Exhibit 10.03
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is hereby entered into and made
effective this 2nd day of December, 2004, by and between Diatect International
Corporation, a California corporation, with it's principal place of business
located in Heber City, Utah (the "Company") and David Andrus of Heber City,
Utah, ("Andrus").
RECITALS
1. The Company is engaged in the business of developing,
manufacturing and marketing environmentally benign,
diatomaceous earth ("DE") based insecticide products, and
desires to acquire qualified, experienced leadership in this
endeavor.
2. In view of his considerable experience and effective service
to the Company as Executive Vice President of Operations and
as a director, the Company has determined that it desire to
employ Andrus as its President and Chief Executive Officer for
the period set forth below.
3. In consideration for the terms of this Agreement, Andrus
desires to be employed by the Company as its President and
Chief Executive Officer.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual
covenants, promises, terms and conditions hereinafter set forth, the parties
hereto agree as follows:
I. EMPLOYMENT. The Company hereby employs, engages and hires
Andrus as its President and Chief Executive Officer on the
terms and conditions hereinafter set forth, and Andrus hereby
accepts such employment and agrees to perform such services
and duties and to carry out such responsibilities as
hereinafter set forth.
II. TERMS OF EMPLOYMENT. The term of employment under this
Agreement shall be for a period of two (2) years and
twenty-eight (28) days commencing as of December 3, 2004 and
terminating on December 31, 2006, subject, however, to prior
termination as hereinafter provided. Unless otherwise agreed
in writing, subject to mutual agreement of the parties,
continued employment of Andrus by the Company after December
31, 2006 shall be for a term and on the conditions to be
agreed to by the parties prior to the expiration of the
Agreement.
III. SERVICES, DUTIES AND RESPONSIBILITIES
a. Andrus will faithfully and to the best of his ability
serve the Company in his capacity as its President
and Chief Executive Officer, subject to the policy
direction of the Board of Directors of the Company.
Andrus shall perform such services and duties as are
customarily performed by holding the position of
President and Chief Executive Officer of a public
corporation.
b. As President and Chief Executive Officer, Andrus
shall be responsible for the overall management of
the Company's business. Andrus will devote his full
time, energy and skill during regular business hours
to his employment with the Company. Such duties shall
be rendered at Heber City, Utah, and sat such other
place or places as the Company shall in good faith
require or as interests, needs, business or
opportunity of the Company shall require. While
occupying the office of the President and Chief
Executive Officer, and as a member of the Board of
Directors, Andrus shall be willing to occupy the
officer of Chairman of the Board of Directors and
shall be willing to serve as Chairman of the
Executive Committee of the Board of Directors. Andrus
shall be responsible on a continuing basis for the
development, implementation and maintenance of a
business plan for the corporation and all activities
defined therein. He shall be responsible for
coordination of efforts of the corporate and
subsidiary officers and management teams and their
respective staffs and for the maximization of
corporate performance and overall profitability of
the corporation and its respective subsidiaries;
conditioned, however, upon the Company's providing
sufficient funds for Andrus to so manage and regulate
the Company.
c. Andrus shall be responsible for reporting in writing
to the Board of Directors on a regular basis.
d. As Chief Executive Officer, Andrus shall be
responsible for the development, coordination and
execution of all aspects of the operation as directed
by the Board of Directors. Subject to the Company's
continuing ability to pay Andrus' salary on a regular
basis as hereinafter provided, Andrus will devote
full time, energy and skill during regular business
hours to providing services and carrying out the
duties and responsibilities of his employment with
the Company. Such duties shall be rendered at the
principal place of business of the Company and at
such other places as the Company shall in good faith
require or as interests, needs business or
opportunity of the Company shall require.
e. Andrus shall not directly or indirectly represent or
be engaged by or be an employee of any other person,
firm or corporation or be engaged for his services as
an officer, general manager or consultant in any
other business or enterprise while he is in the
employ of the Company, unless specifically authorized
to do so. It is understood, however, that the
foregoing in no way prevents Andrus from owning stock
or having economic interest in other businesses or
enterprises. Furthermore, Andrus may serve on the
board of directors of other companies so long as such
service does not conflict with his interest in and
duties of the Company. Also, he may hold the position
of corporate officer in any family or personal
investment business so long as it does not conflict
with his interest in and duties to the Company.
