EXHIBIT 10.01
EMPLOYMENT AGREEMENT
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This Agreement made effective as of the 1st day of August, 1998
between Calorimetry Sciences Corporation of Provo, Utah
(hereinafter referred to as "CSC") and Xxxxxx X. Xxxxxx,
(hereinafter referred to as the "Xxxxxx").
W I T N E S E T H:
- - - - - - - - -
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, CSC and Xxxxxx agree
as follows:
1. EMPLOYMENT.
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CSC hereby employs Xxxxxx, and he hereby accepts such employment,
to perform the Services as hereinafter defined.
2. TERM OF EMPLOYMENT.
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The Term of this Agreement shall begin on the date first above
written, and shall end five years thereafter. If CSC or Xxxxxx
chooses not to renew this agreement or not to negotiate a new
agreement, CSC will give Xxxxxx a temporary extension of this
contract for up to one year to give him time to find alternate
employment. Such an extension shall be under the same terms and
conditions as this Agreement and will terminate as soon as Xxxxxx
finds another similar position or in one year whichever is sooner.
CSC, at its sole discretion, may at the end of the fifth year pay
Xxxxxx one year base compensation and terminate this agreement
rather than give the one year extension.
3. SERVICES.
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(1) Duties and Title. Xxxxxx shall devote substantial time and
attention to the affairs of CSC as necessary to perform such duties
as may be assigned to him as Chairman, President and CEO of CSC,
from time to time, by the Board of Directors. If Xxxxxx' title or
duties should change during the term of this Agreement, such change
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shall not impact any terms of this Agreement including the base
compensation or benefits.
(2) Other Activities. From time to time Xxxxxx xxx take or
teach college classes but no more than four credit hours per
semester, participate in professional organizations and/or be
involved in community service activities (such activities to be
limited to 3 working hours per week without special board approval.
CSC recognizes that such activities benefit both CSC and Xxxxxx.
CSC also recognizes that these activities may put certain demands on
the time of Xxxxxx which is not within his control. CSC and Xxxxxx
agree to work in a reasonable manner to resolve any conflicts with
Xxxxxx' duties at CSC caused by such activities.
4. BASE COMPENSATION.
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For all Services rendered by Xxxxxx under this Agreement, base
compensation shall be paid to him as follows:
(1) Salary. As salary Xxxxxx shall be paid a minimum base
salary of $231,000 per year the first year of this agreement, and
such base salary will rise a minimum of 5% per year for each year of
this Agreement. However, based upon the performance of the company
and Xxxxxx, the Board may set his salary higher than provided for
under this section if the Board so chooses. The minimum base salary
can be increased but not lowered by the Board of Directors at any-
time 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 CSC. Should such a reduction
occur, Xxxxxx' minimum base salary shall be restored at such time as
the other employees return to their previous base salaries. The base
salary shall be payable in equal installments not less than monthly.
CSC shall deduct and withhold all necessary Social Security and
withholding taxes and any other similar sums required by law from
Xxxxxx' salary.
(2) Business Expenses. CSC will reimburse certain business
expenses of Xxxxxx as the Board of Directors, or other designated
party, from time to time shall specify. Normal business expenses do
not require Board approval for reimbursement.
(3) Benefits. Xxxxxx shall be included in CSCs' major medical
and hospitalization plan and other benefit plans including profit
sharing, incentive compensation, executive bonus plan, pension plan,
group term life insurance and dental plans. In addition, if this
Agreement is terminated Without Cause, or is terminated by Xxxxxx
for Good Reason, CSC agrees to provide Xxxxxx with major medical and
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hospitalization insurance until Xxxxxx is eligible to receive medi-
care. Such insurance shall not provide benefits less than those
provided for other employees through CSCs' group health insurance
plan. The coverage that CSC provides Xxxxxx shall be valid regard-
less of where Xxxxxx lives.
(4) Life Insurance Premiums. CSC shall reimburse Xxxxxx for any
personal life insurance premiums in the amount of $3,000 per year.
