EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as specified herein, between Medtox
Laboratories, Inc., a Minnesota corporation ("Medtox") (substantially all of the
assets of Medtox are to be acquired by Psychiatric Diagnostic Laboratories of
America, Inc. ("PDLA"), a wholly-owned subsidiary of Editek, Inc. ("Editek"),
pursuant to which transaction this Agreement shall be assumed) and Harry G.
McCoy ("Employee").
NOW, THEREFORE, in consideration of the terms and mutual undertakings
herein contained, it is agreed by and between Medtox and Employee as follows:
1. Effective Date and Term of Employment: This Agreement shall become
effective on January 30, 1996, the date of the asset acquisition transaction
between Medtox and Editek (the "Acquisition"), and shall supersede the Change in
Control Agreement between Employee and Medtox effective as of December 30, 1994.
The Agreement shall remain in effect until the close of business two years from
such effective date (the "Agreement Expiration Date"); provided, however, that
on the Agreement Expiration Date and on each anniversary of the Agreement
Expiration Date (a "Renewal Date"), this Agreement shall be renewed for a period
of one additional consecutive year unless either Medtox or Employee provides
written notice to the other party at least ninety (90) days prior to a Renewal
Date that the Agreement shall terminate without renewal as of the corresponding
Agreement Expiration Date. When the Agreement extends for a period of one
additional consecutive year, the Agreement Expiration Date shall also extend by
one year.
2. Duties and Responsibilities: Employee is the President of Laboratory
Operations of Medtox and, following the Acquisition, Employee shall have a
comparable position, subject to such changes in level of responsibility,
position, authority or duty as are consistent with the Acquisition (without
prejudice to seek a Severance Award pursuant to Sectoin 5.2). Employee hereby
agrees to faithfully and competently render services on a full-time basis to
Medtox in the foregoing capacity and to devote his best efforts, skill and
attention (except during vacations and leaves conforming with Medtox policies)
to Medtox.
3. Compensation: Medtox agrees to employ Employee for the term and in
the capacities described in Sections 1 and 2 above and to compensate Employee
for such services as follows:
3.1 Employee shall be paid a base salary of one hundred
sixty-seven thousand dollars ($167,000) per annum ("Base Salary"). Employee
shall be eligible for annual increases in such Base Salary; and the first such
increase, if any, shall become effective on or before the first anniversary of
the most recent change in Base Salary. Said Base Salary, including any
increases, shall be paid in equal installments in accordance with
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Medtox's customary pay schedule and shall be subject to applicable withholding
for federal and state income taxes and social security and related deductions.
3.2 Benefit Plans: During the term of this Agreement, Employee
shall be entitled to participate in the benefit plans or bonus programs
established by Medtox for its senior management as in effect from time to time.
Nothing in this Section 3.2 shall be construed as limiting the ability of Medtox
to amend or terminate any of its benefit plans or bonus programs, or to afford
Employee greater rights than exist pursuant to the terms and provisions of the
benefit plans or bonus programs.
4. Expense Reimbursement: Medtox shall pay or reimburse Employee for
all ordinary and necessary expenses reasonably incurred in the performance of
his duties hereunder. Such reimbursement shall be made against the submission by
Employee of properly signed and supported itemized expense reports in accordance
with the travel and business reimbursement policies of Medtox in effect from
time-to-time.
5. Termination of Employment:
5.1 Employee Resignation: Employee may terminate his
employment prior to the termination of this Agreement by submitting a written
notice of resignation to the Chief Executive Officer of Editek (the "C.E.O."),
specifying a termination date which shall be no sooner than ninety (90) days
after the submission of said notice, unless Employee and C.E.O. shall agree to a
shorter notice period. During this ninety (90) day period, Employee shall
receive current Base Salary installments and benefits in accordance with
Medtox's customary pay schedule and policies, but his duties and the capacity in
which he serves shall be subject to such conditions and limitations as may be
imposed by the C.E.O. If Employee and C.E.O. agreement to a shorter notice
period, payments to Employee shall continue only for the notice period. The
termination of Employee's employment that does not result in the payment of a
Severance Award as defined in Section 5.2 shall not result in any further
payments hereunder except as provided in this Section 5.1; and a voluntary
termination that does not satisfy the provisions of Section 5.2(b) shall not
result in the payment of a Severance Award.
5.2 Termination Without Cause and Eligibility for Severance
Award: The severance payments described in Section 6 (the "Severance Award")
shall be payable to Employee if Employee's employment with Medtox terminates
during the term of this Agreement and within twelve (12) months following a
Change in Control for any of the following reasons:
(a) involuntarily, other than an involuntary
termination on account of Misconduct; or
(b) voluntarily, following:
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(i) any reduction in Employee's Base
Salary from the level existing at any time
within ninety (90) days preceding the date
of a Change in Control;
(ii) any material reduction in the
health care or retirement benefits provided
to Employee. It is the intent that this
provision will in no way limit the ability
of Editek to reasonably alter, which would
include a reasonable reduction, health care
and retirement benefits on account of a
Change in Control without triggering the
payment of a Severance Award, provided that
any such alteration is uniformly applied to
all similarly situated employees;
(iii) any relocation to which
Employee has not agreed to an office of
Medtox or if a related entity more than
thirty (30) miles from the office where
Employee was located at the time of the
Change in Control or any increase in
Employee's required travel amounting to a
constructive relocation; or
(iv) any material reduction in the
level of responsibility, position (including
status, office, title, reporting
relationships or working conditions),
authority or duties of Employee with Medtox
from that as existed within ninety (90) days
preceding the date of a Change in Control.
The intent of this provision is that
Employee, following a Change in Control,
will have a materially comparable position
with Medtox or a successor or related entity
as existed within ninety (90) days preceding
the date of a Change in Control and that
changes in level of responsibility,
position, authority or duties which are
consistent with the Change in Control will
not be construed as constituting a material
reduction. If Employee believes that a
material change has occurred, Employee shall
provide Medtox with notice and a reasonable
opportunity to cure (not to exceed fifteen
(15) business days); or
(c) voluntarily if, following a Change in
Control, Medtox or any successor of Medtox
either announces that it will not honor or
cause Medtox to honor the terms of this
Agreement, or if Medtox or any successor of
Medtox or related entity at any time fails
to confirm in writing to Employee, within
fifteen (15) business days of a request by
Employee, that it will honor and will cause
Medtox to honor the terms of this Agreement.
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5.3. The date of Employee's cessation of active employment
shall constitute Employee's "Termination Date." Although the Acquisition between
Medtox and Editek shall not constitute a termination of employment for purposes
of this Agreement, it is the intent of this Agreement that such transaction will
constitute a Change in Control such that a termination of Employee's employment
which satisfies the requirements of Section 5.2 above, will result in the
payment of a Severance Award.
6. Severance Award: The Severance Award, which shall be in
lieu of additional payments under this Agreement, shall consist of the
following:
6.1 If terminated during the initial two (2) year period of
this Agreement, a lump sum equal to the sum of: (i) twenty-four (24) months'
Base Salary; and (ii) two (2) times the most recent annual bonus paid or payable
to employee or, if greater, the annual bonus paid or payable to Employee for the
fall fiscal year ended prior to the fiscal year during which the Change in
Control occurred, payable as soon as administratively possible after Employee's
Termination Date but in no event later than thirty (30) days after the
Employee's Termination Date; and, if terminated during a one year renewal
period, a lump sum equal to twelve (12) months' Base Salary, payable as soon as
administratively possible after Employee's Termination Date but in no event
later than thirty (30) days after the Employee's Termination Date. Nothing
herein shall be construed to result in the nonpayment of Employee's accrued
compensation as of his Termination Date. For purposes hereof, accrued
compensation shall include amounts earned but not paid, including any accrued
vacation pay.
6.2 Advance payment or subsequent reimbursement of reasonable
expenses in an amount up to ten thousand dollars ($10,000), incurred by Employee
in the pursuit of subsequent employment during the period of six (6) months
following Employee's Termination Date, including reasonable expenses for any
reputable outplacement assistance or such other administrative assistance as may
be necessary to secure subsequent employment, for tax or accounting assistance
on account of termination of employment, and for phone and mail services, and
for reasonable travel expenses.
6.3 A lump sum payment of an amount equal to the cost of
employee-only coverage for a period of eighteen (18) months under the group
health plan maintained by or on behalf of Medtox. Such lump sum shall be paid as
soon as administratively possible after Employee's Termination Date, but in no
event later than thirty (30) days after the Employee's Termination Date. The
payment under this subsection is in no way intended to reduce or limit any
continuation coverage under such group health plan to which Employee and any of
his or her qualified beneficiaries are entitled under the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; and such
payment shall be made regardless of whether Employee is participating in the
group health plan or elects continuation coverage under such plan.
