Exhibit 99.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Agreement dated as of December 9, 2004 (this "Agreement") amends and
restates in its entirety that certain Employment Agreement dated April 23, 2003
(the "Original Agreement") by and between Mediscience Technology Corp., a New
Jersey corporation ("MDSC"), with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("Employee"), an individual residing
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
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For and in consideration of the covenants and undertakings set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. MDSC and Employee desire to clarify their original intent with respect
to the Original Agreement and the instruments issued to Employee pursuant to the
Original Agreement by amending and restating the Original Agreement in the clear
and unambiguous form of this Agreement.
2. MDSC agrees to employ Employee, and Employee accepts such employment, as
President and Chief Operating Officer of MDSC on the terms and conditions and
during the Term hereinafter set forth.
3. The initial term of Employee's employment hereunder shall commence on
April 1, 2003 (the "Commencement Date") and shall end on April 23, 2006, said
initial term to be automatically extended by additional one-year renewal terms
unless either MDSC or Employee shall notify the other in writing, at least 30
days prior to the end of the then current term, of its or his intent to
terminate this Agreement as of the end of the then current term. In addition,
this Agreement is terminable prior to the expiration of its term as follows:
(a) by MDSC for Cause (as such term is hereafter defined in Section
18); or
(b) upon the death or "permanent and total disability" (as such term
is defined in section 22(e)(3) of the Internal Revenue Code (the "Code"))
of Employee.
The term of this Agreement, as extended or terminated pursuant to this Section 3
is hereinafter referred to as the "Term".
4. As President and Chief Operating Officer of MDSC, Employee shall,
subject to the control of the Chairman of the Board (the "Chairman"), the Chief
Executive Officer (the "CEO") and the Board of Directors of MDSC (the "Board"),
have general charge of the business and affairs of MDSC, including any and all
subsidiary corporations and limited liability companies, and shall have the
direction of all other officers, agents, consultants, employees of MDSC (except
the Chairman, the CEO and the Treasurer, who shall report directly to the
Board). Employee may delegate such duties to such other officers of MDSC, if
any, as he deems appropriate.
5. As President and Chief Operating Officer, Employee shall, when present,
preside at all meetings of the shareholders of MDSC and shall also preside at
all meetings of the Board at which the Chairman is not present. Employee shall
be an ex-officio member of all committees of the Board. At the sole discretion
of the CEO, Employee may be present and participate in any meeting of the Board,
or any committee or subcommittee thereof, where a transaction or proposed
transaction involving Employee or any other entity in which Employee has an
interest is discussed, evaluated, considered, or voted upon. Notwithstanding the
foregoing, Employee shall abstain from voting in his capacity as officer or
director of MDSC with respect to any transaction involving Employee or any other
entity in which Employee has any interest, direct or indirect.
6. The CEO and Employee have prepared a comprehensive executive
summary/business plan for the transition of MDSC from a development stage to a
profitable commercial company (the "Business Plan"). The Business Plan has been
reviewed and approved by the Board. Employee shall use his best efforts to cause
MDSC to meet the goals and objectives of the Business Plan.
7. In consideration of Employee's services pursuant to this Agreement,
during the Term MDSC shall pay Employee an annual base salary of One Hundred
Twenty Thousand Dollars ($120,000), payable monthly in arrears (with the agreed
exception of a One Thousand Dollar ($1,000) per month stipend, which shall be
paid monthly in advance).
8. Employee's annual base salary and whether any of the conditions to
vesting all or any portion of Employee's Incentive Stock Option being issued to
Employee pursuant to Section 15 shall be deemed satisfied or waived, shall be
subject to annual review by the Board and interim review in the sole discretion
of the CEO whenever the CEO determines that the on-going performance and
financial capability of MDSC, and Employee's ability to cause MDSC to timely
satisfy any of the following five critical milestones (each, a "Critical
Milestone") described in the Business Plan requires such interim review:
(a) preclinical toxicity studies shall have been completed within a
reasonable time of the initial funding contemplated by the Business Plan
(the "Initial Funding Date");
(b) device development and preclinical validation shall have been
completed within a reasonable time period of the Initial Funding Date;
(c) phase I and phase II clinical trials shall have been completed
within a reasonable time of the Initial Funding Date;
(d) phase III clinical trials and PMA submission to the FDA shall have
been completed;
(e) PMA approval shall been received within a reasonable time of the
Initial Funding Date.
