Exhibit 10.7
Employment Agreement for Xxxxxx Xxxxxxx.
NATUREWELL INCORPORATED
EMPLOYMENT AGREEMENT
XXXXXX XXXXXXX
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the 1st day of
October, 2002, by and between NatureWell, Incorporated, a Delaware corporation
(the "Company"), its subsidiaries, affiliates, successors and assigns
(collectively, "Affiliates") and Xxxxxx Xxxxxxx, an individual (the "Executive")
with reference to the following facts:
RECITALS
A. The Company desires to employ Executive as its Senior Vice President of
Research and Development and to have Executive serve as a member of the Board of
Directors of the Company (the "Board") on the terms and conditions hereinafter
set forth; and
B. Executive desires to be employed by the Company as its Senior Vice
President of Research and Development and serve as a member of the Board and to
perform and to serve the Company on the terms and conditions hereinafter set
forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and of the mutual promises,
agreements and covenants set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) DUTIES. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment, as the Senior Vice President of
Research and Development for the Company. In his role as Senior Vice President
of Research and Development, Executive shall be responsible for such duties and
functions of a supervisory or managerial nature as may be directed from time to
time by the Chief Executive Officer provided that such duties are reasonable and
customary for a Senior Vice President of Research and Development. Executive
agrees that he shall, during the term of this Agreement, except during
reasonable vacation periods, periods of illness and the like, devote
substantially all his business time, attention and ability to his duties and
responsibilities hereunder; provided, however, that nothing contained herein
shall be construed to prohibit or restrict Executive from (i) serving as a
director of any corporation, with or without compensation therefor;
(ii) serving in various capacities in community, civic, religious or charitable
organizations or trade associations or leagues; or (iii) attending to personal
business; provided, however, that no such service or activity permitted in this
Section 1(a) shall materially interfere with the performance by Executive of his
duties hereunder. Executive shall report directly to the Chief Executive
officer.
(b) TERM.
(i) The term of this Agreement and Executive's employment period
shall be for a term commencing on the date of this Agreement and ending on the
third (3rd) anniversary of the date of this Agreement (the "Employment Period");
provided, however, that commencing on the first day after the date of this
Agreement and on each day thereafter, the Employment Period shall be extended
for one (1) additional day so that a constant three (3) year Employment Period
shall be in effect, unless (A) the Company or Executive elects not to extend the
term of this Agreement by giving written notice to the other party in accordance
with Sections 3(b) and 10 hereof, in which case, the term of this Agreement
shall become fixed and shall end on the third (3rd) anniversary of the date of
such written notice ("Notice of Non-Renewal"), or (B) Executive's employment
terminates hereunder.
(ii) Notwithstanding anything contained herein to the contrary,
(A) Executive's employment with the Company may be terminated by the Company or
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (B) nothing in this Agreement shall mandate or prohibit a
continuation of Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board and Executive may
mutually agree.
(iii) If Executive's employment with the Company is terminated,
for purposes of this Agreement, the term "Unexpired Employment Period" shall
mean the period commencing on the date of such termination and ending on the
last day of the Employment Period.
(c) LOCATION/TRAVEL. Executive shall work at the Company's
headquarters in La Jolla, California. Executive shall not be required to
relocate from San Diego County during the Employment Period.
2. COMPENSATION. Subject to the provisions of Sections 7 and 9 hereof,
the Company and its Affiliates shall each be responsible and have joint and
several liability for all compensation and benefits owed to Executive under this
Agreement. A reference to a Company plan, program, obligation or commitment
shall also be considered an obligation or commitment of each of the Company and
its Affiliates but shall not result in duplicate benefits being paid or provided
to Executive.
(a) SALARY. Executive shall receive an annual base salary of One
Hundred Seventy Five Thousand Dollars ($175,000) which shall be payable on a
monthly basis. The annual base salary payable to Executive pursuant to this
Section 2(a), which may be increased but not decreased by the Chief Executive
Officer and shall be hereinafter referred to as the "Annual Base Salary."
(b) ANNUAL BONUS.
(i) Executive shall be entitled to receive an annual bonus based
upon a formula and subject to certain performance goals having been achieved
(the "Formula"), in an amount determined by the Chief Executive Officer, in his
sole discretion, hereinafter referred to as the "Discretionary Annual Bonus".
