CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of November,
1995, by and between Oxboro Medical International, Inc., a Minnesota corporation
(the "Company"), and Xxxxx X. Xxxxxxxxx (the "Consultant").
WHEREAS, the Company is engaged in the business of developing, assembling,
and marketing medical products and through its wholly owned subsidiary, Oxboro
Outdoors, Inc., developing, assembling and marketing outdoor recreational
products (collectively the "Business"); and
WHEREAS, Consultant was previously a consultant to the Company for 11 years
and has been an executive officer of the Company for 2 1/2 years and has
developed unique knowledge, information, and expertise concerning the Business
in connection therewith; and
WHEREAS, Consultant has indicated his intention to retire as an employee
and officer of the Company within the next five years; [for accounting
treatment, may need to provide more specific retirement date] and
WHEREAS, the Company desires that Consultant, following his retirement,
continue to provide consulting services to the Company and refrain from engaging
in competing business activities as set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants herein contained and intending to be legally bound
hereby, the parties agree as follows:
1. Consulting Services. Consultant agrees that commencing on the date of
his retirement from his duties as an officer and employee of the
Company, he will hold himself available, unless disabled from doing so
as a result of illness or other incapacity, to advise and consult from
time to time, by telephone, in person at the Company's offices, or in
such other manner and at such other place or places as may from time
to time be mutually agreeable to Consultant and the Company, with the
officers, directors, employees, and other representatives of the
Company when and to the extent reasonably requested to do so by the
Company's officers and/or directors, relative to the Business of the
Company and to give to the Company, through such officers, directors,
employees, and other representatives, the benefit of his experience
and knowledge of the Business and of his judgment on the financial,
merchandising, personnel, and other management aspects, problems, and
policies of the Business. Consultant shall not be required to provide
consulting services for more than five days per month (or sixty days
per year); however, Consultant may, at his own discretion, devote two
of said five days a month to the review of operations, manufacturing,
marketing/sales, product development and finances/accounting, with
full access to the Company's books and records, information and sales
and accounting data and systems, with assistance from company staff,
as reasonably requested by Xxxxxxxxx. In no event shall Consultant be
required to provide more than ten (10) days in any given calendar
month.
2. Relationship. It is the intent of the parties to this Agreement that
Consultant is and shall remain at all times an independent contractor
in the performance of this Agreement and nothing herein contained
shall be construed as inconsistent with that status. The Consultant
shall not be considered the employee, agent, or servant of the Company
at any time, under any circumstances, or for any purpose whatsoever.
The payments to Consultant pursuant to this Agreement are not to be
construed to be salary, wages, or payroll. The Consultant understands,
acknowledges, and agrees that the Company will not withhold state or
federal income tax from the compensation that it will pay to
Consultant, will not withhold or make contributions to social
security, and with the exception of medical benefits and insurance to
the extent Company provides such benefits and insurance to its
employees and split-dollar life insurance benefits in force as of the
date of and following termination of employment, will not provide
unemployment compensation, worker's compensation, or any other kind of
taxes, benefits, or insurance. Consultant shall not be entitled to
paid vacations, paid sick leave, or any other fringe benefits.
Consultant understands and agrees that he has no authority to and will
not enter into contracts or commitments in the name or on behalf of
the Company, that he shall in no event represent that he is acting as
an agent or representative of the Company, and that he shall not
otherwise attempt to bind the Company in any respect whatsoever,
unless authorized to do so in writing by the Company. The Consultant
shall not make any representations, warranties, or commitments binding
upon the Company.
3. Commencement. This Agreement shall only commence upon Consultant's
retirement from his employment with the Company if Consultant is at
least fifty-five years of age. If Consultant voluntarily terminates
his employment with the Company then this Agreement shall not be
binding upon the Company prior to age fifty-five and shall be of no
further force and effect. However, if the Company does not renew
Consultant's Employment Agreement on April 1, 1998, for reasons other
than good cause, as defined in said Employment Agreement, attributable
to Consultant, then this Agreement shall commence on such date.
4. Compensation. For the services rendered by Consultant pursuant to this
Agreement, the Company shall pay the Consultant annually the sum of
One Hundred Fifty Thousand Dollars ($150,000) in twelve (12) equal
monthly installment payments in the amount of Twelve Thousand Five
Hundred Dollars ($12,500) each. It is understood that Consultant shall
be paid the compensation set forth above whether or not the Company
requests him to provide consulting services.
Any amounts otherwise payable to the Consultant pursuant to this paragraph
4 shall be paid before or after his death in accordance with written directions
delivered to Company by Consultant or his duly appointed personal
representative(s) from time to time or, in the absence of such a direction,
shall be paid to Consultant during his life and to his estate after his death.
The Company shall also reimburse the Consultant for any reasonable travel
or other out-of-pocket expenses incurred by Consultant in performing consulting
services requested hereunder by the Company, provided that the Company shall
have approved such expenditures in advance if over $500.00 per month.
If Consultant is required to provide consulting services exceeding the
limit set forth in paragraph 1 hereof, the Company shall pay for such services
at the rate of $2,500 per day; however, during the first year of this Agreement,
the sum of the amounts paid to Consultant by Company pursuant to this Agreement
(consisting of the base consulting fee ($150,000) plus the per diem amount(s))
and the total of the annual direct compensation paid to Consultant's
replacement, shall not exceed the amount of the direct compensation paid to
Consultant during the twelve months preceding the Consultant's
retirement/termination date. A "day," pursuant to the terms of this Agreement,
shall be defined as eight hours.
In the event that the Company, in good faith, has determined Consultant is
in breach of any of his covenants, agreements, or obligations arising under this
Agreement, the Company shall have the right to withhold payments to Consultant
until Consultant has cured any such existing breaches. If Consultant fails to
cure such breach within thirty (30) days written notice thereof, Company may
discontinue making such payments. If Consultant cures such default within thirty
(30) days, then withheld payment shall be released and payments to Consultant
shall continue as set forth herein.
5. Confidential Information. Consultant acknowledges that Consultant may
receive, have access to, or contribute to the production of
Confidential Information. For purposes of this Agreement, Consultant
agrees that "Confidential Information" shall mean information or
material proprietary to the Company or its Affiliates (as hereinafter
defined) or designated as "Confidential Information" by the Company or
an Affiliate and not generally known by non-Company personnel that
Consultant develops or that Consultant may obtain knowledge of or have
access to as a result of Consultant's relationship with the Company or
any Affiliate prior to or during the term of this Agreement (including
information conceived, originated, discovered, or developed in whole
or in part by Consultant). "Confidential Information" shall include,
but not be limited to, the following types of information and other
information of a similar nature in whatever form (including written or
electronic media): discoveries, ideas, concepts, software in various
stages of development, designs, secrets, drawings, specifications,
techniques, models, data, source codes, object codes, documentation,
diagrams, flow charts, research, development, processes, procedures,
"know-how," marketing techniques and materials, marketing and
development plans, customer names and other information related to
customers, price lists, pricing policies, and financial information.
"Confidential Information" also includes any information of the same
general nature as that described above that the Company or an
Affiliate obtains from another party and that the Company or an
Affiliate treats as proprietary or designates as "Confidential
Information," whether or not owned or developed by the Company or the
Affiliate. Consultant further agrees:
(a) that he will, to the best of his ability, furnish the Company on
demand, at any time during or after the term of this Agreement, a
complete list of the names and addresses of all persons that
Consultant knows have dealt with, are dealing with, or propose to
deal with the Company or any Affiliate, whether or not such
information is in the possession or within the knowledge of the
Company or any Affiliate. Such information may be disclosed by
periodic reports to the Company during the term of this
Agreement;
(b) that all notes, data, reference materials, sketches, drawings,
memoranda, documentation, and records in any form and in any way
incorporating or reflecting any Confidential Information belong
exclusively to the Company, and Consultant will turn over all
copies of such materials in Consultant's control to the Company
upon request or upon termination of this Agreement;
(c) that during the term of this Agreement and thereafter, the
Consultant will hold in confidence and not directly or indirectly
reveal, report, publish, disclose, or transfer any of the
Confidential Information to any person or for any purpose, except
in the course of Consultant's work for the Company;
(d) that any inventions or ideas in whole or in part conceived of or
made by Consultant during or after the term of Consultant's
relationship with the Company or any Affiliate shall be as set
forth in the Exclusive License and Royalty Agreement between
Consultant and Oxboro Outdoors, Inc. dated April 17, 1993, as
amended ("Royalty Agreement") and in the Exclusive License
Agreement between Consultant and Company dated April 1, 1990, as
amended (the "License Agreement"); and
(e) that Consultant has been given a copy and has reviewed Chapter
325C of Minnesota Statutes, known as the Minnesota Uniform Trade
Secrets Act (the "Act"), and acknowledges that violation of the
Act or of Consultant's agreements, covenants, and representations
contained in this Agreement may give rise to a cause of action in
favor of the Company against Consultant for general and specific
damages, exemplary damages, injunctive relief, and attorney's
fees.