IV. COMPENSATION
a. Base Salary. The Company shall pay Andrus a base
salary at the rate of One Hundred and Fifty Thousand
Dollars ($150,000) per year, payable twice a month on
the first and fifteenth days of each month while this
Agreement shall be in force. Said salary payments
will be subjected to withholding taxes, e.g., Federal
Income Tax, FICA, State and/or Local Withholding
Taxes. Whereas such salary shall not be decreased
during the term of this Agreement without the consent
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of Andrus, it shall be subject to increase by the
Board of Directors which shall review the salary
periodically, and at least annually. It is understood
that Company may not be able to pay this base salary
on a regular basis. In the event that any portion of
said salary is not paid as scheduled on the basis of
fiscal inability of the Company to pay, such event
shall not constitute a default. In such event, Andrus
may elect to defer said payment shortfall, with
interest thereon, simple fixed, at the rate of 10%,
or, on a quarterly basis (at the end of each calendar
quarter) take payment of any portion of said
shortfall in form of restricted rule 144K common
stock of the Company at the average price quoted over
the ten (10) day period immediately prior to the end
of said quarter.
b. Salary Subject to "Take or Pay". The foregoing salary
of Andrus shall be subject to "take or pay"
provisions, whereby the Company hereby commits to pay
said salary (including any increases from date) for
the entire term of this Agreement, regardless of
whether his employment is terminated hereunder at any
earlier date, unless such termination is for cause
based on malfeasance, as defined in Section X (b)
herein below.
c. Incentive Bonus Stock. The Company here by grants and
issues to Andrus an incentive bonus of three million
(3,000,000) shares of restricted, non-diluteable
stock of the Company. Two million of these shares are
granted without restriction and the remaining one
million shall follow the vesting/performance items
noted below:
i. 250,000 shares are fully vested to Andrus
upon the successful presentation of the Fire
Ant product to 70 of the local vendor number
stores of the awarded big box retailer.
ii. 250,000 shares are fully vested to Andrus
upon the receipt of orders from at least 50
of the local vendor number stores of the
awarded big box retailer.
iii. 250,000 shares are fully vested to Andrus
upon reaching sales of $250,000 to the local
vendor number stores of the awarded big box
retailer.
iv. 250,000 shares are fully vested to Andrus
upon reaching sales of $500,000 to the local
vendor number stores of the awarded big box
retailer.
d. Performance Bonus. Commencing at the date hereof,
Andrus shall be granted a bonus equal to one percent
(1%) of the gross sales receipts determined quarterly
based on the filing of the 10Q report with the SEC.
Said payment shall occur within thirty (30) days
following the filing of the 10Q report.
e. Deferred Compensation Plan. As soon as it is
economically feasible and appropriate as determined
by the Board of Directors of the Company, the Company
will establish a Deferred Compensation Plan for its
senior executives, including Andrus.
f. Benefits. As soon as it is financially able, as
determined by the Board of Directors, the Company
shall provide the following benefits to Andrus:
i. Participation in a group medical plan;
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ii. Comprehensive dental care plan;
iii. Life insurance at the rate of at least four
times Andrus' annual salary, with the
beneficiary of said insurance to be named by
Andrus;
iv. Disability insurance;
v. A reasonable vehicle allowance
V. BUSINESS FACILITIES AND EQUIPMENT. The Company shall provide
Andrus, or shall pay for, suitable work facilities and
adequate business accommodation, office equipment and devices
as may be reasonably necessary for Andrus to perform his
services and carry out his responsibilities and duties to the
Company.
VI. DIRECTORS AND OFFICERS INSURANCE. As soon as it is financially
able, as determined by the Board of Directors, the Company
shall purchase and maintain Directors' and Officers' liability
insurance, including coverage for Andrus, in an amount of not
less than five million dollars ($5,000,000).