9. In addition to the base annual salary provided for in Section 7,
Employee shall be entitled to receive bonuses, at such times, in such amounts
and payable in cash or in shares of MDSC common stock as the Board determines
based on the performance by Employee, the financial capability of MDSC and the
timely satisfaction on budget of each Critical Milestone.
10. In the event that the Term shall be ended by the death or permanent and
total disability of Employee, the annual base salary and bonuses most recently
paid with respect to an annual period shall continue to be paid during the
one-year period following the end of the Term.
11. Employee acknowledges that MDSC does not now have any group life,
disability or medical insurance, or cash bonus, deferred compensation, pension,
retirement or other employee benefit plan of any kind, or any liability
insurance or director and officer insurance. Employee agrees that MDSC shall not
be required to institute any of such plans or insurance until and unless its
financial resources permit, and then only to the extent contemplated by the
Business Plan. Notwithstanding the foregoing, MDSC shall obtain directors and
officers liability insurance at the earliest practical time consistent with
MDSC's financial ability to obtain same. Once instituted in accordance with the
Business Plan, Employee shall be entitled to participate in all such plans and
to be covered by all such insurance. Employee shall not be entitled to
reimbursement for the cost of any insurance Employee obtains or maintains or for
the cost or loss of opportunity to contribute to any pension or retirement plan,
but Employee shall be entitled to a car allowance and other fringe benefits up
to an aggregate maximum of Twelve Thousand Dollars ($12,000) per year during the
Term (in addition to all fringe benefits required by law to be provided to
Employee). During the Term, Employee shall also be entitled to:
(a) vacation time each year in accordance with MDSC's standard
employee policy in respect thereof from time to time in effect in addition
to the holidays normally observed by MDSC; and
(b) prompt reimbursement for reasonable out-of-pocket business
expenses incurred by Employee in accordance with MDSC's standard employee
reimbursement policy from time to time in effect.
12. To the maximum extent permitted by applicable law, MDSC shall indemnify
Employee, and hold Employee harmless from and against, any loss, damage or claim
to which Employee may become subject as the direct result of any of his acts or
omissions as the President and Chief Operating Officer of MDSC, (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by Employee in connection
therewith, and such indemnification shall continue after Employee has ceased to
be a director, trustee, officer, employee or agent. MDSC shall provide, at its
own expense, legal counsel to defend Employee in connection therewith. Such
counsel shall be MDSC's counsel unless MDSC's counsel shall have a conflict of
interest, in which case Employee may select counsel of his choice, and MDSC
shall promptly reimburse Employee for the reasonable fees and expenses of such
counsel. The right to indemnification conferred in this Section 12 shall be a
contract right and shall include the right to be paid by MDSC the expenses
(including attorneys' fees) incurred by Employee in defending any such legal
proceeding in advance of its final disposition. Employee understands, as his
additional contract obligation, that it will be an irreparable material breach
of Employee's employment agreement should Employee not fully cooperate,
individually or through counsel in any legal action whatsoever, where any loss,
damage or claim asserted is claimed to be the direct or indirect result of any
of his acts or omissions as the President and Chief Operating Officer of MDSC.
Employee herein acknowledges his contractual obligation for his unqualified
cooperation so as to enable MDSC to mitigate, defend, settle, and otherwise
resolve any matter in the best interest of the shareholders, investors and
management of MDSC.
13. During the Term, Employee shall devote his time and energies to the
business of MDSC. Notwithstanding the foregoing and provided that such
activities do not materially impair the performance by Employee of his duties
under this Agreement as President and Chief Operating Officer of MDSC, Employee
shall not be prohibited from:
(a) engaging in charitable and civic activities,
(b) discharging those obligations which Employee was subject to on the
date of the Original Agreement, as summarized on Annex I to the Original
Agreement ("Annex I");
(c) continuing to participate in those businesses/boards listed on
Annex 1;
(d) retaining for his personal benefits all fees, honoraria and
profits from the activities permitted by subsections (a), (b) and (c) of
this Section 13.
14. The Board and the shareholders of MDSC have approved and adopted a
stock option plan (the "1999 Plan") complying with section 422 of the Code. The
1999 Plan permits holders of options granted thereunder to pay the exercise
price due upon exercise either with cash or shares of MDSC common stock valued
at the fair market value of such shares at the time of such exercise. The 1999
Plan permits options granted thereunder to be exercised for the maximum periods
permitted by the Code during which such options can be exercised following the
death, permanent and total disability or termination of employment.
