Exhibit 10.29



 



EXHIBIT 10.29




AMENDED AND RESTATED EMPLOYMENT AGREEMENT



THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made by
and between Chad Therapeutics, Inc. (the “Company”) and Thomas E. Jones (the
“Employee”). This Agreement is effective as of January 1, 2003 and supersedes
that certain Employment Agreement entered into by and between the Employee and
the Company as of April 1, 1998.



The Company and the Employee contract with reference to the following facts:



A.     The Employee has special and unique experience, skills, training and
expertise which qualify him to serve as the Company’s Chief Executive Officer
and Chairman of the Board of Directors (“CEO”), the Company desires to employ
the Employee in the position of CEO, and the Employee desires to accept such
employment by the Company. The employment of the Employee by the Company
pursuant to this Agreement is hereinafter sometimes referred to as “the
Employment.”



B.     The Company and the Employee hereby enter into this Agreement setting forth
each and all of the terms and conditions of the Employment.
NOW, THEREFORE, in consideration of the agreements, representations, promises,
warranties and covenants contained in this Agreement, the Company and the
Employee hereby agree as follow:



1.     Employment, Term, Duties and Exclusive Employment.



     1.1 Duties and Responsibilities. Within the limitations established by
the Company’s Bylaws and its Board of Directors (“the Board”), the Employee
shall have each and all of the duties and responsibilities as CEO of the
Company:





	 	a.	 	strategic planning
	 
	 	b.	 	product development
	 
	 	c.	 	industry relations
	 
	 	d.	 	management of the AirMatrix relationship
	 
	 	e.	 	working with the sales force
	 
	 	f.	 	consultation and coordination with the President of the Company
	 
	 	g.	 	certification of SEC reports and performance of such other
duties as may be required of a chief
executive officer by the SEC or the American Stock Exchange
	 
	 	h.	 	such other duties as may be assigned from time to time by the Board.



     Employee will also serve as Chairman of the Company’s Board. His
principal responsibilities as Chairman shall be to schedule and coordinate the
meetings and activities of the Board.



     1.2 Term of Employment. The Employment began on April 1, 1998 and shall
continue unless terminated as provided below in Paragraph No. 9.



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     1.3 No Other Employment. During the Employment, the Employee shall
diligently and conscientiously devote all of his energies, interests,
abilities, and productive time and attention to discharging his duties to the
Company and shall not, without the express prior written consent of the
Company, render to any other person, corporation, partnership, firm, company,
joint venture or other entity any services of any kind for compensation, or
engage in any other activity that would in any manner whatsoever compete with
the Company, be adverse to any interests of the Company and/or in any manner
whatsoever interfere with the performance of the Employee’s duties for the
Company.



     1.4 Place of Employment. During the Employment, the Employee shall
maintain, at the Company’s expense, two offices on behalf of the Company, one
in the Kansas City metropolitan area and one at the Company’s principal offices
in southern California. The Employee shall endeavor to be physically present
for work at the southern California office at least 25% of his working time,
subject to business travel requirements and vacation schedules.



2.     Compensation.



In full and complete consideration for the Employment, each and all of the
services to be rendered to the Company by the Employee, and each and all of the
warranties, representations, agreements, promises and covenants undertaken by
the Employee pursuant to this Agreement, the Employee shall receive annual
compensation as follows:



     2.1 Base Salary. The Employee shall receive from the Company a base
salary of One Hundred Sixty Thousand Dollars ($160,000.00) per year, payable in
equal, semi-monthly installments (the “Base Salary”). From each salary payment
the Company will withhold and pay to the proper governmental authorities any
and all amounts required by law to be withheld. The Company will also deduct
from the Employee’s salary payments those sums authorized by the Employee. The
Company will make those payments and contributions, such as unemployment
insurance premiums, workers’ compensation insurance premiums and the employer’s
portion of federal social security tax, which are required by law to be made by
the Company for the Employee’s benefit.



