EXHIBIT 10.04
EMPLOYMENT AGREEMENT FOR
XXXXXXX XXXXX
EMPLOYMENT AGREEMENT
This Agreement made effective as of the 1st day of August, 1993,
between Xxxx Scientific, Inc. of Pleasant Grove, Utah (hereinafter referred to
as the "Xxxx") and Xxxxxxx X. Xxxxx, (hereinafter referred to as the "Xxxx").
W I T N E S S E T H:
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In consideration of the mutual covenants and conditions hereinafter set
forth, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Xxxx and Xxxx agree as follows:
1. Employment:
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Xxxx hereby employs Xxxx, and Xxxx hereby accepts such employment, to perform
the Services (as hereinafter defined).
2. Term of Employment:
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a. The Initial Term of this Agreement shall begin on the date
first above written, and shall end ten years thereafter.
x. Xxxx may terminate this Agreement at any time for Cause (as
hereinafter defined) with sixty days written notice. Xxxx xxx terminate this
Agreement at any time after five years by delivering written notice of such
termination to Xxxx ninety days prior to such termination. If Xxxx terminates
this Agreement for any reason other than Cause, Xxxx shall receive severance
of 50% of the remaining amount he would have received under the contract but
in no case shall that amount be less than one year's salary.
c. If Xxxx terminates this Agreement pursuant to paragraph (b) of
this Section, Xxxx may, at its sole option and discretion waive the 90 day
notice period required in Section 2(b) above and allow Xxxx to terminate this
employment with a notice period less than 90 days. Xxxx shall provide the
Services required under Section 3 during each notice period for the
compensation provided in Section 4, during which time the provision of this
Agreement shall remain in full force and effect.
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d. Should Xxxx terminate this Agreement for one or more of the
following reasons, such termination shall be deemed for purposes of this
Agreement to be "With Cause":
(1) embezzlement or conversion by Xxxx of significant assets of
Xxxx.
(2) indictment or conviction of Xxxx of any felony or any
misdemeanor involving a crime of moral turpitude the result of which causes
substantial embarrassment or hindrance to Xxxx.
(3) violation of any term of this Agreement, including, but not
limited to, violation of the trade secrets provisions contained in Section (6)
of this Agreement.
(4) violation of Section 5, Best Efforts.
3. Services:
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Xxxx, as Vice President of Engineering, shall devote essentially his full time
attention and energies to the affairs of Xxxx and shall perform such duties as
may be assigned to him, from time to time, by the Board of Directors. All
duties set out in this Section 3 shall be known as "Services" for purposes of
this Agreement. Xxxx shall have the power to determine not only the specific
duties which shall be performed by Xxxx, but also the power to determine,
within reason, the means and the manner by which those duties shall be
performed.
4. Compensation:
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a. For all Services rendered by Xxxx under this agreement, base
compensation shall be paid to Xxxx as follows:
(1) Xxxx shall be paid a minimum salary of $82,000 per year,
payable in equal installments not less than monthly. Xxxx shall deduct and
withhold all necessary Social Security and withholding taxes and any other
similar sums required by law from Mike's salary. The minimum salary can be
increased but not lowered by the Board of Directors at anytime during the term
of this agreement, unless an across the board reduction in all employees'
salaries shall be deemed necessary for the financial well being and health of
Xxxx. Should such a reduction occur, Mike's base salary shall be restored at
such a time as all of the employee's return to their previous base salaries.
The Board of Directors can also set a higher salary for Xxxx without causing a
change in the minimum.
(2) Xxxx will reimburse certain business expenses of Xxxx as
the Board of Directors or Chief Executive Officer from time to time shall
specify.
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(3) Xxxx shall be included in Xxxx'x hospitalization plan and
other benefit plans including profit sharing and incentive compensation.
(4) Xxxx shall pay premiums for up to $300,000 of life
insurance on Xxxx each year provided such premiums do not cost more than $1000
per year. Xxxx must pay the annual premium and submit a receipt of
reimbursement by the Xxxx. Failure to pay the annual premium on the part of
Xxxx shall release Xxxx from any obligation to provide life insurance to him.
In addition, Xxxx is not obligated to provide life insurance for xxxx should
he become uninsurable.
(5) Xxxx shall receive 4 weeks of vacation per year. Xxxx can
transfer, or carry over one week of vacation, for a total of 5 weeks in any
given year, from one year to the next. Xxxx shall not be entitled to be
reimbursed for unused vacation.