Executive's Discretionary Annual Bonus will be for the annual period of August
1st to July 31 each year.
(ii) Executive's Discretionary Annual Bonus shall be paid to
Executive within ninety (90) days of calendar year end.
(c) REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall promptly
reimburse Executive for all reasonable out-of-pocket expenses incurred by him
pursuant to his employment hereunder during the Employment Period, including,
but not limited to, all reasonable travel and entertainment expenses. Executive
may only obtain reimbursement under this Section 2(c) upon submission of such
receipts and records as may be initially required by the Chief Executive Officer
and, thereafter, as may be required under the reimbursement policies established
by the Company. Notwithstanding the foregoing, Executive shall be permitted to
charge reasonable expenses delineated in this Section 2(c) to Company charge
cards or other credit accounts made available to Executive.
(d) ADDITIONAL BENEFITS; GENERAL RIGHTS. During the Employment
Period, Executive shall be entitled to:
(i) participate in all employee stock option, pension, savings,
and other similar benefit plans of the Company as the Company may designate from
time to time;
(ii) participate in all welfare plans established by the Company
such as life insurance, medical, dental, disability, and business travel
accident plans and programs as the Company may designate from time to time. In
addition, the Company shall reimburse Executive for (i) any premium costs
Executive may incur with respect to the health insurance plan currently
maintained by the Company (and which may be maintained by the Company from time
to time) in which Executive (and his spouse and children) participates, and (ii)
for all other medical and dental expenses not covered by any medical or dental
plan in which Executive (and his spouse and children) participates, including,
without limitation, deductibles and out of pocket expenses;
(iii) four (4) weeks paid vacation per year;
(iv) a monthly automobile allowance of Five Hundred Dollars
($500.00); and
(v) any other benefits provided by the Company to its executive
officers.
(e) WITHHOLDING. The Company shall deduct from all compensation paid
to Executive under this Agreement, any Federal, State or city withholding taxes,
social security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to Federal, State or city laws,
rules or regulations.
3. TERMINATION OF EMPLOYMENT; EVENTS OF TERMINATION.
(a) This Agreement may be terminated during the Employment Period
under the following circumstances:
(i) CAUSE. Executive's employment hereunder shall terminate for
"Cause" ten (10) days after the date the Company shall have given Executive
notice of the termination of his employment for "Cause". For purposes of this
Agreement, "Cause" shall mean the commission by Executive of fraud, theft,
embezzlement or an act of serious, criminal moral turpitude.
(ii) DEATH. Executive's employment hereunder shall terminate
upon his death.
(iii) DISABILITY. If Executive becomes unable due to a mental
or physical disability (as defined by Section 12926 of the California Fair
Employment and Housing Act) to perform the essential functions of his position,
with or without reasonable accommodation, for an aggregate of six (6) months in
any twelve (12) month period (a "Disability"), the Company, at its option, may
terminate Executive's employment hereunder (the date of such termination, the
"Disability Date", and, thereafter, Executive shall not be deemed to be employed
under this Agreement. In determining Disability under this Section, the Company
shall rely upon the written opinion of the physician regularly attending
Executive in determining whether a Disability is deemed to exist. If the Company
disagrees with the opinion of such physician, the Company may choose a second
physician, the two (2) physicians shall choose a third physician, and the
written opinion of a majority of the three (3) physicians shall be conclusive as
to Executive's Disability. The expenses associated with the utilization of any
physician other than the physician regularly attending Executive shall be borne
solely by the Company. Executive hereby consents to any required medical
examination and agrees to furnish any medical information requested by the
Company and to waive any applicable physician/patient privilege that may arise
because of such determination. Nothing in this Agreement is intended to cause
the Company to be in violation of the Americans with Disabilities Act.
(iv) GOOD REASON. Executive shall have the right to terminate
his employment for "Good Reason." This Agreement shall terminate effective
immediately on the date Executive shall have given the Chief Executive Officer
notice of the termination of his employment with the Company for "Good Reason."