     The Employee’s salary shall be reviewed on an annual basis by the Board
prior to April 1 of each year, and any change in the Employee’s salary will be
made in the Board’s sole discretion; provided that, in no event shall
Employee’s Base Salary be less than $160,000.



     2.2 Bonus. The Employee shall receive consideration each year for a
discretionary incentive bonus (the “Bonus”) by the Board. The amount of the
Bonus will be determined based on the provisions of the Management Incentive
Compensation Plan, which has been approved by the Board. Employee’s target
Bonus shall be Twenty-five Percent (25%) of the Base Salary in effect for each
year. Employee shall be entitled to participate in any new bonus plan which
the Company may adopt to the full extent that any of the Company’s executive
officers may participate in any such bonus plan.



     2.3 Severance Benefits. Pursuant to the terms and conditions of the
Company’s Severance and Change in Control Plan for Senior Executives, the
Employee shall participate in that Plan.



     2.4 Vacation. Employee shall be entitled to take paid vacation during
each year of the Employment for such periods as the Board may determine. In
the event that Employee is unable for any reason to take the total amount of
vacation time authorized herein during any year, the Company will pay the
Employee for any accrued, but unused vacation which is not taken.



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     2.5 Other Benefits. Except as otherwise provided in this Agreement, if
and to the extent that the Company maintains or adopts any stock option plan or
any employee benefit plan, including, without limitation, any group health
insurance or life insurance plan, financial planning, pension, stock or 401(k)
savings or retirement plan, the benefits thereof shall be extended to the
Employee provided that he is eligible for participation therein in accordance
with the terms, standards and regulations of such plan as they are from time to
time maintained by the Company in its sole discretion.



     2.6 Benefit Plans. Anything in this Agreement or elsewhere to the
contrary notwithstanding, the Company specifically reserves the unrestricted
right to change or eliminate any or all of the benefits provided to its
employees as a group pursuant to any and all employee benefit plans or programs
maintained by it, including the right to change the administrators and/or
carriers, if any, through which it provides any such benefits.



     2.7 Retention Bonus. If, at the request of the Company, Employee agrees
to continue as an employee of the Company (i) through completion of a
transaction which would be deemed a Change in Control as defined in the
Company’s Severance and Change in Control Plan for Senior Executives (a “Change
in Control”), (ii) for any specified period of time during the negotiation of a
Change in Control, (iii) for any specified transition period following
completion of a Change in Control or (iv) for any combination of the foregoing
(collectively, the “Retention Period”), then, in addition to any other
compensation to which he might be entitled, Employee shall receive a Retention
Bonus equal to the amount of his Base Salary for the last completed calendar
year. The Retention Bonus shall be paid as a lump sum not later than 15 days
following completion of the Retention Period. In no event shall the Retention
Period exceed 12 months.



3.     Expenses.



     Except as otherwise expressly provided in this Agreement, the Company will
reimburse the Employee for those customary, ordinary and necessary business
expenses incurred by him in the performance of his duties and activities on
behalf of the Company. Such expenses shall include, without limitation,
Employee’s reasonable travel expenses incurred in traveling between Kansas City
and Los Angeles for business purposes. Such expenses will be reimbursed only
upon presentation by the Employee of appropriate documentation to substantiate
such expenses pursuant to the policies and procedures of the Company governing
reimbursement of business expenses to its executives.



4.     Duties of the Employee After Any Termination.



     Following any termination of the Employment, the Employee shall provide
reasonable cooperation to the Company in all matters relating to the winding up
of the Employee’s work on behalf of the Company and the orderly transfer of all
pending work and of the Employee’s duties and responsibilities to such other
person or persons as may be designated by the Company which designations shall
be made in its sole discretion. Upon any termination of the Employment, the
Employee will immediately deliver to the Company any and all of the Company’s
property of any kind or nature whatsoever in the Employee’s possession, custody
or control, including, without limitation any and all Confidential Information.



