Document:

Exhibit 10.1

                                  May 29, 2001

Guaranty Bank
8333 Douglas Avenue
Dallas, Texas 75225

     Re:  Modification of an existing $65,000,000.00 guidance line from Guaranty
          Bank, a federal  savings  bank  (formerly  known as "Guaranty  Federal
          Bank,  F.S.B.")  ("Lender") to Legacy/Monterey  Homes L.P., an Arizona
          corporation  ("Borrower");  such  loan and  other  indebtedness  being
          guaranteed by Meritage Corporation, a Maryland corporation,  MTH-Texas
          GP, Inc.,  an Arizona  corporation  and MTH-Texas LP, Inc., an Arizona
          corporation (collectively referred to as "Guarantor")

Gentlemen:

     Reference is made to that certain Master Loan Agreement dated as of January
31, 1993 (and all amendments  thereto,  if any) (the "Loan  Agreement ") between
Lender and Borrower governing a $65,000,000.00  loan (as decreased) (the "Loan")
for the acquisition  and/or  refinancing of residential  lots located in certain
counties in the State of Texas as described  therein,  and the  construction  of
single-family  residences  thereon.  Unless otherwise  expressly defined herein,
each term used herein with its initial letter capitalized shall have the meaning
given to such term in the Loan Agreement. As used in this letter agreement,  the
term "Loan  Instruments"  shall mean and include (i) the "Loan  Instruments"  as
defined in the Loan Agreement,  (ii) the Seventh Modification Agreement dated as
of even date  herewith,  executed by and between the parties  hereto,  and (iii)
this letter agreement and all other documents  executed in conjunction  herewith
(and all amendments thereto, if any).

     Borrower and Lender desire to amend and modify certain terms and provisions
of the Loan and the Loan Instruments as follows:

     1. The stated maturity date of the Note is hereby extended to and including
May 31, 2002,  when the entire unpaid  principal  balance of the Note,  together
with  all  accrued  and  unpaid  interest  shall be due and  payable;  provided,
however,  such  date may be  extended  as set forth in  Paragraph  9 of the Loan
Agreement (as amended hereby).

     2.  Paragraph 2 (b) of the Loan  Agreement  is hereby  modified by deleting
such paragraph in its entirety and replacing it with the following:
<PAGE>
Guaranty Bank
May 29, 2001
Page 2

          (b) With  respect  to any  Property  located  in the  State of  Texas,
     Mortgagee Title Policy Binder on Interim Construction Loan, or with respect
     to Property located in any other state, an ALTA Lender's extended policy of
     Title Insurance (either form being referred to as the "Policy"),  issued by
     a company or companies acceptable to Lender,  agreeing to insure Lender, in
     the aggregate  amount of the Loan Allocation (as  hereinafter  defined) for
     each Property  covered by such Mortgage (the "Aggregate Loan  Allocation"),
     that such Mortgage and any other liens securing the payment of the Note and
     Loan have the  priority  required by Lender.  If  required  by Lender,  the
     Policy  shall be extended to cover each and every  advance at the time such
     advance is made;  provided,  however, the maximum title insurance for title
     insurance  underwriters  must be acceptable  to Lender,  and if required by
     Lender,  from time to time,  Borrower shall cause to be issued to Lender an
     additional  Policy  or  Policies,  in such  amounts  and  from  such  title
     insurance underwriters, as are acceptable to Lender.

     3. Paragraph 2(l) of the Loan Agreement is hereby modified by deleting such
paragraph in its entirety and replacing it with the following:

          (l) Lender may require as a condition  to each  advance,  a bills-paid
     affidavit from each original contractor and subcontractor,  to be submitted
     with each draw  request,  together with any other  information  required or
     permitted,  as determined by Lender,  under  applicable law in the state in
     which the Property is located (including, without limitation,  requests for
     information,  notices of contract, notices of payments, interim waivers and
     release upon payment or lien subordination agreements).

     4.  Paragraph 6 (a) of the Loan  Agreement  is hereby  modified by deleting
such paragraph in its entirety and replacing it with the following paragraph:

          (a) Prior to the  recordation  of any Mortgage,  no work (as that term
     may be defined under  applicable  law for the state in which the particular
     Property is located) of any kind  (including the  destruction or removal of
     any  existing  improvements,   site  work,  clearing,  grubbing,  draining,
     erection of temporary  utilities or fencing of the Property)  pertaining to
     the construction of any of the Residences, has been or will be commenced or
     performed  upon the  Property  and no material (as that term may be defined
     under  applicable  law for the state in which the  particular  Property  is
     located)  or  equipment  has  been  or  will be  delivered  to or upon  the
     Property,  and no construction contract for the construction of erection of
     any of the  Residences  has been or will be let (and if required by Lender,
     prior to commencement of such work or delivery of such materials,  Borrower
     shall execute and deliver to Lender any notice of commencement [in form and
     content  satisfactory  to Lender] as may be required or  permitted,  in the
     determination of Lender, under applicable law).
<PAGE>
Guaranty Bank
May 29, 2001
Page 3

     5.  Paragraph 8 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:

          8. REVOLVING LOAN. All or any portion of the principal of the Loan may
     be borrowed,  paid, prepaid,  repaid and reborrowed from time to time prior
     to maturity in accordance with the provisions of the Loan Instruments.  The
     excess of  borrowing  (advances  and  re-advances)  over  repayments  shall
     evidence  the  principal  balance  of the Loan from time to time and at any
     time.  The aggregate  amount of all advances  under the Loan may exceed the
     Loan Amount, but neither the outstanding  principal balance of the Loan nor
     the outstanding  aggregate amount of the Loan Allocations shall ever exceed
     the Loan Amount. The Loan shall not be governed by or be subject to Chapter
     15 of the Texas  Credit  Code Title 79,  Revised  Civil  Statutes of Texas,
     1925, as amended.

          The maximum  total Loan  Allocations  and Letters of Credit  under the
     Loan at any time  shall be  limited  to  $125,000,000.00,  which  sum shall
     consist of the following:

          (a) the total of all Loan Allocations for Property (Texas and Arizona)
     secured by Mortgages, plus;

          (b) the amount of any Letters of Credit (when issued, if any);

          provided, however, that the $125,000,000.00 Loan Allocation limitation
     set forth in this  sentence  shall be  increased  by an amount equal to any
     cash  deposits made by Borrower with Lender as security for the Loan and as
     a Borrower's  Deposit under  Paragraph 5 of the Loan  Agreement  (with each
     such deposit to be advanced by Lender to Borrower prior to the disbursement
     of loan proceeds upon the  satisfaction  of conditions  for advances  under
     this Loan  Agreement).  Borrower  shall  execute and deliver to Lender such
     documents as may be necessary to establish such account and to grant Lender
     a security interest in the same.

          Notwithstanding any provision in the Loan Instruments to the contrary,
     in no event shall the sum of (i) the aggregate  amounts  advanced under the
     Note,  and (ii) the amount of any Letters of Credit (when  issued,  if any)
     exceed a total of  $75,000,000.00,  notwithstanding  that the maximum total
     Loan  Allocations  and  Letters of Credit  under the Loan may  exceed  such
     $75,000,000.00 total; and consequently,  Lender shall have no obligation to
     disburse additional funds in the event the sum of (i) the aggregate amounts
     advanced or to be advanced (including all Loan Allocations) under the Note,
     and (ii) the amount of any Letters of Credit (when issued, if any) exceed a
     total of $75,000,000.00.
<PAGE>
Guaranty Bank
May 29, 2001
Page 4

          Notwithstanding   any  provisions  in  the  Loan  Instruments  to  the
     contrary,  if at anytime  the  aggregate  disbursed  and  unpaid  principal
     balance of the Loan (together  with the aggregate  amount of any Letters of
     Credit  under  the  Loan)  exceed   $75,000,000.00,   then  Borrower  shall
     immediately  (following  written demand by Lender) deliver to Lender a cash
     amount  equal to such  excess,  which cash  amount  shall be applied to the
     principal  balance of the Loan in order that such aggregate amount shall be
     reduced to $75,000,000.00.

