Exhibit 10.b
EMPLOYMENT AGREEMENT
Between
XXXXXXX X. XXXXXX
and
PML MICROBIOLOGICALS, INC. and PML, INC.
The purpose of this Agreement is to confirm the terms of the employment
relationship between PML Microbiologicals, Inc. and PML, Inc. (hereinafter
referred to as "Employer" or "PML"), and Xxxxxxx Xxxxxx (hereinafter referred to
as the "Employee").
I. Term of Agreement. Employer and Employee agree that the term of this
Agreement shall be from the day of execution by all parties until May 31, 2002,
unless employment is sooner terminated as provided herein.
1.1. Position and Duties.
1.1.1 Employer and Employee agree that Employee will be employed
as the President and CEO of PML and that in this capacity, Employee's
responsibilities will include, but are not limited to those described in Exhibit
A, attached hereto and incorporated herein by this reference. It is understood
that from time to time Employee may be assigned other duties in addition to
those described in Exhibit A. It is further agreed and understood that as the
President/CEO of Employer, the hours which Employee is required to work, will
vary considerably and will sometimes be more and sometimes less than forty (40)
hours per week. It is understood and agreed that Employee's pay will not be
affected by the number of hours worked in a given week; Employee is not eligible
for overtime compensation nor subject to deductions from compensation due to any
variance in the number of hours worked.
1.1.2 Unless agreed otherwise, Xxx Xxxxxxx will meet with the
Employee on Wednesdays at 3:00 p.m. in the conference room at PML.
1.1.3 Employee's obligation to devote his full-time, attention
and energy to the business of Employer shall not be construed as preventing
Employee from investing his assets so long as any such investment will not
require any services on the part of Employee in the operation of the affairs of
the company(ies) or business(es) in which such investment(s) is (are) made.
2. Employee shall have the authority to hire and fire other employees of
Employer under his supervision.
3 . Employer's Covenants.
3.1 Employer agrees to reimburse Employee for all reasonable
business expenses incurred by Employee while on Employer's business. Employee
shall maintain such records as will be necessary to enable Employer to properly
deduct such items as business expenses when computing Employer's federal income
tax.
3.2 Employer agrees to conduct performance reviews of Employee on
a periodic basis during Employee's first six months of employment and on an
annual basis thereafter.
4 . Compensation.
4.1 For all services rendered by Employee under this Agreement
(exclusive of stock options and bonus, if any), Employer shall pay Employee a
base salary of One Hundred Fifty Thousand Dollars ($150,000) per year, until May
31, 1999 and then increased to $175,000 effective June 1, 1999. Employee shall
be paid this salary on PML's regular pay days, minus all lawful and agreed upon
payroll deductions.
4.2 Unpaid compensation due to short-term cash flow
considerations shall be accrued by Employee without payment of interest if not
paid when due.
5 . Bonuses.
5.1 Goal. To maximize shareholder value. The Board of Directors
of PML proposes the following plan for the term of the contract with the
understanding that the bonus after that period will likely be based upon
Economic Value Added (EVA) according to a formula yet-to-be determined.
5.2 Basis. Fifty percent of pre-tax profits above the base of
$360,000, with a maximum bonus of $100,000. Employer profit sharing
contributions, 401(k) matching contributions and expenses resulting from
issuance of non-qualified stock options are added back to pre-tax profits for
calculations of bonus amount.
5.3 Term. There will be no bonus paid for the fiscal year ending
May 31, 1996. Any bonus for any other fiscal year in which Employee is employed
under the terms of this Agreement shall be calculated as set forth herein.