5.     Disclosure of Confidential Information.



     The Employee recognizes, acknowledges and agrees that due to and during
the Employment he will have access to and obtain certain Confidential
Information, as that term is defined in Paragraph No. 12 of this Agreement,
relating to the Company’s business and not generally known to the public or to
the Company’s competitors. The Employee recognizes, acknowledges and agrees
that the Confidential Information constitutes a valuable, special and unique
asset to the Company, access to and knowledge of which is essential to the


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 performance of the Employee’s duties. The Employee specifically agrees
that, except as directed by the Board, the Employee will not at any time during
the Employment or after the termination of the Employment use or disclose any
Confidential Information to any person whomsoever or allow any Confidential
Information to be disclosed to any person whomsoever for any purpose other than
for the benefit of the Company.



6.     Compliance with the Company’s Bylaws.



     The Employee agrees to become thoroughly familiar with, that he shall be
fully bound by and employed pursuant to, each and all of the Company’s Bylaws
and any directives of the Board of Directors.



7.     Conflicts of Interest.



     The Employee specifically covenants and represents to the Company that he
has the full, complete and entire right and authority to enter into the
Employment and this Agreement, that he has no agreement, duty, commitment or
responsibility of any kind or nature whatsoever with any other person,
corporation, partnership, firm, company, joint venture or other entity which
would conflict in any manner whatsoever with any of his duties, obligations or
responsibilities to the Company pursuant to the Employment and/or this
Agreement. As a condition of the Employment, the Employee will not, without
the Board’s express prior written consent, accept any employment, contractual
or other relationship of any kind or nature whatsoever or engage in any
association or dealing of any kind or nature whatsoever with any person,
corporation, partnership, firm, company, joint venture, or other entity, other
than the Company, that poses or could potentially pose any conflict or
potential conflict between the interests of any such other entity and the
interests of the Company.



8.     No Predatory Solicitation.



     The Employee agrees that during the Employment and for one (1) year
following any termination of the Employment he will not, either directly or
indirectly, on his own behalf or in the service of others, disrupt, damage,
impair or interfere with the business of the Company whether by way of
interfering with or raiding its officers, employees, agents, and/or independent
contractors or in any manner attempting to persuade any such person to
discontinue any relationship with the Company, without having received the
Company’s prior written permission to do so. The Employee is not, however,
hereby restricted from being employed by or engaged in a competing business
subsequent to any termination of the Employment, which business may compete
with the Company provided that Employee does not provide such competing
business, directly or indirectly, with any Confidential Information, records,
customer lists, employee lists or other data of any kind constituting property
of the Company which is not in the public domain.



9.     Termination of Employment.



     9.1 Termination for Cause. The Company has the unrestricted right to
terminate the Employment at any time for cause, and upon any termination for
cause the Company’s sole obligation to the Employee is to pay to the Employee,
through the date of such termination, his accrued salary and accrued but unused
vacation and expenses, if any.



          9.1.1 Cause for termination of Employment shall include: theft of Company
property having a value in excess of $100; dishonest or fraudulent conduct in
his dealings with the Company or on behalf of the Company if such conduct might
have a Material Adverse Effect (as defined below) on the Company; willful
destruction of Company property having a value in excess of $100; performing
any illegal act related in any manner to his employment by and/or duties to the
Company if such conduct might have a Material Adverse Effect on the Company;
conviction of any felony or any act involving moral turpitude;



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unauthorized disclosure of any Confidential Information; or the Employee’s
physical or mental incapacity to perform the essential functions of his job
with reasonable accommodation.



          9.1.2 Cause for termination of Employment shall also include: performing
any act adverse to the interests of the Company if such conduct might have a
Material Adverse Effect on the Company; gross insubordination; willful neglect
of duty; the Employee’s failure to follow the instructions of the Board; any
breach by the Employee of any of the Company’s rules, policies or procedures if
such conduct might have a Material Adverse Effect on the Company; or any
material breach or threatened breach by the Employee of any term, provision, or
covenant of this Agreement.



