Exhibit 10.44
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated January 1, 2000 by and between MEDTOX
Scientific, Inc., a corporation (the "Company") and Richard J. Braun a resident
of Minnesota ("Executive").
WHEREAS, the Company desires to employ Executive upon and subject to
the terms and conditions set forth in this agreement, and Executive desires to
render services for the Company on such terms and conditions.
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1 . Definitions. The following defined terms have the respective meanings
described below:
1.1 Change in Control. A "Change in Control" of the Company shall mean any
of the following:
(a) a change in control of a nature that would be required to be
reported in response to Item 6(c) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is then subject to such
reporting requirement; or
(b) a merger or consolidation to which the Company is a party if,
following the effective date of such merger or consolidation, the
individuals and entities who were shareholders of the Company prior to the
effective date of such merger or consolidation have beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) of less than fifty
percent (50%) of the combined voting power of the surviving corporation
following the effective date of such merger or consolidation; or
(c) when, during any period of twenty-four (24) consecutive months
during the term of this Agreement, the individuals who, at the beginning of
such period, constitute the Board (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof,
provided, however, that a director who was not a director at the beginning
of such twenty-four (24) month period shall be deemed to have satisfied
such twenty-four (24) month requirement, and be an Incumbent Director, if
such director was elected by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually, because they were directors at the
beginning of such twenty-four (24) month period, or by prior operation of
this Section.
1.2 Potential Change in Control. A "Potential Change in Control" of the Company
shall be deemed to have occurred if:
(a) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(b) any person (including the Company) publicly announces an intention
to take or to consider taking actions which if consummated would constitute
a Change in Control;
(c) any person becomes the beneficial owner, directly or indirectly,
of securities of the Company representing ten percent (10%) or more of the
combined voting power of the Company's then outstanding securities; or
(d) the Board adopts a resolution to the effect that, for the purposes
of this Agreement, a "Potential Change in Control" of the Company has
occurred.
1.3 Cause. Termination by the Company of the Executive's employment
for "Cause" shall mean termination upon:
(a) the willful and continued failure by the Executive to
substantially perform an Executive's duties with the Company (other than
any such failure resulting from Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Company's Board of Directors, which
demand specifically identifies the manner in which the Company believes
that Executive has not substantially performed Executive's duties; or
(b) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise.
For purposes of this Section 1.3, no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Company.
1.4 Company. The term "Company" means MEDTOX Scientific. Inc. and any
successors and assigns of the Company.
2. Employment. The Company hereby employs Executive as Chief Executive
Officer, and Executive accepts such employment and agrees to perform
services for the Company, for the period and upon the other terms and
conditions set forth in this agreement.
3. Term of Employment. The term of Executive's employment hereunder ("Term of
Employment") shall commence on the date hereof and shall continue for a
three year period ending on December 31, 2002 (unless earlier terminated in
accordance with the provisions of Section 13 of this agreement). The Term
of Employment shall be automatically extended by successive 12-month terms
thereafter.
4. Position and Duties
4.1 Service with Company. During his Term of Employment,
Executive agrees to perform such reasonable employment duties,
consistent with the terms of this agreement, as the Board of Directors
of the Company shall assign to him from time to time, Such duties and
employment responsibilities shall be performed in accordance with the
Company's rules, regulations and instructions now in force or which may
be adopted by the Company in the future. During the Executive's Term of
Employment, the Board of Directors shall nominate and recommend to
shareholders the election of, and vote all shareholder proxies in favor
of, Executive's election to the Company's Board of Directors.
4.2 Performance of Duties. During his Term of Employment, the
Executive agrees to serve the Company exclusively and to the best of
his ability. The Executive shall have active involvement and be fully
committed to the business and affairs of the Company, and shall devote
one hundred percent of his business time to the affairs of the Company,
except for (i) vacations and excused leaves of absence as permitted in
accordance with Company policy; (ii) service on the Boards of Directors
of other companies at the discretion of the Company's Board of
Directors; (iii) service on the Boards of Directors of not-for-profit
entities without approval of the Company's Board of Directors; and (iv)
a reasonable amount of time during the business day to handle his
personal affairs. Executive hereby confirms that he is under no
contractual commitments inconsistent with his obligations set forth in
this agreement and that during his Term of Employment, except as
provided herein, he will not render or perform services for any other
corporation, fin-n, entity or person, nor will he become involved in
the operations or management of any other commercial corporation, firm,
entity or person.
