Employment Agreement With Kenneth L. Sabot



 Exhibit 10.7 
  
 Employment Agreement with Kenneth L. Sabot 







 EMPLOYMENT AGREEMENT – Kenneth L. Sabot 
  
 THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between Royal BodyCare,
Inc. (“Employer”) located at 2301 Crown Court, Irving, Texas 75038 and Kenneth L. Sabot (“Employee”), residing at 7201 Summitview Drive, Irving, Texas 75063. 
  
 The parties to this Agreement declare that: 
  
 The Employer is engaged in, among other businesses, the international distribution of nutritional supplements and personal care products through the network marketing
distribution model, and the distribution of wound care and oncology care products. 
  
 The Employee is willing to be employed by the Employer, and the Employer is willing to employ the Employee, on the terms, covenants, and conditions set forth in this Agreement. 
  
 In consideration of the mutual promises set forth in this Agreement, the Employer and the Employee agree as follows: 
  
 Section 1. Effective Date. The Effective Date of this Agreement shall be
January 1, 2004. 
  
 Section 2. Employment Title and Duties. The
Employer shall employ the Employee in the capacity of Senior Vice President – Operations. In this capacity, Employee shall have the responsibility to perform all duties that are customarily performed by one holding that position in other, same,
or similar businesses or enterprises as that engaged by Employer. The Employee shall be responsible for operations related to the Employer’s business in the US, Canada and all other international territories, whether operations are conducted
through a license agreement, or through an entity owned by or affiliated with the Employer. Operations shall include, but not be limited to, purchasing, inventory management, shipping, information technology, facilities management, and the call
center that supports Employer’s network marketing distribution business. A diagram of the Employee’s functional responsibility is attached as Exhibit A. The Employee accepts this employment, subject to the general supervision and pursuant
to the orders and direction of the Employer. The Employee shall also render such other and unrelated services and duties as may be assigned from time to time by the Employer. 








 Employment Agreement – Kenneth L. Sabot 
 Page 2 
  

 Section 3. Compensation of the Employee. The Employer shall pay the Employee in full payment for the
Employee’s services under this Agreement, the following compensation: 
  

	 	a.	Annual Base Salary. Employee’s annual base salary shall be Two Hundred Thousand Dollars ($200,000) per year payable bi-weekly in twenty-six (26) equal payments.


  

	 	b.	Incentive Bonus. Employee shall be paid a cash incentive bonus as described in Exhibit B. 

  

	 	c.	Uniform Benefits. Employee shall receive uniform benefits as set forth in Employer’s manual for executive employees, such benefits to include but not be limited
to personal time off, holidays, retirement benefits and health insurance benefits. EMPLOYER RESERVES THE RIGHT UNILATERALLY TO AMEND ANY AND ALL PARTS OF THE EMPLOYER’S MANUAL FOR EXECUTIVE EMPLOYEES AT ITS SOLE DISCRETION.


  
 Section 4. Best Efforts of the Employee. The
Employee agrees to perform all of the duties pursuant to the express and implicit terms of this Agreement to the reasonable satisfaction of the Employer. The Employee further agrees to perform such duties faithfully and to the best of his ability,
talent, and experience. 
  
 Section 5. Place of Employment. The
Employee shall render such duties at 2301 Crown Court, Irving, Texas 75038 and at such other places as the Employer shall in good faith require or as the interest, needs, business, or opportunity of the Employer shall require. 
  
 Section 6. Non-Competition with the Employer during the Term of Employment. The
Employee shall devote all his time, attention, knowledge, and skills solely to the business and interest of the Employer, and the Employer shall be entitled to all of the benefits and profits arising from the work of the Employee. The Employee shall
not, during the term of this Agreement, be interested directly or indirectly, in any manner, as partner, officer, director, shareholder, advisor, employee, or in any other capacity in any other business similar to the Employer’s business or any
allied trade. However, nothing contained in this section shall prevent or limit the right of the Employee from investing in the capital stock or other securities of any corporation whose stock or securities are publicly owned and traded on any
public exchange, nor shall anything contained in this section prevent or limit the Employee from investing in real estate. 
  
