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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of August 30, 1999 (the
"Effective Date") by and between XxxXxxXx.xxx division of Biomerica, Inc., (the
"Company"), and Xxxxxx X. Goto (the "Executive") under the following terms and
conditions:
RECITALS:
WHEREAS, the Company and Executive desire to set forth the terms and
conditions on which (i) the Company shall employe Executive, (ii) Executive
shall render services to the Company, and (iii) the Company shall compensate
Executive for such services; and
WHEREAS, in connection with the employment of Executive by the Company,
the Company desires to restrict Executive's rights to compete with the business
of the Company;
WHEREAS, the parties acknowledge that the Executive's abilities and
services are unique and essential to the prospects of the Company; and
WHEREAS, in light of the foregoing, the Company desires to employ the
Executive as Chief Technology Officer and the Executive desires to accept such
employment.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
employment with the Company upon the terms and conditions hereinafter set forth.
2. TERM.
2.1 The term of this Agreement (the "Term") shall be for a period
commencing on the Effective Date of this Agreement and shall continue for a
period of (1) year from the date thereof, unless sooner terminated as provided
in Paragraph 6. This period, as the same may be extended hereafter by agreement
of the parties or terminated pursuant hereto, is hereinafter referred to as the
"Term"
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3. COMPENSATION.
3.1 For all services rendered by Executive under this Agreement, the
Company shall pay Executive a base salary of one hundred fifty thousand dollars
($150,000) per annum in equal monthly or semi-monthly installments (the "Base
Salary"). The amount of the Base Salary may be increased at any time and from
time to time by a unanimous vote of the Board of Directors of the Company. No
such change shall in any way abrogate, alter, terminate or otherwise effect the
other terms of this Agreement.
3.2 In addition to the Base Salary, Executive may be eligible for an
incentive bonus ("Incentive Bonus") to be based upon the criteria agreed upon
between the Board, the Chief Executive Officer and/or a Committee of the Board
and the Executive, within 60 days of the Effective Date. The Incentive Bonus
shall be paid, if earned, within 30 days after the Company's year-end operating
results have been determined by the Company's accountants or other time as
determined by the Board and/or Chief Executive Officer.
3.3 In addition to the Base Salary, the Company shall grant to
Executive an option to purchase 62,000 restricted shares of the Company's
common stock at an exercise price of fair market value per share. The option
shall vest over a period of three (3) years, with 33-1/3% on the first
anniversary of the Effective Date, and the remaining 66-2/3 vesting each month
over the next two years, and shall have a term of five (5) years.
3.4 Executive shall be reimbursed for all reasonable "out-of-pocket"
business expenses for business travel and business entertainment incurred in
connection with the performance of his or her duties under this Agreement (i)
so long as such expenses constitute business deductions from taxable income for
the Company and are excludable from taxable income to the Executive under the
governing laws and regulations of the Internal Revenue Code and (ii) to the
extent such expenses do not exceed the amounts allocable for such expenses in
budgets that are approved from time to time by the Company. The reimbursement
of Executive's business expenses shall be upon monthly presentation to and
approval by the Company of valid receipts and other appropriate documentation
for such expenses.
3.6 All compensation shall be subject to customary withholding tax
and other employment taxes as are required with respect to compensation paid by
a corporation to an employee.
4. DUTIES AND RESPONSIBILITIES.
4.1 Executive shall, during the Term of this Agreement, devote his
full attention and expend his best efforts, energies, and skills, on a
full-time basis, to the
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controlled by Executive or any member of the Executive's family or in which
Executive or any member of the Executive's family has any direct or indirect
financial interest whatsoever.
4.5 To induce the Company to enter into this agreement, the Executive
represents and warrants to the Company that except as set forth on Schedule
4.5,(a) the Executive is not a party or subject to any employment agreement or
arrangement with any other person, firm, company, corporation or other business
entity, (b) the Executive is subject to no restraint, limitation or restriction
by virtue of any agreement or arrangement, or by virtue of any law or rule of
law or otherwise which would impair the Executive's right or ability (i) to
enter the employ of the Company, or (ii) to perform fully his duties and
obligations pursuant to this Agreement, and (c) to the best of Executive's
knowledge no material litigation is pending or threatened against any business
or business entity owned or controlled or formerly owned or controlled by
Executive.
4.6 Executive shall submit to the Board of Directors of the Company for
its approval, not later than 60 days before the beginning of each calendar year,
an annual business plan for the Company (the "Annual Plan"). The Annual Plan
shall be revised by Executive and submitted to the Board of Directors for its
review (and approval in the case of material changes from the approved Annual
Plan) from time to time during each year to reflect changes in the Annual Plan
because of operations or otherwise. Each Annual Plan shall include the following
information:
(a) an annual forecast of income and expenses for the operation of the
Company;
(b) a cash flow budget, estimate of profit or losses, and source and use
of cash statements for the operation of the Company;
(c) a payroll and staffing plan and budget for the operation of the
Company; and
(d) a capitalization expense budget for the operation of the Company.