     6. Paragraph 13 of the Loan  Agreement is hereby  modified by deleting such
paragraph in its entirety and replacing it with the following paragraph:

          13. CHOICE OF LAW. THE LOAN  INSTRUMENTS ARE EXECUTED AND DELIVERED IN
     THE STATE OF TEXAS AND THE LOAN IS PAYABLE THERE.  EXCEPT WHERE FEDERAL LAW
     IS APPLICABLE (INCLUDING,  WITHOUT LIMITATION, ANY FEDERAL USURY CEILING OR
     OTHER  FEDERAL  LAW  WHICH,  FROM  TIME  TO  TIME,  IS  APPLICABLE  TO  THE
     INDEBTEDNESS  HEREIN  AND  WHICH  PREEMPTS  STATE  USURY  LAWS),  THIS LOAN
     AGREEMENT,  THE NOTE, THE MORTGAGES AND THE OTHER LOAN INSTRUMENTS SHALL BE
     GOVERNED AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS,
     EXCEPT TO THE EXTENT THE LAW OF THE STATE IN WHICH THE  MORTGAGED  PROPERTY
     IS LOCATED  GOVERNS THE  PERFECTION  AND  DETERMINATION  OF LIEN RIGHTS AND
     PRIORITY,  AND THE  ENFORCEMENT  OF  REMEDIES  AND THE  DISPOSITION  OF THE
     PROPERTY.

     7. Loan Agreement is hereby  modified by deleting  Paragraph 20 of the Loan
Agreement in its entirety and replacing it with the following:

          20.  LETTERS OF CREDIT:  At  Lender's  sole and  absolute  discretion,
     Lender  shall  issue  letters of credit (the  "Letters of Credit")  for the
     benefit of Borrower for the purposes set forth below; provided, that during
     the term of the Loan, the aggregate  amount of any  outstanding  Letters of
     Credit and the amount of any Letters of Credit funded by Lender shall never
     exceed the lesser of (a) a sum derived by subtracting  the total  aggregate
     sum of all Loan Allocations  from  $75,000,000.00,  or (b)  $10,000,000.00.
     Furthermore,  the amount of the  Letters of Credit  (when  issued,  if any)
     shall reduce the Borrowing  Base. In addition to any other  requirements of
     Lender,  and as a  condition  to the  issuance  of any  Letters  of Credit,
     Borrower   shall   execute  and  deliver  to  Lender  a  Letter  of  Credit
     Application,  Reimbursement  and  Loan  Agreement,  in the  same  form  and
     substance of the document  attached hereto as Exhibit D.  Concurrently with
     the issuance of, or renewal of, any Letters of Credit,  Borrower  shall pay
     to Lender a
<PAGE>
Guaranty Bank
May 29, 2001
Page 5

     fee equal to the  greater of (a)  $250.00,  or (b)  one-half of one percent
     (1/2%) of the amount of each such Letters of Credit.

     8.  Exhibit A to the Loan  Agreement  is hereby  modified by deleting  such
exhibit in its entirety and replacing it with Exhibit A attached hereto.

     9. All  Loan  Instruments  hereby  are  amended  and  modified  in a manner
consistent with the  modifications,  terms and/or  provisions  contained herein.
Except as modified hereby, all the terms,  provisions and conditions of the Loan
Instruments shall remain in full force and effect.

     10. This letter agreement constitutes the "Letter Agreement" referred to in
the Sixth  Modification  Agreement of even date herewith executed by and between
the parties hereto.

     11. The terms and provisions of this letter  agreement may not be modified,
amended,  altered or otherwise affected except by instrument in writing executed
by Lender and Borrower.

     12. Each  Guarantor by its  execution  hereof agree to the  amendments  and
modifications  to the  Loan  Instruments  set  forth  herein  and  in the  prior
amendments and  modifications to the Loan Instruments and agree that all of such
modifications do not and will not waive,  release or in any manner modify either
Guarantor's obligations and liabilities under and pursuant to the Guaranty.

             (The balance of this page is intentionally left blank.)
<PAGE>
Guaranty Bank
May 29, 2001
Page 6

     If this letter  agreement  correctly  sets forth our  understanding  of the
subject matter contained  herein,  please indicate this by executing this letter
agreement in the space furnished below and then return a fully-executed  copy to
the undersigned.

                                        Very truly yours,

                                        BORROWER:

                                        LEGACY/MONTEREY HOMES L.P.,
                                        an Arizona limited partnership

                                        BY: MTH-TEXAS GP, INC.,
                                            an Arizona corporation,
                                            General Partner

                                        By: /s/ Rick Morgan
                                            ------------------------------------
                                            Name: Rick Morgan
                                            Title: Vice-President
<PAGE>
Guaranty Bank
May 29, 2001
Page 7

                                        GUARANTOR:

                                        MERITAGE CORPORATION,
                                        a Maryland corporation

                                        By: /s/ John R. Landon
                                            ------------------------------------
                                            Name: John R. Landon
                                            Title: Co-Chief Executive Officer

                                        MTH-TEXAS GP, INC.,
                                        an Arizona corporation,

                                        By: /s/ Rick Morgan
                                            ------------------------------------
                                            Name: Rick Morgan
                                            Title: Vice President

                                        MTH-TEXAS LP, INC.,
                                        an Arizona corporation

                                        By: /s/ Rick Morgan
                                            ------------------------------------
                                            Name: Rick Morgan
                                            Title: Vice President
<PAGE>
Guaranty Bank
May 29, 2001
Page 8

ACCEPTED AND AGREED TO:

LENDER:

GUARANTY BANK,
a federal savings bank

By: /s/ Sam A. Meade
    ----------------------------
    Name: Sam A. Meade
    Title: Senior Vice President
<PAGE>
                                    EXHIBIT A

                                TO LOAN AGREEMENT

1.   Introductory  Paragraph.  RESIDENCE AND INVENTORY LOT  LIMITATIONS.  At any
     given time,  Residences and Inventory Lots financed under the Loan shall be
     limited to the following numbers, unless modified by Lender in writing:

     Total Residences:   Nine Hundred Fifty (950).
     Specs:              One Hundred Sixty (160).
     Models:             Seventy (70).
     Inventory Lots:     One Thousand Four Hundred (1,400).

     Borrower may increase the number of Specs  allowed above by the same number
     by which Borrower is short of Models allowed above.  Borrower covenants and
     agrees not to allow, and is prohibited from allowing, any more than fifteen
     (15) Specs, four (4) Models or two hundred (200) Inventory Lots to exist in
     any Approved Subdivision (as hereinafter defined).

     The outstanding  aggregate amount of the Loan Allocations for all Specs and
     Models at any time shall never exceed $31,250,000.00.

     The outstanding  aggregate amount of the Loan Allocations for all Inventory
     Lots at any time shall never exceed $22,500,000.00.

     The term  "Specs"  means a Residence  which is not a Model and is not Under
     Contract.

     The term "Model" means a Residence  specifically  utilized for the purposes
     of marketing other residential products.

     The term "Under  Contract" shall mean Residences  under written contract to
     sell  to  bona  fide  third  parties  unrelated  to  Borrower,   having  no
     contingency or any other  conditions  not  reasonably  susceptible to being
     satisfied,  providing for earnest money deposits of at least $2,000.00, and
     for which Lender has received  preliminary  loan  approval from a bona fide
     residential permanent lender.

     The term "Inventory Residence" means any Residence which is not a Model.