15. On the date of the Original Agreement, MDSC issued and delivered to
Employee the following two options under the 1999 Plan:
(a) a nonqualified three-year option evidencing the fully vested right
to purchase up to 200,000 shares of common stock of MDSC at an exercise
price of $0.25 per share (the "200,000 Share Option"); and
(b) what was intended to be an incentive stock option evidencing the
right to purchase up to 1,8000,000 shares of common stock of MDSC at an
exercise price of $1.00 per share (the "1,800,000 Share Option" and,
together with the 200,000 Shares Option, the "Original Options").
However, because of Employee's right to assign up to 50% of the Original
Options, the 1,800,000 Share Option did not qualify as an incentive stock option
under the Code. Therefore, MDSC and Employee hereby agree that, as of the date
of this Agreement, the 1,800,000 Share Option shall be surrendered by Employee
to MDSC and cancelled by MDSC, and MDSC shall deliver to Employee a new
incentive stock option (the "Incentive Stock Option") under the 1999 Plan having
the same terms and provisions as the 1,800,000 Option except that Employee shall
not have the right to assign any portion of the Incentive Stock Option.
16. As provided in the Original Agreement, the 200,000 Share Option shall
be assignable by Employee as to a maximum of 100,000 shares. From and after the
date of this Agreement, the 200,000 Share Option shall be evidenced by a
nonqualified stock option in the form attached hereto as Exhibit A.
17. The form of the Incentive Stock Option shall be attached hereto as
Exhibit B.
18. In the event that Employee voluntarily terminates his employment or
Employee's employment is terminated by MDSC for "Cause", Employee shall be
entitled to receive compensation and benefits earned by him and/or accruing to
him prior to the date of such termination, prorated up to and including such
date. In the event that Employee's employment is terminated by MDSC without
Cause or in connection with a change in control, Employee shall be entitled to
receive compensation and benefits earned by him and/or accruing to him prior to
the date of such termination, prorated up to and including the first anniversary
of such date or, if longer, until the scheduled expiration date of the Term. For
purposes of this Agreement, "Cause" means any of the following:
(a) any act or acts of Employee constituting a felony (or its
equivalent) under the laws of the United States, any state thereof or any
foreign jurisdiction; or
(b) any material breach by Employee of this Agreement or the policies
of MDSC or any of its subsidiaries or the willful and persistent (after
written notice to Employee) failure or refusal of Employee to perform his
duties of employment or comply in any material respect with any lawful
directive of the Board or the Chairman of the Board; or
(c) a course of conduct by Employee amounting to gross neglect,
willful misconduct or dishonesty; or
(d) any misappropriation of material property (whether real, personal,
tangible or intangible) of MDSC by Employee; or
(e) any misappropriation of a corporate or business opportunity of
MDSC or any of its subsidiaries by Employee; or
(f) Employee's failure or inability to meet or cause MDSC to meet, in
all material respects, any Critical Milestone.
19. During Employee's employment by MDSC and during any time thereafter
while Employee remains a member of the Board or a consultant to MDSC, he will
develop and be exposed to confidential information and trade secrets of MDSC as
well as similar information which MDSC has received from others (e.g. ▇▇▇▇▇▇▇
Corporation, Drexel University, Hahanemann and CUNY) and considers to be
confidential. Employee understands that the maintenance of the proprietary
character of such information is vital to MDSC. Accordingly, at any time during
Employee's employment and at all times thereafter, he will not disclose to
others any such confidential information or trade secrets. The provisions of
this Section 19 shall not apply after the proprietary information has been:
(a) voluntarily disclosed to the public by MDSC; or
(b) independently developed and disclosed by others not bound by any
confidentiality agreement; or
(c) otherwise enters the public domain through lawful means.