5. Compensation.
5.1 Base Salary. Initial base compensation for all services to
be rendered by the Executive under this agreement during the Term of
Employment, the Company shall pay to Executive an annual base salary of
$250,000 per year, which salary shall be paid in accordance with the
Company's normal payroll procedures and policies.
5.2 Annual Bonus Plan. Executive shall participate in the Annual Bonus
Plan of the Company set forth in Attachment 2 to this Agreement.
5.3 Performance Unit Plan. Executive shall participate in the
Performance Unit Plan of the Company set forth in Attachment 3 to this
Agreement.
5.4 Benefits. Executive shall be entitled to such Company-sponsored
benefits as are provided to executive employees of the Company, subject to
the terms and conditions of the applicable policies and/or plans. Executive
shall be entitled to the specific additional benefits enumerated in
Attachment 4 to this Agreement.
5.5 Restricted Stock. Executive shall be entitled to grants of
restricted stock as provided in Attachment 5 of this Agreement.
6. Executive's Agreement to Continue Employment for Six (6) Months. The
Executive agrees that, subject to the terms and conditions of this Agreement, in
the event of a Potential Change in Control of the Company occurring during the
Term of Employment, if so requested by the Company, Executive will remain in the
employ of the Company for a period of six (6) months after the occurrence of
such Potential Change in Control of the Company. If more than one "Potential
Change in Control" occurs during the Term of Employment, the provisions of this
Section 6 shall be applicable to each "Potential Change of Control" occurring
prior to the occurrence of a Change in Control.
7. Severance Payments. If during the Term of Employment, (i) whether or
not a Change in Control or Potential Change in Control has occurred, the Company
terminates the employment of Executive other than for Cause, (ii) a Change in
Control has occurred and Executive has complied with Section 6 of this
Agreement, or (iii) the Executive's duties, responsibilities or authority
(including status, office, title, reporting relationships or working conditions)
have been materially altered from those in effect on the date of this Agreement,
(iv) the Executive has been required to relocate to an office or related entity
more than fifty (50) miles from the office where Executive was located on the
date hereof, or (v) the Company has breached any of its obligations under this
Agreement, then, in any such event (at the Executive's option in the case of any
event described in clause (ii) through (v) above), the Executive's employment
hereunder shall cease and Executive shall be entitled to the following benefits:
(a) the Company will pay to Executive the Executive's
then current base salary for the greater of (i) the
twelve (12) month period following the date of such
termination, or (ii) the balance of the Term of
Employment hereunder, in either case subject to
applicable withholdings and in accordance with the
regular payroll practices of the Company; and
(b) continuous coverage, at the Company's expense, under
any group health plan maintained by or on behalf of
the Company, in which Executive participated as of
the Date of Termination, for the greater of (i) the
twelve (12) month period following the date of
termination, or (ii) the balance of the Term of
Employment hereunder; and
(c) continued participation in the Annual Bonus Plan
referenced in Section 5.3, on a pro rata basis, and
continued benefits referenced in Attachment 4 to this
Agreement, for the same period as base salary shall
be payable pursuant to Section 7(a).
Executive's right to continued coverage under this section shall in no way
reduce or limit any continuation coverage under such group health plan to which
Executive or any of Executive's qualified beneficiaries are entitled under the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") or Minnesota Statutes 61A.092 and 62A.17 et seq. This extension of
coverage, however, shall be coordinated with, and shall be provided concurrently
with, any benefits or continuation rights otherwise available to Executive and
Executive's eligible dependents under state or federal continuation of coverage
statutes, including but not limited to, Minnesota Statutes 61A.092 and 62A.17 et
seq. and the federal Consolidated Omnibus Budget Reconciliation Act ("COBRA").
