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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of June 12, 1996 between Biodynamics International, Inc. (the "Company") and
Xxxx X. Xxxxxxx (the "Employee") (collectively "the Parties").
W I T N E S S E T H:
WHEREAS, the Employee is currently serving as President and Chief
Executive Officer of the Company, and the Company desires to secure the
continuing employment of the Employee in accordance with the terms of this
Agreement;
WHEREAS, the Company will compensate the Employee according to the
terms of this Agreement in order to retain his employment for the term of this
Agreement;
WHEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for the good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS.
In addition to the terms elsewhere defined in this Agreement, the
following terms as used herein shall have the following meanings, unless the
context or use indicates a different meaning.
"Cause" for termination of employment means (a) any act by the
Employee taken otherwise than in good faith that is materially adverse to the
best interests of the Company or which, if the subject of a criminal
proceeding, could result in a criminal conviction for a felony, or (b) the
willful failure by the Employee to substantially perform his duties under this
Agreement, which duties are reasonably within the control of the Employee
(other than the failure resulting from the Employee's incapacity due to
physical or mental illness). Employee shall not be deemed to be terminated for
Cause under subparagraph (b) of this definition unless and until (i) the
Employee receives written notice from the Board of Directors of the Company
specifying with reasonable particularity the actions of the Employee which
constitute a violation of this Agreement, and (ii) within a period of 30 days
after receipt of such notice (and during which the violation is reasonably
within the control of the Employee), the Employee fails to reasonably ad
prospectively cure such violation.
"Common Stock" means the common stock of the Company.
"Good Reason" for resignation from employment means (a) without his
prior concurrence, the Employee is assigned duties or responsibilities that are
inconsistent with his position, duties, responsibilities or status at the
commencement of the term of this Agreement, or his reporting responsibilities
or titles in effect at the time of such commencement are changed, excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bd
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Employee, or (b) the Employee's Annual Base Salary is
reduced or there occurs any other failure by the Company to comply in any
respect with the provisions of Section 4 hereof, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by
the Employee, or (c) there occurs any change in any employee benefit plans or
arrangements of the Company in which the Employee participates (including
without
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limitation any pension or retirement plan, savings or profit sharing plan,
stock ownership or purchase plan, stock option plan of life, medical or
disability insurance plan), which would materially and adversely affect the
Employee's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to all executive officers of the Company and does not
result in a proportionately greater reduction in the rights of or benefits to
the Employee as compared with any other executive officer of the Company, or
(d) the Employee is required to relocate his residence away from New Xxxxxx,
New Jersey because of the Company's business, or (e) the Company fails to
obtain the additional financing and the restructuring of certain debt and
equity per the November 23, 1995 Commitment Letter as described on p. 6 of the
SEC Form 10-QSB for the period ended December 31, 1995, attached to this
Agreement as Exhibit A, or (g) the Company fails to remedy its current
deficiency in meeting the listing criteria on the NASDAQ Small Cap Market or
(h) the Company fails to obtain an Updated Opinion from Xxxxx & Xxxxxxx (or
other law firm with specialization in FDA law and regulations), within one
month following execution and delivery of this Agreement, stating the Company
is in compliance with the National Organ Transplant Act of 1984, or (i) the
Company fails to obtain shareholder approval for stock options as required by
Sections 4(c) and 4(d) of this Agreement, or (i) the Company fails to obtain
Directors' and Officers' Liability Insurance as specified in Section 4(i).
"Stock Options" means either Annual Stock Options or Special Stock
Options as defined in Section 4(c) or 4(d) of this Agreement.
2. EMPLOYMENT.
The Company hereby employs the Employee, and the Employee hereby
accepts employment with the Company, on the terms and conditions set forth
herein.
3. TERM.
The term of the Employee's employment with the Company hereunder
commenced on March 1, 1996 ("Date of Employment") and shall terminate at the
close of business on February 28, 1999, provided, however, that unless on or
before January 1 immediately preceding each February 28 on which the term of
the Employee's employment with the Company would otherwise terminate, either
party delivers to the other party a written notice of his or its election to
terminate such employment on February 28, the term of the Employee's employment
with the Company shall be automatically extended for additional one year
periods commencing on the day immediately following such February 28 and ending
on the close of business on the following February 28, unless the term of the
Employee's employment hereunder shall sooner terminate in accordance with the
provisions of Section 7 hereof.