20. During the Term and for a period of eighteen (18) months after the end
of the Term, Employee shall not, for his own account or in any other capacity
(including as an officer, member, employee, consultant, partner, representative,
sole proprietor or advisor of another), participate in any entity (or affiliate
or connect with, or render service to, or furnish assistance or advice to, any
person, corporation, firm or other organization), which, in competition with
MDSC:
(a) renders medical services or engages in research, development,
marketing and/or manufacturing of medical devices or equipment; or
(b) utilizes optical spectroscopy methods and instrumentation to: (i)
differentiate dysplastic or malignant from nonmalignant tissue and cellular
smears; (ii) determine the efficacy of vitamins and/or and other chemicals
in reversing pre-cancerous conditions; (iii) differentiate between sterile
and non-sterile environments; (iv) differentiate between residue and
non-residue environments; (v) create images in turbid media using time and
space gated technology for optical mammography and tomography; or (vi)
determine healing from sores, wounds and ▇▇▇▇▇.
Without limiting MDSC's other remedies, in the event of Employee's actual or
threatened breach of this Section 20, Employee acknowledges that MDSC shall be
entitled to injunctive relief to enforce it.
21. This Agreement shall inure to the benefit of, and be binding on, the
successors and assigns of MDSC. This Agreement contemplates personal services
and shall not be assignable by Employee.
22. This Agreement supersedes in its entirety all other agreements and
understandings, both written and oral, regarding Employee's employment with MDSC
and/or any affiliate of MDSC.
23. Unless otherwise hereinafter designated by either party, any notices or
other written communications under this Agreement shall be faxed or emailed and
confirmed by certified mail to the addresses most recently furnished by the
party to whom the written communication is to be sent.
24. This Agreement, including the Exhibits hereto, contains the entire
understanding and agreement between the parties with respect to the subject
matter hereof and thereof.
25. The invalidity of any provision of this Agreement shall not impair the
validity of any remaining provision. All parties to this Agreement shall use
diligence and good faith effort to satisfy any and all time requirements (e.g.
FDA applicable law etc.). In this respect, time is not of the essence to this
Agreement. In this respect, time shall not be of the essence to this Agreement.
26. No modification, waiver or agreement of termination of this Agreement
shall be binding upon either party unless made in writing and signed by or on
behalf of such party.
27. This Agreement shall be construed in accordance with the laws of the
State of New Jersey and MDSC and Employee hereby agree to submit any and all
disputes to binding arbitration before a single independent knowledgeable and
industry qualified arbitrator in New Jersey with the American Arbitration
Association, and pursuant to the American Arbitration Association's
then-applicable rules and procedures.
IN WITNESS WHEREOF, the parties intending to be legally bound have executed
this Agreement on and as of the date first above written.
MEDISCIENCE TECHNOLOGY CORP.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Exhibit A
Nonqualified Stock Option Agreement
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This Stock Option Agreement is entered into as of April 23, 2003, between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("Optionee"), and Mediscience Technology Corp. (the
"Company"), pursuant to the Company's 1999 Stock Incentive Plan (the "Program")
and the Supplemental Stock Incentive Plan, which constitutes Part II of the
Program. The Program, insofar as it is applicable to this Option Agreement (this
"Agreement"), including, without limitation, the General Provisions of the Stock
Incentive Plan and Part II of the Program, are hereinafter collectively referred
to as the "Plan").
The Board of Directors of the Company has determined that Optionee is
eligible and deserving of an award under the Plan. This Agreement is subject to
the terms of the Plan in all respects, and specific reference shall be made to
the Plan in determining Optionee's rights and obligations hereunder. Capitalized
terms, which are used herein and not otherwise defined, shall have the meanings
set forth in the Plan. This Agreement is made by and between the Company and
Optionee as follows:
1. Grant.
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Grant Date: April 23, 2003 Number of Options: 200,000 shares of common
stock, $.01 par value
Expiration Date: April 23, 2006 Exercise Price: $0.25 per share
Vesting Schedule: 100% fully vested on Grant
Date
The options are not incentive stock options under the Internal Revenue Code
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of 1986, as amended.
2. Exercise. Subject to the provisions of this Agreement and the Plan, the
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Options granted hereby shall vest and become exercisable as set forth herein. To
the extent exercisable, these Options may be exercised in whole or in part at
any time and from time to time until fully exercised or until the Option
expiration date set forth above or until these Options otherwise terminate under
the Plan.
3. Transferability. These Options may be exercised only by Optionee, his
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guardian, legal representative or Permitted Transferee during Optionee's
lifetime and, thereafter, as provided in the Plan. Optionee shall have the right
to assign and transfer up to 100,000 of the Options evidenced by this Agreement.