          9.1.3 The Company may terminate the Employment for any of the reasons
stated in Sections 9.1.1 and 9.1.2 by giving written notice of the termination
to the Employee specifying the grounds for the termination, provided that, if
the cause for termination arises under Section 9.1.2, then the Employee shall
be afforded a reasonable period of time of not less than 30 days to advise the
Board as to why the act in question does not constitute cause for termination.
The board shall promptly review any information submitted by Employee in this
regard and, within 45 days of receipt thereof, shall advise the Employee in
writing that his proposed termination has been withdrawn or that his appeal of
his proposed termination has been rejected (a “Rejection Notice”). Pending any
appeal by Employee of his proposed termination for cause pursuant to Section
9.1.2, the Board may, in its sole discretion, suspend Employee with pay.
Notice of termination shall be without prejudice to any other remedy to which
the Company may be entitled at law, in equity, or under this Agreement. In the
case of termination for cause under Section 9.1.1, the Employment will
terminate immediately upon the Company’s delivery of a notice of termination
for cause. In the case of termination for cause under Section 9.1.2, the
Employment will terminate immediately upon delivery to Employee of a Rejection
Notice.



          9.1.4 For purposes hereof, Material Adverse Effect shall mean the
incurrence by the Company of any liability, the development of any contingent
liability or the diminution in value of any of the Company’s assets, in an
amount which is determined in good faith by the Board of Directors to involve a
loss to the Company of $10,000 or more.



     9.2 Termination Without Cause. The Company and the Employee fully
understand and agree that the Employment may be terminated by the Company at
any time without cause. Upon any termination of the Employment by the Company
without cause, the Company’s sole obligation to the Employee is to provide to
him (i) a severance benefit pursuant to the Company’s Severance and Change in
Control Plan (the “Plan”), or (ii) if Employee is not eligible for benefits
under the Plan, to pay Employee a severance benefit equal to two times the sum
of Employee’s Base Salary and incentive bonus, if any, for the last complete
year prior to such termination without cause (the “Severance Benefit”).
Payment of the Severance Benefit shall be made in 24 equal monthly
installments, commencing on the first day of the month following Employee’s
termination without cause. As a condition to receipt of the Severance Benefit
or payment under the Plan, Employee shall execute and deliver to the Company a
full general and special release of any and all claims (the “Release”) which
the Employee may then have against the Company. The Company will deduct from
the payments hereunder, and deliver to the proper governmental authorities, any
and all amounts required by law to be withheld from such severance benefits.



     9.3 Other Termination. The Employment shall, in its entirety, terminate
immediately upon the death of the Employee. In such event, Employee’s estate
shall be entitled to such benefits, if any, which the Company has agreed to
provide for the estates of its senior officers.



     9.4 Termination by Employee. In the event that the Employee decides to
terminate the Employment, he will give the Company advance written notice of
the termination of the Employment of not less than ninety (90) days prior to
the date upon which the Employment will terminate. Upon receipt of such
written notice, continuation of the Employment during the notice period, or at
any time after receipt of the


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 notice, will be in the sole discretion of the Company. In the event of
termination by the Employee, payment of the Employee’s base salary for the
notice period shall constitute full and complete satisfaction of each and every
obligation of the Company to the Employee.



10.     Arbitration.



     Any controversy, dispute and/or claim in any manner arising out of or
relating to this Agreement; the Employment; the meaning, application and/or
interpretation of this Agreement; any breach or claimed breach of this
Agreement; any voluntary or involuntary termination of this Agreement; any
claim of discrimination or harassment under federal or state
anti-discrimination laws; and/or any voluntary or involuntary termination of
the Employment with or without cause shall be settled solely by arbitration in
accordance with the Employment Dispute Rules of the American Arbitration
Association. Judgment on any decision rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The Employee and the Company
shall each pay the fees of his or its own attorneys, the expenses of his or its
witnesses and all other expenses connected with presenting his or its case in
arbitration. All other costs of the arbitration, including, without
limitation, the costs of any record or transcript of the arbitrator
proceedings, administrative fees, the fee of the arbitrator and all other fees
and costs shall be borne equally by the Company and by the Employee. Unless
otherwise agreed by the Company and the Employee, the arbitration will take
place in Los Angeles County, California.



