XXXXXX EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of February 24, 2005
(the "Effective Date"), is made and entered into between aMRIs GmbH
("Employer"), a company organized under the laws of Germany, Xx. Xxxxxxx Xxxxxx
("Xxxxxx"), and Biophan Technologies, Inc., a Nevada corporation (the "Buyer").
WHEREAS, pursuant to that certain Agreement (the "Purchase Agreement")
dated as of the date hereof, by and among Employer, Xxxxxx, Buyer, Tomovation
GmbH, a company organized under the laws of Germany ("Tomovation"), Xxxxxxx
Xxxxxx ("Xxxxxx"), Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxx, the Buyer is acquiring
from Tomovation and Xxxxxx shares of Employer representing 51% of the
outstanding shares of Employer; and
WHEREAS, the execution and delivery of this Agreement by Xxxxxx is
required pursuant to the Purchase Agreement; and
WHEREAS, Employer wishes to employ Xxxxxx and Xxxxxx wishes to accept such
employment on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, benefits and
covenants herein contained, Employer and Xxxxxx hereby agree as follows:
1. Effective Date; Term.
1.1 Effective Date. This Agreement shall be effective as of the
Effective Date.
1.2 Employment Term. Employer employs Xxxxxx, and Xxxxxx accepts such
employment, for an initial period of four (4) years commencing on the Effective
Date (the "Employment Term"), and continuing on an annual basis thereafter
subject to mutual agreement of Employer and Xxxxxx, which agreement shall be
confirmed by the parties at least three (3) months before the end of the initial
four-year term and each annual term thereafter.
1.3 Termination. This Agreement may be terminated before the expiration of
the Employment Term as provided in Section 4 of this Agreement.
2. Scope of Employment.
2.1 Position and Duties. During the term of this Agreement, Employer shall
employ Xxxxxx and Xxxxxx shall serve as "Geschaftsfuhrer" (managing director)
according to ss. 6 GmbHG (German Law pertaining Companies with Limited
Liability) (which means that as far as this Agreement does not explicitly state
otherwise the provisions of paragraph 611 to paragraph 000 XXX (Xxxxxx Civil
Code) are applicable to the Agreement) and Chief Executive Officer of Employer
with such authority as is normally associated with and appropriate for such
position. Xxxxxx shall report directly to the shareholders of Employer and
perform such executive, administrative and operational duties as may reasonably
be assigned to Xxxxxx from time to time by the shareholders. Duties not
customarily with the position of Chief Executive Officer or "Geschaftsfuhrer"
(managing director) shall not be deemed "reasonably assigned" if Xxxxxx objects
-2-
reasonably promptly to such assignment in writing to Buyer on behalf of the
shareholders. Xxxxxx agrees to be bound by the limitations in his authority and
obligations set forth in the Employer's Articles of Association as in effect
from time to time. Buyer agrees to cause Xxxxxx to be appointed to Buyer's Board
of Directors as soon as practicable, but in any event within 60 days, after the
Effective Date and, for so long as Xxxxxx serves as a member of Buyer's Board of
Directors, Buyer shall compensate Xxxxxx not less than other similarly situated
non-executive members of Buyer's Board of Directors. Once elected in accordance
with the foregoing provisons, Buyer agrees to cause Xxxxxx to remain a member of
Buyer's Board of Directors until the earlier of (i) Xxxxxx'x resignation from
such Board, and (ii) Xxxxxx ceasing to be employed by Employer and any Affiliate
of Employer.
2.2 Scope of Efforts. Xxxxxx agrees to serve Employer faithfully and to
the best of Xxxxxx'x reasonable ability and to devote not less than 40% of
Xxxxxx'x entire business time, attention and efforts to the interests and
business of Employer, its subsidiaries and their affiliates. Xxxxxx'x entire
business time during the term of this Agreement shall be not less than 40 hours
per week. Xxxxxx shall primarily work under this Agreement at the Employer's
location in Castrop-Rauxel, Germany or such subsequent location within 50 miles
thereof, but subject to such travel as reasonably necessary to perform his
duties. Xxxxxx represents and warrants to Employer that Xxxxxx is not under any
contractual commitment which prohibits or limits Xxxxxx'x employment by Employer
or which is inconsistent with Xxxxxx'x obligations set forth in this Agreement.
Xxxxxx agrees that during the term of this Agreement, Xxxxxx shall not perform
any services for any other corporation, firm, entity or other person in
violation of this Agreement without the prior written consent of Employer and
consistent with the written policies and procedures of Employer in effect from
time to time of which Xxxxxx has received notice.
2.3 Compliance with Laws. Xxxxxx agrees at all times to adhere strictly to
and perform all his duties in accordance with applicable laws, rules and
regulations and the written policies and procedures of Employer in effect from
time to time and of which Xxxxxx has received notice. Without limiting the
generality of the foregoing, Xxxxxx shall comply with any and all foreign and
domestic securities laws and regulations applicable to Employer and any
Affiliate. Employer shall provide, and shall cause any applicable Affiliate to
provide Xxxxxx with any materials and other information such Affiliate provides
to individuals in comparable employment positions with respect to such laws and
regulations.
