensuing eighteen (18) month period in accordance with the Company’s normal payroll practice (subject to applicable withholding tax).
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(d) Stabilization . For purposes hereof, “Stabilization” shall be deemed to exist as of any point in time in the event that the earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the 12 full months immediately preceding the month in which Employee’s employment is terminated, exceeds $200,000. If as of the date of termination of Employee’s employment the Company has not achieved Stabilization, then Notwithstanding anything to the contrary contained herein, except as provided in Section 2.4(e) below, the sole compensation Employee shall be entitled to receive from the Company for termination of this Agreement shall be the receipt of his base salary, bonus, benefits and expense reimbursements through the date of termination. In addition, notwithstanding anything to the contrary contained herein, until such point in time that the Company has either raised at least $1,000,000 of additional capital (by debt and/or equity financing from sources other than Executive) or has achieved Stabilization (such point in time being the “Cash Stabilization Point”), it shall not be obligated to pay the full salary called for hereunder, and at the option of the Board of Directors of the Company, the Company can accrue the unpaid portion of the salary or waive the obligation to pay salary, provided: (i) in no event shall the Company pay less than $10,000 per month to Executive for the remaining term of this Agreement
(e) Termination Compensation in Event of Change in Control. Notwithstanding anything to the contrary contained in this Agreement, in the event that following a Change in Control Employee’s employment is terminated due to death, total disability or Without Cause pursuant to Sections 2.2(a), 2.2(b) or 2.2(e), respectively, then Employee (or his estate) will be entitled to receive his base salary over the next ensuing sixty (60) month period in accordance with the Company’s normal payroll practice (subject to applicable withholding tax, as well as all accrued, unpaid salary.
2.5 Business Expenses .
(a) Reimbursement . The Company shall reimburse the Employee for all reasonable, ordinary, and necessary business expenses incurred by him in connection with the performance of his duties hereunder, including, but not limited to, ordinary and necessary travel expenses and entertainment expenses. The reimbursement of business expenses will be governed by the policies for the Company and the terms otherwise set forth herein. Notwithstanding anything to the contrary contained herein, as it relates to automobile expenses (lease or use of vehicle, gas and maintenance), cell phone expenses and internet expenses, the Company shall pay Employee an $800 per month automobile allowance to cover all of such expenses and Employee shall be responsible for paying those expenses directly.
(b) Accounting . The Employee shall provide the Company with an accounting of his expenses, which accounting shall clearly reflect which expenses were incurred for proper business purposes in accordance with the policies adopted by the Company and as such are reimbursable by the Company. The Employee shall provide the Company with such other supporting documentation and other substantiation of reimbursable expenses as will conform to Internal Revenue Service or other requirements. All such reimbursements shall be payable by the Company to the Employee within a reasonable time after receipt by the Company of appropriate documentation therefore.
2.6 Termination for “Cause.” For purposes of this Agreement, “Cause” for Employee’s termination will exist if the Company terminates Employee’s employment for any of
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the following reasons: (i) Employee fails to substantially perform his duties hereunder (other than any such failure due to his physical or mental illness), and such l failure is not remedied within ten (10) business days after written notice from the Company’s board of directors, which written notice shall state that failure to remedy such conduct may results in an involuntary termination for Cause; (ii) Employee engages in willful and serious misconduct (including, but not limited to, an act of fraud or embezzlement) that has caused or is reasonably expected to result in material injury to the Company or any of its Affiliates; (iii) Employee is convicted of or enters a plea of guilty or nolo contendere to a: (A) crime that materially adversely affects his ability to perform his duties on behalf of the Company; or (B) felony; (iv) Employee engages in alcohol or substance abuse which adversely affects his ability to perform his duties; or (v) Employee willfully breaches any of his obligations hereunder or under any other agreement between himself and the Company, and such willful breach is not remedied within ten (10) business days after written notice from the Company’s board of directors, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause.
COMPENSATION AND BENEFITS
3.1 Compensation . During Employee’s employment, the Company shall pay Employee such salary, bonus and other benefits and awards as set forth on Exhibit A .
3.2 Payment . Except as otherwise provided herein, all compensation shall be payable in intervals in accordance with the general payroll payment practice of the Company. The compensation shall be subject to such withholdings and deductions by the Company as are required by law.
3.3 Vacation . The Employee shall be entitled to receive four (4) weeks of personal time off (“PTO”) each year of the Employment Term (prorated for fractional years).
3.4 Other Benefits . Employee shall be entitled to participate in any retirement, pension, profit-sharing, stock option, health plan, insurance, disability income, incentive compensation and welfare or any other benefit plan or plans of the Company which may now or hereafter be in effect and for which the Employee is eligible or for which all executives in general are eligible. Notwithstanding the forgoing, the Company shall be under no obligation to institute or continue the existence of any such benefit plan.
CONFIDENTIALITY, NON-SOLICITATION, NON-COMPETE
AND QUIT CLAIM AGREEMENT
4.1 Non-Disclosure of Confidential Information . Employee hereby acknowledges and agrees that, as of a result of the employment hereunder, Employee will acquire, develop, and use information that is not generally known to the public or to the Company’s industry, including but not limited to, certain records, phone locations, documentation, software programs, email and mobile strategies, price lists, customer lists, contract prices for the Company’s services, business plans and prospects of the Company, equipment configurations, ledgers and general information, employee records, mailing lists, accounts receivable and payable ledgers, financial and other
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records of the Company or its affiliates, and other similar matters, as well as any information disclosed to the Company by any third party under which the Company has a confidentiality obligation to the third party (all such information pertaining to the Company, its affiliates or disclosed to Company under confidentiality from third parties being hereinafter referred to as “Confidential Information”). Employee further acknowledges and agrees that the Confidential Information is of great value to the Company and its affiliates and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of the Company. Accordingly, Employee hereby agrees that: