EXHIBIT B
EMPLOYMENT AGREEMENT
BETWEEN
CENTREX, INC.
AND
XXXX X. XXXXXXX
This Employment Agreement ("Agreement") is made and executed this 21st
day of January, 2003 and is effective March 1, 2003 (the "Effective Date"), by
and between Centrex, Inc. ("Centrex" or the "Company"), a Oklahoma Corporation
having its principal place of business at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx, XX
00000 and Xxxx X. Xxxxxxx ("Executive") who currently resides at 000 Xxxxxxxxxxx
Xxxx, Xxxxxx, Xxxxxxx 00000.
WHEREAS, Centrex desires to recruit Executive as its new President and
Chief Executive Officer and Executive desires to be part of the challenge
offered by the Company and its technology platform.
WHEREAS, the Centrex Board has authorized the execution of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
made in this Agreement, the parties do hereby agree as follows:
1. Employment, Responsibilities and Term:
(a) Position Responsibilities:
Centrex agrees to and does hereby engage and employ Executive initially
as a consultant to the current CEO and upon completion of certain
pre-requisities (as defined in Section 3. (c)) then the Company's
newPresident and Chief Executive Officer of Centrex Corporation for the
term and upon the terms and conditions set forth herein, and Executive
accepts such offer of employment. Executive will have full charge chief
executive responsibilities that include business strategy development,
research, product development,
clinical, regulatory, manufacturing, finance, capital formation,
business development & licensing, human resources, investor relations,
sales, marketing, administration, and presenting information to the
Board of Directors.
(b) Term:
The Term of the agreement will be three years commencing on the
EDeffective date of this Employment Agreement.
(c) Board of Directors:
It is also understood and agreed that Executive will serve as a
Director of the Company, without additional compensation, for the
appointed term. During the term of this Agreement, the Board of
Directors will take such actions as may be required to appoint
Executive for election as a director by the shareholders. Executive
may serve on the Board of Directors of companies not affiliated with
Centrex, and receive compensation in connection therewith, if such
Board position is approved by the Board of Directors of Centrex. It is
also recognized and agreed to that Executive is a Director of
Angiogene, Inc. a medical device company in Montreal and will continue
to serve on such Board and will be allowed to travel and participate
in Board meetings during the year while employed by Company. Xx.
Xxxxxxx also has some trailing responsibilities with DNA Print
Genomics that he will be involved with occasionally through May 2003.
The activities with these companies will not interfere with Xx.
Xxxxxxx'x ability to perform for Centrex and may even enhance and
support his Centrex efforts.
(d) Commitment:
Executive agrees to discharge his duties hereunder in accordance with
the direction of the Board of Directors of Centrex and to follow
diligently and implement faithfully all management policies and
decisions communicated to him by the Board of Directors. During the
employment of Executive by Centrex, Executive shall devote his full
and undivided time, attention, energies and loyalty to the Company's
business but the foregoing shall not be construed to prevent Executive
from making investments in other businesses or enterprises or engaging
in any other business activity that does not interfere with
Executive's duties under this Agreement, or conflict with his
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obligations under Paragraph 10 hereof or otherwise represent a
conflict of interest with his duties to Centrex.
(e) Changes in Board and Officers:
Concurrent with the execution of this agreement and also the closing
of the next $1.5 million (net after fees and expenses) in financings
theExecutive will officially join the Company and willbe elected
President and CEO of Centrex and also Chairman of the Board by the
current Centrex Board. The official start date is the dateat which
time the Executive assumes legal responsibilities for running the
Company. From the Effective Date to the official start date Executive
will serve as a consultant to the current CEO and Board and for
purposes of stock grant vesting and other items the Effective Date of
this agreement will serve as the anniversary date of the employment
contract. It is also understood that the current Officers and
Directors of Centrex will resign when Executive officially joins the
Companywith the execution of this agreement. Executive will be the
sole Officer and Director and will be responsible for nominating a new
Board of Directors and hiring a new management team.
2. Term and Renewal. The term of Executive's employment hereunder will
be for a period commencing on the Effective Date and continuing for a
period of three (3) years (the "Expiration Date"), unless Executive's
employment is terminated by either party pursuant to Paragraph 7 of
this Agreement. The agreement will automatically be renewed for
another year if neither party provides the other with written notice
of termination twelve (12) months in advance.
3. Compensation Package and Relocation Reimbursement:
(a) Starting Annual Salary:
For services provided hereunder, Executive will be paid an annual base
salary of Two Hundred Fifty Thousand Dollars ($250,000). Executive
will initially operate the Company from his Florida location.
Executive will be eligible for a salary review once each year on the
anniversary of his employment agreement. It is understood that
Executive is not entitled to any raise in salary but he is entitled to
an annual performance review and an annual review of his compensation
package. Any salary increases during the term will be at the sole
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discretion of the Board but in no event will the base salary be less
than the initial amount during the Term.
(b) Initial Start Up Period:
Executive will begin full time employment with the Company on or
aroundMarch 1, 2003. From Effective Date to March 1 Executive will
provide consulting services as a non-employee to the Company at a 40%
commitment and will be paid in cash at a rate consistent with his
starting base salary plus all benefits and taxes. Accordingly,
Executive will be paid $5,000 on signing plus $12,500 for February
2003. (40% of base salary + fringe benefits + employer payroll taxes +
40% of car allowance = approximately $12,500). Given the Company's
cash challenge at this time Executive agrees to withhold payment of
services for February until new cash is received by the Company. In
the event the pre-conditions in Section 3 (c) are not fully met by
March 1, 2003 then Executive will continue to serve the Company in the
full time capacity of a consultant to the current management and Board
until the $2 million (gross) financing is closed and the other
pre-conditions are met. Consultant will be paid a consulting fee of
$31,250/month (prorated by calendar days) until the pre-conditions are
fully met and consultant officially joins the Company as its new CEO
and Director.
(c) Pre-conditions:
The Company agrees to several employment pre-conditions as follows:
- The outstanding payment obligations to the University of
California for the Los Alamos project for the months of December
through Executive's start date will be paid in full when due.
- In addition to the above the Company will raise a net minimum of
$1,500,000 (net of fees and expenses) cash to operate the Company
going forward until the next fundraising effort.
- The ceiling on authorized common shares will be raised above the
45 million level to 250125 million.
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- A non-cash support agreement for the balance of 2003 with Xxx
Xxxxxxxx and the Centrex Tulsa staff will be executed.
- Completion, attachment and certification of financial schedules
as described in Section 23.
- Confidentiality and Patent Assignment Agreement as described in
Section 9
- Change of Control Agreement
- Stock Grant Agreement
- A Promissory Note for the purchase of the common stock grant
- Income tax review of stock grant and all other appropriate
agreements
(d) Cash Bonus:
It is understood and contemplated that, in addition to the foregoing
annual base salary; Executive will be eligible to receive cash bonuses
in each calendar year during the term of this Agreement in such
amounts, if any, as shall be determined from time to time by a
majority of independent Directors of the Company in their sole
discretion. If this Agreement expires on the Expiration Date, then the
obligation of the Company to pay a bonus to Executive on for the last
year of service, if a bonus is approved, shall survive such
expiration, and the Company shall pay such bonus to Executive as if
this Agreement remained in full force and effect. The range of annual
bonus payment may be from no bonus at all to 100% of Executive's then
Base Salary for that year. However, the bonus, if approved by a
majority of the independent Directors, for the first year will not be
less than $50,000.
(d) Headquarters Relocation Salary Adjustment:
It is contemplated that the Board of Directors will request that
Executive relocate to a geographical location more suitable to
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building and financing the Company. At the Board's request Executive
will promptly relocate to such location. It is agreed that in the
event the Company is moved to Atlanta such salary adjustment will be
$15,000 ($265,000 per year) annually and if in the Northeast such
salary adjustment will be $25,000 ($275,000 per year). If such a
relocation takes place Executive's base salary will be increased for
the appropriate relocation allowance on the day Executive begins to
conduct the business from the new location. If the Board chooses a
location other than Atlanta or the Northeast the parties will agree on
a reasonable base salary adjustment for the relocation.
(e) Reimbursement of Household Relocation Costs:
The Company will provide Executive with a $45,000 relocation allowance
and the Company will provide a full federal, state and local income
tax gross up on such relocation allowance so that the after tax cost
to the Executive is less than $1,000. This allowance is intended to
cover the move of household goods, real estate commissions, mortgage
points and closing costs on both homes. The Company will pay half the
relocation allowance on eitherthe execution of a purchase agreement
for a home in the new area or the sale of his current Florida homeand
the latter half upon the Executive's relocation to the new area.
(f) House Hunting and Temporary Living costs:
In addition, the Company will reimburse Executive and his spouse for
up to three house hunting visits and, if necessary, provide temporary
living for up to six months.
(g) Given the tax complexities as a result of a relocation during 2003
the Company agrees to reimburse Executive for the professional
services associated with filing his personal federal and state income
taxes in 2004 for the 2003 tax year.
4. Fringe Benefits:
Executive, during the period of his employment hereunder, will receive
fringe benefits such as medical, dental, prescription drug and
hospitalization insurance, vacation leave, short term sick leave and
long term disability as well as participation in any retirement plan
as may exist from time to time for all other executive officers of the
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Company; provided, however, that, during the term of this Agreement.
The Company shall maintain at its expense a long-term disability
policy for the benefit of Executive, which will provide coverage equal
to Executive's Base Salary. Company will provide Executive an
automobile and assume the cost of such car lease for business and his
personal use including insurance and car maintenance while under
contract with the Company. The purchase price level, before taxes, of
the automobile to be leased will not exceed $40,000 and if it does
exceed that amount Executive will contribute the incremental portion
of the lease payment. In addition, the Company will provide
reimbursement for certain communication devices such as cell phone,
computer, PDA/Blackberry and related internet and other services that
support such communication devices. Executive shall be entitled to
four weeks of vacation leave, annually, which shall be paid at his
then Base Salary, and shall accrue such vacation time and be used in
accordance with the policies and procedures of the Company.
5. Reimbursement of Business Expenses:
The Company will promptly reimburse Executive for all business expenses
incurred by him in connection with the business of the Company in
accordance with regular Company policy regarding the nature and amount
of expenses and the maintenance and submission of receipts and records
necessary for the Company to document them as proper business expenses.
6. Executive Stock Options:
(a) Stock Grant Description:
To both retain Executive and to provide him with incentives to perform
well for the Company and its shareholders the Company will grant
Executive an equity incentive in Centrex common stock. In general,
Executive is granted an equity incentive equal to 15% of the fully
diluted shares outstanding after all debt conversion to equity and
after the grant to Executive is made. The term will be ten years with
a purchase price will be of $.05/share and the shares will be subject
to certain vesting criteria and repurchase agreements. In addition,
the underlying shares and the grant option itself will have certain
restrictions.
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(b) Definitive Stock Grant Contract:
Executive and the Company are parties to a Stock Grant Agreement dated
January 21, 2003, which shall be deemed to be incorporated into this
Agreement as if fully set forth in this Paragraph 6.
7. Termination of Employment and This Agreement.
(a) Termination for Cause or Voluntary Termination:
If Executive's employment is terminated by the Company for cause (as
hereinafter defined) or if Executive voluntarily leaves the employment
of the Company prior to the Expiration Date, the Company will pay
Executive the equivalent of three (3) months' salary at the Base
Salary, and three (3) months continuation of fringe benefits then
being received by Executive. For purposes of this Agreement,
termination "for cause" means termination of Executive's employment by
action of a majority of outside Directors of Centrex because of:
(1) material breach of contract,
(2) failure or inability to carry out legal directives of
the Board of Directors,
(3) conviction of Executive for a felony, even if such
conviction is subject to appeal,
(4) uncontroverted evidence of falsification of records
or statements of the Company,
(5) uncontroverted evidence of intentional misuse of
Company funds or property, or
(6) other substantial misconduct which, in the reasonable
judgment of the Board, results in material adverse
effect, discredit or disrepute to the Company.
A termination of employment for any cause listed in clauses
(1),(2)or(6)above shall be effective only if Executive has first been
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given written notice by the Board of Directors of the alleged breach,
failure to perform or misconduct and such breach, failure to perform
or misconduct continues for fifteen days following the date of such
notice.
(b) Termination for No Cause:
If this Agreement expires on the Expiration Date, or if the sooner
termination of Executive's employment and this Agreement is not for
cause, not because of Executive's death or disability and not because
of his voluntary termination of employment, then the Company will make
a lump sum cash payment to Executive equal to one year of the
Executive's then annual Base Salary, plus an average cash bonus for
the last three years but not less than $50,000 and will provide twelve
(12) months continuation of fringe benefits available to Executive and
his dependents covered for such benefits at the time of Executive's
Termination for No Cause. If it is not possible to cover Executive and
his family with fringe benefits then the Company will make a lump sum
payment to Executive for the value of such benefits. All the above
lump sum payments will be paid immediately upon formal Termination for
No Cause by the Board.
(c) Termination Due to Death:
The Company will secure a term life insurance policy for the benefit
of the Executive's estate in the amount of $1 million. Such insurance
policy will promptly be put in place and will be maintained by Company
during the full Term of this agreement including all extensions.
(d) Termination Due to Disability:
The Company agrees to carry and pay for an individual long term
disability policy on Executive of his choosing that covers his Base
Salary plus bonus. The Company will continue to pay Executive his
current salary and continue to accrue his bonus until the disability
policy begins to pay Executive.
It is understood that a permanently disabled status subject to long
term disability shall mean such sickness, as well as physical or
mental disability, that qualifies or, with the passage of time (not to
exceed 90 calendar days), will qualify Executive to receive benefit
payments
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under at least one of the long-term disability policies maintained by
the Company for Executive in accordance with Paragraph 4. In the event
of a dispute as to Executive's ability to perform his duties, the
Company may refer Executive to a licensed practicing physician of
Centrex's choice and reasonably satisfactory to Executive, and
Executive agrees to submit to such tests and examinations as such
physician shall deem appropriate. The determination by the physician
as to whether or not Executive is unable to perform substantially his
normal duties shall conclusively determine such facts for the purposes
of this Paragraph 7(c). Short term illness or injury not amounting to
long term disability shall be treated in accordance with any benefit
provided under Paragraph 4 of this Agreement.
8. No Restrictions on Executive's Employment by Centrex.
Executive represents as a condition of this Agreement that he is not
under any existing employment agreement, non-competition agreement or
other legally binding agreement which would prohibit or in any manner
restrict his employment hereunder with Centrex.
9. Employee Confidentiality and Invention Assignment Agreement.
Executive and the Company agree that the Employee shall keep all
proprietary information confidential during employment and for two
years after employee leaves his employment.are parties to a
confidentiality and invention assignment letter agreement dated
______________, which shall be deemed to be incorporated into this
Agreement as if fully set forth in this Paragraph 9.
10. Change of Control:
Executive and the Company are parties to a Change of Control agreement
dated January 21, 2003 ______________, which shall be deemed to be
incorporated into this Agreement as if fully set forth in this
Paragraph 10.
11. Restrictions on Competition.
(a) During Employment. In order to protect Centrex's investment, which
includes but is not limited to, time, money, options and proprietary
information, and in recognition of the unique character of the Trade
Secrets and other Confidential Information which are the
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basis of Centrex's business and future business opportunities, in
recognition of the worldwide geographic scope of Centrex's business
and/or potential business opportunities and Executive's contemplated
role, responsibilities and knowledge therefor, for the entire period
of Executive's employment by Centrex, Executive agrees that he will
not work as a consultant for or directly or indirectly perform
services anywhere in the world for himself or any other person, firm
or corporation in competition with Centrex. A business in competition
with Centrex includes any business activity being actively
investigated or contemplated by Centrex during the period of
Executive's employment by Centrex. Without limitation on the
foregoing, but by way of example, businesses currently contemplated by
Centrex as being in competition with it include, but are not limited
to, businesses engaged in or considering engaging in manufacture,
marketing or development of lazer based Bioterrorism detection systems
designed to detect airborne, water based and blood based pathogens as
covered by Company patents.