The assignees and transferees of up to 100,000 of such Options shall be referred
to in this Agreement as "Permitted Transferees". Except as provided in this
Section 3, neither these Options nor any portion thereof or interest therein may
be sold, pledged, assigned or transferred in any manner other than by will or by
the laws of descent and distribution, and then only within the limitations set
forth in the Plan.
4. Payment. Exercise of these Options shall not be effective until the
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Company or a designee thereof has received written notice of exercise,
specifying the number of whole shares of the Company's Common Stock (the
"Shares") to be purchased or otherwise received. Such notice shall be
accompanied by full payment of the aggregate exercise price for the number of
Shares so purchased: (i) by certified or bank cashier's check payable to the
order of the Company; or (ii) by Shares owned by Optionee and valued at their
then Fair Market Value as determined by the Plan Administrator in accordance
with Section 4 of the Plan ("Fair Market Value"). Upon a partial exercise of
these Options, this Agreement shall be automatically amended to reduce the
number of Shares covered by these Options by the number of Shares so purchased
without the necessity of the execution of a new agreement or a formal written
amendment of this Agreement. The Plan Administrator's records regarding the
number of Shares remaining to be exercised under this Agreement shall control
and not be subject to challenge by Optionee absent bad faith or malfeasance by
the Plan Administrator.
5. Certain Taxes. Optionee authorizes the Company to withhold, in
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accordance with applicable law, from any Option Shares to be issued to Optionee
upon exercise by Optionee of all or a portion of these Options, if necessary, a
number of Shares based on their Fair Market Value equal to the amount of any
taxes required to be withheld by any federal, state or local law or regulation
as a result of the exercise of these Options. Whether or not the Company
withholds any amount for taxes, Optionee shall be solely responsible for and
shall pay any and all Federal/State taxes not withheld by the Company.
6. Compliance with Securities Laws. Optionee agrees that the Shares
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acquired upon exercise of these Options shall be acquired for his or her own
account for investment purposes only and not with a view to any distribution or
public offering thereof within the meaning of the Securities Act of 1933 (the
"Act") or applicable state securities laws. If the Company so determines, any
stock certificates issued upon exercise of these Options shall bear a legend to
the effect that the Shares have been so acquired. The Company shall not be
required to bear any expenses of compliance with the Act, applicable state
securities laws or the rules and regulations of any national securities exchange
or other regulatory authority in connection with the registration, qualification
or transfer, as the case may be, of these Options or any Shares acquired upon
the exercise thereof. The Company may legend the stock certificates evidencing
Shares acquired pursuant to the Plan in such manner it deems appropriate to
carry out the intent and purposes of the Plan. The foregoing restrictions on the
transfer of the Shares shall not apply if (a) the Company shall have been
furnished with an opinion of counsel satisfactory in form and substance to the
Company to the effect that such transfer will be in compliance with the Act and
other applicable securities laws, or (b) the Shares shall have been duly
registered in compliance with the Act and other applicable securities laws.
7. Acceptance of the Plan. Optionee hereby approves and accepts the terms,
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conditions, and provisions of this Agreement and the Plan and agrees to be bound
hereby and thereby, and further agrees that his or her executors,
administrators, heirs, and successors shall be bound hereby and thereby. Without
limitation of the foregoing, the Optionee hereby agrees, individually and for
his or her executors, administrators, heirs, and successors that all decisions
or interpretations of the Plan Administrator with regard to any and all aspects
of the Plan and the administration thereof shall be binding, conclusive and
final.
8. Address for Notices. The parties hereto designate as the respective
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addresses for the receipt of any notice under this Agreement or the Plan the
addresses set forth below their signatures on this Agreement.
9. Conformity With the Plan. This Agreement is intended to conform in all
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respects with, and is subject to all applicable provisions of, the Plan, which
is incorporated herein by reference. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. By
executing and returning the enclosed copy of this Agreement, Optionee
acknowledges his receipt of the Plan and agrees to be bound by all of the terms
of the Plan. All definitions stated in the Plan shall apply to this Agreement.
10. Use of Services; Successors. Nothing herein confers any right or
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obligation on Optionee to continue rendering services to the Company or shall
affect in any way Optionee's right or the right of the Company, as the case may
be, to terminate Optionee's services at any time.
