EMPLOYMENT AGREEMENT
BETWEEN XXXXXXX X. XXXXXXX, D.V.M., PH.D. AND
HYPERTENSION DIAGNOSTICS, INC.
This Agreement is made and entered into this 30th day of October, 1995, by
and between Xxxxxxx X. Xxxxxxx, D.V.M., Ph.D. ("Employee") and Hypertension
Diagnostics, Inc., a Minnesota corporation ("Company") on the terms and
conditions set forth below.
I. DUTIES OF EMPLOYEE. On an interim basis, Employee will continue to serve
Company as President and Chief Executive Officer until Company, through its
Board of Directors, appoints another President and Chief Executive
Officer. At such time, Employee will serve Company as an Executive Vice
President and the Chief Technical Officer. Employee shall serve under the
direction of the Board of Directors of Company, and shall perform such
duties as may be directed by the Board of Directors.
II. COMPENSATION. In full consideration of the covenants contained herein,
Employee's rendition of services under this Agreement, and subject to the
full performance by Employee of his obligations hereunder, Company shall
provide and the Employee shall accept the following:
A. FIRST PAYMENT. Employee shall receive a lump sum payment in the
amount of Twenty-Five Thousand Dollars ($25,000) within five (5)
business days after the date of the first closing of the private
placement of Company's $.01 par value common stock pursuant to the
Agency Agreement dated August 15, 1995 between Company and Marche
Securities, Inc.
B. SECOND PAYMENT. Employee shall receive a lump sum payment in the
amount of Twenty-Five Thousand Dollars ($25,000) within three (3)
months after the date of the final closing of the private placement of
Company's $.01 par value common stock pursuant to the Agency Agreement
dated August 15, 1995 between Company and Marche Securities, Inc.
C. ANNUAL SALARY. Employee shall be paid at the basic rate of
Seventy-Two Thousand Dollars ($72,000) per year in equal installments
on a semi-monthly basis (twice per month) in accordance with the
normal payroll procedures of Company as established by the Board of
Directors of Company. For services rendered under this Agreement,
Company shall pay Employee a minimum annual salary (exclusive of
benefits, bonuses or incentive payments) of $72,000 subject to
adjustments to increase same by the Board of Directors at least
annually. In addition, Employee's Annual Salary shall be
automatically adjusted at each January 1 to reflect any increase in
the cost of living as hereinafter provided. Such increase shall be
computed as of January 1 by dividing the preceding December figure
in the general index of the Minneapolis-Saint Xxxx area, as shown by
the Bureau of Labor Statistics, Consumer Price Index (all items) --
Minneapolis-Saint Xxxx, Minnesota and published by the Xxxxxx xx
Xxxxxxxxxxx, Xxxxxxxxxx xx Xxxxx, Xxxxxx Xxxxxx Government (or the
next closest month for which
the publication is made for such component of the index) by the
December 1994 figure. The resulting quotient shall be multiplied by
the Annual Salary then in effect to arrive at the adjusted Annual
Salary due for the following year. If, at any time, the foregoing
index is not maintained, the adjustment shall be computed in
accordance with a substitute or successor index. If the Employee's
salary is increased during the term of this Agreement, the increased
amount shall be the Annual Salary until adjusted by the Board of
Directors. For the duration of the term of this Agreement, the base
Annual Salary plus benefits, bonuses and incentive payments paid to
the Employee shall be equal to, or greater than, eighty percent (80%)
of that paid to Company's President and Chief Executive Officer.
D. STOCK OPTIONS. Company shall grant Employee certain stock options of
Company as more fully described in the document entitled
"Non-Qualified Stock Option Agreement Between Xxxxxxx X. Xxxxxxx,
D.V.M., Ph.D. and Hypertension Diagnostics, Inc.," attached hereto as
Exhibit A.
E. INSURANCE AND BENEFITS. Employee shall be entitled to contributory
participation in all life insurance, major medical health insurance,
dental insurance, disability insurance, and other benefit plans of
Company as may be approved from time to time by the Board of Directors
of Company.
