Exhibit 10.10
-------------
EMPLOYMENT AGREEMENT
This Agreement is between Cellular Magnetics, an Arizona corporation,
(hereinafter referred to as the "Company"), and Xxxxx X. Xxxxxx (hereinafter
referred to as "Employee").
1. Engagement. The Company hereby engages the Employee and the Employee
----------
hereby accepts engagement upon the terms and conditions hereinafter set forth.
Employee's compensation set forth herein shall be subject to all applicable
federal or state tax withholding provisions.
2. Term. Subject to the provisions for termination as hereafter provided,
----
the term of this Agreement shall be for a period of thirty-six (36) months
commencing on October 15, 1996. The parties hereby acknowledge and agree it is
their intent that: (a) any extension or renewal of this Agreement shall be
concluded at least Three (3) months prior to the expiration date of the initial
thirty-six (36) months term and Three (3) months prior to the expiration date of
any subsequent extension or renewal term hereof; and (b) absent mutual agreement
to the contrary, the failure to conclude such extension or renewal by the dates
indicated shall be deemed notice to the Company and the Employee that the
Agreement shall not be extended.
3. Duties. The Employee shall be the President of the Company. As such,
------
the Employee shall, during the term of this Agreement, perform the
responsibilities and duties, exercise the powers and follow the instructions
which from time to time may be lawfully assigned to or vested in him by the
Board of Directors of the Company. It is agreed that during the term of this
Agreement, and for so long as no Event of Default has occurred hereunder, the
Employee will not accept an officership or directorship, participate in the
operation or management of or act as an Employee to any other company, which is
in the same line of business as or in competition with the Company unless it be
a company either owned or controlled by the Company, without the prior written
consent of the Board of Directors of the Company.
4. Extent of Services. Employee agrees to provide not less than 30 hours
------------------
per week of executive services to the Company for the compensation paid to the
Employee. Employee shall not be prevented from investing his assets in any
manner, except that in no event may the Employee make investments in any firms
in competition with, or in the business of supplying goods or services to the
Company, unless such investments are disclosed to and approved by the Board of
Directors of the Company.
5. Compensation. For services rendered by the Employee under this
------------
Agreement, the Company shall pay the Employee the compensation and bonus, and
grant such other benefits, as are set forth on Exhibit "A." If during the term
------------
of the Agreement the Employee is unavailable because of illness which prevents
Employee from performing his duties described herein, the Company shall be
obligated to pay the Employee for all such periods of absence; not to exceed
however three (3) months.
6. Bonus and Stock Option Plans and Benefit Programs. The Company proposes
-------------------------------------------------
to establish certain bonus and stock option plans. During the term of this
Agreement, and as additional compensation, the Employee will be eligible to
participate in those plans currently in effect and as they may be amended from
time to time, so long as such plans remain in existence. Furthermore, during
the term of this Agreement, the Employee shall be entitled to participate in all
current or subsequently enacted benefit programs applicable to other officers,
directors, agent and employees of the Company. For purposes of this Agreement,
all references to stock option plans, bonus plans or benefit programs shall be
deemed to mean that Employee shall be eligible to participate in such plans or
programs of the Company in which Employee presently participates or is eligible
for, or such plans or programs of the Company that may subsequently be by the
Company. Options, if any, under this Agreement as are set forth on Exhibit "B."
-----------
7. Expenses. The Employee is authorized to incur reasonable expenses with
--------
regard to the business of the Company, including expenses for entertainment,
travel and other items of a similar character. The Company will reimburse the
Employee for all such expenses incurred by him in the performance of his duties
hereunder.
8. Termination by Company. This Agreement may be terminated by the Company
----------------------
as follows:
(a) If the Employee shall commit a breach of this Agreement, and such breach,
if capable of rectification, is not rectified within thirty (30) calendar
days of receipt by Employee from the Company of written notice requiring
him so to do.
(b) If the Employee shall be convicted of a felony criminal offense, or been
found in a judicial proceeding initiated after the date of this Agreement
by a court of competent jurisdiction, in a decision subject to no further
appeals, to have committed any dishonest or unlawful act or to have been
engaged or engaging in any conduct which might irreparably injure or tend
to injure the reputation or business of the Company.