11. Entire Agreement. This Agreement (including the Plan, which is
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incorporated herein by reference) constitutes the entire understanding between
Optionee and the Company, and supersedes all other agreements, whether written
or oral, with respect to the acquisition by Optionee of his/her Options and/or
Shares.
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MEDISCIENCE TECHNOLOGY CORP. OPTIONEE:
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Chairman of the Board and CEO Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ Turnpike, Suite 204
▇▇▇▇▇▇ ▇▇ 07446
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Exhibit B
Incentive Stock Option Agreement
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This Stock Option Agreement (this "Agreement") is entered into on December
9, 2004, between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("Optionee"), and Mediscience Technology
Corp. (the "Company"), pursuant to: (i) the Company's 1999 Stock Incentive Plan
(the "Program") and the Incentive Stock Plan, which constitutes Part I of the
Program; and (ii) the Amended and Restated Employment Agreement dated December
9, 2004, between Optionee and the Company (the "Employment Agreement"). The
Program, insofar as it is applicable to this Option Agreement (this
"Agreement"), including, without limitation, the General Provisions of the Stock
Incentive Plan and Part I of the Program, are hereinafter collectively referred
to as the "Plan")
The Board of Directors of the Company has determined that Optionee is
eligible and deserving of an award under the Plan. This Agreement is subject to
the terms of the Plan in all respects, and specific reference shall be made to
the Plan in determining Optionee's rights and obligations hereunder. Capitalized
terms, which are used herein and not otherwise defined, shall have the meanings
set forth in the Plan. This Agreement is made by and between the Company and
Optionee as follows:
1. Grant.
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Grant Date: December 9, 2004 Number of Options: 1,800,000 shares of
common stock, $.01 par value
Expiration Date: April 23, 2006 Exercise Price: $1.00 per share
Vesting Schedule: As Described in Section 2
The Options are incentive stock options under the Internal Revenue Code of 1986,
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as amended.
2. Exercise.
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(a) Subject to the provisions of this Agreement and the Plan, the
Options granted hereby shall vest and become exercisable as set forth in
paragraph (b) of this Section 2. To the extent exercisable, these Options
may be exercised in whole or in part at any time and from time to time
until fully exercised or until the Option expiration date set forth above
or until these Options otherwise terminate under the Plan.
(b) Section 8 of the Employment Agreement, which defines the five
"Critical Milestones" taken from the Business Plan (as such term is defined
in Section 6 of the Employment Agreement), is incorporated herein by
reference with the same effect as if set forth in full in this paragraph
(b). The Options granted hereby shall become vested and exercisable upon
the attainment and satisfaction during the Term of either the Critical
Milestones, as provided in clause (i) below, or the Financial Milestones,
as provided in clause (ii) below.
(i) Upon the satisfaction of any of the Critical Milestones, as
determined by the Board of Directors of the Company, Options to
purchase 380,000 shares shall become vested and exercisable.
(ii) Upon the satisfaction of any Financial Milestone (as such
term is defined in clause (iii) below, Options to purchase 600,000
shares shall become vested and exercisable.
(iii) As used in this paragraph (b), the term "Financial
Milestone" means the completion on an equity investment contemplated
by the Business Plan in the Company and/or any wholly-owned subsidiary
of the Company in the aggregate amount of Five Million Dollars
($5,000,000). Each Financial Milestone may be completed in one or more
transactions. The first Financial Milestone shall be measured from
April 1, 2003, the second Financial Milestone shall be measured from
the completion of the first Financial Milestone, and the third
Financial Milestone shall be measured from the completion of the
second Financial Milestone. No Financial Milestone may be waived, in
whole or in part, by the Board of Directors of the Company unless the
Chairman of the Board, in his sole discretion, shall have introduced a
motion to the Board of Directors for total or partial waiver of any
Financial Milestone based on the on-going performance of Optionee as
the President and Chief Operating Officer of the Company, the
financial capability of the Company and the timely satisfaction on
budget of each Critical Milestone.
3. Non-Transferable. These Options may be exercised only by Optionee, his
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guardian or legal representative during Optionee's lifetime and, thereafter, as
provided in the Plan. Neither these Options nor any portion thereof or interest
therein may be sold, pledged, assigned or transferred in any manner other than
by will or by the laws of descent and distribution, and then only within the
limitations set forth in the Plan.