6. Covenant Not To Compete. Except as set forth in the Royalty Agreement
and the License Agreement, during the term of this Agreement, and so
long as Consultant is receiving payments hereunder, Consultant shall
not, directly or indirectly, on Consultant's own behalf or as a
partner, officer, employee, consultant, agent, shareholder, director,
or trustee of any person, firm, corporation, or other entity, engage
or participate in the business activities of or render services to any
Conflicting Organization (as defined in Section 8(e) hereof) in
connection with the development, manufacture, marketing, licensing,
servicing, or promotion of any Conflicting Product (as defined in
Section 8(d) hereof), or solicit or call upon any accounts that have
been serviced by, or that have purchased products from, the Company or
any Affiliate within the preceding two-year period, or permit
Consultant's name to be used in connection with any such business or
solicitation, unless otherwise agreed to in writing by Company and
Consultant.
7. Injunctive Relief, Attorneys' Fees. In recognition of the irreparable
harm that a violation by Consultant of any of the covenants of
paragraphs 5 or 6 would cause the Company, the Consultant agrees that
in addition to any other remedies or relief afforded by law, an
injunction against an actual or threatened violation or violations may
be issued against him and every other person concerned thereby, it
being the understanding of the parties that both damages and an
injunction shall be proper modes of relief and are not to be
considered alternative remedies. In the event of such an action or
legal proceeding, the prevailing party shall be entitled to be
reimbursed for its costs, expenses and reasonable attorneys' fees
incurred in such proceeding or action by the other party.
8. Definitions. For purposes of this Agreement, it is agreed that the
following terms shall have the meanings set forth below:
(a) "Affiliate" shall mean any corporation, partnership, or other
business entity in which the Company has a financial interest, or
which the Company directly or indirectly, through one or more
intermediaries, officers, or employees, controls, or is
controlled by, or is under common control with, including any
Subsidiary.
(b) "Subsidiary" shall mean any corporation, partnership, or other
business entity in which the Company has a significant financial
interest, or which the Company, directly or indirectly, through
one or more intermediaries, officers, or employees, controls, or
is controlled by, or is under common control with, including as
of the date of this Agreement, Oxboro Outdoors, Inc., and Oxboro
Medical, Inc., both Minnesota corporations and both wholly owned
by the Company.
(c) "Successor" includes any entity or person who acquires or
succeeds to all or a substantial portion of the business or
assets of the Company.
(d) "Conflicting Product" means any product, system, or service of a
Conflicting Organization that is the same as or similar to, or
competes with, or has a usage allied to, a product, process,
system, or service provided by the Company.
(e) "Conflicting Organization" means any person or organization
engaged or about to become engaged in research on or development,
production, marketing, leasing, licensing, selling, or servicing
of a Conflicting Product.