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6.4 To the extent an equity award held by Employee is not
fully vested and exercisable on Employee's Termination Date on account of the
relevant Change in Control, Employee shall be entitled to a lump sum payment in
an amount equal to the value lost under the equity award, payable as soon as
administratively possible after the date that the equity award is forfeited in
whole or in part, and in no event payable later than thirty (30) days after the
Employee's Termination Date. The value lost by Employee under an equity award
shall be determined by calculating the net benefit lost by Employee, exclusive
of taxes, assuming that Employee was fully vested in his equity award on his
Termination Date, exercised the equity award and, if necessary, sold the
underlying stock at the time the equity award is otherwise forfeited. By way of
example, if Employee would have otherwise forfeited an incentive stock option on
his Termination Date, and the option terms required a two dollar ($2.00)
exercise price per share and the fair market value of the stock was five dollars
($5.00) per share on his Termination Date, Employee would be entitled to a
payment of three dollars ($3.00) per share.
6.5 A lump sum payment equivalent on an after-tax basis to the
additional amount Employee would have had in his 401(k) plan account had he: (i)
continued as an employee of Medtox for an additional twelve (12) months and
continued to receive his Base Salary as in effect on his Termination Date and
received an allocation of employer contributions, including deferrals, based on
the maximum percentage allocated to his account for the last two (2) immediately
preceding plan years; and (ii) retired at his early retirement date. The lump
sum payment will be calculated assuming that the 401(k) account had grown at the
rate of average plan earnings for the most recent two (2) plan years preceding
the Change in Control. The lump sum shall be paid not later than thirty (30)
days after the Employee's Termination Date.
7. Responsibilities of Employee: In consideration of the Severance
Award set forth in Section 6 above, Employee agrees to execute a general release
acceptable to Medtox and Editek, which release shall include a release with
respect to any beneficiary of Employee entitled to or eligible to receive all or
a portion of any Severance Award hereunder. Notwithstanding any provision set
forth in this Agreement, if Employee shall not execute such a general release,
then Employee's Severance Award shall consist solely of two (2) months' Base
Salary, payable in a lump sum as soon as administratively possible following
Employee's Termination Date but not later than thirty (30) days after the
Termination Date.
8. Limitations of Agreement:
8.1 Employee shall not be entitled, solely by reason of a
Severance Award or any other provision of this Agreement, to continue to
participate in any employee benefit plans or fringe benefit programs maintained
by Medtox or for the benefit of Medtox employees, and the rights of Employee to
continue to participate in such plans and programs shall be governed solely by
their terms and applicable law.
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8.2 Nothing in this Agreement, including a Severance Award,
shall in any way be construed to extend the period of Employee's employment with
Medtox, and Employee's Termination Date shall not be extended beyond the last
official work day for which Employee is paid for active service.
8.3 Employee shall be entitled to a cash payment of an amount
equal to the amount of any excise tax liability incurred by Employee pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), in
connection with the payment of the Severance Award, plus an additional amount
intended to compensate Employee for the federal and state income tax liability
in connection with such cash payment. The amount of the total cash payment
payable under this Section 8.3 shall be determined pursuant to the following
formula:
X = the sum of the maximum federal
individual income tax rate and the
maximum individual income tax rate
for the Employee's State of primary
residence for the year in which the
stock award become taxable to
Employee (e.g., .40)
amount amount of excise tax liability
of cash =
payment 1 - X
9. Termination on Account of Death: Notwithstanding any provision
herein to the contrary, upon the death of Employee prior to the payment of or
entitlement to a Severance Award, the Base Salary which would have been payable
under Section 3.1 of this Agreement during the remainder of the term of the
Agreement (without any renewal hereunder), but in no event less than twelve (12)
months of Base Salary, shall be paid in a lump sum within thirty (30) days of
Employee's death to the beneficiary designated by Employee for such purpose (if
no designation has been made, payment will be to the estate of Employee). Upon
the death of Employee after Severance Award payments are initiated or after he
becomes entitled to the payment of a Severance Award, the balance of the
Severance Award shall be paid to the beneficiary designated by Employee for such
purpose or, if no designation has been made, payment will be made to the estate
of Employee. If an insurance arrangement has been implemented and accepted in
writing by Employee for the purpose of satisfying Medtox's obligation under this
Agreement under which benefits are payable upon Employee's death, the lump-sum
payment specified above shall not be provided, or shall be reduced on a dollar
equivalent basis for payments received by Employee's beneficiary or estate from
such insurance arrangement on account of Employee's death.