3. Compensation, Benefits and Expenses.
3.1 Base Salary. Except as otherwise provided in this Agreement, during
the term of this Agreement, Employer shall pay to Xxxxxx a base salary at a rate
of US $70,000 per year (the "Base Salary"). The Base Salary may be increased,
but shall not be decreased below US $70,000, during the term of this Agreement
pursuant to the discretion of the shareholders of Employer. Employer shall pay
the Base Salary to Xxxxxx in equal installments pursuant to Employer's standard
payroll policies, and Xxxxxx'x Base Salary shall be subject to such withholding
or deductions as may be mutually agreed between Employer and Xxxxxx or as
required by law.
3.2 Bonus. In addition to the Base Salary set forth in Section 3.1, Xxxxxx
shall be entitled to receive a cash bonus as follows:
-3-
3.2.1 If the Employer's revenue (inclusive of revenue from any
consolidated Employer subsidiaries and revenue received by Buyer pursuant
to the License Agreement of even date herewith between Buyer and aMRIs
Patent GmbH, net of any royalties or fees payable by Buyer to aMRIs Patent
GmbH with respect to such revenues) from January 1, 2005 until February
28, 2006 ("Initial Measurement Period") from contract research, testing
and licensing (the "Applicable Revenue") meets or exceeds the revenue
targets set forth on Exhibit A attached hereto, Xxxxxx shall receive a
one-time cash bonus in the amount set forth on Exhibit A corresponding to
the Applicable Revenue target achieved.
3.2.2 If earned, such cash bonus shall be paid on March 31, 2006, whether
or not Xxxxxx then remains employed by Employer. Payment of any bonus
shall be subject to such withholding or deductions as may be mutually
agreed between Employer and Xxxxxx or as required by law. Xxxxxx may elect
to have any such bonus amount paid directly to Tomovation on his behalf.
3.2.3 Employer's revenue (and consolidated Employer's revenue) for
purposes of determining Applicable Revenue shall be determined in
accordance with United States generally accepted accounting principles
consisting applied and Employer shall provide Employee with full access to
Employer's books and records to verify the determination of Applicable
Revenue. In addition to Employer's revenue and notwithstanding the
provisions of Section 3.2.1 above, Applicable Revenue shall also include
Buyer's net revenue from royalties payable under the License Agreement for
the applicable period.
3.2.4 Bonus opportunity and achievement criteria for calendar years or
portions thereof during the Employment Term commencing after the Initial
Measurement Period shall be mutually agreed upon by the Employee and the
shareholders of Employer prior to the date which is 30 days after the end
of the Initial Measurement Period or any subsequent measurement period.
3.3 Expenses. During the term of this Agreement, Employer authorizes
Xxxxxx to incur reasonable and necessary out-of-pocket business expenses in the
course of performing Xxxxxx'x duties and rendering services hereunder in
accordance with Employer's policies with respect thereto, and Employer shall
reimburse Xxxxxx for all such expenses, provided (i) such expenses and the
purpose for which they were incurred are in accordance with Employer's policies,
and (ii) Xxxxxx timely submits to Employer expense reports and substantiation of
the expenses in accordance with Employer's policies.
3.4 Restricted Stock Grant.
(a) As soon as practicable but no later than five (5) days after the
Effective Date, Employer shall cause the Buyer and Buyer shall, pursuant to its
existing restricted stock plan, will grant to Xxxxxx 100,000 restricted shares
of Common Stock of the Buyer (the "Shares"), subject to the restrictions set
forth herein. The Shares shall be immediately vested at the time of grant. Each
share certificate representing any Shares granted under this Agreement shall
bear a legend indicating that it is "Restricted Stock." Each restricted Share
shall not be transferable and no interest therein may be pledged or assigned to
any other person or entity (including, without limitation, any margin loan or
derivative transaction) from the date of grant until December 31, 2005 (the
-4-
"Lock-up Period"). The Shares are fully vested when issued and are not subject
to forfeiture even if Xxxxxx is not an employee of the Employer at the end of
the Lock-Up Period. The Employer shall hold the certificate representing the
Shares, together with stock powers endorsed in blank, until the expiration of
the relevant Lock-up Period and, unless otherwise agreed, the certificate will
be transferred to Xxxxxx only after satisfaction by Xxxxxx of all income and
employment tax withholding liabilities that arise either on account of the grant
or the vesting of such Shares. Xxxxxx and Buyer shall execute and deliver the
Buyer's form of Restricted Stock Agreement attached as Schedule 3.4(a) (which
shall be amended as necessary to conform to the terms of this Agreement) to
evidence the grant of the Shares under this Section 3.4(a).