F. REIMBURSEMENT OF BUSINESS EXPENSES. Company shall, in accordance
with, and to the extent of, its policies in effect from time to time,
bear all ordinary and necessary business expenses incurred by the
Employee in performing his duties as an employee of Company, provided
that Employee accounts promptly for such expense to Company in the
manner prescribed from time to time by Company.
G. WITHHOLDINGS. Company may make such withholdings, deductions or
payments from sums payable to Employee under this Agreement as are
required or permitted by law.
H. BONUS AND INCENTIVE. Bonus and incentive compensation shall be in the
discretion of the Board of Directors, provided that Employee shall
participate in those bonus and incentive plans in which any executive
employee of the Company currently or hereinafter participates.
I. VACATION. Employee shall be entitled to a minimum of three (3) weeks
paid vacation each calendar year. Vacation shall accumulate, so that
if the full vacation is not taken in a particular year, any unused
portion will be carried into the following year(s). Upon termination
of employment, Employee shall be paid for all accrued but unused
vacation days at a daily rate equivalent to the amount obtained by
dividing 360 days into his then current Annual Salary.
J. DISABILITY OR DEATH. In the event of disability, the Employee's
Annual Salary shall be terminated as of the end of the month in which
the last day of the six (6) month period of Employee's inability to
perform his duties occurs. In the event of the Employee's
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death, Annual Salary shall terminate as of the end of the sixth (6th)
month following the Employee's death.
III. CANCELLATION OF AGREEMENTS AND STOCK OPTIONS. In full consideration of the
covenants, promises, and obligations contained herein, and for other good
and valuable consideration:
A. CANCELLATION OF OUTSTANDING STOCK OPTIONS. Employee hereby forever
waives, forfeits, cancels, surrenders, and divests himself of any
rights pursuant to any outstanding options of Company except those
options contained in Exhibit A.
B. CONVERTIBLE PROMISSORY NOTE. During October 1991, Employee lent the
Company $1,000 at eight percent (8%) interest under terms and
conditions as set forth in a certain Convertible Promissory Note.
Employee shall be paid this $1,000 with accrued interest in a manner
and at a time essentially identical to that applied by the Company to
other holders of such Notes.
C. TERMINATION OF EXECUTIVE EMPLOYMENT AGREEMENT. Employee hereby
terminates a certain "Executive Employment Agreement" dated October 1,
1992, between Employee and Company and forever waives, forfeits,
cancels, surrenders, and divests himself of any rights, claims, and
remedies pursuant to said agreement, including claims for the
non-payment of base salary, bonus and incentives, fringe benefits,
stock options, reimbursement of business expenses, remedies for early
termination, or any other claims for compensation of any kind under
said agreement.
D. CANCELLATION OF PROMISSORY NOTE. Employee is the holder of a certain
Promissory Note dated February 1, 1993 regarding principal with
interest accrued (at eight percent (8%) per annum) which was lent to
the Company. The approximate amount currently owned Employee by the
Company as stated in the Company's Private Placement Memorandum dated
August 25, 1995, is $471,397. Employee hereby agrees to cancel this
Note and divests himself of any rights regarding this Note.
IV. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Employee shall keep
confidential and shall not disclose to anyone or use, either during or
after the term of this Agreement, any confidential information of Company,
except as is required by Employee's duties, or as authorized in writing by
Company. "Confidential Information" means any information or compilation
of information which derives independent economic value from not being
generally known to and not being readily ascertainable by proper means by
other persons who can obtain economic value from its disclosure or use.
