Exhibit 10.03
Compensation Agreement for Xxxxx Xxxxxxxx, April 24, 2000
Sale/Merger/Acquisition Compensation Agreement
This Agreement, dated April 24, 2000, is between Xxxxxxxxxx Industries,
Inc. ("Xxxxxxxxxx") and Xxxxx X. Xxxxxxxx (Xxx), CEO of Xxxx Scientific, Inc.
("Xxxx Scientific"), a wholly owned subsidiary of Xxxxxxxxxx.
As compensation and consideration for Jim's contributions in increasing
the value of Xxxx Scientific, Xxxxxxxxxx agrees to the following:
1. Subject to the provisions of paragraph 5 below, if at any time
during the three years from the date of this Agreement Xxxxxxxxxx
and/or Xxxx Scientific, with or without Xxxx Scientific's
subsidiary Calorimetry Sciences Corporation, is Acquired (defined
below) for an amount which exceeds $25,000,000 in value (the
"Acquisition Value"), Xxx shall be paid 10% of the amount of
Acquisition Value exceeding $25,000,000 as additional
compensation. If Calorimetry Sciences Corporation is acquired by a
third party before, after or separately from Xxxxxxxxxx or Xxxx
Scientific during the term of this Agreement, the value received
for Calorimetry Sciences Corporation will be considered part of
the Acquisition Value used to calculate Jim's 10% compensation
under this Agreement. For purposes of this Agreement, Xxxxxxxxxx
or Xxxx Scientific will be considered to have been "Acquired" upon
completion of any transaction or series of related transactions
(each an "Acquisition") in which:
a. Eighty percent (80%) of the shareholders of Xxxxxxxxxx
exchange their stock in Xxxxxxxxxx for cash or a
combination of cash and stock, through a merger,
consolidation, sale or otherwise; or
b. Either Xxxxxxxxxx or Xxxx Scientific sells all or
substantially all of its assets (which shall not
necessarily include the stock of Calorimetry Sciences
Corporation held by Xxxx Scientific).
2. The Acquisition Value shall include the total consideration
received or to be received by Xxxxxxxxxx and/or Xxxx Scientific
and the Xxxxxxxxxx security holders, including cash, loans,
property and securities, provided, however that if the Acquisition
involves the disposition of assets, the value of any assets in
excess of liabilities not disposed of by the company will be
included in the Acquisition Value. For the purposes of this
Agreement, to the extent the Acquisition Value is paid in
registered securities of a third party, such securities shall be
valued at the average of the closing sales price per shares of
such securities as quoted on the primary exchange on which such
securities are listed, as published in the Eastern Edition of The
Wall Street Journal for the ten (10) trading days prior to the
date of the execution of the definitive agreement for the
acquisition transaction. To the extent that the Acquisition Value
is paid in property other than in cash or registered securities of
a third party, that portion of the Acquisition Value shall be the
fair market value of such property as determined by mutual
agreement between Xxx and Xxxxxxxxxx. In the event that that the
parties fail to agree, the value of such other consideration shall
be determined by an independent accounting firm, agreed upon by
Xxx and Xxxxxxxxxx, which determination shall be binding on the
parties. The fees paid to the accounting firm shall be the sole
responsibility of Xxxxxxxxxx or Xxxx Scientific.
3. The determination as to whether Xxxxxxxxxx or Xxxx Scientific may
be Acquired shall be made by Xxxxxxxxxx in its sole discretion and
nothing in this Agreement shall obligate Xxxxxxxxxx to enter into
or complete any Acquisition transaction contemplated by this
Agreement.
4. All amounts owed Xxx will be paid in the same ratio of cash (by
cashier's check or other immediately available funds) to
registered securities of the acquiring party as the Xxxxxxxxxx
shareholders receive at the closing of an Acquisition, except: (a)
if any portion of the Acquisition Value is to be paid after such
closing under an "earn-out," or third party escrow (a "hold-back")
arrangement (but not installment or time-based payment
arrangement), a proportional portion of the amount due Xxx under
this Agreement shall be paid if and when such subsequent payment
of the Acquisition Value is made; and (b) if there is any post
closing adjustment to the Acquisition Value (positive or negative)
agreed to by the parties to such Acquisition, the amount due Xxx
under this Agreement shall be adjusted accordingly and promptly
paid to or refunded by Xxx; (c) if a portion of the amount owed
Xxx is paid with the registered securities of the acquiring
company, then that amount shall be escrowed by a third party
escrow agent agreed to by Xxx and Xxxxxxxxxx and paid to Xxx on
the eleventh day after closing with the amount of the payment
calculated based on paragraph 2 above.
5. Xxxxxxxxxx is only obligated to pay the compensation referenced in
paragraph 1 to Xxx if an introduction to a third party that
ultimately leads to an Acquisition has been made and Xxx (a) has
not voluntarily terminated his employment with Xxxx Scientific, or
(b) has not died or become incapacitated. If such an introduction
has been made prior to Jim's death or incapacitation, Jim's
estate, heirs, successors or assigns shall be paid Jim's
compensation as defined by this Agreement.
6. Regardless of where or when the closing takes place, Xxx shall be
allowed to attend the closing even if he is not signing the
closing documents or other papers on behalf of Xxxxxxxxxx or Xxxx
Scientific. Xxxxxxxxxx will give Xxx sufficient notice of the
location of the closing so he has time to arrange to be there.
7. In the event of any dispute regarding this Agreement, both parties
agree to final and binding arbitration conducted in the State of
Delaware in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. If the matter in controversy
(exclusive of attorney fees and expenses) shall appear at the time
of the demand for arbitration to exceed $100,000, then the panel
to be appointed shall consist of three neutral arbitrators,
otherwise one neutral arbitrator. Any arbitrator shall be either
an accountant, investment banker or attorney experienced in
transactions such as the Acquisition. The arbitrator(s) shall
allow such discovery as the arbitrator(s) determine appropriate in
the circumstances. The decision rendered shall be in writing and
the parties shall abide by the decision. Judgment upon the award
of the arbitrator(s) may be entered in any court having proper
jurisdiction.
8. To the extent permissible by Delaware law, Xxxxxxxxxx agrees to
indemnify and hold harmless Xxx, his heirs, successors and assigns
from any legal action or judgments arising from this Agreement or
an Acquisition as contemplated by this Agreement.
9. This is the entire understanding and agreement between the
parties. It cannot be modified, without the written consent from
both parties. The waiver by a party of any provision of this
Agreement shall be effective only if made in writing by such party
and such waiver shall not be deemed to be a waiver of any
provision except to the extent specified in such writing. This
Agreement shall be governed by the laws of the State of Utah and
shall be binding upon the parties and their successors and
assigns. If any part of this Agreement is deemed unenforceable,
the balance of the Agreement shall remain in full force and
effect. The parties agree that a party defaulting in any way
hereunder shall be obligated to reimburse and pay any and all
legal fees and costs incurred by the other party in enforcing its
rights hereunder, including reasonable attorneys' fees, whether
such enforcement is by arbitration, suit or otherwise.
The parties have executed this agreement personally or through a duly
authorized representative, to be effective as of the date first written above.
XXXXX LIFSCHULZ XXXXX X. XXXXXXXX
--------------- -----------------
Xxxxx Xxxxxxxxxx for Xxxxx X. Xxxxxxxx
Xxxxxxxxxx Industries
12