10. Termination for Disability: Notwithstanding any provision
herein to the contrary, upon the termination of employment on account of
disability prior to the payment or entitlement of a Severance Award, Employee
shall continue to receive the Base Salary that would otherwise have been payable
under Section 3.1 of the Agreement during the remainder
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of the term of the Agreement (without any renewal hereunder) but in no event
will the payments received on account of termination on account of a disability
be less than twelve (12) months of Base Salary. Employee may elect to delay the
payment of disability benefits on terms mutually agreeable with Medtox if the
payment thereof shall result in the reduction of any insured disability benefit
to which Employee is entitled. For purposes of this Agreement, disability shall
be defined as disability that would entitle Employee to disability payments
under any long term disability plan maintained by Medtox, or alternatively, a
Social Security determination of disability. Whether Employee is terminated for
disability shall in no way be governed by this Section 10, but shall be
determined by the employment policies of Medtox.
11. Termination for Misconduct: Medtox shall have the right to
terminate Employee's employment under this Agreement for Misconduct. Employee
shall not be entitled to a Severance Award if his employment with Medtox is
terminated for Misconduct; or, for purposes of Section 11(i), if within twelve
(12) months following a termination of employment it is determined that Employee
engaged in Misconduct. For purposes hereof, "Misconduct" shall mean: (i) the
conviction of, or the entering of a plea of, nolo contendere by Employee for any
felony arising out of acts of fraud or dishonesty committed against Medtox or
Editek; or (ii) the intentional and continual failure of Employee to perform his
reasonably assigned duties with Medtox, other than on account of a physical or
mental illness that could reasonably be expected to result in a disability as
defined herein, which failure continues for a period of at least thirty (30)
days after a written notice of demand for substantial performance delivered to
Employee specifying the manner in which Employee has failed substantially to
perform. It will not be grounds for termination for Misconduct if the assigned
duties otherwise result in a violation of Section 5.2(b) of the Agreement,
provided that Employee timely puts Editek on notice of a violation of Section
5.2(b) in accordance with the provisions thereof.
The determination as to whether Employee's employment has been
terminated for Misconduct shall be made by the C.E.O. Written notice of a
tentative determination of Misconduct, as defined in Section 11(ii) above, shall
be provided to Employee and Employee shall have a reasonable opportunity to cure
such Misconduct. Such written notice shall set forth in reasonable detail the
facts and circumstances that are claimed to constitute Misconduct. If the C.E.O.
shall determine that Employee cannot cure the Misconduct, as defined in Section
11(ii) above, or the cure is not acceptable, or if Employee refuses to cure,
then Employee is subject to immediate termination for Misconduct. If Employee
shall contest the C.E.O.'s determination of Misconduct as defined in Section
11(ii), then the dispute shall be resolved pursuant to Section 20. The C.E.O.'s
determination of termination for Misconduct as defined in Section 11(i) above
shall be final.
12. Termination - Records: In the event of the termination or
resignation of Employee pursuant to this Agreement, whether the termination is
voluntary, is without cause or for Misconduct, Employee will transfer all books,
records, documents, and other memoranda of Medtox and any related entity,
including all materials which have come into
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his custody, possession and control as a result of employment with Medtox, to
whomsoever Medtox shall designate. Employee shall not, any time after the
resignation or termination of his employment hereunder, divulge to any person
any information or fact relating to the conduct and management of Medtox or any
related entity, which shall have come to his knowledge in the course of his
employment and the disclosure of which would cause damage or loss to Medtox or
any related entity or result in the disclosure of confidential or proprietary
information regarding Medtox or any related entity or any of its members.