     In the event of any controversy, dispute and/or claim in any manner
arising out of or relating to this Agreement; the Employment; the meaning,
application and/or interpretation of this Agreement; any breach or claimed
breach of this Agreement; any voluntary or involuntary termination of this
Agreement; any claim of discrimination or harassment under either federal or
state anti-discrimination laws; and/or any voluntary or involuntary termination
of the Employment with or without cause by either party, whether directly or by
or through any of its officers, directors, employees, agents, attorneys, or
shareholders, the parties hereby covenant, warrant and agree that he or it
shall not directly or indirectly sue or bring any legal action against, or
attempt to collect any damages or sums from, or attempt to obtain any
injunction or other legal or equitable remedy against the other party, any
shareholder, director, officer, or employee of a party or of any firm or
corporation affiliated with said corporation. It is expressly understood by
the parties that the sole right of action shall be against the parties to this
Agreement through the arbitration proceedings contained in this Paragraph of
this Agreement.



11.     Survival of Certain Provisions of this Agreement.



     Each and all of the terms, provisions and/or covenants of each of
Paragraphs Nos. 4, 5, 8, 10, 12 and 13 of this Agreement shall, for any and all
purposes whatsoever, survive any termination of the Employment.



12.     Definitions.



     As used in this Agreement the following terms have the meanings stated:



     12.1 “Inventions” means and refers to any process, technique, machine,
device, composition of matter, instrument, tool or formula which is new or
which the Employee has a reasonable basis to believe may be new, whether or not
patentable or reduced to practice by the Company or any other person,
corporation, partnership, firm company, joint venture or other entity,
including, without limitation, Trade Secrets, know-how, creations, discoveries,
and software.



     12.2 “Proprietary Information” means and refers to any and all marketing
surveys; customer lists; contact lists; pricing information; sources of supply;
sources of customers; business plans, projections or


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 prospects; actual and/or
projected expenses; actual and/or projected revenues; actual and/or projected
profits;
research or experimental work; data; lists; files; notes; books; records;
drawings and any and all other documents, work products or licensors of a
confidential, proprietary or secret nature which is or may be applicable to or
related in any way to: (i) the Company and/or any of its owners, clients,
customers, or suppliers; (ii) the business of the Company and/or any of its
owners, clients, customers, or suppliers; and/or (iii) the research, plans,
projections, intentions, or investigations of the Company and/or any of its
owners, clients, customers, or suppliers; provided that, Proprietary
Information shall not include any information which enters the public domain
through no fault of Employee.



     12.3 “Trade Secrets” means and refers to trade secrets as defined in
Section 3426.1(d) of the Civil Code of the State of California.



     12.4 “Confidential Information” means and refers, collectively, to all
Inventions, Proprietary Information and Trade Secrets, and each of them, as
those terms are respectively defined in this Paragraph No. 12, provided that,
Confidential Information shall not include any information which enters the
public domain through no fault of Employee.



13.     General.



     13.1 Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of and be binding upon the Company, the Employee and each and
all of their respective heirs, legal representatives, successors and assigns.
The obligations of the Employee under this Agreement shall be personal and not
assignable or delegable by the Employee in any manner whatsoever to any person,
corporation, partnership, firm, company, joint venture or other entity. The
Employee may not assign, transfer, convey, mortgage, pledge or in any other
manner encumber the compensation or other benefits to be received by him or any
rights which he may have pursuant to the terms and provisions of this
Agreement, and the Employee may not delegate any of his duties,
responsibilities or obligations pursuant to this Agreement. The Company
retains the unrestricted right to assign its obligations and rights under this
Agreement.