 Section 7. Restrictions on the Use of Trade Secrets and Records. During the term of employment under this Agreement, the Employee may have access to various
trade secrets, consisting of formulas, patterns, devices, inventions, processes, and compilations of information, records and specifications, all of which are owned by the Employer and regularly used in the operation of the Employer’s business.
All files, records, customer lists, documents, drawings, specifications, equipment, and similar items relating to the business of the Employer, whether they are prepared by the Employee or come into the Employee’s possession in any other way
and whether or not they contain or constitute 
  










 Employment Agreement – Kenneth L. Sabot 
 Page 3 
  

 trade secrets owned by the Employer, are and shall remain the exclusive property of the Employer and shall not be
removed from the premises of the Employer under any circumstances whatsoever without the prior written consent of the Employer. The Employee agrees not to divulge, misappropriate, or disclose any of these trade secrets and records directly or
indirectly, to any person, firm, corporation, or other entity in any manner whatsoever, either during the term of this Agreement or at any time thereafter except as required in the course of employment. 
  
 Section 8. Term. This Agreement shall be effective for period of three (3)
years beginning on January 1, 2004 and ending on December 31, 2006. This Agreement shall be automatically renewed for an additional one-year period upon expiration of its initial term and each anniversary thereafter, unless terminated by either
Employer or Employee upon thirty (30) days prior written notice to the other. 
  
 Section 9. Termination. 
  

	 	a.	Definition. For purposes of this Section 9, “Change of Control” shall be defined as follows: 

  
 (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than Employer’s current Chief Executive Officer, Clinton H. Howard, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Employer
representing fifty percent (50%) or more of the combined voting power of Employer’s then outstanding securities; 
  
 (ii) as a result of, or in connection with, any tender offer or exchange offer, merger, or other business combination (a “Transaction”), the
persons who were directors of Employer immediately before the Transaction shall cease to constitute a majority of the Board of Directors of Employer or any successor to Employer; 
  
 (iii) Employer is reorganized, merged or consolidated with another corporation and as a result of the reorganization,
merger or consolidation less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting corporation shall then be owned in the aggregate by the former stockholders of Employer; 
  
 (iv) Employer sells or disposes of all or substantially all of its assets
to any person, other corporation, or other legal entity not controlled by Employer, or the shareholders approve a plan of complete liquidation or an agreement for the sale or disposition of Employer in a majority; or, 
  










 Employment Agreement – Kenneth L. Sabot 
 Page 4 
  

 (v) another event occurs that the Board deems to be a change in the control of Employer. 

 

	 	b.	Non-renewal by Employer. If the Employer elects to terminate this Agreement pursuant to the terms of Section 8, the Employee, if requested by the Employer, shall
continue to render services, and shall be paid compensation as provided in this Agreement up to the date of termination, and shall be entitled to receive payment for accrued, unused personal time off as provided in the Employer’s manual for
executive employees. In addition, the Employee shall continue to be paid his base salary for a period of six (6) months following the date of termination, less all amounts required to be held and deducted. 

  

	 	c.	Non-renewal by Employee. If the Employee elects to terminate this Agreement pursuant to the terms of Section 8, the Employee shall continue to render services and
shall be paid compensation as provided in this Agreement up to the date of termination. In addition, Employee shall be entitled to receive payment for accrued, unused personal time off as provided in the Employer’s manual for executive
employees. 

  

	 	d.	Cause. If the Employee willfully breaches or habitually neglects the performance of duties required under the terms of this Agreement (“Cause”), the Employer
may terminate this Agreement by giving written notice of termination to the Employee without prejudice to any other remedy to which the Employer may be entitled either at law, in equity, or under this Agreement. In this case, Employee shall be paid
compensation as provided in this Agreement up to the date of termination, and shall be entitled to receive payment for accrued, unused personal time off as provided in the Employer’s manual for executive employees. 