5.4 Calculation. Pre-tax profits - Less debt forgiveness, if any
- Less base ($360,000) = Profits to be used for base calculation
Example: $750,000 Pre-tax profits
(100,000) Debt forgiveness
(360,000) Base
= $290,000 Profits for base calculation
$145,000 50% of applicable profits
$100,000 Bonus paid (Bonus is based upon 50%
of profits over $360,000
up to a maximum bonus of
$100,000)
5.5 Earning and Payment of Bonus. Two-thirds of the bonus for any
fiscal year (other than fiscal year 1996, which will have no bonus) will be
earned at the close of the fiscal year for which the pre-tax profits were at
least $360,000, as certified by the auditors. Said earned portion of the bonus
will be paid within ten days of the certification of the annual audit results
for the fiscal year for which the bonus is being calculated.
One-third of the bonus will be earned at the close of the fiscal
year immediately following the fiscal year for which the bonus is being
calculated, providing that the pre-tax profits are at least $360,000 for that
fiscal year. That earned portion of the bonus will be paid within ten days of
the certification of the annual audit results for the fiscal year for which the
bonus is being calculated.
If PML's pre-tax profits are less than $360,000 in any fiscal
year, any bonus payment or portion of bonus payment unpaid from the prior fiscal
year will be deemed unearned and will not be paid.
5.6 Forfeiture of Bonus. No unearned bonus or portion of bonus
will be paid if any of the following circumstances exist:
5.6.1 Employee quits PML at any time other than at the expiration
of the contract.
5.6.2 Employee is fired for cause, as that term is defined in
paragraphs 10.1.1 through 10.1.4.
5.7 Payment of Bonus in Event of Termination Without Cause.
5.7.1 If Employee is terminated at the close of any fiscal year
without "cause" as that term is defined in Paragraphs 10.1.1 and 10.1.4, and if
the terms and conditions of Paragraphs 5.2, 5.3, 5.4 and 5.5 are met, Employee
will receive payment of his bonus, if any, for his last fiscal year of
employment subject to and under the terms and conditions contained herein.
5.7.2 If Employee is terminated at any other time without "cause"
as that term is defined in Paragraph 10.1, and if the terms and conditions of
Paragraphs 5.2, 5.3, 5.4 and 5.5 are met, Employee will receive a pro rata share
of his bonus, if any, for whatever portion of the last fiscal year of employment
and subject to and under the terms and conditions contained herein.
Example. If Employee is terminated without cause on
November 1, 1997, and if the pre-tax profits of the
Employer were greater than $360,000 in fiscal year
ending May 31, 1998, then Employee shall receive a
bonus equal to 5/12ths of whatever bonus he would
have been entitled to had he worked the entire
1997-1998 fiscal year. Two-thirds of the pro rata
bonus shall be paid ten (10) days after the audit
results are certified for fiscal year ending May 31,
1998 (approximately August, 1998) and one-third ten
days after the audit results are certified for the
following fiscal year (approximately August, 1999),
assuming the pre-tax profits for the fiscal year
ending May 31, 1999, are greater than $360,000.
Payment of any bonus under Paragraph 5.7 will be subject to the
provisions of Paragraph 11.4.
6 . Stock Options.
6.1 Employee will be eligible for a total of 140,000 shares over
a period of six years.
Shares Price Date of vesting
20,000 Fair market value,
date of grant 4/8/96
20,000 Same 5/31/97
20,000 Same 5/31/98
20,000 Same 5/31/99
20,000 Same 5/31/00
20,000 Same 5/31/01
20,000 Same 5/31/02
6.2 Except as to those options which have already vested and
subject to the provisions of paragraph 6.3, Employee's rights to any stock
option cease on the date of Employee's termination. Employee must be employed on
the date of vesting in order to receive his option.
6.3 In the event of a termination without cause, as defined in
paragraphs 10.1.1-10.1.4, or a sale of a controlling interest in PML during
Employee's employment, all options vest immediately.
6.4 Employee agrees to be bound by the terms and conditions of
the MEDA, Inc. 1994 Stock Option Plan.
7 . Fringe Benefits.
7.1 Fringe Benefits. Employer and Employee agree that during the
term of this Agreement, Employee shall be entitled to participate in all fringe
benefits as may be authorized and adopted from time to time by Employer and for
which Employee is eligible.