Examples of Confidential Information not to be disclosed or used except as
permitted by Company, include but are not limited to:
A. Information concerning Company's operations, organizational structure,
methods, technology, procedures, finances, accounting, and legal
matters;
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B. Information concerning Company's sales activities and strategies,
marketing activities and strategies, servicing activities and
strategies, and strategic business planning activities;
C. Information concerning Company's past, present, or potential customers
(hereafter referred to as "customers"), including the names, addresses
and telephone numbers of these customers; the identity of the
individuals responsible for buying products and services on behalf of
these customers; the needs and buying tendencies of these customers;
contract negotiations between Company and these customers; the
contents of contracts and agreements between Company and these
customers; financial information concerning these customers' business
operations; credit information regarding these customers; and
identity, quantity, and price of products or services purchased from
Company by these customers;
D. Vendor and supplier information including the names, addresses, and
telephone numbers of Company's vendors and suppliers; information
regarding Company's relationship with its vendors and suppliers;
contract negotiations between Company and its vendors and suppliers;
the contents of contracts and agreements between Company and its
vendors and suppliers; financial information concerning its vendors
and suppliers; and identity, quantity and prices of products purchased
by Company from its vendors and suppliers;
E. Information regarding Company's pricing of its products and services,
including price lists and pricing strategies;
F. Personnel records and data.
V. BUSINESS RECORDS. Employee shall not remove any records or documents from
the premises of Company or its clients in either original, duplicate, or
copied form, except as necessary in the ordinary course of conducting
business for Company. Employee shall immediately deliver to Company, upon
termination of this Agreement with Company, any such records or documents
in Employee's possession or control.
VI. FULL TIME DUTIES. Employee shall devote his full-time and best efforts to
Company and to fulfilling the duties of his position which shall include
such duties as may from time to time be assigned him by the Board of
Directors of the Company; provided that such duties are reasonably
consistent with Employee's education, experience and training.
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VII. TERMINATION OF AGREEMENT.
A. DURATION OF AGREEMENT. Unless properly terminated as provided herein,
this Agreement shall continue in effect for a term of five (5) years,
or until October 31, 2000.
B. TERMINATION BY EMPLOYEE. Employee may give written notice of
termination of this Agreement for any reason sixty (60) days prior to
the proposed date of termination, at which time this Agreement shall
terminate.
C. TERMINATION BY COMPANY. Company may give written notice of
termination of this Agreement only for Reasonable Cause sixty (60)
days prior to the proposed date of termination, at which time this
Agreement shall terminate. No waiver by Company of any breach of this
Agreement shall be deemed a waiver of any prior or subsequent breach.
For purposes of this Agreement, "Reasonable Cause" shall mean:
1. Dishonesty, fraud, misrepresentation, diversion of corporate
opportunity, using insider information for personal gain, theft
or embezzlement of Company assets, or material intentional
violations of law; or
2. Willful or reckless misconduct by Employee in the performance of
the duties, functions, obligations or responsibilities delegated
to Employee.
D. EFFECT OF DEATH. This Agreement shall terminate immediately upon the
death of Employee. Upon the date of death of Employee, any and all
obligations of Company or its successors and assigns hereunder shall
be terminated, relieved and discharged, except as to compensation
earned by Employee under this Agreement prior to the date of his death
and as provided in Paragraph J, (Section II: Compensation) herein.
E. COOPERATION UPON TERMINATION. Following notice of termination of this
Agreement, Employee shall fully cooperate with Company in all matters
relating to the winding up of Employee's pending work on behalf of
Company and the orderly transfer of such pending work to such other
employees as may be designated by Company. Employee will be entitled
to continue to participate in all benefit plans and programs for
twenty-four (24) months after termination becomes effective.
VIII.NON-TRANSFERABILITY. This Agreement may not be assigned or transferred by
Company, and shall not be assigned by Employee to any other person or
entity.
IX. BINDING AGREEMENT. This Agreement shall be binding upon and inure to the
benefit of the legal representatives, executors, administrators, successors
and assigns of each of the parties to this Agreement.
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X. GOVERNING LAW.
A. The laws of Minnesota shall govern the validity, interpretation and
performance of the respective duties and obligations of this
Agreement.
