This Exhibit contains Confidential Information which has been omitted and
filed seperately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request under rule 24b-2 of the Securities and Exchange
Act of 1934 as amended. The Confidential Information on pages 1, 2, 7 and 8 has
been replaced with an *.
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made this __ day of _______,
2000, by and between Gary Kehoe ("Mr. Kehoe") and Gumtech International, Inc.
("Company").
WHEREAS, Mr. Kehoe is currently employed by the Company as its President
and Chief Operating Officer and also serves on the Company's Board of Directors;
WHEREAS, the Company has or will enter into a Shareholders' Agreement
("Shareholders' Agreement") with Swedish Match AB ("SM") pursuant to which SM
and the Company will jointly develop, manufacture, and sell certain products
containing nicotine;
WHEREAS, pursuant to the Shareholders' Agreement, the Company has agreed
that Mr. Kehoe's services will be available in furtherance of the agreement with
Swedish Match for a period of five years;
WHEREAS, Gary Kehoe acknowledges that Gumtech has or will enter into the
Shareholders' Agreement with Swedish Match in reliance upon the agreement
made herein;
WHEREAS, *,
WHEREAS, the Company has agreed that Mr. Kehoe's services will be available
in furtherance *,
WHEREAS, Gary Kehoe acknowledges that Gumtech may *; and
NOW THEREFORE, the Company and Mr. Kehoe wish to enter into this Agreement
to ensure that in the event of Mr. Kehoe's termination of employment with the
Company, his services are available for the above reasons.
Confidential Information on this page has been omitted and filed seperately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
In consideration of the mutual promises set forth herein, the sufficiency
of which is hereby acknowledged by each of the parties hereto, the parties
hereby agree as follows:
1. CONSULTING SERVICES.
(a) GENERAL. Mr. Kehoe agrees that, in the event of his termination of
employment with the Company for any reason, he will provide and perform for the
benefit of the Company and/or the joint venture entity established by the
Company and SM, certain research and development services in the area of
nicotine delivery required under the agreements with Swedish Match, and will
also provide and perform for the benefit of the Company, certain research and
development services *. The Company agrees to hire and engage Mr. Kehoe to
provide the Services.
(b) ACCESS TO FACILITIES. The Company specifically agrees that during
the Term, Mr. Kehoe will have access to the Company's research and development
facilities for the purpose of fulfilling his obligation to provide Services
under this Agreement.
(c) REPORTING RESPONSIBILITIES. In connection with performing Services
under this Agreement, Mr. Kehoe shall report directly to the Company's Chief
Executive Officer or such other senior executive designated by the Company's
Board of Directors.
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2. CONSIDERATION FOR SERVICES. As consideration for the Services, the
Company shall pay Mr. Kehoe: (1) A monthly amount equal to U.S.$ 12,500, (2) A
monthly amount equal to the cost of providing COBRA medical and dental coverage
under Gumtech's medical and dental insurance plans, and (3) Five percent (5%) of
Gumtech's annual Net Income realized from the joint venture with Swedish Match.
Any amounts owed under Item 3 above will be paid within 90 days after the end of
the joint venture's fiscal year. The Company will be under no obligation to pay
or reimburse Mr. Kehoe for any additional services, costs, or expenses incurred
in connection with the Services, except as otherwise provided herein.
3. TERM OF AGREEMENT. The term of this Agreement shall commence on the
first day of the calendar quarter following the calendar quarter in which the
agreement with Swedish Match is signed ("Effective Date") and shall end on the
day prior to the fifth anniversary of the Effective Date (the "Expiration
Date"). The period of time from the Effective Date to the Expiration Date is
referred to as the "Term."
4. TERMINATION OF AGREEMENT. The Company may terminate this Agreement at
any time during the Term with Cause. If the Company terminates this Agreement
with Cause, Mr. Kehoe will not be entitled to any future payments under Section
2 above (other than reimbursement of costs or expenses incurred prior to the
termination). For purposes of this Agreement, the term Cause means (i) theft or
embezzlement from Company or any affiliate; (ii) the commission of any felony
involving moral turpitude that reflects adversely upon the standing of Company
in the community; (iii) fraud directed at Company, any affiliate or any
individual or entity that provides goods or services to, receives goods or
services from or otherwise deals with Company or any affiliate; or (iv) the
repeated and material violation by Mr. Kehoe of this Agreement, any policies of
Company or any directives of Company. A violation will not be considered to be
"repeated" unless such violation has occurred more than once and after receipt
of written notice from Company of such violation.
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The Company may also terminate this agreement at any time without Cause. If
the Company terminates this agreement without Cause for any reason, the Company
will continue to pay Mr. Kehoe all amounts in Section 2 above for the remainder
of the Term.
5. BILLING FOR EXPENSES.
(a) GENERAL. Mr. Kehoe will submit invoices to Company each month for
any costs or expenses incurred by him in the performance of the Services during
the previous month. The invoice should include an itemization of all such costs
and expenses, and any other information that Company may request. Company shall
make payment for all such charges incurred in accordance with the terms of this
Agreement within ten business days after the receipt of each invoice.
(b) PRIOR APPROVAL OF CERTAIN EXPENSES. Any costs or expenses in
excess of $1,000 will only be reimbursed if previously approved by the Company.
The Company acknowledges that Mr. Kehoe will be allowed to fly Business Class
for any travel outside the continental United States required in conjunction
with services provided under this Agreement.