  

	 	e.	Good Reason. If the Employer willfully breaches any material term of this Agreement, or in the event of a Change of Control (collectively “Good Reason”),
Employee may terminate this Agreement by giving written notice of termination to the Employer without prejudice to any other remedy to which the Employee may be entitled either at law, in equity, or under this Agreement. In this case, Employee shall
be paid compensation as provided in this Agreement up to the end of the initial term or renewal term in effect, and shall be entitled to receive payment for accrued, unused personal time off as provided in the Employer’s manual for executive
employees. In addition, the Employee shall continue to be paid his base salary for a period of six (6) months following the date of termination, less all amounts required to be held and deducted. 

  

	 	f.	Death. This Agreement shall be deemed terminated as of the date of Employee’s death. In this case, the Employer shall pay compensation as provided in this
Agreement up to the date of termination. In addition, the Employer shall be obligated to pay Employee’s accrued, unused personal time off as provided for terminating employee’s in the Employer’s manual for executive employees.


  










 Employment Agreement – Kenneth L. Sabot 
 Page 5 
  


	 	g.	Disability. Should the Employee be unable to perform his duties under this Agreement by reason of disability for a period of ninety (90) days, Employer shall have the
right to terminate this Agreement upon written notice to Employee. During the period that Employee fails to perform his duties as a result of disability, the Employee shall continue to receive compensation as provided by this Agreement to the extent
Employee has accrued, unused personal time off available. Should Employee exhaust accrued, unused personal time off prior to a date six (6) months following the date on which Employee was determined to be disabled, Employer will continue to pay the
Employee 50% of the Employee’s base compensation until the sooner of (i) the date on which Employee begins to receive disability benefits under a long-term disability insurance policy provided to Employee by or through Employer, or (ii) the
date that is six (6) months after the date on which Employee was determined to be disabled. It is the intent of the parties hereto that, in the event Employee is disabled, Employer’s maximum obligation for payment of accrued, unused personal
time off is a period of six (6) months. 

  

	 	h.	Early Termination by Employer. Should Employer terminate this Agreement prior to the end of the initial term or any renewal term in effect, other than by reason of
Cause, death or disability, whether or not such termination is in connection with or as a result of a Change of Control, Employee shall be paid compensation as provided in this Agreement up to the end of the initial term or renewal term in effect,
and shall be entitled to receive payment for accrued, unused personal time off as provided in the Employer’s manual for executive employees. In addition, the Employee shall continue to be paid his base salary for a period of six (6) months
following the date of termination, less all amounts required to be held and deducted. 

  

	 	i.	Early Termination by Employee. Should Employee terminate this Agreement prior to the end of the initial term or any renewal term in effect, other than for Good Reason,
death or disability, Employee shall be paid compensation as provided in this Agreement up to the date of termination, but shall not be entitled to receive payment for any accrued, unused personal time off, notwithstanding the provisions of the
Employer’s manual for executive employees. 

  
 Section 10. Indemnity. The Employer shall indemnify the Employee and hold the Employee harmless for any acts or decisions made by the Employee in good faith while performing services for the Employer and will use its best
efforts, as may reasonably be required, to maintain coverage in the amount of $1,000,000 for the Employee under an insurance policy covering the officers and directors of the Employer against lawsuits. The Employer shall pay all expenses, including
attorney’s fees, actually and necessarily incurred by the Employee in connection with any appeal thereon, including the cost of court settlements. 
  










 Employment Agreement – Kenneth L. Sabot 
 Page 6 
  

 Section 11. Effect of Partial Invalidity. The invalidity of any portion of this Agreement shall not
affect the validity of any other provision. In the event that any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall remain in full force and effect. 
  