4. SALARY AND OTHER BENEFITS.
(a) Annual Base Salary. The Company shall pay the Employee an
annual base salary ("Annual Base Salary") at the rate of not less than $160,000
per year, payable in substantially equal monthly installments in accordance
with the customary payroll policies of the Company in effect at the time such
payment is made, or as otherwise mutually agreed upon. The Board of Directors
of the Company may from time to time direct such upward adjustments to the
Employee's Annual Base Salary as the Board deems to be necessary or desirable,
however, the Employee's Annual Base Salary shall not be reduced after any
increase thereof. Any increase in the Employee's Annual Base Salary shall not
serve to limit or reduce any other obligation of the Company under this
Agreement.
(b) Annual Cash Incentive Bonus. Commencing with the fiscal year
ending on September 30, 1997 and so long as the Employee is employed by the
Company, he shall be eligible to receive from the
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Company, in respect of each fiscal year of the Company during which he is
employed, an annual cash incentive bonus ("Annual Cash Incentive Bonus"),
payable in cash within 60 days following the end of such fiscal year, in an
amount approximately equal to 35% of the Employee's Annual Base Salary for that
year, subject to the satisfaction of the Employee's reasonable performance
goals for that year, subject to the satisfaction of the Employees's reasonable
performance goals for that year which are agreed to by the Board of Directors
and the Employee not later than 45 days after the commencement of such year.
The determination as to whether the Employee's performance goals or any of them
have been met for a fiscal year shall be made by the Board of Directors of the
Company based on reasonable business standards and in the exercise of good
faith. As a member of the Board of Directors of the Company, the Employee
shall not vote on matters presented to the Board of Directors of the Company
pursuant to this Section 4(b).
(c) Annual Stock Options. The Employee shall be eligible to
receive from the Company, for each fiscal year of the Company during which he
is employed hereunder, commencing with the fiscal year ending on September 30,
1996, non-qualified stock options ("Annual Stock Options") to be granted
within 60 days following the end of such fiscal year, for 75,000 shares
available for purchase at the market price on the day of the grant. These
Annual Stock Options will be granted under the general provisions of the
Company's 1996 Stock Option Plan for which the Company is to employ its est
efforts to obtain approval by the shareholders at the 1996 Annual Meeting of
shareholders. The Company agrees to use its best efforts to cause shares of
Common Stock issuable upon exercise of such Stock Options to be and remain
registered on an effective Registration Statement on Form S-8 and to prepare
and file with the United States Securities and Exchange Commission any
prospectuses that may be reasonably necessary to permit the Employee to resell
the shares of Common Stock issuable upon exercise of such Stock Options under
the Securities Act of 1933, as amended. The Company also agrees that the 1996
Stock Option Plan will comply with Rule 16b-3 under the Securities Exchange Act
of 1934, as amended. The Employee shall maintain the right to all Annual Stock
Options obtained under Section 4(c) for five (5) years following the date of
grant of such Annual Stock Option, regardless of whether the Employee continues
to be employed by the Company and regardless of whether this Agreement expired
by its own terms or has been terminated, unless the Company terminates te
Employee for Cause or unless the Employee terminates this Agreement without
Good Reason.
(d) Special Stock Options. In consideration of the Employee's
execution and delivery of this Agreement, the Company shall use best efforts to
obtain shareholder approval for a Special Stock Option Bonus and upon such
approval shall issue and deliver to the Employee, as promptly as practicable
following the execution and delivery of this Agreement, non-qualified stock
options ("Special Stock Options") which shall entitle the Employee to purchase
750,000 cents per share. Forty percent (40%) of the Special Stock Options
shall vest immediately with the Employee, thirty percent (30%) of the Special
Stock Options shall vest twelve (12) months following the Employee's Date of
Employment, and thirty percent (30%) of the Special Stock Options shall vest
twenty-four (24) months following the Employee's Date of Employment. The
Company agrees to use its best efforts to cause shares of Common Stock issuable
upon exercise of such Stock Options to be and remain registered on an effective
Registration Statement on Form S-8 and to prepare and file with the United
States Securities and Exchange Commission any prospectuses that may be
reasonably necessary to permit the Employee to resell the shares issuable upon
exercise of such Stock Options under the Securities Act of 1933, as amended.