13. Interpretation: This Agreement is being executed and delivered
contemporaneously with the Acquisition. It is the intent of the parties to this
Agreement that immediately following the Acquisition, consistent with the
substance of this Agreement, all references to Medtox shall mean Editek or an
entity related to Editek by which Employee is employed. For example, reference
to benefit plans of Medtox shall mean the benefit plans of Editek or, if
Employee is not employed by Editek, the entity related to Editek by which
Employee is employed.
14. Covenant Not to Compete:
14.1 Background: This Agreement is being executed and
delivered contemporaneously with and as a condition to the Acquisition by Editek
(the "Purchaser," and for purposes of this Section 14, Purchaser shall also mean
any entity related to Editek, including but not limited to, Medtox) of
substantially all the assets of Medtox ("Seller"). Seller is in the business of
forensic, medical, clinical, biological and/or pharmacological toxicology (the
"Business"). Employee is the President of Laboratory Operations of Seller.
Employee understands that Purchaser will not consummate such Acquisition without
the assurance that Employee will not engage in the activities prohibited by this
covenant not to compete, and in order to induce the Purchaser to consummate the
Acquisition and other transactions contemplated by the Acquisition agreement,
Employee agrees to restrict his actions as provided in this covenant not to
compete. Employee acknowledges and agrees that such restrictions are reasonable
in light of the business of Seller and the direct and substantial benefits of
the Acquisition to Employee and the terms and provisions of this Agreement.
14.2 Territory: Employee acknowledges and agrees that Seller
sells its services throughout the United States (the "Territory") and that
Purchaser intends to continue and to increase its sales and operations
throughout the Territory.
14.3 Noncompetition Period: The Noncompetition Period
commences on the date of this Agreement and shall terminate on the later of (i)
the second anniversary of the closing date of the Acquisition; or (ii) the first
anniversary of termination of employment with Purchaser; the period for which a
Severance Award is payable hereunder.
14.4 Noncompetition: Employee agrees that during the
Noncompetition Period, he will not, directly or indirectly, either:
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(a) have any interest in (whether as proprietor,
officer, director or otherwise),
(b) enter the employment of,
(c) act as agent, broker, or distributor for or
adviser or consultant to, or
(d) provide information useful in conducting the
Business to, solicit customers or employees
on behalf of or otherwise provide any
substantial assistance useful in conducting
the Business to any person, firm,
corporation or business entity which is
engaged, or which Employee reasonably knows
is undertaking to become engaged, in the
Territory in the Business or outside the
Territory if sales are solicited from
customers located inside the Territory.
Notwithstanding the foregoing, Employee shall not be
prohibited from (i) being employed by or acting as an agent, broker or
distributor for or advisor or consultant to any Non-Business Affiliate of a
person, division, firm, corporation, a business entity ("Parent") which
("Parent"), as one of its businesses, is or may become engaged in the Business
so long as (x) Employee has no relationship or contact with any portion of
Parent which is competitive with the Business, (y) Employee's activities are not
described in clause (d) above and (z) the Business does not constitute more than
ten percent (10%) of the aggregate revenues of Parent on a consolidated basis;
or (ii) owning not more than one percent (1%) of the issued and outstanding
securities of a publicly traded entity which may be engaged in whole or in part
in the Business. A Non-Business Affiliate is a person, division, firm,
corporation or business entity which does not, and is not preparing to, engage
in the Business.
14.5 No Interference with Purchaser Customers: Employee
agrees that during the Noncompetition Period, he will not, directly or
indirectly:
(a) solicit, divert or take away, or attempt to
solicit, divert or take away, the business
of any Purchaser Customer; or
(b) attempt or seek to cause any of the
Purchaser Customers to refrain, in any
respect, from maintaining or acquiring from
or through the Purchaser any product or
service of the Business sold (or offered for
sale) to such Purchaser Customer by Seller
or Purchaser during the twelve (12) month
period prior to the date of this Agreement
or during the Noncompetition Period.
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As used in this Section, "Purchaser Customer" means any
customer of Seller or Purchaser located in the Territory served or solicited by
Seller or Purchaser within the twenty-four (24) month period prior to
termination of employment with Purchaser.
14.6 No Interference With Employees: Employee agrees that for
the Noncompetition Period, he will not, directly or indirectly, request or
induce any employee of Purchaser to terminate his employment with Purchaser or
accept employment with another business entity engaged in the Business in the
Territory or which is located outside the Territory if sales are solicited from
customers located inside the Territory.