4. Payment. Exercise of these Options shall not be effective until the
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Company or a designee thereof has received written notice of exercise,
specifying the number of whole shares of the Company's Common Stock (the
"Shares") to be purchased or otherwise received. Such notice shall be
accompanied by full payment of the aggregate exercise price for the number of
Shares so purchased: (i) by certified or bank cashier's check payable to the
order of the Company; or (ii) by Shares owned by Optionee and valued at their
then Fair Market Value as determined by the Plan Administrator in accordance
with Section 4 of Plan ("Fair Market Value"). Upon a partial exercise of these
Options, this Agreement shall be automatically amended to reduce the number of
Shares covered by these Options by the number of Shares so purchased without the
necessity of the execution of a new agreement or a formal written amendment of
this Agreement. The Plan Administrator's records regarding the number of Shares
remaining to be exercised under this Agreement shall control and not be subject
to challenge by Optionee absent bad faith or malfeasance by the Plan
Administrator.
5. Certain Taxes. Optionee authorizes the Company to withhold, in
--------------
accordance with applicable law, from any Option Shares to be issued to Optionee
upon exercise by Optionee of all or a portion of these Options, if necessary, a
number of Shares based on their Fair Market Value equal to the amount of any
taxes required to be withheld by any federal, state or local law or regulation
as a result of the exercise of these Options. Whether or not the Company
withholds any amount for taxes, Optionee shall be solely responsible for and
shall pay any and all Federal/State taxes not withheld by the Company
6. Compliance with Securities Laws. Optionee agrees that the Shares
----------------------------------
acquired upon exercise of these Options shall be acquired for his or her own
account for investment purposes only and not with a view to any distribution or
public offering thereof within the meaning of the Securities Act of 1933 (the
"Act") or applicable state securities laws. If the Company so determines, any
stock certificates issued upon exercise of these Options shall bear a legend to
the effect that the Shares have been so acquired. The Company shall not be
required to bear any expenses of compliance with the Act, applicable state
securities laws or the rules and regulations of any national securities exchange
or other regulatory authority in connection with the registration, qualification
or transfer, as the case may be, of these Options or any Shares acquired upon
the exercise thereof. The Company may legend the stock certificates evidencing
Shares acquired pursuant to the Plan in such manner it deems appropriate to
carry out the intent and purposes of the Plan. The foregoing restrictions on the
transfer of the Shares shall not apply if (a) the Company shall have been
furnished with an opinion of counsel satisfactory in form and substance to the
Company to the effect that such transfer will be in compliance with the Act and
other applicable securities laws, or (b) the Shares shall have been duly
registered in compliance with the Act and other applicable securities laws.
7. Acceptance of the Plan. Optionee hereby approves and accepts the terms,
----------------------
conditions, and provisions of this Agreement and the Plan and agrees to be bound
hereby and thereby, and further agrees that his or her executors,
administrators, heirs, and successors shall be bound hereby and thereby. Without
limitation of the foregoing, the Optionee hereby agrees, individually and for
his or her executors, administrators, heirs, and successors that all decisions
or interpretations of the Plan Administrator with regard to any and all aspects
of the Plan and the administration thereof shall be binding, conclusive and
final.
8. Address for Notices. The parties hereto designate as the respective
-------------------
addresses for the receipt of any notice under this Agreement or the Plan the
addresses set forth below their signatures on this Agreement.
9. Conformity With the Plan. This Agreement is intended to conform in all
-------------------------
respects with, and is subject to all applicable provisions of, the Plan, which
is incorporated herein by reference. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. By
executing and returning the enclosed copy of this Agreement, Optionee
acknowledges his receipt of the Plan and agrees to be bound by all of the terms
of the Plan. All definitions stated in the Plan shall apply to this Agreement.
10. Use of Services; Successors. Nothing herein confers any right or
-----------------------------
obligation on Optionee to continue rendering services to the Company or shall
affect in any way Optionee's right or the right of the Company, as the case may
be, to terminate Optionee's services at any time.
11. Entire Agreement. This Agreement (including the Plan, which is
-----------------
incorporated herein by reference) constitutes the entire understanding between
Optionee and the Company, and supersedes all other agreements, whether written
or oral, with respect to the acquisition by Optionee of his Options.
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MEDISCIENCE TECHNOLOGY CORP. OPTIONEE:
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Chairman of the Board and CEO Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ Turnpike, Suite 204
▇▇▇▇▇▇ ▇▇ 07446
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