7.2 Miscellaneous Expense. Employer shall pay for Employee's
membership dues in professional organizations and reimbursement for courses up
to a reasonable annual amount and as Employer's finances permit, provided that
the benefit to Employer of such organization or course can be demonstrated.
8 . Vacation and Sick Leave. Employee shall be entitled to four (4)
weeks paid vacation per year. Vacation is earned based on Employee's anniversary
date. Employee shall earn sick leave pursuant to the policies generally
available to PML's employees.
8.1 Carryover Unused Vacation. Employee may accrue a maximum of
240 hours. No further vacation will accrue beyond 240 hours until Employee uses
some accrued vacation time.
8.2 Scheduling. Vacation shall be scheduled by Employer at a time
mutually convenient to both Employer and Employee.
8.3 Accrued and Unused Vacation at Termination. In the event this
Agreement is terminated before its expiration date by either Employer or
Employee, Employee shall be paid for all previously accrued and unused vacation
time.
9 . Confidential Information and Non-Solicitation.
9.1 It is understood and agreed that as a result of Employee's
employment with PML, Employee will be acquiring and making use of confidential
information about Employer's business as well as financial information about
PML. Employee agrees that he will respect the confidences of Employer and will
not at any time during or after his employment with PML, directly or indirectly
divulge or disclose for any purpose whatsoever or use for his own benefit, any
confidential information that has been obtained by or disclosed to Employee as a
result of his employment with PML.
9.2 Employee agrees that during his employment with PML, and for
a period of two years after termination of his employment, he will not directly
or indirectly solicit for employment any employee of PML.
9.3 If Employee violates any of the provisions of these
subparagraphs, Employer shall be entitled to receive from Employee reimbursement
for any and all damages caused by such breach, as liquidated damages and not as
a penalty (both Employer and Employee realizing the difficulty in establishing
the amount of actual damages incurred by PML as the result of such a breach), an
amount equal to fifty percent (50%) of Employee's then current yearly base
salary if still employed by PML, or if no longer employed by Employer, the
amount of Employee's yearly base salary at the time of his termination. It is
understood and agreed that this remedy is in addition to, and not a limitation
on, any injunctive relief for other rights or remedies to which PML is or may be
entitled to under the law.
9.4 If any provisions of these subparagraphs are held to be
invalid or unenforceable, the remaining provisions shall, nevertheless, continue
to be valid and enforceable as though the invalid or unenforceable parts had not
been included.
10 . Termination.
10.1 Either Employee or Employer may terminate this Agreement at
any time with or without cause. For purposes of paragraph 10.1 only, "cause" is
defined as any one or more of the following:
10.1.1 Dishonesty that materially impairs the interest of PML
10.1.2 Refusal to follow a lawful direction of the Board.
10.1.3 Conviction of a crime that is classified as either a
misdemeanor or a felony.
10.1.4 Personal or professional conduct which injures or tends to
injure the reputation of Employer or otherwise significantly adversely affects
the interests of Employer.
10.1.5 Failure to reach mutually agreed performance targets.
10.1.6 Deterioration of the financial condition of Employer which
makes it impossible to continue.
10.1.7 Death of Employee, other than death caused primarily by
Employee's performing duties on behalf of Employer.
10.1.8 Disability of Employee for a cumulative period of more
than twelve weeks in any one-year period other than any disability caused
primarily by Employee's performing duties on behalf of Employer. "Disability"
means being unable to perform the essential functions of the job with or without
reasonable accommodation.
10.2 Effect of Termination. Upon termination of Employee's
employment with PML, Employer agrees to pay Employee all salary due and owing to
Employee as of the date of termination, less legal deductions or offsets
Employee may owe to Employer for such items as salary advances or loans.
Employee agrees that his signature on this Agreement constitutes his
authorization for all such deductions. Employee agrees to return to PML all of
Employer's property of any kind which may be in Employee's possession. In the
event of termination of this Agreement, the terms and provisions of this
Agreement shall also terminate, with the exception of the confidentiality
provisions provided in the paragraphs above.