14.7 Notice to Others: Employee hereby agrees that Purchaser
may disclose the provisions of this Section 14 to any person or entity,
including without limitation one that at the time employs or is considering
employing Employee.
14.8 Remedies: Employee acknowledges that any violation of
this Section 14 may cause irreparable harm to Purchaser and that damages are not
an adequate remedy. Employee therefore agrees that Purchaser shall be entitled
to injunctive relief, including temporary, preliminary and permanent
injunctions, by an appropriate court in the appropriate jurisdiction, enjoining,
prohibiting and restraining Employee from the continuance of any such violation,
in addition to any monetary damages which might occur by reason of the violation
of this Section 14, including, but not limited to, the forfeiture or repayment
of any Severance Award. The remedies provided in this Section 14.8 are
cumulative and shall not exclude any other remedies to which any party to this
Agreement may be entitled under this Agreement or applicable law, and the
exercise of a remedy shall not be deemed an election excluding any other remedy
(any such claim by the other party to this Agreement being hereby waived).
14.9 Modification: It is understood and agreed by the parties
hereto that should any portion, provision or clause of this Section 14 be deemed
too broad to permit enforcement to its full extent, then it shall be enforced to
the maximum extent permitted by law, and Employee hereby consents and agrees
that such scope may be judicially modified accordingly in any proceeding brought
to enforce such restriction.
14.10 Independent: The covenants and agreements set forth in
this Section 14 shall be deemed, and shall be construed as, separate and
independent covenants and agreements, and should any part or provision of such
covenants or agreements be held invalid, void or unenforceable by any court of
competent jurisdiction, such invalidity, voidness or unenforceability shall in
no way render invalid, void or unenforceable any other part or provision thereof
or any separate covenant not declared invalid, void or unenforceable; and this
Section 14 shall in that case be construed as if the void, invalid or
unenforceable provisions were omitted.
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15. Miscellaneous:
15.1 Notice: All notices under this Agreement shall be in
writing and given either in person, by express overnight service (with all fees
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid, to the address of the party to this Agreement set forth below
his or its signature or to such other address as a party to this Agreement may
furnish to the other as provided in this sentence, and shall be deemed received
on the date of personal delivery, on the first business day after sent by
express overnight service or on the date of delivery or attempted delivery as
indicated by the return receipt if sent by registered or certified mail; and if
notice is given pursuant to the foregoing of a permitted successor or assign,
then notice shall thereafter be given pursuant to the foregoing to such
permitted successor or assign.
15.2 Assignment; Binding Effect: No assignment, transfer or
delegation of any rights or obligations under this Agreement by a party shall be
made without the prior written consent of the other parties to this Agreement
(which shall not be unreasonably withheld.) This Agreement shall be binding upon
the parties to this Agreement and their respective legal representatives, heirs,
devisees, legatees or other successors and assigns, and shall inure to the
benefit of the parties to this Agreement and their respective permitted legal
representatives, heirs, devisees, legatees or other permitted successors and
assigns.
15.3 Gender; Captions: Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders. Titles
and captions of or in this Agreement are inserted only as a matter of
convenience and for reference and in no way affect the scope of this Agreement
or the intent of its provisions.
15.4 Certain Definitions: The parties agree that "applicable
law" means all provisions of any constitution, statute, law, rule, regulation,
decision, order, decree, judgment, release, license, permit, stipulation or the
official pronouncement enacted, promulgated or issued by any governmental
authority or arbitrator or arbitration panel; that "governmental authority"
means any legislative, executive, judicial, quasi-judicial or other public
authority, agency, department, bureau, division, unit, court or other public
body, person or entity; and that "including" and other words or phrases of
inclusion, if any, shall not be construed as terms of limitation, so that
references to "included" matters shall be regarded as non-exclusive,
non-characterizing illustrations.
15.5 Entire Agreement: This Agreement constitutes the entire
agreement of the parties to this Agreement with respect to its subject matter,
supersedes all prior agreements, if any, of the parties to this Agreement with
respect to its subject matter, and may not be amended except in writing signed
by the party to this Agreement against whom the change is being asserted.
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15.6 No Waiver: The failure of any party to this Agreement at
any time or times to require the performance of any provisions of this Agreement
shall in no manner affect the right to enforce the same; and no waiver by any
party to this Agreement of any provision (or of a breach of any provision) of
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed or construed either as a further or continuing waiver of any
such provision or breach or as a waiver of any other provision (or of a breach
of any other provision) of this Agreement.