6. INDEPENDENT CONTRACTOR STATUS. The relationship of Mr. Kehoe to Company
under this Agreement is that of an independent contractor, and nothing herein
shall be construed or deemed as creating any other relationship. Without
limiting the foregoing, the relationship between the parties hereto shall not be
deemed to be that of an employer-employee, joint venture, or partnership. As an
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independent contractor, Mr. Kehoe shall have the sole responsibility for paying
taxes, workers compensation, employee benefits (if any), and all similar
obligations, and shall be charged with performing the Services and completing
the tasks in the way that Mr. Kehoe deems the most feasible or desirable in
order to accomplish the tasks in the most efficient manner possible.
7. CONFIDENTIAL INFORMATION AND WORK FOR HIRE. Mr. Kehoe and Company hereby
acknowledge and agree that in connection with the performance of the Services
set forth herein, Mr. Kehoe shall be provided with or shall otherwise be exposed
to or receive certain confidential and/or proprietary information of the Company
or of third parties and may develop certain products, services, methods,
know-how, procedures, formulae, processes, specifications, and information of a
similar nature that relate to the Services rendered hereunder. Mr. Kehoe
therefore agrees not to disclose such information at any time unless authorized
by Company or required by law.
8. AUDIT AND RECORDS. Mr. Kehoe shall keep accurate records and books of
account showing all charges, disbursements, and expenses made or incurred by Mr.
Kehoe in the performance of the Services. The Company shall have the right, upon
reasonable notice, to audit at any time up to one year after payment of its
final invoice, the direct costs, expenses, and disbursements made with respect
to the performance of the Services.
9. TITLE TO MATERIALS AND EQUIPMENT. All materials and equipment furnished
by the Company and all materials and equipment the cost of which is either paid,
or reimbursed to Mr. Kehoe, by the Company will remain the property of the
Company and will be returned to the Company within 30 days of the expiration or
earlier termination of this Agreement, or within 10 days after written demand by
the Company, whichever first occurs.
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10. NOTIFICATION AND DISCLOSURE. Mr. Kehoe will promptly and fully disclose
to the Company in writing, whether or not requested by the Company, any and all
ideas, improvements, discoveries, inventions, trademarks, proprietary
information, know-how, processes, or other developments or improvements
(collectively, the "Inventions"), whether or not Mr. Kehoe believes them to be
patentable, that Mr. Kehoe conceives or first reduces to a plan, practice, or
device, either individually or jointly with others, during the term of this
Agreement, or within the period ending six months after the termination thereof,
and that relate to nicotine delivery products or systems, or arise out of Mr.
Kehoe's use of the Company's equipment, supplies, facilities, or trade secret
information, or result from any work performed by Mr. Kehoe in his capacity as
service provider for the Company, whether conceived or developed during the
Company's business hours or otherwise. Mr. Kehoe will keep current, accurate,
and complete records of all Inventions, which records will belong to the Company
and copies will be kept at all times and stored on Company premises.
11. OWNERSHIP AND PATENTING OF INVENTIONS. During the term that Mr. Kehoe
is providing Services to the Company and at any time thereafter, Mr. Kehoe, at
any time upon the requests of the Company, will execute and deliver an
assignment or assignments of any and all applications, plans, devices, and other
uses relating to the Inventions that the Company deems necessary or convenient
to apply for, obtain, or maintain patents of the United States, and any other
foreign countries, for the Inventions and to assign and convey to the Company or
its nominee the sole and exclusive right, title, and interest in and to the
Inventions. Mr. Kehoe will provide any and all aid and assistance deemed
necessary by the Company to protect the Company's interest in the Inventions
with respect to any disputes arising out of any unauthorized use or infringement
of the Inventions or any patents issued in relation thereto.
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Confidential Information on this page has been omitted and filed seperately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
12. NON-COMPETITION. In consideration of the Company's promises under this
Agreement, including the payments to be made by it to Mr. Kehoe, Mr. Kehoe
agrees that, during the Term, he will not, without the prior written consent of
Company, consult with or act as an advisor to any company or individual in the
field of nicotine or * that violates the terms of the Swedish Match or *.
13. ASSIGNABILITY. This Agreement shall be binding upon and inure to the
benefit of the parties, their legal representatives, successors, and assigns.
This Agreement may not be assigned, transferred, conveyed, or encumbered,
whether voluntarily or by operation of law, by Mr. Kehoe without the prior
written consent of the Company (which may be granted or withheld in the
Company's sole and absolute judgment).
14. SEVERABILITY. If any one or more of the provisions or parts of a
provision contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, but this Agreement shall be reformed and construed as if such
invalid, illegal or unenforceable provision or part of a provision had never
been contained herein and such provisions or part thereof shall be reformed so
that it would be valid, legal and enforceable to the maximum extent permitted by
law. Any such reformation shall be read as narrowly as possible to give the
maximum effect to the mutual intentions of Mr. Kehoe and the Company.
15. AMENDMENTS, ETC. No modification, amendment, or waiver of any provision
of this Agreement shall be effective unless the same shall be in writing and
signed by each of the parties hereto. Any waiver of any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which given.
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Confidential Information on this page has been omitted and filed seperately
with the Securities and Exchange Commission pursuant to a Confidential Treatment
Request.
16. NO WAIVER; REMEDIES. No failure on the part of the Company to exercise,
and no delay in exercising, any right, power, or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. In the event that Mr. Kehoe breaches this agreement by
non-performance or termination, Mr. Kehoe agrees that all monies paid under this
contract shall be refunded to Gum Tech. Non-performance is defined as failure
during the Term hereof to meet the Company's obligations to provide Mr. Kehoe's
consulting services under the agreements with Swedish Match and *. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
17. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of Arizona.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
GUMTECH INTERNATIONAL, INC.
By:
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Its:
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"MR. KEHOE"
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