Xxxxxx must pay the premium and submit a receipt for reimbursement
by the company.
(5) Vacation and Sick Days. Xxxxxx shall receive 25 days of
vacation per year. He can carry over up to 6 days of vacation each
year for a total of 31 days in any given year; however, he shall not
be entitled to be reimbursed for unused vacation.
(6) Disability. In the event of accident or illness which
prohibits Xxxxxx from performing his normal services for CSC, CSC
agrees to continue Xxxxxx' base compensation and any other compensa-
tion for a period of 180 days, even if he is unable to return to
work for CSC. Also CSC, at its expense, agrees to provide Xxxxxx
with long term disability insurance to cover any long term disabil-
ities beyond the 180 day period covered by CSC. Such insurance
shall provide, at the time of disability, salary replacement of up
to 60% of his salary including Social Security payments (or the
maximum level of such benefits that Xxxx or CSC disability insurance
covers for any other employee), per year through age 65 and not
require him to accept jobs outside of his own occupation through age
65. CSC does not have to provide Xxxxxx with disability insurance if
either he or the company, as a whole, becomes uninsurable. If Xxxxxx
is disabled during the term of this Agreement and is required to stop
performing his duties for a period of time in excess of 180 days,
this Agreement shall continue in force; however, if Xxxxxx is unable
to perform his duties and is receiving insurance disability payments
after 180 days, CSC may suspend payments of his base salary and bonus
until he is fit to return to work. If Xxxxxx is able to return to CSC
within two years of the suspension of his base salary and bonus, CSC
shall allow him to return to work and resume payment of his compensa-
tion as defined in this Agreement. If Xxxxxx is unable to resume his
duties at CSC within two years of the suspension due to disability
then CSC may, at its' sole discretion, terminate any remaining term
of this Agreement except for medical insurance and hospitalization
benefits, as described in Section 4 paragraph 3, and Life Insurance
Premiums, as described in Section 4 paragraph 4, which shall continue
to be paid by CSC through any remaining term of this agreement.
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(7) Emergency Family Leave. During the term of this Agreement,
if any member of Xxxxxx' family needs major medical care due to
accident, injury or illness, Xxxxxx will be allowed to take up to 4
weeks of emergency family leave, with pay, in any given year. The
Board can require Xxxxxx to provide reasonable details of the family
medical problem he must attend to. Anytime off beyond the 4 weeks
specified herein must be approved by the Board on a case by case
basis.
5. BEST EFFORTS.
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Xxxxxx agrees that he will at all times, faithfully, industriously,
and to the best of his abilities, experience, and talents perform
all duties that may be required of and from him as described in
Section 3, Services. If he fails to perform his duties in a
competent manner, CSC shall warn Xxxxxx in writing identifying the
specific deficiencies to be corrected, except those deficiencies
may not be the result of illness or disability. If Xxxxxx does not
correct such deficiencies to the extent an arbiter would require of
him in a reasonable time period after being warned, then Xxxxxx xxx
be discharged With Cause after three such warnings in one year and
failure on Xxxxxx' part to correct such deficiencies to the satis-
faction of an arbiter.
6. TERMINATION BY CSC.
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(1) With Cause Termination. A termination of this agreement by
CSC under this paragraph shall be considered Termination With Cause.
CSC may terminate this Agreement With Cause for the following reasons:
(i) If there is substantial and irrefutable evidence
Xxxxxx embezzled significant assets of CSC,
(ii) If Xxxxxx is convicted of any felony involving a
crime of moral turpitude the result of which causes substantial
embarrassment or hindrance to CSC,
(iii) If Xxxxxx willfully violates the trade secrets pro-
visions contained in Section (9) of this Agreement
(iv) If Xxxxxx is in breach of Section 5, Best Efforts.
In the event of termination upon any item described above, prior
to the completion of the term of employment specified herein, Xxxxxx
shall be entitled to all compensation and other benefits earned by
him as provided for in this Agreement, and said accrued compensation
shall be paid by CSC within thirty (30) days of the termination date.