15.7 Counterparts: This Agreement may be executed in two or
more copies, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or its terms to produce or account
for more than one of such copies.
16. Change in Control: For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred if:
(i) Any "person" as defined in Section
3(a)(9) of the Securities Exchange Act of 1934 (the
"Act"), including a "group" (as that term is used in
Sections 13(d)(3) and 14(d)(2) of the Act), but
excluding Editek and any employee benefit plan
sponsored or maintained by Editek, including any
trustee of such plan acting as trustee, who:
(A) makes a tender or exchange offer
for any shares of Editek's stock pursuant to
which any shares of Editek's stock are
purchased; or
(B) together with its "affiliates"
and "associates" (as those terms are defined
in Rule 12b-2 under the Act) becomes the
"beneficial owner" (within the meaning of
Rule 13d-3 under the Act) of at least fifty
percent (50%) of Editek's stock;
(ii) The shareholders of Editek approve a
definitive agreement or plan to merge or consolidate
Editek with or into another corporation, to sell or
otherwise dispose of all or substantially all of its
assets, or to liquidate Editek; or
(iii) When, during any period of twenty-four
(24) consecutive months during the existence of the
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
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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.
17. Indemnification: Medtox agrees to indemnify and hold harmless
Employee for any legal, including reasonable attorneys fees, or court expenses
he may incur while acting within the proper scope of his employment, which right
of indemnification and agreement to hold harmless shall continue in effect
subsequent to any termination herewith so long as any claim or expense relates
to services provided by Employee during his employment. Such indemnification
shall not include any dispute of Employee related to this Agreement.
18. Binding Effect: This Agreement shall be binding upon the successors
and assigns of Medtox, including those that may result from merger or
reorganization.
19. Governing Law: This Agreement shall be governed by the laws of the
State of Minnesota without regard to its conflicts of law principles.
20. Binding Arbitration: Any dispute involving this Agreement, other
than an action by Medtox to enforce its rights pursuant to Section 14 hereof,
shall be resolved through binding arbitration in accordance with the rules of
the American Arbitration Association then in effect. The venue of the
arbitration will be in Minnesota. Any such resolution shall include a
determination as to the portion of the costs of arbitration that shall be borne
by Medtox and by Employee. Except if Employee is terminated for Misconduct, if
Medtox contests the payment of a Severance Award or the calculation of the
Severance Award, after written notice from Employee, Medtox shall make
conditional payments to Employee of a periodic amount equal to what otherwise
would have been his Base Salary until such dispute is resolved. To the extent
Employee shall be entitled to payments in addition to the conditional payments
following a resolution of the dispute, Employee shall be entitled to interest on
such payments. Interest shall be payable from the date beginning thirty (30)
days after Employee's Termination Date and shall be calculated at a rate equal
to one hundred twenty percent (120%) of the applicable Federal rate as of
Employee's Termination Date determined under Section 1274(d) of the Code,
compounded semi-annually. To the extent Employee is required to return all or
any portion of the conditional payments following a resolution of the dispute,
Employee shall be required to include interest on such payments to Medtox.
21. Severability: In the event any of the provisions of this Agreement
are held to be unenforceable, it is understood that the provision(s) affected
thereby shall not be terminated, but shall be deemed amended to the extent
required to render them valid and enforceable, and the validity and
enforceability of the other provisions of this Agreement shall not be affected
thereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Medtox and Employee have each dated, executed and
delivered this Agreement on the day and year indicated by their signatures, and
effective as of the Acquisition, PDLA has assumed this Agreement as set forth
herein and as acknowledged below by Employee and PDLA on the day and year
indicated by their signatures.
EMPLOYEE
Date: _______________ /s/ Harry G. McCoy
Harry G. McCoy
MEDTOX LABORATORIES, INC.
Date: _______________ By: /s/ Harry G. McCoy, President
-------------------------------
ACKNOWLEDGEMENT OF ASSUMPTION:
EMPLOYEE
Date: _______________ /s/ Harry G. McCoy
Harry G. McCoy
PSYCHIATRIC DIAGNOSTIC
LABORATORIES OF AMERICA, INC.
Date: 1/30/96 By: Peter J. Heath
Page 14 of 14