EXHIBIT
10.59


 


EMPLOYMENT
AGREEMENT


 


THIS AGREEMENT dated January 1, 2003 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.


 


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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 Chairman, Chief Executive Officer and President, 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 one-year period ending on December
31, 2003 (unless earlier terminated in accordance with the provisions of
Section 12 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, entity or person, nor will he
become involved in the operations or management of any other commercial
corporation, firm, entity or person.


 


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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, shall be an annual base salary of $300,000 per year, which salary
shall be paid in accordance with the Company’s normal payroll procedures and
policies. This base salary will be reviewed annually.


 


5.2                                 Annual Bonus Plan. Executive shall participate in the MEDTOX
Scientific, Inc. Executive Incentive Compensation Plan. The Plan is composed of
annual restricted stock grants equal to 25% of base salary and a targeted bonus
equal to 50% of base salary. The Plan is incorporated herein by reference.


 


5.3                                 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 1 to this Agreement.


 


5.4                                 Restricted Stock and Stock Options Executive may be entitled to additional
grants of restricted stock and stock options as determined in the discretion of
the Compensation Committee and the Board of Directors.


 


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 or Potential 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:


 


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(a)                                  the Company will pay to Executive the
Executive’s then current base salary for the twelve (12) month period following
the date of such termination subject to applicable withholdings and in
accordance with the regular payroll practices of the Company and the Company
will also pay the annual restricted stock grant and target bonus described in
Section 5.2 for the twelve (12) month period following the date of such
termination, except that in the case of a Change in Control, Potential Change
in Control, or termination under Section 12.1(b) the payment period for salary
continuation, stock grant and bonus will be twenty-four (24) months, and


 


(b)                                 continuous coverage, at the Company’s
expense, under any group health plan and other benefits described in Section
5.3 maintained by or on behalf of the Company, in which Executive participated
as of the Date of Termination, for the twelve (12) month period following the
date of termination, except that in the case of Change in Control, Potential
Change in Control or termination under Section 12.1(b) coverage will be for twenty-four
(24) months following the date of termination, and


 


(c)                                  continued participation in the Annual Bonus
Plan referenced in Section 5.2, on a pro rata basis for the calendar year in
which termination under Sections 7 or 12.1(b) occurs.


 


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.


 


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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.


 


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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 a
national securities exchange or publicly traded in the over-the-counter market
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.


 


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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


 


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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 Chief Financial Officer 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)                                  At Company’s option upon the occurrence of an
event constituting “Cause” as defined in Section 1.3.


 


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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 Section l2.1 (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.


 


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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

  
					



 


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ATTACHMENT
1 


 




	
  Fringe
  Benefits:

  	
   

  	
  Health
  Care - Standard Company Plan

  
	
   

  	
   

  	
  Dental
  - Standard Company Plan

  
	
   

  	
   

  	
  Flexible
  Spending Account - Standard Company Plan

  
	
   

  	
   

  	
  Matching
  401(k) - up to 6% of Compensation - Standard Company Plan

  
	
   

  	
   

  	
  Car
  or allowance provided by Company

  
	
   

  	
   

  	
  Club
  membership at one club of choice

  
	
   

  	
   

  	
  Supplemental
  LTD/Life Insurance paid by Company

  
	
   

  	
   

  	
  ADD

  
	
   

  	
   

  	
  Training
  and Development budget of $10,000

  
	
   

  	
   

  	
  Financial
  Planning/Tax Planning budget of $2,500

  






 


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