(f) "Cause" shall mean (i) the conviction of Consultant by a court of
competent jurisdiction of or the written confession by Consultant
to any felony committed by Consultant prior to or during the term
of this Agreement, (ii) the conviction of or written confession
by Consultant to the embezzlement or misappropriation of funds of
the Company committed by Consultant prior to or during the term
of this Agreement, (iii) failure or refusal of Consultant to
perform the services to be provided pursuant to this Agreement
for a period of more than thirty (30) days after receipt of
written notice from Company, or (iv) violation of Consultant of
the provisions of Section 4 or 5 of this Agreement; or
(g) "Permanent Disability" means a physical or mental condition of
Consultant resulting from bodily injury, disease, or mental
disorder that renders him incapable of performing the substantial
and material duties required of him under this Agreement. For
purposes of determining whether Consultant is "permanently
disabled" or has a "permanent disability" under this Agreement, a
written medical report prepared by Consultant's personal
physician stating that Consultant either is permanently disabled
or has a permanent disability shall be conclusive evidence on the
parties hereto.
9. Termination. This Agreement may be terminated:
(a) by Consultant without cause, for any reason or for no reason, at
any time upon thirty days' written notice to the Company;
(b) by the Company immediately for Cause (as defined in Section 7(f))
without prior notice to Consultant;
(c) upon the death or Permanent Disability (as defined in Section
7(g)) of Consultant,
(d) upon its fifth anniversary if Company does not renew this
Agreement and the non-compete shall also terminate on that date;
however, this Agreement may be renewed on the fifth anniversary
of the commencement date hereof and on each fifth year
anniversary thereafter, with a Consumer Price Index adjustment to
the $150,000 annual consulting fee from the beginning of the
preceding five-year period to the renewal date, and the
non-compete shall continue in force for each such renewal period;
or
(e) if Company is in default hereunder and such default is not cured
within thirty (30) days of written notice thereof, then
Consultant can terminate this Agreement and the non-compete
provision hereof is of no further force and effect.
10. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with regard to the subject matter hereof and supersedes
all prior or contemporaneous agreements and understandings, oral or
written, between the parties hereto with respect to the subject matter
hereof.
11. Other Agreements/Benefits. Notwithstanding anything in this Agreement
to the contrary, this Agreement is independent of and has no effect on
other agreements between the Company and the Consultant regarding
Consultant's employment or rights to royalties or other compensation.
Nothing contained in this Agreement shall be construed to alter,
abridge, or in any manner affect the rights and privileges of
Consultant to participate in any pension or profit sharing plan or
other qualified retirement plan that the Company may now or hereafter
provide, including the Company's employee stock ownership plan.
12. Amendment. No amendment or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing and signed by
all the parties and then such waiver shall only be effective in the
specific instance and for the specific purpose for which it was given.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefits of the parties hereto and their respective heirs,
personal representatives, successors, and permitted assigns, including
the successors or assigns of the Company or any Subsidiary or
Affiliate of the Company, but nothing in this Agreement is to be
construed as an authorization or right of either party to assign its
rights or delegate its duties under this Agreement without the consent
of the other party hereto. A successor or assign of the Company shall
include, but shall not be limited to, any entity acquiring all or
substantially all of the assets, business or stock of the Company. The
term "substantially" shall mean a transfer of more than twenty percent
(20%) of the assets (with respect to book value) or business (with
respect to revenues) or more than fifty percent (50%) of the stock of
the Company.
14. Governing Law. This Agreement shall be construed, governed by, and
enforced in accordance with the laws of the State of Minnesota.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
16. Headings. The headings of the paragraphs of this Agreement are
intended for the convenience of the parties only and shall in no way
be held to explain, modify, amplify, or aid in the interpretation of
the provisions hereof.
17. Severability. The provisions of this Agreement shall be deemed
severable and if any portion hereof shall be held invalid, illegal, or
unenforceable for any reason, the remainder shall not thereby be
invalidated but shall remain in full force and effect.
18. Waiver. The waiver by either party of the breach of any provision of
this Agreement by the other party shall not operate or be construed as
a waiver of any subsequent breach of that provision or any other
provision. None of the terms of this Agreement shall be deemed to have
been waived by either party unless such waiver is in writing and
signed by or on behalf of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day, month, and year first above written.
COMPANY:
Oxboro Medical International, Inc.
By /s/ Xxxxxx Xxxxx
Its President/CEO
CONSULTANT:
/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