(b) If Xxxxxx is subject to United States taxation, Xxxxxx may elect
pursuant to Section 83(b) of the Internal Revenue Code, within thirty (30) days
of the date of grant, to include in his or her gross income the fair market
value of all or any portion of the Shares covered by this Agreement in the
taxable year of grant. If he makes this election, Xxxxxx shall promptly notify
the Buyer by submitting to the Buyer a copy of the statement filed with the
Internal Revenue Service in which Xxxxxx makes such election.
(c) Xxxxxx shall have all rights of a shareholder with respect to the
Shares except as otherwise limited by the terms of this Agreement.
(d) In the event of any change in the Common Stock of the Buyer by reason
of any stock dividend, stock split, split-up or any similar change affecting the
Common Stock, the number and kind of Shares awarded hereunder shall be adjusted
automatically consistent with such change.
3.5 Stock Options.
(a) On each of the first four anniversaries of the Effective Date, the
Buyer, pursuant to its existing stock option plan, shall grant to Xxxxxx an
option (each an "Option Grant") to purchase 75,000 shares of Common Stock (the
"Option Shares") pursuant to a non-qualified stock option. The exercise price
for each share of the Option Shares shall be the fair market value per share as
of the applicable date of grant of the related Option Grant. If any shares of
Buyer Common Stock are publicly-traded on a national exchange in the United
States, including the so-called Over-the-Counter Bulletin Board as such shares
currently trade, the fair market value per share of the Option Shares shall be
the last trade price on the business day that such shares last traded prior to
the date of grant. If no shares are then publicly-traded, the fair market value
of the Option Shares shall be as determined in good faith by the Board of
Directors of the Buyer. With respect to each Option Grant, Xxxxxx shall have
vested and nonforfeitable rights to exercise such option to purchase the Option
Shares only to the following extent:
Aggregate Percentage of
Applicable Date Stock Option Exercisable
--------------- ------------------------
date of grant 25%
1st anniversary of date of grant 50%
2nd anniversary of date of grant 75%
3rd anniversary of date of grant 100%
-5-
Notwithstanding the foregoing but subject to Section 4.4, in the event of
the termination of employment of Xxxxxx before the expiration of the Employment
Term, any Option Shares which have not vested as of the date of termination
shall be forfeited by Xxxxxx. As soon as practicable but no later than five (5)
days after the Effective Date Xxxxxx and Buyer shall execute and deliver the
Buyer's form of Stock Option Agreement attached as Schedule 3.5(a) (which shall
be amended as necessary to conform to the terms of this Agreement) to evidence
the grant of stock options under this Section 3.5(a).
(b) On the Effective Date, the Buyer, pursuant to its existing stock
option plan, shall grant to Xxxxxx an option (the "Bonus Option Grant") to
purchase 115,000 shares of Common Stock (the "Bonus Option Shares") pursuant to
a non-qualified stock option. The exercise price for each share of the Bonus
Option Shares shall be the lesser of the fair market value per share as of the
date of grant or US $1.18 per share. If any shares of Buyer Common Stock are
publicly-traded on a national exchange in the United States, including the
so-called Over-the-Counter Bulletin Board as such shares currently trade, the
fair market value per share of the Bonus Option Shares shall be the last trade
price on the business day that such shares last traded prior to the date of
grant. If no shares are then publicly-traded, the fair market value of the Bonus
Option Shares shall be as determined in good faith by the Board of Directors of
the Buyer. With respect to the Bonus Option Grant, Xxxxxx shall have vested and
nonforfeitable rights to exercise the options to purchase the Bonus Option
Shares on March 31, 2006; provided, however, that Xxxxxx shall forfeit a portion
of the Bonus Option Shares as of February 28, 2006, to the extent that the
Applicable Revenue (as defined in Section 3.2.1) during the Initial Measurement
Period fails to meet or exceed the revenue targets set forth on Exhibit B
attached hereto. Buyer covenants and agrees that the Bonus Option Shares shall,
prior to March 31, 2006, be subject to an effective registration statement under
the Securities Act of 1933.
Xxxxxx and Buyer shall execute and deliver the Buyer's form of Stock
Option Agreement attached as Schedule 3.5(a) (which shall be amended as
necessary to conform to the terms of this Agreement) to evidence the grant of
stock options under this Section 3.5(b).
(c) Xxxxxx'x rights under the Option Grants and Bonus Option Grant shall
terminate if, before the exercise of the options thereunder, Xxxxxx breaches his
obligations under Section 5 hereof in any material respect.
3.6 Benefits. During the term of this Agreement, Xxxxxx shall be entitled
to participate in all of the welfare benefit plans and programs maintained by
the Employer from time to time for the benefit of its senior executives to the
extent Xxxxxx satisfies the requirements for participation in such plans and
programs; provided, however, Xxxxxx'x benefits under all plans and programs in
which he is entitled to participate shall be reduced appropriately to take into
account the fact that Xxxxxx is only devoting 40% of his business time to the
Employer.