VII. INDEMNIFICATION. The Company shall indemnify Andrus, his
heirs, executors, administrators and assigns, against, and he
shall be entitled without further act on his part, to be
indemnified by the Company for, all expenses, including, but
not limited to, amounts of judgments, reasonable settlement of
suits, attorney fees and related costs of litigation,
reasonably incurred by him in connection with or arising out
of any action, suit or cause of action against the Company
and/or against Andrus as a result of his having been, an
officer and/or director of the Company, or, at its request, of
any other corporation which the Company owns or of which the
Company is a stockholder or creditor, whether or not he
continues to be such officer or director at the time of
incurring said expenses. Said indemnity shall apply, but not
be limited to, expenses incurred in respect to:
a. Any matter in which he shall be finally adjudged in
any such action, suit or proceeding to be liable for
gross negligence or intentional misconduct in the
performance of his duty as such officer and/or
director, or;
b. Any matter in which a settlement is effected to an
amount in excess of the amount of reasonable expenses
incurred by or on behalf of Andrus in such action,
suit or proceeding to the point of final settlement
and resolution.
Further, nothing in this section regarding indemnification
shall be construed to require or authorize the Company to
indemnify Andrus against any liability to which he would, but
for settlement or compromise of such action, suit or
proceeding, be otherwise subject by reason of his gross
negligence or intentional misconduct in the performance of his
duties as an officer and/or director of the Company. The
foregoing right of indemnification shall not be exclusive of
other rights to which Andrus may be entitled.
VIII. BUSINESS EXPENSE REIMBURSEMENT. The Company shall reimburse
Andrus for all reasonable business expenses incurred by him in
the performance of his services, duties and responsibilities,
including, but not limited to, transportation, travel
expenses, board and room, entertainment, and other business
expenses incurred within the scope of presentation to the
Company by Andrus of an itemized accounting of said expenses
substantiated by account books, receipts, bills and other
documentation where applicable. If reimbursement, advances or
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allowances are based on permitted mileage or per diem rates,
then Andrus shall submit specification of relevant mileage,
destination, dates and other supporting information required
for tax purposes.
IX. VACATION. During the term of this Agreement, Andrus shall have
the right to six (6) weeks of paid vacation during each year.
Vacation time may be taken all at once or in segments as
desired by Andrus, subject to reasonable notice to the Company
for the purpose of coordinating work schedules. Such vacation
is not cumulative from year to year.
X. TERMINATION OF EMPLOYMENT.
a. Termination for Cause, Generally. Under this
Agreement, the Company shall have the right to
terminate the employment of Andrus for cause, which
shall consist of two classes: cause involving
malfeasance on the part of Andrus, and causes not
involving malfeasance (no-fault). Upon termination,
all Company property and credit cards in the
possession and control of Andrus must be returned to
the Company.
b. Malfeasance Termination for Cause. In the event the
employment of Andrus is terminated on the grounds of
malfeasance, then, in that event, all compensation,
including salary, stock options, bonuses, deferred
compensation and benefits cease immediately.
Termination for cause on grounds of malfeasance
included, but is not limited to, the following
conduct:
i. Breach of restrictive covenant contained
herein against competition or disclosure of
trade secrets;
ii. Continued failure and refusal to carry out
the duties and responsibilities of the
office under this Agreement within a
reasonable time following written notice
from the Board of Directors requiring the
subject performance;
iii. Failure to cure a material breach of this
Agreement within ten (10) days after
receiving written notice from the Board of
Directors;
iv. Failure to cease conduct unbecoming the
President and CEO of the Company after
receipt of written notice from the Board of
Directors to cease such conduct;
v. Commission of a felony.
c. No-Fault Termination for Cause. At no fault of
Andrus, termination of employment hereunder for cause
can occur as the result of death, disability, sale of
the Company (asset or stock sale), merger or
consolidation, "takeover" of control and operation of
the business by an outside entity or group, or
termination of the business for any reason
whatsoever.
d. Rights, Stock and Benefits Surviving No-Fault
Termination for Cause. Termination of Andrus'
employment for cause based upon any of the no-fault
reasons or events described in the foregoing
subsection c, shall not effect Andrus' right to the
following compensation under this Agreement:
i. Base salary for the entire term of this
Agreement.
ii. Full vesting of the Incentive Bonus Stock.
iii. Performance Bonus for two quarters following
termination.