2.   Introductory Paragraph.  APPROVED SUBDIVISIONS.  The following subdivisions
     and  any  additional  subdivisions  approved  in  writing  by  Lender  (the
     "Approved  Subdivisions")  are  approved by Lender for the  Residences  and
     Inventory Lots:

     Subdivision                                  County
     -----------                                  ------
     Auburn Ridge - Pinelakes                     Harris

EXHIBIT A, - PAGE 1
<PAGE>
     Bethany Ridge                                Collin
     Candle Meadow                                Dallas
     Canyon Gate at The Brazos                    Fort Bend
     Canyon Gate at Cinco Ranch                   Fort Bend
     Cypress Mills                                Harris
     Cypress Point                                Denton
     Parks at Deer Creek                          Tarrant
     El Dorado Heights                            Collin
     Forest Creek                                 Williamson
     Forest Oaks                                  Denton
     Hillcrest Estates                            Collin
     Indian Pointe Estates                        Dallas
     Lakeside Village Estates                     Dallas
     Legend Bend                                  Denton
     Legend Crest                                 Collin
     McCreary Estates                             Tarrant
     Parkwood Hills                               Tarrant
     Pine Lakes                                   Harris
     Plum Creek                                   Hays
     Ryan Ranch                                   Denton
     Springbrook Glen                             Williamson
     Spring Meadow                                Collin
     Stone Gate                                   Tarrant
     Stone Meadow                                 Tarrant
     Village at Western Oaks                      Travis
     Westchester Square                           Dallas
     Westwood Shores                              Dallas
     Wimbledon Champions                          Harris
     Winding Hollow                               Dallas
     Windy Hills Farm                             Collin

3.   Introductory  Paragraph.  APPROVED PRICE RANGE.  The Residences shall be in
     the $70,000.00 to $400,000.00 price range; provided, however, Residences in
     any Approved  Subdivision in the Austin, Texas metropolitan area may have a
     $70,000.00 to $900,000.00 price range.

4.   Paragraph  1(c).  GUARANTOR.  Guarantor  of the  Loan  shall  be:  Meritage
     Corporation,  a Maryland  corporation;  MTH-Texas  G.P.,  Inc.,  an Arizona
     corporation; and MTH-Texas L.P., Inc., an Arizona corporation.

5.   Paragraph 2(h). LOAN FINANCE CHARGE. None.

6.   Paragraph  2(k) and 6(g).  INSPECTION  FEE. An inspection fee of $30.00 per
     Residence  shall be paid to Lender on the day the  Mortgage  pertaining  to
     such Residence is recorded in the Real Property Records.

EXHIBIT A, - PAGE 2
<PAGE>
7.   Paragraph 4(c). LOAN RATIOS. With respect to Residences Under Contract, the
     Loan  Allocation  shall not exceed the  lesser of (1) one  hundred  percent
     (100%) of the direct costs of a Property,  as  determined by Lender or, (2)
     eighty  percent  (80%) of the lowest of the values as provided in Paragraph
     4(c) (i), (ii) and (iii) of this Loan Agreement.

     With respect to Specs, Models and Inventory Lots, the Loan Allocation shall
     not exceed the lesser of (1) one hundred percent (100%) of the direct costs
     of a Property,  as determined by Lender or, (2) seventy-five  percent (75%)
     of the lowest of the values as provided  in  Paragraph  4(c) (i),  (ii) and
     (iii) of this Loan Agreement.

8.   Paragraph 6(q). OTHER ENTITIES. The Mortgages shall additionally secure all
     other  indebtedness  now or  hereafter  owed by the  following  entities to
     Lender: None.

9.   Paragraph  6(s).  REQUIRED  RELEASES.  Borrower shall cause:  (a) Inventory
     Residences to be released from a Mortgage nine (9) months from the day such
     Mortgage  is  recorded  in the Real  Property  Records,  (b)  Models  to be
     released from a Mortgage twenty-four (24) months from the day such Mortgage
     is recorded in the Real  Property  Records,  and (c)  Inventory  Lots to be
     released  from a Mortgage  twelve (12) months from the day such Mortgage is
     recorded in the Real Property  Records;  provided,  however,  if no default
     then exists under any Loan Instruments,  Lender may, at its option,  extend
     the  Required  Release  Date for periods of six (6) months  (the  "Extended
     Release Date");  provided,  such Extended Release Date shall in no event go
     beyond the Stated  Maturity Date (as  hereinafter  defined) or the Extended
     Maturity Date (as hereinafter defined), if applicable.

10.  Paragraph 7. REQUIRED PRINCIPAL  REDUCTIONS.  Prior to the date that Lender
     gives Borrower the notice  described in Paragraph 4(f) above, the following
     shall apply:  in the event a Property has been granted an Extended  Release
     Date (as provided in Paragraph 9 of this Exhibit A) and a Mortgage  remains
     covering  such  Property  beyond the  following  periods from the date such
     Mortgage is recorded,  then Borrower shall make a principal  payment of the
     Note in an amount equal to ten percent  (10%) of the Loan  Allocation  with
     respect to such Property (and the Loan  Allocation  for such Property shall
     be reduced by the same amount), as determined by Lender:

     Inventory Residences:    Fifteen (15) months.
     Models:                  Twenty-four (24) months.
     Inventory Lots:          Twelve (12) months.

     From and after the date that Lender gives Borrower the notice  described in
     Paragraph 4(f) of the Loan  Agreement,  the following  shall apply:  in the
     event a Property has been granted an Extended  Release Date, as provided in
     Paragraph 9 of this Exhibit A, Borrower  shall make a principal  payment on
     the Note of ten  percent  (10%) of that  portion  of the Loan  advanced  by
     Lender for such  Property,  within the  following  periods  from the date a
     Mortgage covering such Property is recorded in the Real Property Records:

EXHIBIT A, - PAGE 3
<PAGE>
     Inventory Residences:    Fifteen (15) months.
     Models:                  Twenty-four (24) months.
     Inventory Lots:          Twelve (12) months.

11.  Paragraph 9. MATURITY AND EXTENSION. The maturity date of the Note shall be
     the later of the maturity  date as provided in the Note (May 31, 2002) (the
     "Stated Maturity Date"), or nine (9) months after the recording in the Real
     Property  Records  of the last  Mortgage  (the  "Extended  Maturity  Date")
     approved  by Lender  and  recorded  prior to the  expiration  of the Stated
     Maturity Date. After the Stated Maturity Date, no additional Mortgage shall
     be recorded.

12.  Paragraph  10.  ADDITIONAL  DEFAULTS.  In addition to the events of default
     stipulated in the Loan  Instruments,  it shall be a default under this Loan
     Agreement if Borrower fails to comply with any of the following: None.

13.  Paragraph 11.  ADDITIONAL LOAN COVENANTS.  Borrower shall fully perform and
     satisfy the following "Additional Loan Covenants":

     (a)  The aggregate  net worth of Borrower  (determined  in accordance  with
          generally accepted accounting principles,  consistently applied) shall
          not fall below $40,000,000.00.

     (b)  The ratio of total  liabilities  to equity (as  determined  by Lender)
          shall not exceed 3.0 to 1.0.

     (c)  John Landon shall at all times retain management control of Borrower.

     (d)  In no event shall Meritage Corporation, a Maryland corporation,  be in
          default under any secured indebtedness.

     If Borrower or Guarantor (if  applicable to Guarantor)  breaches any of the
     Additional  Loan  Covenants  then,  at  Lender's  election,  no  additional
     Mortgages  shall  be  recorded  in the  Real  Property  Records;  provided,
     however,  that a breach  of any  Additional  Loan  Covenants  shall  not be
     considered a default under the Loan Instruments.

14.  Paragraph  16(d).  RELEASE PRICE. The partial release price shall be a cash
     amount  equal to the Loan  Allocation  for the Property  multiplied  by the
     Stage  (expressed  as a percentage)  of the Property,  all as determined by
     Lender;  provided,  however, if Lender shall have given Borrower the notice
     described in Paragraph 4(f) of the Loan Agreement, then the partial release
     price  shall be an  amount in cash  equal to one  hundred  and one  hundred
     percent  (100%) of the  outstanding  balance of the Loan advanced by Lender
     for the Property.

15.  Paragraph  16(e).  EXTENSION  FEE. If Lender  extends the Required  Release
     Date, as provided in Paragraph 9 of this Exhibit A,  Borrower  shall pay to
     Lender an  extension  fee of one percent  (1%) of that  portion of the Loan
     advanced by Lender for each such

EXHIBIT A, - PAGE 4
<PAGE>
     Property times a fraction, the numerator of which is the number of days the
     Required Release Date is extended and the denominator of which is 365.