The Company also agrees that the Special Stock Options will comply with Rule
16b-3 under the Securities Exchange Act of 1934, as amended. The Employee
shall maintain the right to all Special Stock Options obtained under Section
4(d) for five (5) years following the date of grant of such Special Stock
Option, regardless of whether the Employee continues to be employed by the
Company and regardless of whether this Agreement expired by its own terms or
has been terminated, unless the Company terminates the Employee for Cause or
unless the Employee terminates this Agreement without Good Reason.
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(e) Employee Benefits. The Employee shall be entitled to
participate in or receive benefits under any and all employee benefit plans and
arrangements made available by the Company at any time and from time to time
during the term of this Agreement to its executive officers and key management
personnel, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans or arrangements. Except for any such
salary that the Employee defers pursuant to any plan under 26 U.S.C.A.
Section 401(k) (West Supp. 1995) ("Section 401(k)"), nothing paid to the
Employee under any such plan or arrangement presently in effect or made
available in the future shall be deemed to be payable to the Employee pursuant
to Sections 4(a) and 4(b).
(f) Business Expenses. Upon receipt of itemized vouchers, expense
account reports and supporting documents submitted to the Company in accordance
with the Company's procedures from time to time in effect, the Company shall
reimburse the Employee for all reasonable and necessary travel, entertainment
and other reasonable and necessary business expenses incurred ordinarily and
necessarily by the Employee in connection with the performance of his duties
hereunder.
(g) Vacation. So long as the Employee is employed hereunder, the
Employee shall be entitled to three weeks of paid vacation during each 12-month
period commencing on the Date of Employment, at the reasonable and mutual
convenience of the Company and the Employee.
(h) Office. As soon as reasonably possible, but not later than
December 31, 1996, the Company will provide an office for the employees in the
Morristown, New Jersey area which will be the principal office of the Employee.
The Employee will also be provided offices at the Company's locations in Tampa,
Florida and in Germany.
(i) Insurance and Indemnification. The Company shall purchase and
maintain Directors' and Officers' Liability Insurance from an insurance company
with a Best rating of A- or higher in amounts and covering matters customary
for companies of similar size in the same industry. This Directors' and
Officers' Liability Insurance shall provide defense of any lawsuit brought
against the Employee in connection with his employment by the Company, and
indemnification for any damages therefrom. The Company further agrees that it
will (i) indemnify and hold harmless the Employee from any and all damages that
he may incur as a result of his employment with the Company and (ii) advance
expenses in connection with any lawsuit, action, investigation or proceeding to
the maximum extent permitted by law. The Company further agrees that it will
not amend the indemnification and advancement of expenses provisions contained
in its certificate of incorporation and by-laws unless required by law.
(j) Board of Directors. Commencing with the 1996 Annual Meeting
of shareholders, and so long as the Employee is employed hereunder, the Company
shall cause the Board of Directors of the Company to nominate and to solicit
proxies from the shareholders of the Company for the purpose of electing at
each annual meeting (or special meeting in lieu thereof) of the Company's
shareholders a Board of Directors which includes the Employee as a director.
5. POSITION AND DUTIES.
The Employee shall serve as the President and Chief Executive Officer
of the Company, accountable only to the Board of Directors of the Company, and,
subject to the authority of such Board, shall have supervision and control
over, and responsibility for, the general management and operation of the
Company and shall have such other powers and duties as may from time to time be
prescribed by such Board, provided that such duties are reasonable and
customary for a President and Chief Executive Officer.
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6. DEATH.