B. Employee consents to venue and jurisdiction in the District Court of
Hennepin County, State of Minnesota, and in the United States District
Court for the District of Minnesota, and to service of process under
Minnesota law, in any action commenced by Company to enforce this
Agreement.
XI. SEVERABILITY. If any provision of this Agreement is adjudged void, invalid
or unenforceable under law, the remainder of this Agreement shall continue
and remain in full force and effect.
XII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and may not be amended,
changed, modified, terminated, or waived other than by written instrument
signed by both parties.
XI. SUPREMACY. This Agreement supersedes all prior oral or written agreements
and understandings between Employee and Company concerning the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year below written:
EMPLOYEE HYPERTENSION DIAGNOSTICS, INC.
/s/ Xxxxxxx X. Xxxxxxx By /s/ Xxxxxxx X. Xxxxxxx
------------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx, D.V.M., Ph.D. Its President/CEO
-----------------------------------
Dated: Oct. 31, 1995 Dated: Oct. 31, 1995
------------------------------- --------------------------------
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NON-QUALIFIED STOCK OPTION AGREEMENT
BETWEEN XXXXXXX X. XXXXXXX, D.V.M., PH.D. AND
HYPERTENSION DIAGNOSTICS, INC.
THIS AGREEMENT is made and entered into this 30th day of October, 1995,
between Hypertension Diagnostics, Inc., a Minnesota corporation ("Company"), and
Xxxxxxx X. Xxxxxxx, D.V.M., Ph.D. ("Optionee") on the terms and conditions set
forth below.
WHEREAS, the Board of Directors of the Company has decided to permit
Non-Qualified Stock Options to be granted to certain individuals providing
valuable services to the Company and any subsidiary corporations of the Company
to purchase voting common stock of the Company; and
WHEREAS, the Company desires the Optionee to secure stock ownership in the
Company in order to increase effectiveness and personal interest in the Company;
NOW THEREFORE, in consideration of the promises and of the covenants and
agreements set forth below, it is mutually agreed as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee an option to
purchase from the Company all or any part of an aggregate amount of
288,046 shares of the voting common stock of the Company, par value
$.01 per share ("Option Shares"), at an option price of $1.70 per
share. The date of this Agreement is the date of the grant.
2. EXERCISE PERIOD. The Option shall become exercisable and fully vested
on October 30, 1995. Thereafter, Optionee may exercise his rights
with respect to any number of the Option Shares at any time or from
time to time, but in no event shall this Option be exercisable after,
and this Option shall become void and expire as to all unexercised
Option Shares, at 5:00 p.m. (Minneapolis, Minnesota time) on October
30, 2005.
3. EXERCISE OF OPTION. This option may be exercised only by written
notice of intent to the Company at its xxxxxx xx Xxxx Xxxxx Xxxxx,
Xxxxx Xx. Xxxx, XX 00000-0000. Such notice shall state the number of
shares in respect of which the option is being exercised and shall be
accompanied by payment for such shares by personal check. The
exercise of the Option shall be deemed effective upon receipt of such
notice and payment. As soon as practicable after the effective
exercise of the Option, the Company shall record on the stock transfer
books of the Company the ownership of the shares purchased in the name
of the Optionee, and the Company shall deliver to the Optionee one or
more duly issued stock certificates evidencing such ownership.
4. EXERCISE UPON DEATH. If Optionee shall die, this option may be
exercised with respect to any vested options at the date of death to
the same extent that Optionee
EXHIBIT A
was entitled to exercise such options, by the person or persons to
whom Optionee's rights under this option pass by will or applicable
law, or if no such person has such right, by his executors or
administrators.