4.7 During each year, Executive in the performance of his duties under
this Agreement shall comply or cause compliance with the applicable Annual Plan
and shall not (except for emergency expenditures or special circumstances
requiring an unanticipated expenditure) deviate materially from any budget
category set forth in the Annual Plan, incur any material additional expense or
change materially the manner of operation of the Company without the approval of
the Chief Executive Officer and/or the Board of Directors.
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5. RESTRICTIVE COVENANTS.
5.1 Executive acknowledges that (i) he has a major responsibility for
the operation, administration, development and growth of the Company's
business, (ii) his work for the Company has brought him and will continue to
bring him into close contact with confidential information of the Company and
its customers, and (iii) the agreements and covenants contained in this Section
5 are essential to protect the business interest of the Company and that the
Company will not enter into this Agreement but for such agreements and
covenants. Accordingly, the Executive covenants and agrees as follows:
5.1(a) Except as otherwise provided for in this Agreement,
during the Term of this Agreement and, if this Agreement is terminated for any
reason during the Term, for six (6) months following such date of termination
(the "Termination Period"), the Executive shall not, directly or indirectly,
compete with respect to any services or products of the Company which are
either offered or are being developed by the Company; or, without limiting the
generality of the foregoing, be or become, or agree to be or become, interested
in or associated with, in any capacity (whether as a partner, shareholder,
owner, officer, director, Executive, principal, agent, creditor, trustee,
consultant, co-venturer or otherwise) with any individual, corporation, firm,
association, partnership, joint venture or other business entity, which
competes with respect to any services or products of the Company which are
either offered or are being developed by the Company; provided, however, that
the Executive may own, solely as an investment, not more than one percent (1%)
of any class of securities of any publicly held corporation in competition with
the Company whose securities are traded on any national securities exchange in
the United States of America, and may retain his ownership interest in those
entities referred to in Subparagraph 4.1.
5.1(b) During the term of this Agreement and, if applicable, during
the Termination Period, the Executive shall not, directly or indirectly, (i)
induce or attempt to influence any employee of the Company to leave its employ,
(ii) aid or agree to aid any competitor, customer or supplier of the Company in
any attempt to hire any person who shall have been employed by the Company
within the one (1) year period preceding such requested aid, or (iii) induce or
attempt to influence any person or business entity who was a customer or
supplier of the Company during any portion of said period to transact business
with a competitor of the Company in Company's business.
5.1(c) During the Term of this Agreement, the Termination Period, if
applicable, and thereafter, the Executive shall not other than in the
performance of his duties disclose to anyone any information about the affairs
of the Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Company or is not generally known in the relevant trade, nor shall the
Executive
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such jurisdictions shall hold such Restrictive Covenants wholly unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
parties hereto that such determination not bar or in any way affect the
Company's right to the relief provided above in the courts of any other
jurisdictions within the geographical scope of such Restrictive Covenants, as
to breaches of such covenants in such other respective jurisdictions, the above
covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
6. TERMINATION.
6.1 The Company may terminate the Executive's employment under this
Agreement at any time for Cause. "Cause" shall exist for such termination if
Executive (i) is adjudicated guilty of a felony by a court of competent
jurisdiction, (ii) commits any act of fraud or intentional misrepresentation,
(iii) has, in the reasonable judgment of the Company's Board of Directors, (a)
engaged in misconduct, which conduct has, or would if generally known,
materially adversely affect the good will or reputation of the Company and
which conduct the Executive has not cured or altered to the satisfaction of the
Board of Directors within ten (10) days following notice by the Board of
Directors to the Executive regarding such conduct, or (b) willfully and
intentionally failed to perform his duties as specified to him by the Board of
Directors, or (c) negligently performs his or her duties and such negligence
adversely affects the Company or (iii) has made any material misrepresentation
to the Company under Sections 4 and 5 hereof.
6.2 If the Company terminates the Executive's employment under this
Agreement pursuant to the provisions of Section 6.1 hereof, the Executive shall
not be entitled to receive any compensation following the date of such
termination.
6.3 This Agreement shall automatically terminate on the last day of
the month in which Executive dies or becomes permanently incapacitated.
"Permanent incapacity" as used herein shall mean mental or physical incapacity,
or both, reasonably determined by the Company's Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company's Board
of Directors, either Executive's regularly attending physician or a duly
licensed physician selected by the Company's Board of Directors, rendering
Executive unable to perform substantially all of his or her duties hereunder
and which appears reasonably certain to continue for at least six (6)
consecutive months without substantial improvement. Executive shall be deemed
to have "become permanently incapacitated" on the date the Company's Board of
Directors has determined that Executive is permanently incapacitated and so
notifies Executive.
6.4 Upon termination because of Permanent incapacity, the Executive
shall be entitled to receive compensation for twelve (12) months from the date
of such termination (such payments to be diminished, however, by the extent to
which the Executive receives compensation during such period from any
disability insurance or other income source) in an amount equal to the monthly
compensation paid Executive for the month prior to such termination.