-6-
4. Termination.
4.1 Termination. Xxxxxx'x employment by Employer pursuant to the terms of
this Agreement shall terminate at the expiration of the Employment Term, unless
employment continues thereafter by mutual agreement of Employer and Employee,
and shall terminate without notice before the expiration of the Employment Term
upon the occurrence of any of the following events:
4.1.1 in case Section 6.4 applies to Xxxxxx;
4.1.2 termination by Employer for Cause (as defined in Section 6);
4.1.3 Xxxxxx'x resignation without Good Reason (as defined in
Section 6);
4.1.4 termination by Employer for any reason other than Cause; or
4.1.5 Xxxxxx'x resignation for Good Reason.
4.2 Time of Termination. Xxxxxx'x employment with Employer shall terminate
upon the written notice of termination from Employer or Xxxxxx upon the
occurrence of an event specified in Sections 4.1.2 or 4.1.3. It shall terminate
according to paragraph 621 BGB upon the occurrence of an event specified in
Section 4.1.1, 4.1.4 or 4.1.5, or automatically upon expiration of the
Employment Term (as applicable, the "Termination Date").
4.3 Effect of Termination of Employment. Following the Termination
Date:
4.3.1 Xxxxxx shall return all property of Employer as provided in
Section 5.2(b) of this Agreement;
4.3.2 except as provided in Section 4.4, Xxxxxx'x salary shall cease to
accrue;
4.3.3 the shareholders of Employer shall determine whether to pay to
Xxxxxx any unpaid bonus (other than any bonus payable under Section 3.2)
or other incentive compensation for the period through the Termination
Date computed consistently with the manner in which Xxxxxx'x bonus or
incentive compensation would have been determined for such period if
Xxxxxx'x employment had not terminated;
4.3.4 Xxxxxx'x participation in Employer's benefit plans, if any, shall
cease except as required by law or by the terms of the plan(s) and except
that if the termination is upon the occurrence of an event specified in
Section 4.1.1, 4.1.4 or 4.1.5 and before the expiration of the Employment
Term, any insurance benefits provided by Employer shall be maintained at
the sole cost and expense of Employer until the earlier of 12 months
following the termination of Xxxxxx'x employment or the expiration of the
Employment Term; and
4.3.5 Xxxxxx shall submit any claims for reimbursement of business
expenses incurred in accordance with Section 3.3 within the time period
required under Employer's policies generally or Employer will not be
obligated to reimburse such expenses.
-7-
4.4 Termination Payment under Certain Circumstances. In the event that
Xxxxxx'x employment with Employer is terminated pursuant to Section 4.1.4 or
4.1.5 before the expiration of the Employment Term, and notwithstanding Section
4.3.2, Employer shall pay to Xxxxxx an amount equal to the Base Salary which
Xxxxxx would have earned during the balance of the Employment Term subject to
any withholding agreed to between Employer and Xxxxxx or required by law,
payable in equal monthly installments for the remaining balance of the
Employment Term, and any unvested Option Shares shall continue to vest in
accordance with their terms throughout the remaining balance of the Employment
Term. In the event that Xxxxxx'x employment with Employer is terminated pursuant
to Section 4.1.1 and before the expiration of the Employment Term, and
notwithstanding Section 4.3.2, Employer shall pay to Xxxxxx an amount equal to
50% of the Base Salary which Xxxxxx would have earned during the balance of the
Employment Term subject to any withholding agreed to between Employer and Xxxxxx
or required by law, payable in equal monthly installments for the remaining
balance of the Employment Term, and any unvested Option Shares shall continue to
vest in accordance with their terms throughout the remaining balance of the
Employment Term. Such termination payment and vesting shall be contingent upon
compliance by Xxxxxx with the other terms and conditions of this Agreement
(including, without limitation, Section 5 hereof) and in consideration of a
release duly executed by Xxxxxx (or his legal representatives if deceased or
incompetent) at the time of the termination of his employment waiving any rights
of Xxxxxx, his heirs or legal representatives to make any claims against
Employer or the Buyer under this Agreement and forever releasing and
indemnifying Employer and the Buyer from and against any further claims,
demands, loss liability actions, proceedings and expenses relating to this
Agreement (other than under Section 4.3.4, this Section 4.4 and with respect to
the Shares and any vested Option Shares and Bonus Option Shares).
4.5 No Limitation. Xxxxxx'x termination pursuant to this Section 4 shall
not limit any remedy of Employer for damages caused by Xxxxxx.
5. Confidentiality, Intellectual Property, Noncompete, and
Nonsolicitation.