The Employee's employment with the Company under this Agreement shall
terminate upon his death. The Company shall pay the Employee's Annual Base
Salary, Annual Cash Incentive Bonus, and Annual Stock Options due to the
Employee through the effective date of termination of this Agreement by death
to the extent not theretofore paid. The estate of the Employee shall retain
all Stock Options granted to the Employee as of the day of his death per
Section 4(c) and 4(d) for a period of three (3) years following the Employee's
death.
7. TERMINATION OF THIS AGREEMENT.
(a) The Company may terminate the Employee's employment with the
Company under this Agreement for Cause. Except for the obligation to pay the
Employee's Annual Base Salary through the effective date of termination, and
except for the rights and obligations of the Company under Sections 4(i), 22
and 23 hereof, all obligations of the Company hereunder shall cease upon such
termination, subject to the terms and provisions of any employee benefit plans
or arrangements maintained by the Company in which the Employee was
participating at the time of such termination. The Company may effect a
termination pursuant to this Section 7(a) only by the affirmative vote of not
less than two-thirds (2/3) of the total number of directors of the Company then
in office, not counting the Employee. In voting upon such termination, if the
Employee is also a member of the Board of Directors of the Company, then he
shall not vote on, and will not be considered present for any purpose with
respect to, a matter presented to the Board of Directors of the Company
pursuant to this Section 7(a).
(b) The Employee may, in his sole and absolute discretion,
terminate his employment with the Company under this Agreement for any reason
whatsoever by giving at least 30 days' prior written notice of his desire to do
so (which notice shall, if the termination is for Good Reason, specify with
reasonable particularity the reason or reasons therefore) to the Board of
Directors of the Company. Except for the obligation to pay the Employee's
Annual Base Salary through the effective date of termination, and any Annual
Cash Incentive Bonus or Annual Stock Options Bonus due to the Employee to the
extent not theretofore paid, and except for the obligations of the Company
under Sections 4(d), 4(i), 8, 22 and 23 hereof, all obligations of the Company
hereunder shall cease upon such termination, subject to the terms and
provisions of any employee benefit plans or arrangements maintained by the
Company in which the Employee was participating at the time of such
termination.
8. COMPENSATION AFTER CERTAIN TERMINATIONS.
If the Employee's employment with the Company under this Agreement is
terminated (whether such termination is by the Employee or by the Company) at
any time for any reason whatsoever other than (a) termination by the Company
for Cause, or (b) the Employee's death, or (c) termination at the election of
the Employee without Good Reason, then the Company shall pay the Employee his
full annual salary through February 28, 1999.
9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
In the event the Company shall effect a split of the Common Stock or a
dividend payable in Common Stock, or in the event the outstanding Common Stock
shall be combined into a smaller number of shares, the Stock Options of the
Employee granted under Sections 4(c) or 4(d) shall be decreased or increased
proportionately. In the event that, before delivery by the Company of all of
the shares of Common Stock for which the Stock Option has been granted, the
Company shall have effected a stock split, reverse stock split, stock dividend,
reclassification or combination of the Common Stock, the number of shares still
subject to such
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Stock Option shall be increased or decreased proportionately and the purchase
price per share shall be decreased or increased proportionately so that the
aggregate purchase price and ownership percentage of the Company for all of the
shares then subject to such Stock Option shall remain the same as immediately
prior to such stock split, reverse stock split, stock dividend,
reclassification or combination.
In the event of a reclassification of Common Stock not covered by the
foregoing, or in the event of a liquidation or reorganization (including a
merger, consolidation or sale of all or substantially all assets of the
Company) of the Company, the Board of Directors shall make such adjustments as
appropriate in the number, purchase price and kind of shares covered by the
unexercised Stock Options so that the aggregate purchase price of the Stock
Options and the ownership percentage of the Company provided by those Stock
Options shall remain the same as immediately prior to such reclassification,
liquidation or reorganization.
10. MITIGATION.
The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Agreement
be reduced by any compensation earned by the Employee as the result of
employment by another employer after the date of termination of the Employee's
employment with the Company, or otherwise.
11. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement and understanding between
the Parties hereto with respect to the subject matter hereof and supersedes al
prior negotiations, agreements and understandings between the Parties relating
to such subject matter. This Agreement may be modified or amended only by an
instrument in writing signed by the Parties hereto.
12. LAW TO GOVERN.
This Agreement is executed and delivered in the State of Delaware and
shall be governed construed and enforced in accordance with the laws of the
State of Delaware.
13. ASSIGNMENT.
This Agreement is personal to the Parties, and neither this Agreement
nor any interest herein may be assigned (other than by will or pursuant to the
laws of descent and distribution) without prior written consent of the Parties
hereto nor be subject to alienation, anticipation, sale, pledge, encumbrance,
execution, levy or other legal process of any kind against the Employee or any
of his beneficiaries or any other person.
14. REFERENCES.
All references to "Sections", "subsections" and other subdivisions
contained herein are, unless specifically indicated otherwise, references to
Sections, subsections and other subdivisions of this Agreement. Whenever
herein the singular number is used, the same shall include the plural where
appropriate.
15. WAIVER.
No waiver of any right under this Agreement shall be deemed effective
unless the same is set forth in writing and signed by the party giving such
waiver.
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16. NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the Parties at the respective addresses set forth opposite their
names on the signature page hereof, or at such other addresses as may have
theretofore been specified by written notice delivered in accordance herewith.
17. OTHER INSTRUMENTS.
The Parties hereto covenant and agree that they will execute such
other and further instruments and documents as are or may become necessary or
convenient to effectuate and carry out the terms of this Agreement.
18. HEADINGS.
The headings used in this Agreement are used for reference purposes
only and do not constitute substantive matter to be considered in construing
the terms of this Agreement.
19. INVALID PROVISION.
Any clause, sentence, provision, section, subsection or paragraph of
this Agreement held by a court of competent jurisdiction to be invalid, illegal
or ineffective shall not impair, invalidate or nullify the remainder of this
Agreement, but the effect thereof shall be confined to the clause, sentence,
provision, section, subsection or paragraph so held to be invalid.
20. RIGHTS UNDER PLANS AND PROGRAMS.
Anything in this Agreement to the contrary notwithstanding, no
provision of this Agreement is intended, nor shall it be construed, to reduce
or in any way restrict any benefit to which the Employee may be entitled under
any other agreement, plan, arrangement or program of the Company providing
benefits for its Employees.
21. MULTIPLE COPIES.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
22. WITHHOLDING OF TAXES.
The Company shall withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or government regulation or ruling.
23. LEGAL FEES AND EXPENSES.
The Company shall pay and be responsible for all legal fees and
expenses which the Employee may incur as a result of disputes originated by the
Company under this Agreement or as a result of the Company's
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failure to perform under this Agreement, or as a result of the Company or any
successor contesting the validity or enforceability of this Agreement.
24. SET OFF OR COUNTERCLAIM.
Except with respect to any claim against or debt or other obligation
of the Employee properly recorded on the books and records of the Company,
there shall be no right of set off or counterclaim against, or delay in, any
payment by the Company to the Employee or his beneficiaries provided for in
this Agreement in respect of any claim against or debt or other obligation of
the Employee, whether arising hereunder or otherwise.
25. THIRD PARTY BENEFICIARY.
Any successor-in-interest to the Company, whether the successorship
arises through sale of stock or assets, merger, or any manner of change in
control of the Company, will be a third-party beneficiary to this Agreement and
shall be obligated to the Employee to fulfill each of the terms of this
Agreement. The Company agrees that no sale, merger or change in control will
occur without securing the agreement of the purchaser, successor, or new
control party to assume this Agreement and responsibility for all obligations
of the Company under this Agreement.
26. CONTRA PROFERENTUM.
The principle of contra proferentum shall not apply and terms of this
Agreement shall not be construed against its drafter.
BIODYNAMICS INTERNATIONAL, INC.
By: ---------------------------------
Xxxxxxx Xxxxxxx
Chairman of the Board of Directors
Address:
X.X. Xxx 000 ---------------------------------
Xxxx Xxxx Drive Xxxx X. Xxxxxxx
Xxx Xxxxxx, XX 00000