Accordingly, within ten (10) days after the date of termination, Executive and
Executive's dependents who are eligible for such statutory continuation rights
shall complete all forms and papers necessary and customary to elect such
continuation coverage. The Parties expressly agree that the extension of
benefits provided for by this Agreement is not intended to create a retiree
health plan covering any other employees. In all other respects, the payment of
benefits, including the amounts and timing thereof, to Executive and Executive's
eligible dependents will be governed by the terms of applicable employee benefit
plans for which Executive and Executive's dependents are eligible. The Company
will answer any reasonable questions that Executive may have from time to time
and will offer him the same assistance given other participants in employee
benefit plans so long as Executive is entitled to benefits as provided herein or
under the terms of those plans.
Nothing in this Agreement, including the Severance Payments described
in this Section 7, shall in any way be construed to extend the period of
Executive's employment with the Company.
8. Confidential Information. Except as permitted or directed by the
Company's Board of Directors, during the term of this Agreement or at any time
thereafter Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the of the business of the Company) any
confidential or secret knowledge or information of the Company which Executive
has acquired or become acquainted with or will acquire or become acquainted with
prior to the termination of the period of his employment by the Company
(including employment by the Company or any affiliated companies prior to the
date of this agreement), whether developed by himself or by others, concerning
any trade secrets, confidential or secret designs, processes, formulae, plans,
devices or material (whether or not patented or patentable) directly or
indirectly useful in any aspect of the business of the Company, any customer or
supplier lists of the Company, any confidential or secret development or
research work of the Company, or any other confidential information or secret
aspects of the business of the Company, Executive acknowledges that the
above-described knowledge or information constitutes a unique and valuable asset
of the Company and represents a substantial investment. of time and expense by
the Company and its predecessors, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of the Company would be
wrongful and would cause irreparable harm to the Company. Both during and after
the term of this agreement, Executive will refrain from any acts or omissions
that would reduce the value of such knowledge or information to the Company. The
foregoing obligations of confidentiality, however, shall not apply to any
knowledge or information which is now published or which subsequently becomes
generally publicly known in the form in which it was obtained from the Company,
other than as a direct or indirect result of the breach of this agreement by
Executive. It is hereby acknowledged that it is not the intention of the
forgoing provisions to preclude the Executive from securing gainful employment
with subsequent employers who are not competitors of the Company or who would
otherwise have no reasonable commercial use of the above described knowledge or
information, but only to protect the Company's legitimate proprietary
information or knowledge.
9. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in such project, program or venture shall belong to the Company. Except
as formally approved by the Company's Board of Directors, Executive shall not be
entitled to any interest in such project, program or venture or to any
commission, finder's fee or other compensation in connection therewith other
than the salary or other compensation to be paid to Executive as provided in
this Agreement.
10. Noncompetition Covenant.
10.1 Agreement Not to Compete. Executive agrees that, during
his Term of Employment with the Company and for a period of twelve (12)
months after the termination of such employment (whether such
termination is with or without Cause, or whether such termination is
occasioned by Executive or the Company), he shall not, directly or
indirectly, engage in competition with the Company in any manner or
capacity (e.g., as an advisor, principal, agent, partner, officer,
director, stockholder, employee, or otherwise) in any phase of the
business which the Company is conducting during the term of this
Agreement. In addition, during this same twelve (12) month period
following Executive's Term of Employment, Executive shall not solicit
or otherwise encourage any third party or representative thereof, who
was at the end of Executive's Term of Employment, a customer of the
Company, for the purpose of causing such customer or customers to
purchase, lease or otherwise use any product or service offered by
Executive or any organization with which Executive is affiliated. Nor
during this same twelve (12) month period shall Executive solicit or
otherwise encourage any employee of the Company to leave the employ of
the Company for any reason.