5.1 Nondisclosure and Nonuse of Confidential Information. Xxxxxx shall not
disclose or use at any time, either during his employment with Employer or
thereafter, any Confidential Information (as defined below) of which Xxxxxx is
or becomes aware, whether or not such information is developed by him, except to
the extent that such disclosure or use is directly related to and required by
Xxxxxx'x performance of duties assigned to Xxxxxx by Employer or is required by
law. Before disclosing Confidential Information pursuant to a legal requirement,
Xxxxxx shall notify Employer at least 7 days' prior to any such intended
disclosure to permit Employer to seek a protective order to prevent such
disclosure. In addition, Xxxxxx acknowledges that some Confidential Information
will contain material, non-public information (within the meaning of applicable
securities laws) that may remain material and non-public for an extended period
of time. Xxxxxx acknowledges that he is aware that the applicable securities
laws impose restrictions on trading by persons in possession of non-public
information and agrees to comply with such restrictions. Xxxxxx shall take all
appropriate steps to safeguard Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft. As used in this
Agreement, the term "Confidential Information" means information that is not
generally known to the public and that is used, developed or obtained by
Employer or its Affiliates in connection with their business, including but not
limited to (i) inventions, devices, research, new developments, methods and
-8-
processes, whether patentable or unpatentable and whether or not reduced to
practice, (ii) all technology, know-how and trade secrets, (iii) strategic
plans, potential acquisitions, business plans, budgets and financial models,
(iv) existing or potential customers and clients and customer or client lists,
(v) products or services, (vi) fees, costs and pricing structures, (vii)
designs, (viii) analysis, (ix) drawings, photographs and reports, (x) computer
software, including operating systems, applications and program listings, (xi)
flow charts, manuals and documentation, (xii) data bases, (xiii) accounting and
business methods, (xiv) copyrightable works, and (xv) all similar and related
information in whatever form. Notwithstanding the foregoing, "Confidential
Information" shall not include any information (A) of which Xxxxxx became aware
before his affiliation with Employer (except to the extent that Xxxxxx has
transferred such Confidential Information to Employer) or which Xxxxxx developed
and which does not relate to MRI safety or image compatability and safety of
vascular and peripheral implants and resonant technologies, (B) of which Xxxxxx
learns from sources other than Employer or (C) which is disclosed in a
prospectus or other documents for dissemination to the public or published in a
form generally available to the public before the date Xxxxxx proposes to
disclose or uses such information. Information shall not be deemed to have been
published merely because individual portions of the information have been
separately published, but only if all material portions thereof have been
published.
5.2 Employer's Ownership of Intellectual Property.
(a)(i) Acknowledgment of Company Ownership. In the event that Xxxxxx as
part of his activities on behalf of Employer generates, creates, authors or
contributes to any invention, design, new development, device, product, method
or process (whether or not patentable or reduced to practice or constituting
Confidential Information), any copyrightable work (whether or not constituting
Confidential Information) or any other form of Confidential Information directly
or indirectly relating to MRI safety or image compatibility and safety of
vascular and peripheral implants and resonant technologies (collectively,
"Intellectual Property"), Xxxxxx acknowledges that such Intellectual Property is
the exclusive property of Employer and hereby assigns all right, title and
interest in and to such Intellectual Property anywhere in the world to Employer
in accordance with the "Gesetz uber Arbeitnehmererfindungen" (German Law
pertaining to Inventions of Employees). Any copyrightable work prepared in whole
or in part by Xxxxxx which relates to the Intellectual Property shall be
worldwide owned by the Employer including all of the rights comprised by the
copyright therein. Xxxxxx hereby grants to Employer an exclusive, royalty-free,
irrevocable, perpetual world-wide license to use and sublicense any existing
Intellectual Property owned by Xxxxxx. Xxxxxx shall promptly and fully disclose
all Intellectual Property to Employer and shall cooperate with Employer to
protect its interest in and right to such Intellectual Property (including,
without limitation, providing reasonable assistance in securing patent
protection and copyright registrations, executing all documents as reasonably
requested by Employer, whether such requests occur before or after termination
of Xxxxxx'x employment with Employer, and assisting Employer in any lawsuit for
the enforcement of any such patents or copyrights, subject only to reimbursement
of Xxxxxx'x reasonable out-of-pocket expenses, including legal fees for
independent counsel of Xxxxxx, and compensation for Xxxxxx'x time at a fair and
reasonable hourly rate). Should Employer be unable after not less than 60 days'
written notice to obtain Xxxxxx'x signature on any document necessary or
desirable to apply for, prosecute, obtain or enforce any patent or copyright to
which it is entitled under the above provisions, Xxxxxx hereby irrevocably
designates and appoints Employer and each of its duly authorized officers and
-9-
agents as Xxxxxx'x agent and attorney-in-fact, to act for and in Xxxxxx'x behalf
and stead, to execute and file any such documents, and to do all other lawfully
permitted acts to further the prosecution, issuance, and enforcement of such
patents or copyrights, with the same force and effect as if executed and
delivered by Xxxxxx.