10.3 Employee's compliance with the terms and conditions of the
Support Agreement dated November 25, 1996 and signed by PML Microbiologicals,
Inc., Norwest Business Credit, Inc. and Xxxxxxx X. Xxxxxx shall not be construed
as a termination of this Agreement ("the Support Agreement"). The terms and
conditions of the Agreement shall remain in full force and effect during
Employee's compliance with the terms of the Support Agreement. By way of
example, but not as a limitation, Employee's employment may still be terminated
according to the terms of the Agreement, and Employee will still be eligible for
any stock option and/or bonus, providing he otherwise qualifies pursuant to
terms and conditions contained in the Agreement.
11 . Severance.
11.1 If termination is for "cause" (as defined in paragraph
10.1), no severance will be paid.
11.2 If termination is for reasons other than for "cause" (as
defined in Paragraph 10.1) or the expiration of the contract, severance will
equal all base salary payable under the remaining term of the contract (through
May 31, 2002), and any bonus pursuant to Paragraph 5.7. The severance will be
paid on regularly scheduled pay dates or in one lump sum, at Employer's option.
11.3 If Employee quits at any time before the contract expires,
he will receive no severance.
11.4 Severance paid pursuant to paragraph 11 will be paid only in
exchange for a mutual release of all claims.
12 . Family Position. The terms and conditions of the document entitled
"Family Position," attached hereto as Exhibit B, are incorporated herein by this
reference.
13 . Construction of Agreement.
13.1 Superseding Agreement. This Agreement supersedes any prior
Agreements, written or oral, including without limitation the Employment
Agreement entered into on April 4, 1996.
13.2 Essential Terms and Modification of Agreement. It is
understood and agreed that the terms and conditions described in this Agreement
constitute the essential terms and conditions of the employment arrangement
between Employer and Employee, all of which have been voluntarily agreed upon.
Employer and Employee agree that there are no other essential terms or
conditions of the employment relationship that are not described within this
Agreement, and that any change in the essential terms and conditions of this
Agreement will be written down in a supplemental agreement which shall be signed
by both Employer and Employee before it is effective.
13.3 Severability. If any term, covenant, condition or provision
of this Agreement or the application thereof to any person or circumstance
shall, at any time, or to any extent, be determined invalid or unenforceable,
the remaining provisions hereof shall not be affected thereby and shall be
deemed valid and fully enforceable to the extent permitted by law.
13.4 Notices. Any notice hereunder shall be sufficient if in
writing and delivered to the party or sent by certified mail, return receipt
requested and addressed as follows:
a. If to Employer: Xxx Xxxxxxx
00000 XX Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
b. If to Employee: Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Either party may change the address herein specified by giving to the other.
Notice shall be effective on the day of mailing.
13.5 Governing Law and Venue. This Agreement is made and shall be
construed and performed under the laws of the State of Oregon. In the event of
any dispute between Employer and Employee, venue shall be in Washington County,
Oregon.
13.6 Waiver of Agreement. The waiver by Employer of a breach of
any provision of this Agreement by Employee shall not operate or be construed as
a waiver by Employer of any subsequent breach by Employee.
13.7 Captions. The captions and headings of the paragraphs of
this Agreement are for convenience and reference only and are not to be used to
interpret or define the provisions hereof.
13.8 Assignment and Successors. The rights and obligations of
Employer under this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of Employer. The rights and obligations of Employee
hereunder are nonassignable. Employer may assign its rights and obligations to
any entity in which Employer or a company affiliated to Employer, has a majority
ownership interest.
13.9 Notice of Intent Not to Renew. Employee and Employer both
agree to provide the other with no less than 90 days prior written notice of
their intent not to renew the contract and/or to continue employment beyond the
term of the contract.
DATED this day of , 1997.
EMPLOYEE: EMPLOYER:
XXXXXXX X. XXXXXX PML MICROBIOLOGICALS, INC.
and PML, INC.
By
Its