(c) If the Employee shall grossly, willfully or inexcusably neglect the
performance of Employee's duties as set forth herein. Such standard of
neglect shall however be determined only by the Board of Directors, based
upon written opinion of independent counsel and written advice to
Employee and unanimously approved by the full Board of Directors
especially convened for such purpose.
9. Termination by Employee. Employee may terminate this Agreement with or
-----------------------
without cause, and if terminated, the Company and Employee agree to abide by and
promptly honor the provisions of Section 10 of this Agreement. Cause for
----------
termination by Employee shall not consist of the Company's refusal to follow the
bona-fide professional recommendations of the Employee.
10. Payments Upon Termination by Company or Employee. It is agreed that if
------------------------------------------------
this Agreement is terminated payments and/or provisions for payments will be
made as follows:
(a) If the Company terminates this Agreement on some basis other than for any
of the reasons as stated in Paragraph 8 hereof, the Company will take the
actions set forth in Subparagraphs (1) through (5) of this Paragraph. If
the Employee terminates this Agreement for cause, which shall be limited
to a failure by the Company to pay Employee his compensation, or a breach
by Employer of that certain Agreement and Plan of Merger of even date
herewith to which Employer and Employee are partners, or that certain
Promissory Note of even date herewith in the principal amount of Eighty
Thousand Dollars ($80,000), the Company will take all of the following
actions:
(1) All stock options granted to the Employee pursuant to this Agreement
will become immediately vested for the full amount of Optioned
Shares and shall be exercised, if ever, in accordance with and
subject to the terms and provisions of the Company's Compensatory
Stock Option Plan and Employee's Stock Option Agreement; and
(2) The Employee will receive within fifteen (15) days of the effective
date of such termination, all compensation and all other benefits
that would have accrued and/or been payable to the Employee during
the term of this Agreement; and
(3) The Employee will be paid in full any other contractual benefits
Employee may have with the Company and be reimbursed for all un-
reimbursed accountable expenses; and
(4) Within ninety (90) days thereafter, Employee shall have the option,
on giving Employer fifteen (15) days prior written notice, to
require Employer to redeem for cash all or any portion of the stock
of Employer then owned by Employee, at one hundred percent (100%) of
its then fair market value.
(5) Within thirty (30) days after the effective date of such
termination, Employer shall pay to Employee the amount of any
Minimum Bonus payable to Employee during the first two (2) years
hereof, as set forth on Exhibit "A," Section B, which has not
theretofore been paid to Employee.
(b) If the Company terminates this Agreement for a reason or reasons set
forth in paragraph 9 hereof or the Employee terminates this Agreement
without cause, the Company will only be obligated to pay to the Employee
the actual amount of compensation accrued to the date of termination to
which Employee is otherwise entitled pursuant to this Employment
Agreement, including, but not limited to, the minimum bonus set forth on
Exhibit "A," Section B hereto and, all other payments or benefits recited
----------------------
herein shall be canceled and terminated, without recourse.
11. Termination Due to Change in Control. If Employee is terminated by the
------------------------------------ --------
Company, for any reason as part or because of a change in control of the
Company, or of Intercell, Inc.,
the Company's parent, then Employee shall be entitled to a one time lump sum
payment of cash for the termination of this Agreement as follows:
Termination Occurring In Amount
------------------------ ------
Years One (1) through Three (3) $216,000.00
The cash payment set forth herein, shall be made within Five (5) days of the
date of delivery to Employee of written termination of this Agreement by the
Company. Upon receipt of the payment as set forth herein, the Employee and the
Company shall in writing cancel this Agreement and the parties shall be released
of all further obligations under this Agreement, provided however, that any
options which have been granted to Employee and which are otherwise vested shall
remain unimpaired and in full force and effect.
A change in control of the Company shall be deemed to have occurred when, as a
result of any type of corporate reorganization, execution of proxies or voting
trusts or other arrangements, a person or group or persons acquire sufficient
equity or voting control of the Company to elect more than a majority of the
Board of Directors.