EXHIBIT A, - PAGE 5Exhibit 10.2

                          GUM TECH INTERNATIONAL, INC.

                              EMPLOYMENT AGREEMENT

     This Employment Agreement (the "AGREEMENT") is made and entered into as of
July __, 2001, by and between Gum Tech International, Inc., a Utah corporation
(the "Company"), and Carl J. Johnson ("EXECUTIVE").

                                   ARTICLE 1
                                 DUTIES AND TERM

     1.1 EMPLOYMENT. In consideration of their mutual covenants and other good
and valuable consideration, the receipt, adequacy, and sufficiency of which is
hereby acknowledged, the Company agrees to employ Executive, and Executive
agrees to remain in the employ of the Company, upon the terms and conditions
herein provided.

     1.2 POSITION AND RESPONSIBILITIES.

          (a) Executive will serve as President of the Company, reporting
directly to the Board of Directors of the Company. Executive agrees to perform
services not inconsistent with his position as shall from time to time be
assigned to Executive by the Board.

          (b) During the period of Executive's employment hereunder, Executive
will devote substantially all of Executive's business time, attention, skill,
and efforts to the faithful performance of Executive's duties hereunder.

     1.3 TERM. The term of Executive's employment under this Agreement will
commence on the date first written above and will continue, unless sooner
terminated, for three years; after the three-year period, Executive's term of
employment will automatically be extended from year to year without further
action by the Company or Executive unless a written notice not to renew this
Agreement is provided by one party to the other at least ninety (90) days prior
to the end of any extended term.

                                   ARTICLE 2
                                  COMPENSATION

     For all services rendered by Executive in any capacity during Executive's
employment under this Agreement, the Company will compensate Executive as
follows:

     2.1 BASE SALARY. The Company will pay to Executive an annual base salary of
not less than $225,000.00 to be paid in equal semi-monthly payments (the "Base
Salary") during the term hereof; provided, however, that in the event the
Company institutes a salary reduction program that affects all exempt employees
( as defined by standard Company policies in compliance with the Fair Labor
Standards Act) by the same percentage, then Executive's Base Salary may be
reduced by such percentage (and the term "Base Salary" as used in this Agreement
will refer to the Base Salary as so adjusted). The Board, or a committee
thereof, will annually review the Base Salary, and may, in its discretion,
increase the Base Salary.
<PAGE>
     2.2 BONUS PAYMENTS. An annual bonus, beginning with the first year of
employment, will be $112,500.00, based on meeting specified goals. After the
first year of employment, the annual bonus will be equal to at least one-half of
Executive's Base Salary for the applicable year, based on meeting specified
goals. The goal measurements will be based on 30% revenue, 40% net earnings and
30% business plans/strategies. The Board, or a committee thereof, will establish
in each fiscal year during the term hereof an executive goal measurement plan.
Any bonus under any such plan is referred to herein as the "Annual Incentive
Bonus". This Annual Incentive Bonus shall be paid within ninety (90) days of the
end of the year for which it is calculated. For the period July 1, 2002 through
December 31, 2002, Executive shall be paid a pro rata Annual Incentive Bonus.
After December 31, 2002, Executive's Annual Incentive Bonus will be calculated
on a calendar year basis.

     2.3 STOCK OPTIONS. Pursuant to the Executive's Employment Offer Letter,
stock options will be granted and addressed in subsequent Stock Option Plan
documents that will be provided. The Company shall use all reasonable efforts to
establish and maintain one or more stock option plans in which Executive shall
be entitled to participate.

     2.4 ADDITIONAL BENEFITS. Executive will be entitled to participate in all
benefit and welfare programs, plans, and arrangements that are from time to time
available to the Company's employees; provided, however, there will be no
duplication of termination or severance benefits, and to the extent that such
benefits are specifically provided by the Company to Executive under other
provisions of this Agreement, the benefits available under the foregoing plans
and programs will be reduced by any benefit amounts paid under such other
provisions. Specifically, without limitation, Executive will receive the
following benefits:

          (a) Simple IRA. The Company offers a voluntary pre-tax salary
reduction plan with a three percent (3%) employer match in which eligible
employees may elect to participate on the first day of the month following 90
days of continuous employment. Eligible employees will have 30 days in which to
sign up for participation once the enrollment criterion of 90 days of continuous
employment has been met, subject to plan restrictions. Employees' pre-tax plan
contribution amounts are limited to $6,000.00 annually. Federal guidelines and
regulations governing Simple Retirement Account (SRA) programs determine maximum
annual contribution amounts.

          (b) REIMBURSEMENT OF BUSINESS EXPENSES. The Company will, in
accordance with standard Company policies, pay, or reimburse Executive for, all
reasonable travel and other expenses incurred by Executive in performing
Executive's obligations under this Agreement.

          (c) VACATIONS. Executive will be entitled to 15 business days,
excluding Company holidays, of paid vacation during each calendar year of
employment hereunder. For the period July 1, 2001 through December 31, 2001,
Executive shall be entitled to a pro rata portion of vacation days. Executive
may accrue and carry forward vacation days from any particular year of his
employment under this Agreement to the next year.

     2.5 RELOCATION EXPENSES. Executive will receive up to $50,000.00 for
relocation expenses from the Grand Rapids, Michigan area to a location
designated by the Company by December 31, 2001. The Company will reimburse
Executive for reasonable travel and temporary living expenses in the Phoenix,

                                       2
<PAGE>
Arizona area until a determination has been made regarding the place to be
designated by the Company for Executive's permanent relocation. Also, in the
event that Executive's current residence is not sold within 90 days of
determination by the Company that Executive should permanently relocate from the
Grand Rapids, Michigan area, the Company guarantees the purchase of the
residence at the middle price of three (3) appraisals that Executive must
obtain, or, protection for the sale of the residence up to $35,000.00 from the
middle appraisal price. Any relocation requirement by the Company shall be
within the continental United States.

                                   ARTICLE 3
                            TERMINATION OF EMPLOYMENT

     3.1 DEATH OR RETIREMENT OF EXECUTIVE. Executive's employment under this
Agreement will automatically terminate upon the death or Retirement (as defined
in Section 6.1) of Executive.

     3.2 BY EXECUTIVE. Executive will be entitled to terminate Executive's
employment under this Agreement by giving Notice of Termination (as defined in
Section 6.1) to the Company:

          (a) for Good Reason (as defined in Section 6.1); and

          (b) at any time without Good Reason.

     3.3 BY COMPANY. The Company will be entitled to terminate Executive's
employment under this Agreement by giving Notice of Termination to Executive:

          (a) in the event of Executive's Total Disability (as defined in
Section 6.1);

          (b) for Cause (as defined in Section 6.1); and

          (c) at any time without Cause.

                                   ARTICLE 4
                   COMPENSATION UPON TERMINATION OF EMPLOYMENT

     If Executive's employment hereunder is terminated in accordance with the
provisions of Article 3 hereof, except for any other rights or benefits
specifically provided for herein following Executive's period of employment, the
Company will be obligated to provide compensation and benefits to Executive only
as follows, subject to the provisions of Section 5.12 hereof:

     4.1 UPON TERMINATION FOR DEATH OR DISABILITY. If Executive's employment
hereunder is terminated by reason of Executive's death or Total Disability, the
Company will:

          (a) pay Executive (or Executive's estate) or beneficiaries any Base
Salary that has accrued but not paid as of the termination date (the "ACCRUED
BASE SALARY");

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<PAGE>
          (b) pay Executive (or Executive's estate) or beneficiaries for unused
vacation days accrued as of the termination date in an amount equal to
Executive's Base Salary multiplied by a fraction the numerator of which is the
number of accrued unused vacation days and the denominator of which is 260 (the
"ACCRUED VACATION PAYMENT");

          (c) reimburse Executive (or Executive's estate) or beneficiaries for
expenses incurred by Executive prior to the date of termination that are subject
to reimbursement pursuant to this Agreement (the "ACCRUED REIMBURSABLE
EXPENSES");

          (d) provide to Executive (or Executive's estate) or beneficiaries any
accrued and vested benefits required to be provided by the terms of any
Company-sponsored benefit plans or programs (the "ACCRUED BENEFITS"), together
with any benefits required to be paid or provided in the event of Executive's
death or Total Disability under applicable law;

          (e) pay Executive (or Executive's estate) or beneficiaries any Annual
Incentive Bonus with respect to a prior fiscal year that has accrued but has not
been paid (the "ACCRUED ANNUAL INCENTIVE BONUS" plus the pro rata share of any
Annual Incentive Bonus for the fiscal year during which Executive's employment
shall be terminated; PROVIDED, HOWEVER, that no such amount shall be payable to
Executive unless the objectives are achieved in the reasonable judgment of the
Company for the full fiscal year (the "PRO RATA BONUS"); and

          (f) Executive (or Executive's estate) or beneficiaries shall have the
right to exercise all unexercised stock options and warrants outstanding at the
termination date related to the original option grant of 75,000 shares, whether
or not vested, in accordance with terms of the plans and agreements pursuant to
which such options or warrants were issued.