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iv. Deferred compensation vested at time of
termination.
v. Company benefits including, but not limited
to, group medical insurance, comprehensive
dental plan, life insurance, disability
insurance, and car allowance shall be
continued for a period of six (6) months
following such termination of employment.
e. Sale/Take-Over Termination Bonus. In the event the
employment of Andrus is terminated because of the
sale of the business (either asset or stock sale),
merger, consolidation, or by "takeover" by any
outside entity or group, then, Andrus shall be
entitled to a termination bonus equal to three times
the amount of bonus he received in the aggregate over
the four quarters immediately preceding such
termination of employment, but in no event shall said
bonus be less than five hundred thousand dollars
($500,000).
f. Resignation or Withdrawal. In the event Andrus'
employment is terminated by his voluntary resignation
or withdrawal, then, in that event, the following
will apply unless otherwise agreed between the
parties in writing:
i. If such resignation or withdrawal occurs
during the first year of the term of this
Agreement, then Andrus will be entitled only
to two weeks salary following notice of
resignation or withdrawal. Company benefits
set forth in Section IV (f) shall be
terminated at the end of the calendar month
next following the date of notice of
resignation or withdrawal. All rights to
stock options, bonuses or deferred
compensation not granted or vested shall be
forfeited.
ii. If such resignation or withdrawal occurs
during the second year of the term of this
Agreement, then Andrus will be entitled only
to two months salary following notice of
resignation or withdrawal. Company benefits
set forth in Section IV (f) shall be
terminated at the end of the calendar month
next following the date of notice of
resignation or withdrawal. All rights to
stock options, bonuses or deferred
compensation not granted or vested shall be
forfeited.
g. Death or Disability. In the event Andrus' employment is
terminated by death or upon medical certification of total
disability ("disability"), then the following will apply in
that respective event:
i. In the event of Andrus' death, the Company
shall:
Pay to Andrus' estate an amount equal to
Andrus' base salary for a three-month period
following his death;
Grant to Andrus' estate the fully vesting of
his Incentive Stock Bonus;
Pay to Andrus' estate an amount equal to the
bonus Andrus would have received for the next two
quarters following termination;
Continue providing the medical and dental
benefits to Andrus' survivors (to the extent
applicable) for a period of one year.
iii. In the event of Andrus' disability, the
Company shall:
Pay to Andrus' estate an amount equal to
Andrus' base salary for a three-month period
following his disability;
Grant to Andrus fully vesting of his
Incentive Stock Bonus;
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Pay to Andrus an amount equal to the bonus
Andrus would have received for the next two quarters
following termination;
Continue providing the medical and dental
benefits to Andrus for a period of two years.
XI. RESTRICTIVE COVENANTS
a. Confidential Information. Andrus covenants not to
disclose the following specified confidential
information to competitors or to others outside of
the scope of reasonably prudent business disclosure,
at any time during or after the termination of his
employment by the Company.
i. Customer lists, contracts, and other sales
and marketing information;
ii. Financial information, cost data;
iii. Formulas, trade secrets, processes and
devices related to the product and its
manufacture;
iv. Supply sources, contracts;
v. Business opportunities for the product or
new developing business for the Company;
vi. Proprietary plans, models and other
proprietary information of the Company.
b. Affirmative Duty to Disclose. Andrus shall promptly
communicate and disclose to the Company all
observations made, information received, and data
maintained relating to the business of the Company
obtained by him as a consequence of his employment by
the Company. All written material, possession during
his employment with the Company concerning business
affairs of the Company or any of its affiliates, are
the sole property of the Company and its affiliates,
and Andrus is obligated to make reasonably prompt
disclosures of such information and documents to the
Company, and, further, upon termination of this
Agreement, or upon request of the Company, Andrus
shall promptly deliver the same to the Company of its
affiliates, and shall not retain any copies of same.
c. Covenant Not to Compete. For a period of three (3)
years following the termination of his employment
with the Company, Andrus shall not work, directly or
indirectly, for a competitor of the Company, nor
shall he himself establish a competitive business.
