Exhibit 10.45
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated January 1, 2000 by and between MEDTOX
Scientific, Inc., a corporation (the "Company") and Harry G. McCoy, 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 President and
Chairman of the Board, and Executive acepts 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
$225,000 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 ___________________ Harry G. McCoy