12. Notices of Termination. All Notices of Termination provided for in this
----------------------
Agreement must be in writing and must provide for a minimum notice period of
Sixty (60) calendar days between the date of such notification and the effective
date of such termination.
13. Arbitration. Any controversy or claim arising out of, or relating to
-----------
this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Phoenix, Arizona in accordance with the then effective rules of the
American Arbitration Association. Such ruling shall be binding upon the parties.
14. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be sufficient if in writing, and if sent by registered or
certified mail to the Employee's residence in the case of the Employee, or to is
principal office in the case of the Company.
15. Waiver, Modification or Cancellation. Any waiver, altercation or
------------------------------------
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the Parties.
16. Binding Effect. This Agreement shall inure to the benefit of and be
--------------
binding upon the Company, its successors and assigns, including but not limited
to any entity which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged,
and the Employee, his successors, representatives and assigns, provided that the
duties of the Employee as described herein may not be delegated.
17. Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall in no way affect the validity or enforceability of any
other provision.
18. Entire Agreement. This Agreement represents the entire Agreement between
----------------
the parties. Each party represents that there are no other oral, written,
express or implied contracts, agreements or understandings between them.
19. Authorization. Each party represents that he, she or it is duly
-------------
competent, authorized and capable of executing this Agreement as a valid,
binding and enforceable Agreement.
20. Governing Law. The substantive law of Arizona shall govern all the
-------------
terms, conditions and interpretations of this Agreement and all other
instruments, documents or agreements executed pursuant hereto. In the event of
litigation concerning this Agreement or any other instrument, document or
agreement relating to it, the parties hereto agree that the exclusive venue and
place of jurisdiction shall be the State of Arizona, County of Maricopa.
Further, each of Employee and Employer by execution hereof, irrevocably and
unconditionally consents to receive service of process and further agrees to
file a general appearance upon either acceptance of process by the other party
or actual service of process upon such party.
21. Nondisclosure and Non-Competition. Employee agrees to the terms and
---------------------------------
conditions of his obligations, if any, relating to nondisclosure and non-
competition as set forth on Exhibit "C."
------------
22. Specific Representations. Each party represents that:
------------------------
(a) The consideration recited herein shall conclusively be deemed fair,
adequate, reasonable and sufficient.
(b) He, she or it has voluntarily and without fraud, duress, coercion, undue
influence or improper persuasion executed this Agreement.
DATED: October 8, 1996
Intercell Corporation
By: /s/ Xxxxxx X. Sales By: /s/ Xxxxx X. Xxxxxx
-------------------- --------------------
Xxxxxx X. Sales Xxxxx X. Xxxxxx
Chief Executive Officer Individually
and President
EXHIBIT "A"
A. Base Compensation $72,000 annually
B. Minimum Bonus:
1. On or before October 1, 1997: $90,000
2. On or before October 1, 1998: $90,000
C. Performance Bonus:
Annually, based on _________ percent (____%) of the amount by which Net
Operating Profit exceeds One Hundred Thousand Dollars ($100,000.00).
For purposes hereof "Net Operating Profit" shall be as determined for
financial accounting purposes, without taking into consideration inter-
company expenditures, and expenses in excess of current (September 30, 1996)
expense ratios.
D. Fringe Benefits:
Use of own company vehicle.
3 weeks paid vacation annually
EXHIBIT "B"
EXHIBIT "C"
NONDISCLOSURE AND NON-COMPETITION
---------------------------------
1. During the term of Employee's employment with the Company and for one (1)
year thereafter, and further provided that neither Company nor Intercell, Inc.
are then in default of any of their respective obligations to Employee under any
agreement to which they are parties, Employee shall not, directly or indirectly,
as principal, agent, employee, trustee, or in any like capacity, or through the
agency of any corporation, partnership, association, agent, agency or any other
like entity.
(a) engage in any business that is similar to the business conducted by the
Company, its subsidiaries or affiliates; or
(b) solicit any person (natural or otherwise) who is or has been within three
(3) years prior to the date Employee's association is terminated, a
customer or client of the Company, its subsidiaries or affiliates; or
(c) induce any present or future Employee or affiliate of the Company, its
subsidiaries or affiliates to accept employment or similar association
with the Employee or any person, firm, association, corporation or other
entity with whom the Employee is now or may hereafter become associated;
or
(d) in any manner interfere with, disrupt or attempt to disrupt the
relationship between the Company and/or any of its customers, or use in
any manner whatsoever, the Company's customer list, database, or trade
secrets.