(b) For one two (1) (2) syear after termination of employment. In
order to protect Centrex's investment, which includes but is not
limited to, time, money and proprietary information and in recognition
of the unique character of the Trade Secrets and other Confidential
Information which are the basis of Centrex's business and future
business opportunities, in recognition of the worldwide geographic
scope of Centrex's business and/or potential business opportunities
and Executive's contemplated role, responsibilities and knowledge
therefor, for a period of two (2) years following the termination of
Executive's employment with Centrex, regardless of the reason
therefor, Executive agrees that he will not work as a consultant for
or directly or indirectly perform services anywhere in the world for
himself or any other person, firm or corporation in any capacity
involving the study, development, use, manufacture or marketing of
products covered by Centrex patents.
The foregoing shall not preclude (1) the employment of Executive,
whether as a director, officer, employee, consultant or otherwise, by
a research partner, joint venture partner, licensee or other person,
or corporation or entity that at such time is authorized by Centrex to
have rights in or to restricted products, or (2) the
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ownership by Executive of investment securities representing not more
than three (3) per cent of the outstanding voting securities of
company engaged in a pharmaceutical business, whose stock and/or
securities are traded on a national stock exchange or national
quotations system, provided that such investment is passive and not
with the intention of controlling such business.
(c) Executive agrees and acknowledges that the restrictions on
competition contained herein including their geographic and product
scope are necessary and reasonable to protect the interests of Centrex
and that the Company's Trade Secrets and other Confidential
Information of which he will become acquainted, if used anywhere in
the world during the period in which he has agreed not to use them or
to disclose them would cause Centrex serious and irreparable damage
and harm. Executive represents and admits that upon the termination of
his employment with Centrex, his experience and capabilities are such
that he can obtain employment engaged in other lines of endeavor and
that the enforcement of this Agreement would not prevent him from
earning a livelihood.
12. Acknowledgments.
(a) It is understood and contemplated by the parties that if the
obligations undertaken herein in Paragraphs 9 and 10 were breached in
any way, irreparable harm to the Company should be presumed. Damages
might be difficult if not impossible to ascertain, and the faithful
observance of the terms of this Agreement during and after termination
of Executive's employment is an essential condition to his employment
with the Company. In light of these considerations, Executive agrees
that a court of competent jurisdiction may immediately enjoin any
breach or threatened breach of Paragraphs 9 and 10 to this Agreement,
without waiver of any other rights and remedies which the Company may
have at law.
(b) The obligations undertaken in Paragraphs 9 and 10 of this
Agreement survive the termination of Executive's employment hereunder
for the period specified in each such Paragraph and the termination of
this Agreement, regardless of the reason therefor.
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The obligations of Centrex to Executive following his termination
of employment as set forth in Paragraphs 3(b), 6, and 7 shall survive
the termination of this Agreement until satisfied in accordance with
the terms thereof.
(c) The rights of Executive under this Agreement are in addition
to any other rights or remedies he may have in law or in equity in the
event Centrex breaches this Agreement, all of which rights and
remedies are preserved in full. Without limiting the foregoing, the
rights of Executive under Paragraph 7 herein do not limit any right he
would have upon termination of employment caused by a breach of
Centrex. However, any damages he may sustain shall be reduced by the
payments required to be made under this Agreement.