     4.2 UPON TERMINATION BY COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON. If Executive's employment is terminated by the Company for Cause, or if
Executive terminates Executive's employment with the Company other than (y) upon
Executive's death or Total Disability or (z) for Good Reason, the Company will:

          (a) pay Executive the Accrued Base Salary;

          (b) pay Executive the Accrued Vacation Payment;

          (c) pay Executive the Accrued Reimbursable Expenses;

          (d) pay Executive the Accrued Benefits, together with any benefits
required to be paid or provided under applicable law;

          (e) pay Executive any Accrued Annual Incentive Bonus; and

          (f) Executive will have the right to exercise vested options and
warrants in accordance with terms of the plans and agreements pursuant to which
such options or warrants were issued.

                                       4
<PAGE>
     4.3 UPON TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD
REASON. If Executive's employment is terminated by the Company without Cause or
by Executive for Good Reason, the Company will:

          (a) pay Executive the Accrued Base Salary;

          (b) pay Executive the Accrued Vacation Payment;

          (c) pay Executive the Accrued Reimbursable Expenses;

          (d) pay Executive the Accrued Benefits, together with any benefits
required to be paid or provided under applicable law;

          (e) pay Executive any Accrued Annual Incentive Bonus;

          (f) pay Executive for a twelve (12) month period commencing on or
before the thirtieth day following the termination date twenty-four (24)
semi-monthly payments each equal to one-twenty-fourth of the sum of (1)
Executive's Base Salary in effect immediately prior to the time such termination
occurs for the remaining term of this Agreement or for one (1) year, whichever
is longer, plus (2) the average of the Annual Incentive Bonuses paid to
Executive for the two (2) fiscal years immediately preceding the fiscal year in
which the termination occurs (or if less than two, the amount of his single
Annual Incentive Bonus, if any) for each of the remaining years of the term of
this Agreement or for one year, whichever is longer.

          (g) maintain in full force and effect at the Company's expense, for
Executive's and Executive's eligible beneficiaries' continued benefit, until the
first to occur of (x) his attainment of alternative employment which provides
substantially similar health benefits or (y) twelve (12) months following the
termination date of Executive's employment hereunder or the remaining term of
this Agreement, (whichever is longer), the benefits provided pursuant to
Company-sponsored benefit plans, programs, or other arrangements in which
Executive was entitled to participate as a full-time employee immediately prior
to such termination in accordance with Section 2.4 hereof, subject to the terms
and conditions of such plans and programs (the "CONTINUED BENEFITS"). If
Executive's continued participation is not permitted under the general terms and
provisions of such plans, programs, and arrangements, the Company will arrange
to provide Executive with Continued Benefits substantially similar to those
which Executive would have been entitled to receive under such plans, programs,
and arrangements; and

          (h) Executive shall have the right to exercise vested options and
warrants in accordance with Section 4.1(f).

     4.4 UPON TERMINATION BY THE COMPANY WITHOUT CAUSE FOLLOWING A CHANGE OF
CONTROL OR BY EXECUTIVE FOR GOOD REASON FOLLOWING A CHANGE OF CONTROL. If
following a Change of Control, Executive's employment is terminated by the
Company Without Cause or by Executive for Good Reason, the Company will:

          (a) Make the payments and provide to Executive the benefits under
Section 4.3 other than under Section 4.3(f) hereof; and

                                       5
<PAGE>
          (b) Pay to Executive a lump sum payment on or prior to the thirtieth
day following the termination date of Executive's employment hereunder in an
amount equal to two hundred percent (200%) of the sum of (1) Executive's Base
Salary in effect for the fiscal year immediately prior to the fiscal year in
which the Change of Control occurs, plus (2) the average of the Annual Incentive
Bonuses paid to Executive for the two (2) fiscal years immediately preceding the
fiscal year in which the Change of Control occurs (or if less than two, the
amount of his single Annual Incentive Bonus, if any).

                                   ARTICLE 5
                              RESTRICTIVE COVENANTS

     5.1 CONFIDENTIAL INFORMATION AND MATERIALS. Executive hereby agrees and
acknowledges that the following ideas, information, and materials in written,
oral, magnetic, photographic, optical or other form and whether now existing or
developed or created during the period of Executive's employment or engagement
with the Company (the "Confidential Information") are proprietary to the Company
and are highly sensitive in nature:

          (a) HARDWARE. Any and all ideas, concepts, know-how, techniques,
structures, information and materials relating to the design, development,
engineering, invention, patent, patent application, manufacture or improvement
of any and all equipment, components, devices, techniques, processes or formulas
(including, without limitation, mask works, semi-conductor chips, processors,
memories, disc drives, tape heads, computer terminals, keyboards, storage
devices, printers, and optical storage media) and any and all components,
devices, techniques or circuitry incorporated in any of the above which is or
are constructed, designed, improved, altered or used by the Company and which is
or are not generally known to the public or within the industries in which the
Company competes.

          (b) SOFTWARE. Any and all ideas, concepts, know-how, techniques,
structures, information and materials relating to existing computer software or
firmware products and computer software or firmware in various stages of
research and development including without limitation source code, object and
load modules, requirements specifications, design specifications, design notes,
flow charts, coding sheets, annotations, documentation, technical and
engineering data, laboratory studies, benchmark test results, and the
structures, organization, designs, formulas and algorithms which reside in the
software and which are not generally known to the public or within the
industries or trades in which the Company competes.

          (c) BUSINESS PROCEDURES. Internal business procedures and business
plans, including analytical methods and procedures, licensing techniques,
manufacturing information and procedures such as formulations, processes and
equipment, technical and engineering data, vendor names, other vendor
information, purchasing information, financial information, service and
operational manuals and documentation therefor, ideas for new products and
services and other such information which relates to the way the Company
conducts its business and which is not generally known to the public.

          (d) LEGAL RIGHTS. All patents, copyrights, trade secrets, trademarks
and service marks, and the like.

                                       6
<PAGE>
          (e) MARKETING PLANS AND CUSTOMERS LISTS. Any and all customer and
marketing information and materials, such as (i) strategic data, including
marketing and development plans, forecasts and forecast assumptions and volumes,
and future plans and potential strategies of the Company which have been or are
being discussed; (ii) financial data, price and cost objectives, price lists,
pricing policies and procedures, and estimating and quoting policies and
procedures; and (iii) customer data, including customer lists, names of
existing, past or prospective customers and their representatives, data about or
provided by prospective, existing or past customers, customer service
information and materials, data about the terms, conditions and expiration dates
of existing contracts with customers and the type, quantity and specifications
of products and services purchased, leased or licensed by customers of the
Company.

          (f) NOT GENERALLY KNOWN. Any and all information not generally known
to the public or within the industries or trades in which the Company competes.