10.2 Geographic Extent of Covenant. The obligations of Executive under
Section 10.1 shall apply to any geographic area in which the Company:
(a) has engaged in business during the term of this agreement through
production, promotional, sales or marketing activity, or otherwise, or
(b) has otherwise established its goodwill, business reputation, or
any customer or supplier relations.
10.3 Limitation on Covenant. Ownership by Executive, as a passive
investment, of less than five percent (5%) of the outstanding shares of
capital stock of any corporation listed on an over-the-counter market
or publicly traded in a national securities exchange shall not constitute
a breach of this Section 10.
10.4 Indirect Competition. Executive further agrees that, during his
Term of Employment and within twelve (12) months thereafter, he will not,
directly or indirectly, assist or encourage any other person in carrying
out, directly or indirectly, any activity that would be prohibited by the
above provisions of this Section 10 if such activity were carried out by
Executive, either directly or indirectly, and in particular Executive
agrees that he will not, directly or indirectly, induce any employee of the
Company to carry out, directly or indirectly, any such activity.
11. Patent, Copyrights and Related Matters.
11.1 Disclosure and Assignment. Executive will promptly
disclose in writing to the Company complete information concerning each
and every invention, discovery, improvement, device. design, apparatus,
practice, process, method or product, whether patentable or not, made,
developed, perfected, devised, conceived or first reduced to practice
by Executive, either solely or in collaboration with others, during the
term of this agreement, or within six months thereafter, whether or not
during regular working hours, relating to any phase of the business of
the Company conducted at such time (hereinafter referred to as
"Developments"). Executive, to the extent that he has the legal right
to do so, hereby acknowledges that any and all of said Developments are
the property of the Company and hereby assigns and agrees to assign to
the Company and all of the Executive's right, title and interest in and
to any and all of such Developments.
11.2 Future Developments. As to any future Developments made
by Executive and which are first conceived or reduced to practice
during the term of Executive's employment, or within six months
thereafter, but which are claimed for any reason to belong to an entity
or person other than the Company, Executive will promptly disclose the
same in writing to the Company and shall not disclose the same to
others if the Company, within ninety (90) days thereafter, shall claim
ownership of such Developments under the terms of this agreement. If
the Company makes such claim, Executive agrees that, insofar as the
rights (if any) of Executive are involved, it will be settled by
arbitration in accordance with the rules of the American Arbitration
Association. The locale of the arbitration shall be Minneapolis,
Minnesota (or other locale convenient to the Company's principal
executive offices). If the Company makes no such claim, Executive
hereby acknowledges that the Company has made no promise to receive and
hold in confidence any such information disclosed by Executive.
11.3 Limitation on Sections 11.1 and 11.2. The provisions of sections
11.1 and 11.2 shall not apply to any Development meeting the following
conditions:
(a) such Development was developed entirely on Executive's own time;
and
(b) such Development was made without the use of any Company
equipment, supplies, facility or trade secret information; and
(c) such Development does not relate (i) directly to the business of
the Company, or (ii) to the Company's actual or demonstrably anticipated
research or development.
11.4 Executive Assistance. Executive agrees to assist Company
in obtaining patents or copyrights on any Developments assigned to the
Company that the Company, in its sole discretion, seeks to patent or
copyright. Executive also agrees to sign all documents and do all
things deemed necessary by Company to obtain and/or maintain such
patents or copyrights, to assign them to Company, and to protect them
against infringement. The obligations of this Section 11 are continuing
and shall survive the termination of Executive's employment with
Company.
11.5 Appointment of Agent. Executive irrevocably appoints the
Chairman of the Board of the Company to act as Executive's agent and
attorney in fact to perform all acts necessary to obtain and/or
maintain patents or copyrights to any Developments assigned by
Executive to the Company under this Agreement if (i) Executive refuses
to perform those acts or (ii) is unavailable, within the meaning of the
United States patent and copyright laws. Executive acknowledges that
the grant of the foregoing power of attorney is coupled with an
interest and shall survive the death or disability of Executive and the
termination of Executive's employment with the Company,
11.6 Notice and Acknowledgment. Executive acknowledges that
this section of this Agreement does not apply to a Development for
which there was no equipment, supplies, facilities or trade secret
information of the Company used and which was developed entirely on
Executive's own time, and which does not relate directly to the
business of the Company or the Company's actual or demonstrably
anticipated research or development, or which does not result from any
work performed by Executive for the Company.