(6) In the event of accident or term illness which prohibits
Xxxx from performing his normal job for Xxxx, Xxxx agrees to continue Mike's
salary and benefits for a period of 180 days, even if he is unable to return
to work for Xxxx In addition, Xxxx, at its expense, agrees to provide Xxxx
with long term disability insurance to cover any long term disabilities beyond
the 180 day period covered by Xxxx. Such insurance shall provide, at the time
of disability, salary replacement of up to 50% of his salary including Social
Security payments per year through age 65, and not require him to accept jobs
outside of his own occupation through age 65.
b. In addition to the base compensation, Xxxx shall receive an
advisory and consulting salary as follows:
After ten years and upon the cessation of full-time employment,
xxxx agrees to retain Xxxx as a consultant and advisor to Xxxx on an as needed
basis for a period of five years at a base compensation of 25% of his annual
base salary in the sixth year of this Agreement. For such compensation, he
agrees to make up to 500 hours per year of his time available to Xxxx. This
time may be provided on premises, at locations away from Xxxx while Xxxx is
working on Xxxx business, by mail and over the phone. In addition, to the
compensation provided for in this section, Xxxx agrees to reimburse him during
the consulting period any incidental expenses Xxxx xxx incur including travel,
phone charges, document preparation and other services necessary for
performance of Mike's duties while consulting or advising. Such compensation
shall be paid on the 6th day of each month regardless of when or how the
services are rendered. At anytime during the five year consulting Agreement,
Xxxx may buy out the balance of the contract for a total price of 50% of the
sum of the amounts left to be paid over the remaining years of the contract.
All monthly payments will be made as scheduled until the buyout amount is paid
in full. The consulting contract shall terminate immediately after the five
year term, or upon payment of the buyout, whichever is sooner.
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5. Best Efforts of Xxxx:
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Xxxx agrees that he will at all times, faithfully, industriously, and to the
best of his ability, experience, and talents perform all duties that may be
required of and from him pursuant to the express and implicit terms hereof, to
the reasonable satisfaction of Xxxx. If he fails to perform his duties in a
competent manner, Xxxx shall warn Xxxx in writing identifying the specific
deficiencies to be corrected, except those deficiencies may not be the result
of illness or disability. If Xxxx does not correct such deficiencies to the
extent an arbiter would require of him in a reasonable time period after being
warned, then Xxxx xxx be discharged With Cause after three such warnings in
one year and failure on Mike's part to correct such deficiencies to the
satisfaction of an arbiter.
6. Trade Secrets:
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a. Xxxx recognizes that during his employment he will receive,
develop, or otherwise acquire information which is of a secret of confidential
nature. Except as authorized in writing by Xxxx, any information of Xxxx he
obtained during the course of his employment relating to inventions,
procedures, machinery, apparatus, ideas, technical data, or other information
which is of a secret or confidential nature, whether or not acquired or
developed by Xxxx, he shall use his best efforts to keep confidential during
the term of his employment.
b. Xxxx will communicate to Xxxx promptly and full all
discoveries, improvements, and inventions (hereinafter called ("Inventions")
made or conceived by Xxxx, either solely or jointly with others, during his
employment and for six months thereafter, which are specifically related to
actual or anticipated business, work, or investigations of Xxxx or which
result from or are suggested by any work Xxxx xxx do for Xxxx; and such
Inventions, except as provided below, shall be and remain the sole and
exclusive property of Xxxx or its nominees. Any product, substance or process
for which a United States patent has been granted and which product, substance
or process is developed directly by Xxxx during the term of this Agreement,
shall be owned one-half by Xxxx and one-half by him. Xxxx shall have an
exclusive worldwide license to make, use and sell products, substances and
processes covered by patents obtained. Xxxx shall have sole authority to
determine when an application for a patent shall be pursued for any product,
substance or process. If Xxxx elects to apply for a patent, all expenses
incurred in pursuing any patent shall be borne entirely by Xxxx. If Xxxx
elects not to apply for a patent, the person who should become vested with an
interest in the patent, may pursue a patent application at his sole expense.
c. Xxxx will keep and maintain adequate and current written
records of all such Inventions, in the form of notes, sketches, drawings, and
reports relating thereto, which records shall be the property of and available
to Xxxx at all times. All such records shall remain on the premises of Xxxx
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at all times and shall be deemed to be secret and confidential.
d. Xxxx will, during and after his employment, without charge to
Xxxx, but at his request and expense, assist Xxxx and its nominees in every
proper way to obtain and vest in it or their title to patents on such
inventions in all countries by executing all necessary documents, including
applications for patents and assignments thereof.
7. Covenant Not to Compete:
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After termination of this Agreement, Xxxx will not divert or attempt to divert
away business from Xxxx by influencing or attempting to influence any
customers of Xxxx with whom he may have been dealing, provided, however, that
the restrictions contained in this sentence shall apply only for a maximum
period of two years and to such capacities, functions, operations, and areas
as shall be reasonably necessary for the protection of Xxxx and shall be
construed to be thus divisible and enforceable provided that Xxxx has paid
Xxxx all compensation due under the terms and conditions of this Agreement.