     5.2 GENERAL KNOWLEDGE. The general skills and experience gained by
Executive during Executive's employment or engagement by the Company, and
information publicly available or generally known within the industries or
trades in which the Company competes, is not considered Confidential
Information. Following the Non-Competition Period (as defined in Section 5.9(a),
Executive is not restricted from working with a person or entity which has
independently developed information or materials similar to the Confidential
Information, but in such a circumstance, Executive agrees not to disclose the
fact that any similarity exists between the Confidential Information and the
independently developed information and materials, and Executive understands
that such similarity does not excuse Executive from the non-disclosure and other
obligations in this Agreement.

     5.3 EXECUTIVE OBLIGATIONS AS TO CONFIDENTIAL INFORMATION AND MATERIALS.
During Executive's employment or engagement by the Company, Executive will have
access to the Confidential Information and will occupy a position of trust and
confidence with respect to the Confidential Information and the Company's
affairs and business. Executive agrees to take the following steps to preserve
the confidential and proprietary nature of the Confidential Information:

          (a) NON-DISCLOSURE. During and after Executive's employment or
engagement by the Company, Executive will not use, disclose or otherwise permit
any person or entity access to any of the Confidential Information other than as
required in the performance of Executive's duties with the Company. Executive
understands that Executive is not allowed to sell, license, market or otherwise
exploit any products or services (including software or firmware in any form)
which embody in whole or in part any Confidential Information.

          (b) PREVENT DISCLOSURE. Executive will take all reasonable precautions
to prevent disclosure of the Confidential Information to unauthorized persons or
entities.

          (c) ABIDE BY THE COMPANY'S RESTRICTIONS. Executive will treat as
confidential and proprietary any information or materials from outside the
Company which the Company is obligated to treat as confidential or proprietary,
in accordance with the Company's reasonable instructions to Executive.

                                       7
<PAGE>
          (d) RETURN ALL MATERIALS. Upon termination of Executive's employment
or engagement by the Company for any reason whatsoever, Executive will deliver
to the Company all tangible materials embodying the Confidential Information,
including any documentation, records, listings, notes, data, sketches, drawings,
memoranda, models, accounts, reference materials, samples, machine-readable
media and equipment which in any way relate to the Confidential Information. Of
course, Executive agrees not to retain any copies of any of the above materials.

     5.4 INFORM SUBSEQUENT EMPLOYERS. Executive covenants and agrees that, for a
period beginning on the date of Executive's termination of employment with the
Company and ending on the termination of the Non-Competition Period, prior to
accepting subsequent employment with an employer engaged in substantially the
same line of work as the Company, Executive will inform any such subsequent
employer that this Agreement exists.

     5.5 IDEAS AND INVENTIONS. Executive agrees to assign to the Company all of
Executive's right, title and interest in or to any and all ideas, concepts,
know-how, techniques, processes, inventions, discoveries, developments, works of
authorship, innovations and improvements ("Inventions") conceived or made by
Executive, whether alone or with others, whether patentable or not, except those
that the Executive developed entirely on Executive's own time without using the
Company's equipment, supplies, facilities, or trade secret information and which
neither (1) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company nor (2) result from any work performed by
the Executive for the Company. Executive agrees to disclose all Inventions to
the Company promptly, and to provide all assistance reasonably requested by the
Company in the preservation of its interests in the Inventions (such as by
executing documents, testifying, etc.), such assistance to be provided at the
Company's expense but without any additional compensation to Executive.

     5.6 INVENTIONS AND PATENTS; ASSERTION OF RIGHTS. Executive agrees that from
this date until Executive leaves the Company's employment, Executive will keep
the Company informed of any Inventions made by Executive, in whole or in part,
or conceived by Executive, alone or with others, which result from any work
Executive may do for, or at the request of, the Company, or which relate to the
Company's activities, investigations, or obligations. Executive will, at the
expense of the Company, assist the Company or its nominees to obtain patents for
such Inventions in any countries throughout the world. Such Inventions will be
the property of the Company or its nominees, whether patented or not. Executive
will and does, without charge to the Company, assign to the Company, all of
Executive's right, title, and interest in and to such Inventions, including
patents and patent applications and reissues thereof. Executive agrees to
execute, acknowledge, and deliver any instruments confirming the complete
ownership by the Company of such Inventions. Such assignments will include the
right to sue for infringement.

     5.7 COPYRIGHTS. Executive agrees that any work prepared by Executive during
the course of Executive's employment or engagement hereunder which is eligible
for United States copyright protection or protection under the Universal
Copyright Convention, the Berne Copyright Convention and/or the Buenos Aires
Copyright Convention will be a work made for hire. In the event any such work is
deemed not to be a work made for hire, Executive hereby assigns all right, title
and interest in and to the copyright in such work to the Company, and agrees to

                                       8
<PAGE>
provide all assistance reasonably requested by the Company in the establishment,
preservation and enforcement of its copyright in such work, such assistance to
be provided at the Company's expense but without any additional compensation to
Executive.

     5.8 CONFLICTING OBLIGATIONS AND RIGHTS. Executive agrees to inform the
Company in writing of any apparent conflict between Executive's work for the
Company and (i) any obligations Executive may have to preserve the
confidentiality of another's proprietary information or materials, or (ii) any
rights Executive claims to any patents, copyrights, trade secrets, or other
inventions, ideas or similar rights, before performing that work. Otherwise, the
Company may conclude that no such conflict exists and Executive agrees
thereafter to make no such claim against the Company. The Company will receive
such disclosures in confidence. There are no such existing obligations and
claims of Executive as of the date of this Agreement.

     5.9 NON-COMPETITION/NON-SOLICITATION.

          (a) Non-Competition/Non-Solicitation. During the Non-Competition
Period (as defined herein), Executive agrees that Executive will not directly or
indirectly Compete (as defined herein) with the Business in the Business
Territory. The term "BUSINESS TERRITORY" means the United States of America,
including (i) the Western United States (Alaska, Arizona, California, Colorado,
Hawaii, Idaho, Oregon, Montana, New Mexico, Nevada, Utah, Washington, and
Wyoming) and (ii) a 30-mile radius around the Company's corporate headquarters
and any other location of the Company.

          (b) For purposes of this Section 5.9, the "NON-COMPETITION PERIOD"
means the period of Executive's employment by the Company, or any of their
Affiliates plus an additional period of one (1) year following the date of
termination of Executive's employment for any reason, whether such termination
is voluntary or involuntary. Executive agrees that the Non-Competition Period
will be extended by the number of days during any such period in which Executive
is or was engaged in activities constituting a breach of this Article 5.

          (c) For purposes of this Section 5.9, the term "COMPETE" or
"COMPETING" means, with respect to the Business: (i) managing, supervising, or
otherwise participating in a management or sales capacity; or (ii) otherwise
managing, operating, controlling, participating in the ownership, management, or
control of, or being connected with or having any interest in, as a stockholder,
agent, partner, lender, consultant, advisor or otherwise, any business or Person
which provides goods, products, or services competitive with those provided by
the Business; PROVIDED, HOWEVER, that nothing contained herein will prohibit
Executive from owning less than one percent of any class of securities listed on
a national securities exchange or traded publicly in the over-the-counter
market; or (iii) entering into or attempting to enter into any business
substantially similar to the Business, either alone or with any other Person.

          (d) For the purposes of this Section 5.9, the words "directly or
indirectly", as they modify the word "Compete" or "Competing" mean (i) acting as
an agent, representative, consultant, officer, director, member, independent
contractor, or employee of any Person that is Competing with the Business; (ii)
participating in any such Competing Person or enterprise as an owner, partner,
limited partner, joint venturer, member, creditor, or shareholder (except as
expressly permitted herein); or (iii) or communicating to any such Competing

                                       9
<PAGE>
Person or enterprise the names or addresses or any other information concerning
any past, present, or identified prospective client or customer or any other
confidential information of the Business, the Company or any of its Affiliates.

          (e) For purposes of this Article 5, the term "BUSINESS" means the
business, as conducted by the Company, or any of its Affiliates immediately
prior to the date hereof and/or developed during Executive's employment
hereunder.