12. Termination.
12.1 Grounds for Termination. This agreement shall be terminated under
the following circumstances:
(a) By mutual agreement of Executive and the Company;
(b) Immediately upon the death of Executive;
(c) Upon delivery by Executive of a notice of termination to the
Company, in which event this agreement shall be terminated sixty (60) days
after receipt of such notice;
(d) At Executive's option, upon the occurrence of any of the events
set forth in clauses (ii) through (v) of the first paragraph of Section 7;
(e) Upon the occurrence of an event constituting "Cause" as defined in
Section 1.3.
Notwithstanding any termination of this agreement, Executive, in
consideration of his employment hereunder to the date of such
termination, shall remain bound by the provisions of this agreement
which specifically relate to periods, activities or obligations upon or
subsequent to the termination of Executive's employment, and the
Company shall remain bound by the provisions of Section 5 (to the
extent that they relate to time periods prior to the date of such
termination), and Section 7 except in the case of a termination for
Cause pursuant to Section12.1 (e) or a termination by Executive
pursuant to Section 12.1(c).
12.2 Surrender of Records and Property. Upon termination of
his employment with the Company, Executive shall deliver promptly to
the Company all records, manuals, books, blank forms, documents,
letters, memoranda, notes, notebooks, reports, data, tables,
calculations or copies thereof, which are the property of the Company
or which relate in any way to the business, products, practices or
techniques of the Company, and all other property, trade secrets and
confidential information of the Company, including, but not limited to,
all documents which in whole or in part contain any trade secrets or
confidential information of the Company; which in any of these cases
are in his possession or under his control. Provided, however, that
Executive shall be entitled to retain items of sentimental value,
copies of which shall be provided to the Company at the request of the
Company and at the Company's expense.
13. Miscellaneous.
13.1 Governing Law. This Agreement is made under and shall be governed
by and construed in accordance with the laws of the State of Minnesota.
13.2 Prior Agreements. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties
relating to the subject matter of this agreement which are not set forth
herein.
13.3 Withholding Taxes. The Company may withhold from all salary,
bonus, severance pay or other benefits payable under this agreement all
federal, state, city or other taxes as shall be required pursuant to any
law or governmental regulation or ruling.
13.4 Amendments. No amendment or modification of this agreement shall
be deemed effective unless made in writing and signed by the parties
hereto.
13.5 No Waiver. No term or condition of this agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any
provisions of this agreement, except by a statement in writing signed by
the party whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated,
shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future or as to
any act other than specifically waived.
13.6 Severability. To the extent any provision of this agreement shall
be invalid or unenforceable, it shall be considered deleted here from and
the remainder of such provision and of this agreement shall be unaffected
and shall continue in full force and effect. In furtherance and not in
limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by, any provision of this agreement be in
excess of that which is valid and enforceable under applicable law, then
such provision shall be construed to cover only that duration, extent or
activities which may validly and enforceably be covered. Executive
acknowledges the uncertainty of the law in this respect and expressly
stipulates that this agreement be given the construction which renders its
provisions valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law.
13.7 Assignment. This agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party.
13.8 Injunctive Relief. Executive agrees that it would be difficult to
compensate the Company fully for damages for any violation of the
provisions of this agreement, including without limitation the provisions
of Sections 9, 10, 11 and 12.2. Accordingly, Executive specifically agrees
that the Company shall be entitled to temporary and permanent injunctive
relief to enforce the provisions of this agreement and that such relief may
be granted without the necessity of proving actual damages. This provision
with respect to injunctive relief shall not, however, diminish the right of
the Company to claim and recover damages in addition to injunctive relief.
MEDTOX SCIENTIFIC, INC.
By______________________ ___________________________
Its ___________________ Richard J. Braun