     13.2 Waiver. No waiver of any breach of any warranty, representation,
agreement, promise, covenant, paragraph, term and/or provision of this
Agreement shall be deemed to be a waiver of any preceding or succeeding breach
of the same or any other warranty, representation, agreement, promise,
covenant, paragraph, term and/or provision of this Agreement. No extension of
the time for the performance of any obligation or other act required or
permitted by this Agreement shall be deemed to be an extension of the time for
the performance of any other obligation or any other act required or permitted
by this Agreement.



     13.3 Sole and Entire Agreement. This Agreement, in conjunction with the
Severance Agreement attached hereto, is the sole, complete and entire contract,
agreement and understanding between the Company and the Employee concerning the
Employment; the terms and conditions of the Employment; the duration of the
Employment; the termination of the Employment and the compensation and benefits
to be paid and provided by the Company to the Employee pursuant to the
Employment. This Agreement supersedes any and all prior contracts, agreements,
correspondence, letters of intent, understandings, and/or negotiations, whether
oral or written, concerning the Employment; the terms and conditions of the
Employment; the duration of the Employment; the termination of the Employment
and/or the compensation and benefits to be paid by the Company to the Employee
pursuant to the Employment.



     13.4 Applicable Law. Except as to the arbitration provisions of this
Agreement which shall be construed under the Federal Arbitration Act and those
portions of this Agreement governed by the Employee Retirement Income Security
Act, this Agreement shall be construed under the internal laws of the State of
California without regard to any conflicts of laws principles.



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     13.5 Amendments. This Agreement becomes effective only when executed and
delivered by both the Company and the Employee, and no amendment, modification,
waiver, or consent relating to this
Agreement will be effective unless and until it is embodied in a written
document signed by the Company and by the Employee.



     13.6 Construction. The language of this Agreement and of each and every
paragraph, term and/or provision of this Agreement shall, in all cases, for any
and all purposes, and in any and all circumstances whatsoever be construed as a
whole, according to its fair meaning, not strictly for or against the Employee
or the Company, and with no regard whatsoever to the identify or status of any
person or persons who drafted all or any portion of this Agreement. The
Company and the Employee hereto expressly agree and contract that it is not the
intention of any of them to violate any public policy, statutory or common
laws, rules, regulations, treaties or decisions of any government or agency
thereof. Therefore if any provision of this Agreement is held by an arbitrator
or a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way and the arbitrator or court construing the
invalid, void or unenforceable provision shall construe that provision in a
manner, to the extent possible, in favor of the Employer’s rights under this
Agreement.



     13.7 Duplicate Copies. This Agreement may be executed in duplicate copies
and each duplicate copy shall constitute an original instrument, but all such
separate duplicate copies shall constitute only one and the same instrument.



     13.8 Notices. Any Notices to be given pursuant to this Agreement by
either party to the other party may be effected by personal delivery or by
registered or certified mail, postage prepaid with return receipt requested.
Mailed Notices shall be addressed to the parties at the addresses stated below,
but each party may change its or his address by written notice to the other in
accordance with this Paragraph No. 13.6 of this Agreement. Notices delivered
personally will be deemed received on the date of delivery.



	 	 	 
	Mailed Notices to the Employee shall be addressed as follows:
	 	 	
Thomas E. Jones
	 	 	
8209 Juniper Lane
	 	 	
Prairie Village, Kansas 66208
	 	 	 
	Mailed Notices to the Company shall be addressed as follows:
	 	 	
Chad Therapeutics, Inc.
	 	 	
21622 Plummer Street
	 	 	
Chatsworth, California 91311
	 	 	
ATTN: President




IN WITNESS WHEREOF the Company and the Employee have each duly executed this
Agreement on the dates set forth below opposite their respective signatures.




	 	 	 	 	 	 	 
	 	 	 	 	CHAD THERAPEUTICS, INC.
	 	 	 	 	 	 	 
	Dated:	 	
April 11, 2003
	 	By:
	 	/s/ Earl L. Yager
	 	 	


	 	 	 	

	 	 	 	 	Earl L. Yager

President
	 	 	 	 	 	 	 
	Dated:	 	April 11, 2003
	 	By:	 	Thomas E. Jones
	 	 	
	 	 	 	






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