          (f) NON-SOLICITATION OF EMPLOYEES. Executive recognizes that the
Company's employees are a valuable resource of the Company. Accordingly, during
the Employee Non-Solicitation Period (as defined herein), Executive agrees that
Executive will not, either alone or in conjunction with any other Person,
directly or indirectly, solicit, induce, or recruit any Company employee to
leave the employ of the Company. For the purpose of this Section 5.9(e), Company
employee means (i) any employee of the Company, or any of its Affiliates as of,
or immediately prior to the date hereof or during the Non-Competition Period,
the Employee Non-Solicitation Period, and the Customer Non-Solicitation Period;
or (ii) any former employee of the Company, or any of its Affiliates whose
employment with the Company, or any of its Affiliates ceased less than one (1)
year before the date of such co-venturing, solicitation, inducement, or
recruitment.

          For purposes of this Section 5.9, the "EMPLOYEE NON-SOLICITATION
PERIOD" and the "CUSTOMER NON-SOLICITATION PERIOD" mean the period of
Executive's employment by the Company, or any of its Affiliates, and an
additional period of one (1) year following the date of termination of
Executive's employment for any reason, whether such termination is voluntary or
involuntary. The Employee Non-Solicitation Period described herein will be
extended by the number of days during any such period in which Executive is or
was engaged in activities constituting a breach of this Article 5.

          (g) NON-SOLICITATION OF CUSTOMERS AND PROSPECTIVE CUSTOMERS. Executive
recognizes that the Company's customers and Prospective Customers are a valuable
asset of the Company. Accordingly, during the Customer Non-Solicitation Period,
Executive will not, for the purpose of competing with the Company, either alone
or in conjunction with any other Person, directly or indirectly, call on,
solicit, take away, accept as a client, customer, or prospective client or
customer, or attempt to call on, solicit, take away, or accept as a client,
customer, or prospective client or customer, any Person that, as of the date of
the termination of Executive's employment hereunder, was a client, customer, or
Prospective Customer of the Company, or any of its Affiliates.

          (h) Executive hereby expressly agrees and acknowledges that:

               (i) the Company has protectable business interests throughout the
Business Territory, and elsewhere, and that competition with and against such
business interests would be harmful to the Company;

               (ii) the covenants contained in this Article 5 are reasonable as
to time and geographical area and do not place any unreasonable burden upon
Executive's ability to earn a livelihood;

                                       10
<PAGE>
               (iii) the public will not be harmed as a result of enforcement of
the covenants contained in this Article 5;

               (iv) the personal legal counsel for Executive has reviewed the
covenants contained in this Article 5; and

               (v) Executive understands and hereby agrees to each and every
term and condition contained in this Article 5.

     5.10 NON-DISPARAGEMENT. During the term of this Agreement, the
Non-Competition Period, the Employee Non-Solicitation Period, and the Customer
Non-Solicitation Period, the Executive will not disparage the Company nor will
the Company, or its representatives, disparage Executive.

     5.11 REMEDIES. Executive expressly agrees and acknowledges that the
covenants set forth in Sections 5.1 through Section 5.10 are necessary for the
protection of the interests of the Company and its Affiliates because of the
nature and scope of their business and Executive's position with the Company
and, consistent with Section 6.3, such covenants may be enforced in any court of
competent jurisdiction. Further, Executive acknowledges that any breach of such
covenants would result in irreparable damage to the Company, and that money
damages will not sufficiently compensate the Company for its injury caused
thereby, and that the remedy at law for any breach or threatened breach of any
of such covenants will be inadequate and, accordingly agrees, that the Company
will, in addition to all other available remedies (including without limitation,
seeking such damages as it can show it has sustained by reason of such breach),
be entitled to injunctive relief or specific performance and that in addition to
such money damages Executive may be restrained and enjoined from any continuing
breach of any such covenant.

     5.12 SEVERABILITY OF ARTICLE 5 PROVISIONS. If any provision of this Article
5 shall be adjudicated by a court of competent jurisdiction to be invalid or
unenforceable because of the scope, duration, area of its applicability, or any
other reason, the court making such determination will have the power to modify
such scope, duration, or area, or all of them, or to strike an invalid or
unenforceable provision, in whole or in part, to make such scope, duration,
area, or provision valid and enforceable. Executive further acknowledges and
agrees that if such covenants, or any of them, are deemed to be unenforceable as
a result of litigation initiated or otherwise supported by Executive and/or the
Executive fails to comply with this Article 5, the Company has no obligation to
provide any compensation or other benefits described in Article 4 hereof.

     5.13 OTHER AGREEMENTS. In the event that Executive has previously signed,
or does sign in the future any one or more separate non-competition,
non-solicitation, confidentiality, or similar agreement(s) with the Company,
such agreement(s) will remain binding and enforceable and the Company may, at
its option, assert any and all such agreement(s) against Executive in addition
to, or in lieu of, this Agreement.

     5.14 SCOPE OF ARTICLE. For purposes of this Article 5, unless the context
otherwise requires, the term "Company" includes Gum Tech International, Inc.,
its direct and indirect subsidiaries, and its Affiliates.

                                       11
<PAGE>
                                   ARTICLE 6
                                  MISCELLANEOUS

     6.1 DEFINITIONS. For purposes of this Agreement, the following terms will
have the following meanings:

          "Accrued Base Salary" - as defined in Section 4.1(a).

          "Accrued Benefits" - as defined in Section 4.1(d).

          "Accrued Annual Incentive Bonus" - as defined in Section 4.1(e).

          "Accrued Reimbursable Expenses" - as defined in Section 4.1(c).

          "Accrued Vacation Payment" - as defined in Section 4.1(b).

          "Affiliate" - of a Person means a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.

          "Annual Incentive Bonus" - as defined in Section 2.2.

          "Base Salary" - as defined in Section 2.1.

          "Board" - means the Company's Board of Directors.

          "Business" - as defined in Section 5.9(e).

          "Business Territory" - as defined in Section 5.9(a).

          "Cause" will mean the occurrence of any of the following:

          (a) Executive's gross and willful misconduct which results in material
injury to the Company;

          (b) Executive's engaging in fraudulent conduct with respect to the
Company's or any of its Affiliates' business or in conduct of a criminal nature
that may have an adverse impact on the Company's or any of its Affiliates'
standing and reputation;

          (c) the material failure or refusal by Executive to perform the duties
required of Executive by this Agreement which inappropriate failure or refusal
shall not be cured within thirty (30) days following receipt by Executive of
written notice from the Board of Directors of the Company specifying the factors
or events constituting such failure or refusal;

          (d) Executive's use of drugs and/or alcohol in violation of then
current Company policy; or

                                       12
<PAGE>
          (e) Executive's material breach of his obligation under Section 1.2(b)
hereof which shall not be cured within thirty (30) days after written notice
thereof to Executive from the Board.

          "Compete" or "Competing" - as defined in Section 5.9(b).

          "Change of Control" shall mean and will be deemed to have occurred if:

               (i) After the date of this Agreement, any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any successor provision thereto) shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act or any successor provision thereto) directly or indirectly of securities of
the Company representing 15 percent or more of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote at an
election of directors; PROVIDED, HOWEVER, that, for purposes of this
subparagraph, "person" shall exclude the Company, its subsidiaries, any person
acquiring such securities directly from the Company, any employee benefit plan
sponsored by the Company or from Executive or any stockholder owning 15% or more
of the combined voting power of the Company's outstanding securities as of the
date of this Agreement; or

               (ii) Any stockholder of the Company owning 15 percent or more of
the combined voting power of the Company's outstanding securities as of the date
of this Agreement shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) directly or indirectly of securities of the
Company (other than through the acquisition of securities directly from the
Company or from Executive) representing 20 percent or more of the combined
voting power of the Company's then outstanding securities ordinarily having the
right to vote at an election of directors; or

               (iii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least 80
percent of the Board, provided, however, that any person becoming a member of
the Board subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least 80
percent of the members then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act or any successor provision
thereto) shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or

               (iv) Approval by the stockholders of the Company and consummation
of a reorganization, merger, consolidation, or sale or other disposition of all
or substantially all of the assets of the Company, in each case, with or to a
corporation or other person or entity of which persons who were the stockholders
of the Company immediately prior to such transaction do not, immediately
thereafter, own more than 80 percent of the combined voting power of the

                                       13
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outstanding voting securities entitled to vote generally in the election of
directors of the reorganized, merged, consolidated or purchasing corporation (or
in the case of a non-corporate person or entity, functionally equivalent voting
power) and 80 percent of the members of the Board of which corporation (or
functional equivalent in the case of a non-corporate person or entity) were not
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, consolidation or sale, not
including the sale of assets pursuant to the Asset Purchase Agreement by and
between Wm. Wrigley Jr. Company and the Company dated as of March 14, 2001.