5. CHANGE IN CONTROL.
a. DEFINITION. For purposes of this Agreement, the term "Change in
Control" shall mean any transaction or occurrence of events in
which (i) Company merges or consolidates with any other
corporation and is not the surviving corporation after such
merger or consolidation; (ii) Company transfers all or
substantially all of its business and assets to any other person,
individual, corporation, partnership, group, or association; or
(iii) more than 50% of Company's outstanding voting shares are
purchased by any other person, individual, corporation,
partnership, group or association.
b. ACCELERATION. If any events constituting a Change in Control of
the Company shall occur, Optionee shall be entitled to receive
option rights covering shares of the surviving or acquiring
entity in the same proportion, at an equivalent price, and
subject to the same conditions as this Option; provided, however,
that Optionee may, at his sole discretion, accelerate the right
to exercise this Option thirty (30) days prior to the anticipated
effective date of any of the foregoing transactions; provided,
however, that if, with respect to Optionee, acceleration of the
vesting of this Option as provided herein (which acceleration
could be deemed a payment within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended
("Code")) together with any other payments which Optionee has the
right to receive from the Company or any corporation which is a
member of an "affiliated group" (as defined in Section 1504(a) of
the Code without regard to Section 1504(b) of the Code) of which
Company is a member, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), the payments to
Optionee as set forth herein shall be reduced to the largest
amount as will result in no portion of such payments being
subject to the excise tax imposed by section 4999 of the Code.
6. DILUTION OR OTHER ADJUSTMENTS. If there shall be any change in the
shares of voting common stock of the Company through merger,
consolidation, reorganization, recapitalization, dividend in the form
of stock (of whatever amount), stock split or other change in the
corporate structure, appropriate adjustments in the outstanding
options shall be made by the Company. In the event of any such
changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject and the price per share subject to
outstanding and future options in order to prevent dilution or
enlargement of option rights.
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7. NO RIGHT TO CONTINUED COMPENSATION. Nothing contained in this
Agreement shall obligate the Company or any subsidiary corporation of
the Company to continue to accept and pay for the services of Optionee
as a consultant, employee or independent contractor for any particular
period or interfere with the right of the Company or any such
subsidiary to terminate any contract or employment relationship with
Optionee.
8. NO SHAREHOLDER RIGHTS. Optionee shall have no rights as a stockholder
with respect to any shares of common stock subject to this option
prior to the date of issuance of a certificate or certificates for
such shares.
9. INVESTMENT REPRESENTATION. Notice of the exercise of this option
shall include a representation that any of the Option Shares purchased
shall be acquired as an investment and not with a view to, or for sale
in connection with, any public distribution.
10. COMPLIANCE WITH LAW AND REGULATIONS. The Optionee acknowledges that
this option may not be exercised until the Company has taken all
actions then required to comply with all applicable federal and state
laws, rules and regulations and any exchange on which the stock may
then be listed. The certificates representing the shares purchased
upon the exercise of this option shall bear a legend in substantially
the following form:
The securities evidenced by this certificate have not been
registered either under any applicable federal law and rules
or applicable state law and rules. No sale, offer to sell,
or transfer of these securities may be made unless a
registration statement under the Securities Act of 1933, as
amended, and any applicable state law with respect to such
securities is then in effect or an exemption from the
registration requirements of such laws is then, in fact,
applicable to such securities.
11. NON-TRANSFERABILITY. This option shall not be transferable other than
by will or by laws of descent and distribution. During the lifetime
of the Optionee, this option shall be exercisable only by such
Optionee.
12. OTHER ASSISTANCE. Upon the exercise of this option the Optionee or
other person exercising the option must execute any document or make
any representation or give any commitment which the Board of
Directors, in its discretion, deems necessary or advisable by reason
of the securities laws of the United States or any state, and execute
any document for the purpose of restricting the transfer of stock to
third parties, or pay any sum of money in respect of taxes or
undertake to pay or have paid any such sum which the Board of
Directors, in its discretion, deems
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necessary by reason of the Code or any rule or regulation thereunder,
or by reason of the tax laws of any state or any contracts or
agreements in effect at such time.
13. BINDING AGREEMENT. This Agreement shall be binding upon and inure to
the benefit of the legal representatives, executors, administrators,
successors and assigns of each of the parties to this Agreement.