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(2) Termination for Disability. If Xxxxxx should be disabled
for a period of more than 180 days in any year, then CSC may suspend
Xxxxxx' salary and bonuses with 30 days written notice if CSC has met
the criteria as set out in Section 4, Base Compensation Paragraph 6.
If CSC is not in compliance with Section 4, Base Compensation, Para-
graph 6, and has not insured Xxxxxx for disability, CSC shall be
responsible for Xxxxxx' disability payments during his time of dis-
ability at the same rate as if insurance were in force. If Xxxxxx'
salary and bonuses are suspended because of disability, Xxxxxx shall
be entitled to all compensation due him as of the date of suspension
as provided for in this Agreement, and any such remaining compensation
shall be paid by CSC within thirty (30) days of the suspension date.
When Xxxxxx recovers from his disability he may be allowed to return
to work as described in Section 4, Base Compensation Paragraph 6.
(3) Termination by Death. If Xxxxxx should die during the term
of this Agreement, CSC may terminate this Agreement immediately upon
his death. Xxxxxx' heirs or estate shall be entitled to all compen-
sation and other benefits earned by him as provided for in this
Agreement, and any remaining compensation shall be paid by CSC to
Xxxxxx' estate within thirty (30) days of the termination date.
(4) Termination Without Cause. Any termination of this agreement
except as provided for else where in this section shall be considered
Termination Without Cause. If CSC terminates this agreement Without
Cause anytime before the end of the employment term defined in this
Agreement, Xxxxxx shall be entitled to immediate severance pay of 50%
of the base compensation remaining to be paid over the life of the
agreement contract or one year's base compensation, whichever is
greater. In addition to xxxxxxxxx Xxxxxx shall receive all other
compensation due him under this Agreement.
7. TERMINATION BY XXXXXX.
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(1) Termination for Good Reason. Xxxxxx xxx terminate this
agreement For Good Reason, which shall mean for purposes of this
Agreement:
(i) A change in control of CSC or Xxxx Scientific. A
Change in Control of CSC or Xxxx Scientific shall mean a change
in the basic ownership of CSC and/or Xxxx shares where 45% or
more of the voting shares are acquired or accumulated in one or
several transactions by another entity. A Change in Control
would be considered to have taken place if the Board fails to
re-elect Xxxxxx as President and CEO of Calorimetry Sciences
Corporation except as per Section 5 of this agreement, or fails
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to re-elect Xxxxxx a director of CSC or Xxxx or removes him from
such offices or directorships, or if at any time during the term
of the employment he fails to be vested by CSC with the powers
and authority of the President of Calorimetry Sciences Corpora-
tion except as per Section 5 or if CSC in any substantive way
diminishes Xxxxxx' responsibilities, duties, power or authority
as set forth under this Agreement. Notwithstanding anything to
the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any trans-
action which results in Xxxxxx, or a group of persons which
includes Xxxxxx, acquiring, directly or indirectly, 45% or more
of the combined voting power of CSCs' securities.
(ii) a failure of CSC to comply with any material provi-
sion of this Agreement which has not been cured within 30 days
after notice of noncompliance has been given by Xxxxxx to CSC.
(iii) any attempted termination by CSC which is not in
compliance with the terms and conditions of this Agreement.
If Xxxxxx terminates this Agreement for Good Reason, Xxxxxx is
due the same compensation as described in Section 6, Termination by
CSC, paragraph 4, which is termination Without Cause.
(2) Voluntary Termination. Xxxxxx xxx terminate this Agreement
at any time by delivering written notice of such termination to CSC
ninety days prior to such termination. Loss of the compensation
described herein is the only penalty of voluntary early termination
by Xxxxxx.
8. STOCK BUY BACK OPTION.
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For a three year period after termination or expiration of this
Agreement, Xxxxxx shall have an option to have CSC buy from Xxxxxx
certain common stock share options or any common stock shares
resulting from the exercise of those specific options presently
exercisable and convertible into shares, in Xxxxxxxxxx Industries,
Inc., that Xxxxxx owns as of the date of this Agreement. The three
year period begins at the time of termination or expiration.