This restrictive covenant shall apply worldwide but
shall be limited to businesses that use diatomaceous
earth and/or pyrethrum in any of its products which
they manufacture, distribute, sell, market or
otherwise promote.
d. Material Harm Upon Breach. The parties acknowledge
the unique and secret nature of the Company's
formulas for the composition of its DE-based products
and related proprietary information, and that
material irreparable harm occurs to the Company if
these restrictive covenants are breached. Further,
the parties hereto acknowledge and agree that
injunctive relief is not an exclusive remedy and that
an election on the part of the Company to obtain an
injunction does not preclude other remedies available
to the Company.
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e. Arbitration. Any controversy, claims, or matter in
dispute occurring between these parties and arising
out of or relating to this Agreement shall be
submitted by either or both of the parties to
arbitration administered by the American Arbitration
Association or its successor and said arbitration
shall be final and absolute. The Commercial
Arbitration Rules of the American Arbitration
Association shall apply subject to the following
modifications:
i. The venue for said arbitration shall be Salt
Lake City, Utah, and the laws of the State
of Utah regarding arbitration shall apply to
said arbitration.
ii. The decision of the arbitration panel may be
entered as a judgment in any court of the
general jurisdiction in any state of the
United States or elsewhere.
XII. NOTICE. Except as otherwise provided herein, all notices
required by this Agreement as well as any other notice to any
party hereto shall be given by certified mail (or equivalent),
to the respective parties as required under this Agreement or
otherwise, to the following addresses indicated below or to
any change of address given by a party to the others pursuant
to the written notice.
COMPANY: Diatect International, Inc.
875 S. Industrial Parkway
Heber City, UT 84032
ANDRUS: David Andrus
1248 S. Pangea Cir
Heber City, UT 84032
XIII. GENERAL PROVISIONS
a. Entire Agreement. This Agreement constitutes and is
the entire Agreement of the parties and supersedes
all other prior understandings and/or Agreements
between the parties regarding the matters herein
contained, whether verbal or written.
b. Amendments. This Agreement may be amended only in
writing signed by both parties.
c. Assignment. No party of this Agreement shall be
entitled to assign his or its interest herein without
the prior written approval of the other party.
d. Execution of Other Documents. Each of the parties
agree to execute any other documents reasonably
required to fully perform the intention of this
Agreement.
e. Binding Effect. This Agreement shall inure to and be
binding upon the parties hereto, their agents,
employees, heirs, personal representatives,
successors and assigns.
f. No Waiver of Future Breach. The failure of one party
to insist upon strict performance or observation of
this Agreement shall not be a waiver of any future
breach or of any terms or conditions to this
Agreement.
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g. Execution of Multiple Originals. Two (2) original
counterparts of this Agreement shall be executed by
these parties.
h. Governing Law. This Agreement shall be governed and
interpreted by the laws of the State of Utah.
i. Severability. In the event any provision or section
of this Agreement conflicts with the applicable law,
such conflict shall not affect the provisions of the
Agreement with can be given effect without the
conflicting provisions.
WHEREFORE, this Agreement is hereby executed and made effective day and year
first above written.
COMPANY DIATECT INTERNATIONAL, INC.
BY /s/ John L. Runft
-------------------------
John Runft, On behalf of
the Board of Directors
ANDRUS /s/ David Andrus
-------------------------
David Andrus
ATTEST:
/s/ Margie Humphries
--------------------------------------
Margie Humphries, Corporate Secretary
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