          "Confidential Information" - as defined in Section 5.1.

          "Continued Benefits" - as defined in Section 4.3(g).

          "Customer Non-Solicitation Period" - as defined in Section 5.9(f).

          "Employee Non-Solicitation Period" - as defined in Section 5.9(e).

          "Good Reason" will mean the occurrence of any of the following:

          (a) Executive's compensation is reduced by the Company in violation of
this Agreement; or

          (b) In either event more than once during the term of this Agreement,
Executive is required by the Company permanently to relocate his residence or
the Company's principal business office is relocated more than 60 miles away
from its then current location; or

          (c) Other material breach of this Agreement by the Company, which
breach is not cured within thirty (30) days after written notice thereof is
received by the Company.

          "Inventions" - as defined in Section 5.5.

          "Non-Competition Period" - as defined in Section 5.9(b).

          "Notice of Termination" will mean a notice which indicates the
specific termination provision of this Agreement relied upon and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.

          "Person" - means any natural person, firm, partnership, association,
corporation, company, limited liability company, limited partnership, trust,
business trust, governmental authority, or other entity.

          "Prospective Customer" - as defined in Section 5.9(g).

          "Retirement" will mean normal retirement at age 65.

          "Total Disability" will mean Executive's failure substantially to
perform Executive's duties hereunder on a full-time basis for a period exceeding
ninety (90) consecutive days or for periods aggregating more than one hundred
eighty (180) days during any twelve-month period as a result of incapacity due
to physical or mental illness. If there is a dispute as to whether Executive is
or was physically or mentally unable to perform his duties under this Agreement,

                                       14
<PAGE>
such dispute will be submitted for resolution to a licensed physician agreed
upon by the Company and Executive, or if an agreement cannot be promptly
reached, the Company and Executive will promptly select a physician, and if
these physicians cannot agree, the physicians will promptly select a third
physician whose decision will be binding on all parties. If such a dispute
arises, Executive will submit to such examinations and will provide such
information as such physician(s) may request, and the determination of the
physician(s) as to Executive's physical or mental condition will be binding and
conclusive. Notwithstanding the foregoing, if Executive participates in any
group disability plan provided by the Company which offers long-term disability
benefits, "Total Disability" will mean total disability as defined therein.

     6.2 KEY MAN INSURANCE. The Company will have the right, in its sole
discretion, to purchase "key man" insurance on the life of Executive. The
Company shall be the owner and beneficiary of any such policy. If the Company
elects to purchase such a policy, Executive will take such physical examinations
and supply such information as may be reasonably requested by the insurer.

     6.3 DISPUTE RESOLUTION. If there shall be any dispute between the Company
and Executive (i) in the event of any termination of Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by Executive, or (iii) otherwise arising out of
Executive's employment or this Agreement, the dispute will be resolved by
binding arbitration in accordance with the National Rules for the Resolution of
Labor Disputes ("Rules") administered by the American Arbitration Association
("AAA"). This arbitration will be held in the AAA office located nearest the
Company's headquarters. The provisions of the Rules are incorporated as a part
hereof; provided, however, that (A) the Company or Executive must initiate
arbitration within one (1) year from the date any claim accrues; and (B) either
party may seek injunctive relief in court to avoid irreparable injury during the
pendency of arbitration proceedings. IT IS EXPRESSLY UNDERSTOOD THAT BY SIGNING
THIS AGREEMENT, WHICH INCORPORATES BINDING ARBITRATION, THE COMPANY AND
EXECUTIVE AGREE, EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN SECTIONS 5.11 AND
THIS SECTION 6.3, TO WAIVE COURT OR JURY TRIAL TO THE FULLEST EXTENT PERMITTED
BY LAW AND TO WAIVE PUNITIVE, STATUTORY, CONSEQUENTIAL, AND ANY DAMAGES, OTHER
THAN COMPENSATORY DAMAGES.

     6.4 SUCCESSORS; BINDING AGREEMENT. This Agreement will be binding upon any
successor to the Company and will inure to the benefit of and be enforceable by
Executive's personal or legal representatives, beneficiaries, designees,
executors, administrators, heirs, distributees, devisees and legatees.

     6.5 MODIFICATION; NO WAIVER. THIS AGREEMENT MAY NOT BE MODIFIED OR AMENDED
EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO. No term or
condition of this Agreement will be deemed to have been waived, nor will there
be any estoppel against the enforcement of any provision of this Agreement,
except by written instrument by the party charged with such waiver or estoppel.
No such written waiver will be deemed a continuing waiver unless specifically
stated therein, and each such waiver will operate only as to the specific term
or condition waived and will not constitute a waiver of such term or condition
for the future or as to any other term or condition.

                                       15
<PAGE>
     6.6 SEVERABILITY. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the employment arrangement
that is the basis for this Agreement, will not affect the validity or
enforceability of any other covenant or agreement contained herein.

     6.7 NOTICES. All notices, demands, and other communications provided for
hereunder will be in writing (including facsimile or similar transmission) and
mailed (by U.S. certified mail, return receipt requested, postage prepaid),
sent, or delivered (including by way of overnight courier service), (i) if to
the Company, c/o Gum Tech International, Inc., 246 W. Watkins Street, Phoenix,
Arizona, 85004, Attention: Chairman, Board of Directors, facsimile no. (602)
420-9949 , and to Richard Stagg, Snell & Wilmer L.L.P., One Arizona Center,
Phoenix, AZ 85004-0001, facsimile no. (602) 382-6070; and (ii) if to Executive,
Carl J. Johnson, 7884 Aspenwood Drive, Ada, Michigan, 49301, facsimile no. (616)
676-1716; or, as to any party, to such other person and/or at such other address
or number as shall be designated by such party in a written notice to the other
party. All such notices, demands, and communications, if mailed, will be
effective upon the earlier of (i) actual receipt by the addressee, (ii) the date
shown on the return receipt of such mailing, or (iii) three (3) days after
deposit in the mail. All such notices, demands, and communications, if not
mailed, will be effective upon the earlier of (i) actual receipt by the
addressee, (ii) with respect to facsimile and similar electronic transmission,
the earlier of (x) the time that electronic confirmation of a successful
transmission is received, or (y) the date of transmission, if a confirming copy
of the transmission is also mailed as described above on the date of
transmission, and (iii) with respect to delivery by overnight courier service,
the day after deposit with the courier service, if delivery on such day by such
courier is confirmed with the courier or the recipient orally or in writing.

     6.8 ASSIGNMENT. This Agreement and any rights hereunder will not be
assignable by either party without the prior written consent of the other party
except as otherwise specifically provided for herein.

     6.9 ENTIRE UNDERSTANDING. This Agreement, and the Executive's Employment
Offer Letter, attached as Exhibit A, constitute the entire understanding between
the parties hereto and no agreement, representation, warranty or covenant has
been made by either party except as expressly set forth herein.

     6.10 EXECUTIVE'S REPRESENTATIONS. Executive represents and warrants that
neither the execution and delivery of this Agreement nor the performance of
Executive's duties hereunder violates the provisions of any other agreement to
which Executive is a party or by which Executive is bound.

     6.11 GOVERNING LAW. This Agreement will be construed in accordance with and
governed for all purposes by the laws of the State of Arizona applicable to
contracts executed and wholly performed within such state.

                                       16
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                                    GUM TECH INTERNATIONAL, INC.

                                    --------------------------------------------

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                                    EXECUTIVE

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                                       17

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