Thereafter, at the end of each year of the three year period, Xxxxxx
xxx request that CSC buy from him for the price described herein up
to 5,260 options or shares. If CSC is unable to afford to purchase
all of the options or shares in a one time cash transaction, CSC, at
CSCs' discretion, can spread the purchase equally over the next
twelve month period. CSC is under no obligation to purchase more
than 5,260 shares of Xxxxxxxxxx Industries, Inc. in any given one
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year period and no more than a total of 15,780 shares over the three
years. The 15,780 options or shares from option shall be made up of
12,880 shares (adjusted for reverse split) available to Xxxxxx
under his Option Agreement dated June 6, 1988 and 2,900 of the
shares (adjusted for reverse split) available to Xxxxxx under the
option agreement dated August 2, 1989. The purchase price shall be
$7.50 (adjusted for reverse split) per share for any common shares
which have been obtained by exercise of these options by Xxxxxx or
$5.94 per common share option if purchased by CSC before any
exercise by Xxxxxx. Under no conditions may Xxxxxx sell back to CSC
shares he has acquired on the market or from another individual,
institution or any other source. If Xxxxxx requests that CSC buy
less than the annual total of 5,260 shares in any year of the three
year period, CSC has no obligation to purchase the untendered shares
or options at anytime in the future. This stock buy back option
survives this Agreement in any case except voluntary termination by
Xxxxxx, as defined in Section 7, Termination by Xxxxxx, Paragraph 2.
If Xxxxxx is terminated With Cause, this stock buy back shall become
void. If this Agreement is terminated for any other reason under
Section 6, Termination by CSC, or for Good Reason as defined in
Section 7, Termination by Xxxxxx, paragraph 1, the stock buy back is
still exercisable under the same terms and conditions as stated
herein. In the event of an acquisition by a successor company of CSC
(whether direct or indirect, by purchase, merger, consolidation or
otherwise), the successor company assumes the obligation of the
stock buy back from CSC and CSC is released from any and all
obligations under this section.
9. TRADE SECRETS.
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(1) Secret Information. Xxxxxx recognizes that during his
employment he will receive, develop, or otherwise acquire information
which is of a secret or confidential nature. Except as authorized in
writing by CSC, any information of CSC 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 Xxxxxx, he shall use his best efforts to keep confidential during
the term of his employment.
(2) Communication and Patents. Xxxxxx will communicate to CSC
promptly and fully all discoveries, improvements, and inventions
(hereinafter called "Inventions") made or conceived by him, either
solely or jointly with others, during his employment and for six
months thereafter, which are similar to actual or anticipated busi-
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ness, work, or investigations of CSC or which result from or are sug-
gested by any work Xxxxxx xxx do for CSC; and such Inventions, except
as provided below, shall be and remain the sole and exclusive property
of CSC 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 Xxxxxx during the term of this
Agreement, shall be owned one-half by CSC and one-half by him. CSC
shall have an exclusive worldwide license to make, use and sell prod-
ucts, substances and processes covered by patents obtained. CSC shall
have sole authority to determine when an application for a patent
shall be pursued for any product, substance or process. If CSC elects
to apply for a patent, all expenses incurred in pursuing any patent
shall be borne entirely by CSC. If CSC 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.
(3) Records. Xxxxxx 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 CSC at all times. All
such records shall remain on the premises of CSC at all times and
shall be deemed to be secret and confidential.
(4) Title. Xxxxxx will, during and after his employment, at
CSC's expense, assist CSC and its nominees in every proper way to
obtain and vest in it or them title to patents on such inventions in
all countries by executing all necessary documents, including appli-
cations for patents and assignments thereof.
10. COVENANT NOT TO COMPETE.
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After termination of this Agreement Xxxxxx will not divert or attempt
to divert away business from CSC by influencing or attempting to
influence any customers of CSC 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 CSC and shall be construed to be thus
divisible and enforceable provided that CSC has paid Xxxxxx all
compensation and other benefits due him under the terms and condi-
tions of this Agreement. If CSC has not paid the compensation and
other benefits defined herein to him for any reason, this covenant
not to compete shall be null and void.