14. GOVERNING LAW.
a. The laws of Minnesota shall govern the validity, interpretation
and performance of the respective duties and obligations of this
Agreement.
b. Employee consents to venue and jurisdiction in the District Court
of Hennepin County, State of Minnesota, and in the United States
District Court for the District of Minnesota, and to service of
process under Minnesota law, in any action commenced by Company
to enforce this Agreement.
15. SEVERABILITY. If any provision of this Agreement is adjudged void,
invalid or unenforceable under law, the remainder of this Agreement
shall continue and remain in full force and effect.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and may not be
amended, changed, modified, terminated, or waived other than by
written instrument signed by both parties.
17. SUPREMACY. This Agreement supersedes all prior oral or written
agreements and understandings between Employee and Company concerning
the subject matter hereof.
18. REGISTRATION RIGHTS. If, at any time prior to October 31, 2005, the
Company shall propose to file any Registration Statement (other than
any registration on Form S-4, or any other similarly inappropriate
form or Registration Statement with respect to any initial public
offering in which there are no selling shareholders) under the
Securities Act of 1933, as amended, covering a public offering of the
Company's Common Stock, it will notify Optionee at least forty-five
(45) days prior to each such filing and will include in the
Registration Statement (to the extent permitted by applicable
regulation) the Common Stock purchased by Optionee or purchasable by
Optionee upon the exercise of the Option to the extent requested by
Optionee. Notwithstanding the foregoing, the number of shares of the
holder of this Option proposed to be registered thereby shall be
reduced pro rata with any other selling shareholder (other than the
Company) upon the request of the managing underwriter of such
offering. If the Registration Statement or Offering Statement filed
pursuant to such forty-five (45) day notice
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has not become effective within six months following the date such
notice is given to Optionee, the Company must again notify Optionee
in the manner provided above.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year below written:
OPTIONEE HYPERTENSION DIAGNOSTICS, INC.
----------------------------------- By
----------------------------------
Xxxxxxx X. Xxxxxxx, D.V.M., Ph.D. Its
---------------------------------
Dated: Dated:
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NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTIONS
Hypertension Diagnostics, Inc.
Five Xxxxx Xxxxx
Xxxxx Xx. Xxxx, XX 00000-0000
Gentlemen:
The undersigned is the holder of a non-qualified stock option (the
"Option") to purchase shares of voting common stock ("Stock") of Hypertension
Diagnostics, Inc. (the "Company"), pursuant to the Non-Qualified Stock Option
Agreement between Xxxxxxx X. Xxxxxxx, D.V.M., Ph.D. and Hypertension
Diagnostics, Inc. dated October 30, 1995. The undersigned hereby irrevocably
elects to exercise the Option to purchase _____________ shares of Stock
("Option Shares"). Enclosed herewith is payment for the Option Shares as
required under the Agreement. The undersigned requests that the certificate
representing the Option Shares be issued in the name of the undersigned and
delivered to the address set forth below within five (5) business days.
In connection with the issuance of the Option Shares to the undersigned,
the undersigned hereby certifies and represents to the Company that the
undersigned is acquiring such shares for the purpose of investment and not
with a view toward distribution. The undersigned understands that these
securities have not been registered either under any applicable federal law
and rules or applicable state law and rules and that resale will not be
permitted under state law unless the securities are first registered or the
sale is a transaction exempt from registration under the applicable state
securities law.
The undersigned further understands that no sale, offer to sell, or
transfer of the Option Shares shall be made unless a registration statement
under the federal Securities Act of 1933, as amended (the "Act"), with
respect to the Option Shares is then in effect or an exemption from the
registration requirements of the Act is then in fact applicable to the Option
Shares. The undersigned understands that a legend reciting this investment
restriction shall be placed on any stock certificate that may be issued to
the undersigned.
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Xxxxxxx X. Xxxxxxx, D.V.M., Ph.D. (Optionee)
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Address
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Social Security No.
Dated:
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