If Xxxx has not paid the compensation defined herein to him for any reason,
this covenant not to compete shall be null and void.
8. Successors:
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Xxxx will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
business or assets of Xxxx, by agreement in form and substance reasonably
satisfactory to Xxxx, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that Xxxx would be required to
perform it if no such succession had taken place. Failure of Xxxx to obtain
agreement prior to the effectiveness of any succession shall be a breach of
this Agreement and shall entitle Xxxx to receive immediate payment in full of
all as yet to be paid compensation available during the term of this
Agreement, and the additional sum of $200,000 payable immediately and in full
by Xxxx. This $200,000 represents Mike's compensation for the Successor
company not agreeing to accept his contract in full upon the succession. It
is an additional severance and does not replace any other type of compensation
Xxxx would be entitled to under the terms and conditions of this Agreement.
9. Governing Law:
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This Agreement shall be subject to and governed by the laws of the State of
Utah.
10. Binding Effect:
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This Agreement shall be binding upon and inure to the benefit of Xxxx and Xxxx
and their respective heirs, legal representatives, personal representatives,
successors, and assigns.
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11. Entire Agreement:
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This writing contains the entire agreement concerning the employment
arrangements between the parties and shall, as of the date hereof, supersede
all other arrangements between the parties. No waiver or modification of this
Agreement nor of any of the conditions contained herein shall be valid unless
in writing and duly signed by the party to be charged therewith.
12. Illegal Provisions:
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If any provision of this Agreement is or becomes or is deemed invalid, illegal
or unenforceable in any jurisdiction, each provision shall be deemed amended
to conform to applicable laws so as to be valid and enforceable or if it
cannot be so amended without materially altering the intention of the parties,
it shall be stricken and the remainder of this Agreement shall remain in full
force and effect.
13. Section Headings:
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Section headings contained in this Agreement are included for convenience only
and form no part of the agreement between the parties.
14. Written Consent:
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Neither the Agreement nor any right or obligation arising hereunder may be
assigned by Xxxx without the prior written consent of Xxxx.
15. Warranties:
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All representations, warranties, indemnifications, obligations of
confidentiality, rights of confidentiality, proprietary rights and
indemnifications shall survive the termination of this Agreement.
16. Indemnification:
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Xxxx shall indemnify Xxxx to the full extent of any expenses, penalties,
damages or other pecuniary loss which he may suffer as a result of his
responsibilities, obligations or duties in connection with carrying out the
employment functions defined in this Agreement and in managing the business of
Xxxx and Xxxx only, and specifically as a Director and/or Officer of Xxxx.
Such indemnification shall be paid by Xxxx to Xxxx to the extent that
fiduciary liability or directors and officers insurance is not available to
cover the payment of such items. Expenses incurred by Xxxx in defending a
claim against him in a proceeding shall be paid by Xxxx as incurred and in
advance of the final disposition of such proceeding. The indemnification
under this Agreement shall continue as to him even though he may have ceased
to be a Director and/or Officer and shall inure to the benefit of the heirs
and personal representatives of Xxxx, The indemnification under this
Agreement shall cover Mike's service as a Director and/or Officer and all of
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his acts in such capacity, whether prior to, or on or after the date of the
Agreement. This indemnification does not apply to illegal acts.
17. Arbitration:
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Should any dispute arise between the parties concerning the performance of
this Agreement, the parties agree to mediation and, if not resolved through
such mediation within 30 days, final and binding arbitration in Salt Lake
City, Utah in accordance with the rules of the American Arbitration
Association subject to Article XII in the case of alleged breach of Articles X
or XI. The decision rendered in any arbitration proceedings shall be in
writing and shall set forth the basis therefor. The parties shall abide by
the award rendered in the arbitration proceedings, and such award may be
entered as final, non-appealable judgment, and may be enforced and executed
upon, in any court having jurisdiction over the party against whom enforcement
of such award is sought. Each of the parties agrees (in connection with any
action brought to enforce the arbitration provisions of this section) not to
assert in any such action, any claim that it is not subject to the personal
jurisdiction of such court, that the action is brought in an inconvenient
forum, that the venue of the action is improper, or that such mediation or
arbitration may not be enforced by such courts. Each party agrees that
service of process may be made upon it by any method authorized by the laws of
the State of Utah.
18. Costs and Attorneys' Fees:
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If Xxxx shall incur any costs resulting from enforcement of this Agreement,
whether by institution of suit or otherwise, Xxxx shall be liable to the
prevailing party of such costs, including reasonable attorneys' fees.
XXXX SCIENTIFIC, INC.
By:XXXXX X. XXXXXXXX
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XXXXXXX X. XXXXX
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