(ii) Xxxxxx Invention. Xxxxxx understands that Section 5.2(a)(i) of this
Agreement regarding the ownership by Employer of Intellectual Property does not
apply to any invention for which no equipment, supplies, facilities or trade
secret information of Employer were used and which was developed entirely on
Xxxxxx'x own time, unless (A) the invention relates to MRI safety or image
compatibility and safety of vascular and peripheral implants and resonant
technologies, or (B) the invention results from any work performed by Xxxxxx for
Employer; provided, however that if, in the course of Xxxxxx'x employment with
Employer, Xxxxxx incorporates into any of Employer's products or Intellectual
Property an invention owned by Xxxxxx or in which Xxxxxx has an interest,
Employer is granted a non-exclusive, royalty-free, irrevocable, perpetual,
world-wide license to make, modify, use and sell such invention as part of and
in connection with Employer's products or Intellectual Property. This license
may be transferred by Employer in connection with the event of the merger or
acquisition of Employer or the sale of all or substantially all of the business
to which the license relates.
(b) Delivery of Materials upon Termination of Employment. As requested by
Employer from time to time and upon the termination of Xxxxxx'x employment with
Employer for any reason, Xxxxxx shall promptly deliver to Employer all copies
and embodiments, in whatever form, of all Confidential Information and
Intellectual Property in Xxxxxx'x possession or within his control (including,
but not limited to, written records, notes, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks, diskettes,
tapes and all other materials containing any Confidential Information or
Intellectual Property) irrespective of the location or form of such material
and, if requested by Employer, shall provide Employer with written confirmation
that all such materials have been delivered to Employer.
5.3 Noncompete. Xxxxxx acknowledges and agrees with Employer that in the
course of his employment with Employer, he shall become familiar with Employer's
trade secrets and with other Confidential Information concerning Employer, that
Xxxxxx'x services to Employer are unique in nature and of an extraordinary value
to Employer, and that Employer would be irreparably damaged if Xxxxxx were to
provide similar services to any person or entity competing with Employer or any
of its Affiliates or engaged in a similar business. In consideration of and as
an inducement to Employer to enter into this Agreement and for Buyer to grant of
the Shares, Option Grant and Bonus Option Grant hereunder, Xxxxxx accordingly
covenants and agrees with Employer that during the Noncompete Period (as defined
in Section 6.6), Xxxxxx shall not, directly or indirectly, either for himself or
for or through any other individual, corporation, partnership, joint venture or
other entity, participate in any business or enterprise conducting or proposing
to conduct business anywhere in the world which engages or proposes to engage in
the a field competitive with the field of the Intellectual Property or, provided
Xxxxxx is actively engaged in such other business while, and in the course of,
being employed by Employer, in any other business competitive with any business
engaged in or being pursued by Employer or any of its Affiliates during the
period of time in which Xxxxxx is employed by Employer.
-10-
For purposes of this Agreement, the term "participate in" shall include,
without limitation, having any direct or indirect interest in any corporation,
partnership, joint venture or other entity, whether as a sole proprietor, owner,
stockholder, partner, member, joint venturer, creditor or otherwise, or
rendering any direct or indirect service or assistance to any individual,
corporation, partnership, limited liability company, joint venture or other
business entity (whether as a director, officer, manager, representative,
supervisor, employee, agent, consultant or otherwise), other than: (i) ownership
of up to 5% of the outstanding stock of any class which is publicly traded, and
(ii) interests as an equity owner in those entities owned by Xxxxxx on the date
of this Agreement and previously disclosed to Buyer and such other interests
outside the fields of vascular and peripheral implants which are not competitive
with the business of Employer or Buyer, or as may be approved in writing by the
Chief Executive Officer of Buyer prior to the date on which Xxxxxx acquires such
interest. Xxxxxx agrees that this covenant is reasonable with respect to its
duration, geographical area and scope and is fully enforceable.
5.4 Nonsolicitation. During the Noncompete Period, Xxxxxx shall not (i)
induce or attempt to induce any employee, officer or consultant of Employer or
any of its Affiliates to leave the employ of Employer or such Affiliate, as the
case may be, or in any way interfere with the relationship between Employer or
any of its Affiliates and any employee, officer or consultant thereof, (ii) hire
directly or through another entity any person who was an employee of Employer or
any of its Affiliates at any time during the six months before the date such
person is to be so hired (so long as the person was not terminated by Employer
or such Affiliate, as the case may be), or (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of Employer or any of
its Affiliates to cease doing business with Employer or such Affiliate, as the
case may be, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and Employer or any of its
Affiliates (including, without limitation, making any negative statements or
communications concerning Employer or such Affiliate, as the case may be).
6. Definitions
6.1 Affiliate shall mean any person, corporation, limited liability
company, partnership, association or other business entity controlling,
controlled by or under common control with the named party, any spouse, child
(natural or adopted), sibling, parent or in-law of the named party or any
officer or director of the named party. For the avoidance of doubt, Buyer is an
Affiliate of Employer.