13. Construction of Agreement.
(a) It is the intention of the parties to this Agreement that any
construction of this Agreement or Paragraph thereof shall be in favor
of its legality and enforceability and that any construction causing
illegality or unenforceability should yield to a construction favoring
legality and enforceability. Further, the parties agree that should
any portion of this Agreement be judicially held invalid,
unenforceable or void, such holding shall not have the effect of
invalidating or voiding any remaining portion of this Agreement not so
declared and that any portion held to be invalid, unenforceable or
void shall, if possible, be deemed amended or reduced in scope,
otherwise to be stricken from this Agreement, but only to the extent
required for purposes of maintaining the legality, validity and
enforceability of this Agreement and all portions thereof in the
jurisdiction so holding.
(b) It is understood that use of the word "and" herein included
the disjunctive as well as its injunctive meaning whenever such
meaning would broaden the protection to the Company in the context in
which it is used.
14. No Waiver. No waiver of any breach of this Agreement may be construed
or deemed as a waiver of any succeeding breach of this Agreement.
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15. Personal Services. It is understood and contemplated that this
Agreement provides for personal services of Executive to the Company.
16. No Interference. For two (2) years following the termination of
Executive's employment hereunder, regardless of the reason therefor,
Executive will not intentionally disrupt or attempt to disrupt the
Company's business relationship with its customers or suppliers, nor
solicit any of the Company's employees to terminate their employment
with Centrex.
17. Certification by Employee. Executive certifies that he has received a
copy of this Agreement for review and study before being asked to
execute it, that he has read this Agreement carefully, that he has had
a sufficient opportunity before executing this Agreement to ask
questions about it and to receive answers to any such questions and
that he understands the obligations and rights provided hereunder.
18. Entire Agreement. This Agreement hereto supersedes any and all other
agreements, both oral and in writing, between the parties hereto with
respect to the employment and terms and conditions thereof of
Executive by Centrex, and it contains all of the parties'
representations, covenants and agreements with respect to such
matters. The terms of this Agreement may not be changed orally but
only by a subsequent writing signed by the party against whom
enforcement of such modification is sought.
19. Captions. Paragraph captions used herein are for convenience of
reference only and shall not change the meaning of the terms of this
Agreement.
20. Successors and Assigns. The terms of this Agreement shall inure to the
benefit of any successors and assigns of the Company.
21. Governing Law and Venue. This Agreement shall be construed and
governed in accordance with the laws of the State of Oklahoma. The
parties agree venue shall be proper solely in the state and federal
courts in Oklahoma.
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22. Corporate Authority. The Company represents and warrants that this
Agreement including the issuance of the Stock Grant (1) has been duly
authorized, executed and delivered by the Company, (2) constitutes a
legal, valid and binding obligation of the Company enforceable in
accordance with its terms, and (3) does not conflict with or result in
a violation of the Company's Certificate of Incorporation, By-laws, or
any contract, agreement or instrument to which the Company is a party
or is otherwise bound.
23. Debt Conversion/Capitalization Table/Budget Certification:
A number of financial schedules have been prepared to fully disclose
the Company's finances and to enable the parties to calculate
Executive's incentive stock grant. As of the March 1 the date
Executive begins full time employment with the Company, the CFO has
prepared and certified the attached monthly "bare bones" budget of
expenses for 2003 (schedule A), a monthly cash flow forecast by month
for the balance of 2003 (schedule B), a detailed schedule of all
payables and accruals (schedule C) outstanding, a pre-Executive stock
grant Capitalization Table showing all major individual shareholders
and derivative holders along with the allowance made to raise
additional cash and provide for Executives stock grant (schedule D).
24. Advice of Counsel:
The parties to this Agreement have the opportunity to seek advice of
counsel prior to executing this Agreement.
25. Jointly Prepared:
As this document is the result of extensive negotiation by the
parties, it shall be deemed to be jointly written and prepared by the
parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal on the date hereof, to be effective as of the Effective Date.
XXXX X. XXXXXXX:
----------------------------
(an individual)
CENTREX, INC.:
By:__________________________
Xxxxxx X. Xxxxxxxx, Xx., M.D.
President and CEO
Attest:
CENTREX, INC.
By:__________________________
Corporate Secretary
(CORPORATE SEAL)
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