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6.5 Executive's employment may be terminated by the Company "without
cause" (for any reason or no reason at all) at any time by giving Executive
sixty (60) days prior written notice of termination, which termination shall be
effective on the 60th day following such notice. If Executive's employment
under this Agreement is so terminated, the Company shall make a lump sum cash
payment to Executive within 10 days after termination of an amount equal to
(i) the amount of the remaining Base Salary and benefits to be paid to Executive
through the Term of this Agreement, (ii) a pro rata option of any agreed upon
incentive compensation, if any, earned for the year in which termination occurs
prorated to the date of termination, plus (iii) any unreimbursed expenses
accruing to the date of termination. After the Company's termination of
Executive under this provision, the Company shall not be obligated to continue
providing any benefits to Executive (except as may be required by law).
6.6 Executive may terminate his or her employment hereunder by
giving the Company sixty (60) days prior written notice, which termination
shall be effective on the 60th day following such notice. Voluntary termination
shall not entitle the Executive to receive any compensation following the date
of termination.
6.7 At the Company's option, Executive shall immediately leave the
Company's premises on the date notice of termination is given by either
Executive or the Company.
7. MISCELLANEOUS.
7.1 The Company may, from time to time, apply for and take out, in
its own name and at its own expense, life, health, accident, disability or
other insurance upon the Executive in any sum or sums that it may deem
necessary to protect its interests, and the Executive agrees to aid and
cooperate in all reasonable respects with the Company in procuring any and all
such insurance, including without limitation, submitting to the usual and
customary medical examinations, and by filling out, executing and delivering
such applications and other instruments in writing as may be reasonably
required by an insurance company or companies to which an application or
applications for such insurance may be made by or for the Company. In order to
induce the Company to enter this Agreement, the Executive represents and
warrants to the Company that to the best of his knowledge the Executive is
insurable at standard (non-rated) premiums.
7.2 This Agreement is a personal contract, and the rights and
interests of the Executive hereunder may not be sold, transferred, assigned,
pledged or hypothecated except as otherwise expressly permitted by the
provisions of this Agreement. The Executive shall not under any circumstances
have any option or right to require payment hereunder otherwise than in
accordance with the terms hereof. Except as otherwise expressly provided
herein, the Executive shall not have any power of anticipation, alienation or
assignment of payments contemplated hereunder, and all rights and benefits
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of the Executive shall be for the sole personal benefit of the Executive, and
no other person shall acquire any right, title or interest hereunder by reason
of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against the Executive; provided, however, that in the event of the Executive's
death, the Executive's estate, legal representative or beneficiaries (as the
case may be) shall have the right to receive all of the benefit that accrued to
the Executive pursuant to, and in accordance with, the terms of this Agreement.
7.3 The Company shall have the right to assign this Agreement to any
successor of substantially all of its business or assets, and any such
successor shall be bound by all of the provisions hereof.
8. NOTICES.
All notices, requests, demands and other communications provided for
by this Agreement shall be in writing and (unless otherwise specifically
provided herein) shall be deemed to have been given at the time when mailed in
any general or branch United States Post Office, enclosed in a registered or
certified postpaid envelope, addressed to the parties stated below or to such
changed address as such party may have fixed by notice:
To the COMPANY:
Attn: Xxxxx Xxxxx
Executive: Sec.
9. ENTIRE AGREEMENT.
This Agreement supersedes any and all Agreements, whether oral or
written, between the parties hereto, with respect to the employment of
Executive by the Company and contains all of the covenants and Agreements
between the parties with respect to rendering of such services in any manner
whatsoever. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement or promise with respect to such
employment not contained in this Agreement shall be valid or binding. Any
modification of this Agreement will be effective only if it is in writing and
signed by the parties hereto.
10. PARTIAL INVALIDITY.
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If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
11. ATTORNEYS' FEES.
Should any litigation or arbitration be commenced between the
parties hereto or their personal representative concerning any provision of this
Agreement or the rights and duties of any person in relation thereto, the party
prevailing in such litigation or arbitration shall be entitled, in addition to
such other relief as may be granted, to a reasonable sum as and for its or their
attorneys' fees in such litigation or arbitration which shall be determined by
the court or arbitration board.
12. ARBITRATION.
The parties agree to arbitrate any disputes arising under this
Agreement in as expeditious a manner as possible through the commercial rules of
the American Arbitration Association in the County of Orange, California, or
such other place which is mutually agreed upon by the parties. Further, the
parties hereby waive any objection based on personal jurisdiction, venue or
forum non conveniens in any arbitration or action brought under this section.
The decision and award rendered by the arbitrators shall be final and binding.
Judgment upon the award may be entered in any court having jurisdiction thereof.
Notwithstanding the first paragraph of this section, any dispute
involving an amount that is less than or equal to the maximum jurisdictional
amount for small claims court, as may be amended, shall be brought in the small
claims court for the County of Orange, State of California, or such other place
which is mutually agreed upon by the parties.
13. GOVERNING LAW.
This Agreement will be governed by and construed in accordance
with the laws of the State of California.
14. BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective representatives, heirs, successors and
assigns.
15. WAIVER.
No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute a waiver of any other provision, whether or not
similar, nor shall any