 Section 12. Entire Agreement. This Agreement contains the complete Agreement
between the parties and shall supersede all other agreements, either oral or written, between the parties. The parties stipulate that neither of them has made any representations except as are specifically set forth in this Agreement and each of the
parties acknowledges that they have relied on their own judgment in entering into this Agreement. 
  
 Section 13. Assignment. Neither party to this Agreement may assign their rights under this Agreement unless the other party so consents to the assignment in writing. 
  
 Section 14. Notices. All notices, requests, demands, and other communications
shall be in writing and shall be given by registered or certified mail, postage prepaid, to the addresses shown on the first page of this Agreement, or to such subsequent addresses as the parties shall so designate in writing. 
  
 Section 15. Arbitration. Any controversy or claim arising out of this
Agreement, or the breach of this Agreement shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator may be entered in any
court having jurisdiction. 
  
 Section 16. Attorney’s Fees. If
any action at law or in equity, including an action for declaratory relief is brought to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorney’s fees as determined by the court in
the same action. 
  
 Section 17. Amendment. Any modification,
amendment or change of this Agreement will be effective only if it is in a writing signed by both parties. 
  
 Section 18. Governing Law. This Agreement, and all transactions contemplated by this Agreement, shall be governed by, construed, and enforced in accordance with the laws of the State of Texas.

  
 Section 19. Headings. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall not affect in any way the meaning or interpretation of this Agreement. 
  










 Employment Agreement – Kenneth L. Sabot 
 Page 7 
  

 Section 20. MANAGEMENT ORGANIZATION. EMPLOYER, ACTING THROUGH ITS CHIEF EXECUTIVE OFFICER WITH THE
CONCURRENCE OF THE INDEPENDENT MEMBERS OF EMPLOYER’S BOARD OF DIRECTORS, RESERVES THE RIGHT UNILATERALLY TO REVISE THE ORGANIZATION OF ANY AND ALL OF THE MANAGEMENT FUNCTIONS AND RELATED REPORTING RELATIONSHIPS AT ITS SOLE DISCRETION. THE
CONTENTS OF THE DIAGRAM ATTACHED AS EXHIBIT A SHALL BE SUBORDINATE TO THE AUTHORITY OF THE EMPLOYER TO REVISE MANAGEMENT ORGANIZATION AND RELATED REPORTING RELATIONSHIPS AS PROVIDED IN THIS SECTION. 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement on this 20th day of February, 2004. 
  

					
	 EMPLOYEE:
	 	 EMPLOYER:

		
	 	 	 Royal BodyCare, Inc.

			
	 /s/ Kenneth L. Sabot

	 	 By:
	 	 /s/ Clinton H. Howard


	 (Signature)
	 	 	 	 (Signature)

			
	 Kenneth L. Sabot
	 	 	 	 Clinton H. Howard

	 	 	 	 	 Chief Executive Officer


  









 EXHIBIT A 
  

	
	










 EXHIBIT B 
  

CASH INCENTIVE BONUS 
  
 In 2004, if the Employer’s Pre-tax Income exceeds two hundred and fifty thousand dollars ($250,000) as the “Base Income”, Employee shall be awarded a bonus
for that year in an amount equal to 2.0 % of the Pre-tax Income of the Employer that exceeds the Base Income. The maximum cash incentive bonus that may be earned by Employee in any calendar year is two (2) times Employee’s annual base salary.

  
 Example: If the Pre-tax income of the Employer for 2004 is one million dollars
($1,000,000), Employee will be paid 2% of seven hundred and fifty thousand dollars ($750,000) or fifteen thousand dollars ($15,000). 
  
 Employee shall be eligible for additional bonuses at the discretion of Employer’s Board, and will participate in an annual bonus plan that will be adopted in advance
each year. 
  
 For purposes of this Exhibit, “Pre-tax Income”
shall mean earnings (loss) from continuing operations before income taxes, as reported in the Employer’s audited financial statements prepared in accordance with generally accepted accounting principles.