6.2 Cause means at any time (i) Xxxxxx'x theft or embezzlement, or
attempted theft or embezzlement, of money or property of Employer, Xxxxxx'x
perpetration or attempted perpetration of fraud, or Xxxxxx'x participation in a
fraud or attempted fraud, on Employer or Xxxxxx'x unauthorized appropriation of,
or attempt to misappropriate, any tangible or intangible assets or property of
Employer, (ii) any act or acts of disloyalty or moral turpitude by Xxxxxx which
the shareholders of Employer determine in good faith, after a hearing at which
Xxxxxx is given the opportunity to be heard and be represented by legal counsel
of his selection, has been or is reasonably likely to be demonstrably and
materially injurious to the interest, business or reputation of Employer, or
Xxxxxx'x conviction of a crime or other violation of law or regulation, (iii)
Xxxxxx'x violation of (or any act or omission of Xxxxxx which causes Buyer or
any Affiliate to violate) any foreign or domestic securities laws applicable to
Buyer or any Affiliate, (iv) Xxxxxx'x refusal or willful failure (other than by
-11-
reason of Disability) to carry out reasonable legal shareholders decisions of
Employer (it being understood and agreed that failure of the Employer or
Employee to achieve any performance targets shall under no circumstances be
deemed willful), (v) Xxxxxx'x breach of any provision set forth in Section 5 of
this Agreement, or (vi) Xxxxxx'x intentional taking of action requiring
shareholder approval by the Articles of Association of Employer without
obtaining such shareholder approval.
6.3 Common Stock means the Buyer's common stock, par value $.005 per
share.
6.4 Disabled or Disability means (i) the definitions of disability
("Behinderung") according to the German Labor Law and German Social Security Law
or (ii) any illness, accident, injury, physical or mental incapacity or other
disability, where such condition has rendered Xxxxxx unable or unfit to perform
effectively the duties and obligations of his employment or to participate
effectively and actively in the management of Employer for a period of at least
120 consecutive days or six months in any twelve-month period (in either case,
as determined by a physician mutually selected by Employer and Employee).
6.5 Good Reason means, without the written consent of Xxxxxx (i) a
material diminution in, or material adverse change to, Xxxxxx'x duties relative
to his duties in effect immediately before the Effective Date or other duties
normally consistent with the positions of Chief Executive Officer or
"Geschaftsfuhrer" (managing director) delegated to Xxxxxx by Employer before the
Effective Date, (ii) a relocation of Xxxxxx'x principal place of business to a
location more than 50 miles from Recklinghausen , (iii) any failure to pay or
provide any item of compensation or benefits promptly when due, (iv) a sale or
transfer of all or substantially all of the assets of Employer or Buyer or a
transfer of all or substantially all of the capital stock of Employer without
the buyer agreeing to assume in writing this Agreement, or (v) any other
material breach of this Agreement by Employer; provided that, in each case,
Employer has not cured such default within 30 days after receiving from Xxxxxx
written notice, directed to Employer and Buyer on behalf of the shareholders, of
the occurrence and nature of the event constituting Good Reason.
6.6 Noncompete Period means the period from the Effective Date until
the later of (a) the date that is six months after the termination of Xxxxxx'x
employment, or (b) the date through which Employer is obligated to pay Xxxxxx
all or any portion of his Base Salary pursuant to Section 4.4; provided,
however, if Buyer fails to make any Capital Contributions (as such term is
defined in the Purchase Agreement) within 60 days of when due, the Noncompete
Period shall automatically expire unless otherwise mutually agreed in writing by
Xxxxxx and Xxxxxx. If Employer is not otherwise obligated to pay Xxxxxx
compensation during the portion of the Noncompete Period following the
termination of Xxxxxx'x employment and Employer elects on prior written notice
to Xxxxxx, given within 5 business days prior to the effective date of the
termination of employment, to enforce its rights under Section 5.3 during such
period, Employer shall pay to Xxxxxx an amount equal to 50% of the Base Salary
which Xxxxxx would have earned during such period subject to any withholding
agreed to between Employer and Xxxxxx or required by law, payable in equal
monthly installments for such period. Notwithstanding the obligations of Xxxxxx
under Section 5.3, in the event Employer fails to make payments due to Xxxxxx
under this Agreement after termination of his employment and the failure is not
cured within 10 business days after written notice of such failure is given by
Freibe to Employer and Buyer, the Noncompete Period will terminate at the end of
such 10 business-day period.