11. SUCCESSORS.
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CSC will require any successor (whether direct or indirect, by
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purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of CSC or Xxxx Scientific (including
acquisition of a controlling interest in the stock of CSC or Xxxx
Scientific), by agreement in form and substance reasonably satisfac-
tory to Xxxxxx, to expressly assume and agree to perform this Agree-
ment in the same manner and to the same extent that CSC would be
required to perform it if no such succession had taken place. Failure
of CSC to obtain this agreement prior to the effectiveness of any
succession shall be a breach of this Agreement and shall entitle
Xxxxxx to receive immediate payment of severance as described in
Section 6 paragraph 4, Termination Without Cause up to a maximum
of $500,000.
12. INDEMNIFICATION.
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CSC shall indemnify Xxxxxx 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 CSC, and CSC only, and specifically
as a Director and/or Officer of CSC. Such indemnification shall be
paid by CSC to Xxxxxx to the extent that fiduciary liability or
directors and officers insurance is not available to cover the
payment of such items. Expenses incurred by Xxxxxx in defending a
claim against him in a Proceeding shall be paid by CSC 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
Xxxxxx. The indemnification under this Agreement shall cover Xxxxxx'
service as a Director and/or Officer and all of 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.
13. GOVERNING LAW.
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This Agreement shall be subject to and governed by the laws of the
State of Utah.
14. BINDING EFFECT.
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This Agreement shall be binding upon and inure to the benefit of CSC
and Xxxxxx and their respective heirs, legal representatives,
personal representatives, successors, and assigns. If he should die
while any amounts would still be payable if he had continued to
live, all such amounts, unless otherwise provided, shall be paid in
accordance with the terms of this Agreement to his designee or, if
there is no such designee, to his estate.
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15. 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.
16. ILLEGAL PROVISIONS.
----------------------
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.
17. SECTION HEADINGS.
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Section headings contained in this Agreement are included for con-
venience only and form no part of the agreement between the parties.
18. WRITTEN CONSENT.
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Neither the Agreement nor any right or obligation arising hereunder
may be assigned by Xxxxxx without the prior written consent of CSC.
19. 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.
20. 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 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 be set forth the basis therefor. The parties shall abide by
the award rendered in the arbitration proceedings, and such award
may be entered as a final, non appealable judgment, and be enforced
and executed upon, in any court having jurisdiction over the party
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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.
21. COSTS AND ATTORNEYS' FEES.
-----------------------------
If Xxxxxx shall incur any costs resulting from efforts to enforce
this Agreement, whether by institution of suit or otherwise, CSC
shall be liable to Xxxxxx if he is the prevailing party in such
action, including reasonable attorneys' fees.
22. WAIVER.
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Any failure by either party to insist upon strict performance of
this Agreement or any terms hereof shall not be deemed to be a
waiver of any of the terms and provisions hereof.
23. DUTY TO MITIGATE.
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Xxxxxx shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise and CSC will not be entitled to set off against amounts
payable to him pursuant to this Agreement any amounts earned by him
from other employment during the remaining term of this Agreement.
24. BOARD RESOLUTION.
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This Agreement has been authorized on behalf of CSC at a special
meeting of its' Board of Directors by a resolution adopted by a
majority of the directors of CSC other than Xxxxxx.
25. BREACHES AND REMEDIES.
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In the event Xxxxxx breaches any portion of this Agreement, all
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remedies and liabilities have been defined herein. No other remedies
or liabilities exist outside of those defined in this Agreement.
Calorimetry Sciences Corporation.
By:XXXXX X. XXXXX
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Xxxxx X. Xxxxx
Executive Vice President and Secretary
By:XXXXX XXXXXXXXXX Approved by Board of Directors on 8/26/98
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Xxxxx Xxxxxxxxxx, Director CSC
XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
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