2. The parties agree that in light of the specialized nature of the industry
and the national-customer base of the Company's business that the restrictions
set forth in Paragraph 1 hereof shall apply to Employee within the territory of
the United States of America.
3. In the event of a violation by Employee of any of the covenants contained
in this Agreement, it is mutually agreed that the term of said covenant and/or
covenants shall be automatically extended against Employee for a period of one
(1) year from the date on which Employee permanently ceases such violation or
for a period of time of one (1) year from the date of the entry by a Court of
competent jurisdiction of a final order or judgment enforcing said covenant(s),
whichever period is later. The extension of the term(s) of said covenant(s) as
provided in this sub-paragraph 3 shall be in addition to and not in lieu of the
remedies provided below.
4. Other than within the proper course of Employee's duties, the Employee
will not during or at any time after the termination of association with the
Company, use for himself or others or divulge or convey to others any secret or
confidential information, knowledge or data of the Company, its subsidiaries its
affiliates or that of third parties obtained by him during the period of his
employment with the Company. Such information, knowledge or data includes but
is not limited to secret or confidential matters.
(a) of a technical nature such as but not limited to research methods, know-
how, reporting procedures, composition, processes, computer databases and
similar terms or research project.
(b) of a business nature such as but not limited to information about
finances, costs, profits, sales, contracts, transactions, or customer
lists, or
(c) pertaining to future developments such as but not limited to research and
development or future marketing or advertising programs.
Further, the Employee shall, during and after the period of Employee's
employment, diligently endeavor to prevent the publication or disclosure of any
such secret or confidential information, knowledge or data.
5. All forms, manuals, letters, notes, notebooks, reports, sketches,
formulas, computer programs and similar items, memoranda, client lists,
business, marketing and financial plans and studies and all other materials and
all copies thereof relating in any way to the business of the Company or of its
subsidiaries or affiliates and in any way obtained or produced by the Employee
during the period of his employment with the Company or its authorized
representative upon the termination of the employment or at any other time at
the request of the Company. Employee further agrees that Employee will not make
or retain any copies of any of the foregoing and will so represent to the
Company upon the termination of Employee's employment.
6. The Company and Employee agree that the Company would not have an
adequate remedy at law for money damages in the event that the provisions of
this Agreement are not complied with in accordance with their terms, and
therefore agree that in the event of any breach of any of these provisions by
the Employee, the Company shall be entitled to equitable relief by way of
injunction or otherwise, together with costs and expenses incurred by it,
including attorneys' fees, in addition to such other remedies as the Company may
have.
7. In the event, Employee violates the terms of this Nondisclosure and Non-
Competition section, and in the further event that Company is not made aware of
such violation until a point in time after which Employee has commenced engaging
in services similar to those engaged in by Company, for clients for whom Company
has provided services within three years of the date of Employee's termination
of employment, then in addition to the injunctive relief provide for in
subparagraph 6 above, Company shall be entitled to liquidated damages which
shall be based upon the revenues generated by Employee from Company's clients as
follows.
(a) Employee shall pay to Company one-third of all revenues collected by
Employee from Company's clients for a period of three (3) years from the
date on which Employee first collected revenues from any such Company
client.
The parties hereby acknowledge that the restrictive covenants contained in this
Agreement are fair and reasonable in light of all of the facts and circumstances
of the relationship between Employee and Company; however, Employee and Company
are aware that in certain
circumstances courts have refused to enforce certain agreements not to compete.
Therefore, in furtherance and not in derogation of the provisions of this
Agreement, Company and Employee agree that in the event a court of competent
jurisdiction should for any reason decline to enforce any of said covenants,
that his Agreement shall be deemed to be modified to restrict Employee's
competition with Company to the maximum extent in time, geography and otherwise
as the court shall deem enforceable and/or to grant Company such other relief at
law or in equity as shall be reasonable necessary to protect the interest of
Company.