-12-
7. Miscellaneous.
7.1 Remedies. Each of the parties hereto shall have all rights and
remedies set forth in this Agreement. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law or any other agreement
or contract to which such person is a party. Each party shall be entitled to
enforce such rights specifically (without the requirement of posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law. Without limiting
the generality of the foregoing, Xxxxxx specifically agrees that any breach or
threatened breach of Sections 5 or 7 would cause irreparable injury to Employer,
that money damages would not provide an adequate remedy to Employer, and that
Employer shall accordingly have the right and remedy (i) to obtain an injunction
prohibiting Xxxxxx from violating or threatening to violate such provisions,
(ii) to have such provisions specifically enforced by any court of competent
jurisdiction, and (iii) to require Xxxxxx to account for and pay over to
Employer all compensation, profits, monies, accruals, increments or other
benefits derived or received by Xxxxxx as the result of any transactions
constituting a breach of such provisions.
7.2 Entire Agreement; Amendments and Waivers. This Agreement (including
the schedules hereto) represents the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by a
written instrument making specific reference to this Agreement signed by the
party against whom enforcement of any such amendment, supplement, modification
or waiver is sought. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. In the event any of the provisions of the Articles of
Association of Employer, as amended from time to time (the "Articles of
Association") are inconsistent with the provisions of this Agreement, the
express provisions of the Articles of Association shall govern.
7.3 Condition Precedent. This Agreement is conditional upon completion of
the transfer of title of the shares being transferred pursuant to the Purchase
Agreement.
7.4 Notices. All notices, demands, solicitations of consent or approval,
and other communications hereunder shall be in writing and shall be delivered
personally, sent by telefax or sent by recognized commercial courier (e.g.,
Federal Express). If delivered personally, such notice shall be deemed to be
given when delivered to the intended recipient. If delivered by telefax, such
notice shall be deemed given when transmission of the notice is complete to the
telefax number of the other party. If delivered by recognized commercial
carrier, such notice shall be deemed given two (2) days after having been
delivered to a recognized commercial carrier for delivery within such period.
All such notices shall be addressed to the address set forth in the Purchase
Agreement or to such other address which such party shall have given to the
other party for such purpose by notice hereunder; provided, any notice given to
Employer shall also be given to Buyer. If notice is given to Xxxxxx under this
Agreement, a copy shall be provided to Xxxxxx X. Xxxxxx, Esq., Xxxxxx Breed Xxxx
& Xxxxxxx, PC, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (telefax:
617-261-7673).
-13-
7.5 Captions. The headings used in this Agreement are intended for
reference purposes only and shall not control or affect in any manner the
meaning or interpretation of any of the provisions of is Agreement.
7.6 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the remaining
provisions of this Agreement, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were omitted. All
provisions of this Agreement shall be enforced to the full extent permitted by
law.
7.7 Interpretation. The parties acknowledge and agree that: (i) each party
and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto,
regardless of which party was generally responsible for the preparation of this
Agreement.
7.8 Counterparts. This Agreement may be executed in any number of copies,
each of which shall be deemed an original, and all of which together shall be
deemed one and the same instrument.
7.9 Successors and Assigns. All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind, and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto whether so expressed or not. Neither party shall transfer or assign this
Agreement or any of their rights or obligations hereunder, whether by operation
of law or otherwise, without the prior written consent of the other party
hereto. Any attempted transfer or assignment of this Agreement or any rights or
obligations hereunder in violation of this provision shall be void ab initio.
The Affiliates of Employer are intended third-party beneficiaries of this
Agreement and shall be entitled to enforce the provisions of this Agreement that
are for their benefit.
7.10 Buyer's Signature. Buyer is executing this Agreement only to be bound
by the provisions of Sections 2.1,3.4, 3.5 and 7 to the extent applicable by
their terms to Buyer. Except for the Buyer's express obligations under such
sections, Buyer shall have no obligations under this Agreement.
7.11 Governing Law. This Agreement shall be governed by, construed and
interpreted in accordance with the laws of Germany without reference to its
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date(s) set forth below.
aMRIs GmbH (Employer)
By: Shareholders decision of __________, 2005
By: ________________________________
Name: ________________________________
Title: ________________________________
Date: _________________, 2005
BIOPHAN TECHNOLOGIES, INC. (Buyer)
By: ________________________________
Name: ________________________________
Title: ________________________________
Date: _________________, 0000
XXXXXX
_______________________________________
Xx. Xxxxxxx Xxxxxx
Date: __________________, 2005
EXHIBIT A
Cash Bonus
Applicable Initial Measurement Period
Revenue Target Cash Bonus
-------------- ----------
less than $300,000 $0
$300,000 or more but less than $500,000 $75,000
$500,000 or more but less than $700,000 $150,000
$700,000 or more but less than $1,000,000 $200,000
$1,000,000 or greater $250,000
EXHIBIT B
Bonus Stock Option
Applicable Initial Measurement Period Aggregate Percentage of
Revenue Target Stock Option Forfeited
-------------- ----------------------
less than $300,000 100%
$300,000 or more but less than $500,000 65%
$500,000 or more but less than $700,000 40%
$700,000 or more but less than $1,000,000 17.5%
$1,000,000 or greater 0%