For purposes of this Agreement, "Good Reason" shall mean (A) any material and
substantial breach of this Agreement by the Company, (B) a diminution of
Executive's responsibilities, loss of title or position in which Executive
currently serves, (C) a Change in Control (as defined below) occurs and
Executive voluntarily quits at any time within the six (6) month period on or
immediately following the Change in Control, (D) the Company issues a Notice of
Non-Renewal to Executive, (E) a reduction in Executive's Annual Base Salary or a
material reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question, or any other
failure by the Company to comply with Section 2, hereof, (F) the relocation of
Executive's office outside San Diego County, or (G) this Agreement is not
assumed by a successor to the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the Board or stockholders of the Company of a transaction that
would result in the reorganization, merger, or consolidation of the Company with
one or more other "Persons" within the meaning of Sections 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 ("Exchange Act"), other than a
transaction following which: (A) at least seventy-one percent (71%) of the
equity ownership interests of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by Persons who,
immediately prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least seventy-one percent
(71%) of the outstanding equity ownership interests in the Company; and (B) at
least seventy-one percent (71%) of the securities entitled to vote generally in
the election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by Persons who,
immediately prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least seventy-one percent
(71%) of the securities entitled to vote generally in the election of directors
of the Company; (ii) the acquisition of all or substantially all of the assets
of the Company; (iii) a complete liquidation or dissolution of the Company, or
approval by the stockholders of the Company of a plan for such liquidation or
dissolution; (iv) the occurrence of any event in the nature of an event
described in this Section if, immediately following such event, at least
seventy-five percent (75%) of the members of the Board do not belong to any of
the following groups: (A) individuals who were members of the Board on the date
of this Agreement; or (B) individuals who first became members of the Board
after the date of this Agreement either: (I) upon election to serve as a member
of the Board by affirmative vote of three-quarters of the members of such Board,
or of a nominating committee thereof, in office at the time of such first
election; or (II) upon election by the stockholders of the Company to serve as a
member of the Board, but only if nominated for election by affirmative vote of
three-quarters of the members of the Board, or of a nominating committee
thereof, in office at the time of such first nomination; provided, however, that
such individual's election or nomination did not result from an actual or
threatened election contest (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the Board; and
(v) one or more other Persons, other than an employee benefit plan sponsored by
the Company, becomes the "beneficial owner," as such term is used in Section 13
of the Exchange Act, of thirty percent (30%) or more of the Common Stock of the
Company issued and outstanding prior to such acquisition.
(v) WITHOUT CAUSE. The Company shall have the right to
terminate Executive's employment hereunder Without Cause subject to the terms
and conditions of this Agreement. In such event, this Agreement shall terminate,
effective immediately upon the date on which the Company shall have given
Executive notice of the termination of his employment for reasons other than for
Cause or due to Executive's Disability.
(vi) WITHOUT GOOD REASON. Executive shall have the right to
terminate his employment hereunder without Good Reason at any time for any
reason subject to the terms and conditions of this Agreement. This Agreement
shall terminate, effective immediately upon the date as of which Executive shall
have given the Board notice of the termination of his employment without Good
Reason.
(b) NOTICE OF TERMINATION. Any termination of Executive's employment
by the Company or any such termination by Executive (other than on account of
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. In the event of the termination of Executive's
employment on account of death, written Notice of Termination shall be deemed to
have been provided on the date of death.
4. PAYMENTS UPON TERMINATION.
(a) WITHOUT CAUSE, FOR GOOD REASON OR DISABILITY. If Executive's
employment is terminated by the Company Without Cause (pursuant to Section
3(a)(v)) or by Executive for Good Reason (pursuant to Section 3(a)(iv)), or by
the Company due to Executive's Disability (pursuant to Section 3(a)(iii)),
Executive, or in the case of Executive's Disability, Executive's legal
representative (assuming Executive's affairs are handled by a representative
rather than Executive himself), shall be entitled to receive from the Company
(i) a lump sum payment in an aggregate amount equal to three (3) times the sum
of (A) the current Annual Base Salary and (B) the average of Executive's Annual
Bonus paid during the two (2) immediately preceding full fiscal years of
employment ending prior to the date of termination (the "Severance Payment");
(ii) any bonuses which have been earned but not been paid prior to such
termination ("Prior Bonus Payment") and (iii) reimbursement of expenses incurred
prior to date of termination (the "Expense Reimbursement"). The aforesaid
amounts shall be payable in cash without discount for early payment, at the
option of Executive, either in full immediately upon such termination or monthly
over the Unexpired Employment Period (the "Payment Election"). In addition,
Executive's fringe benefits specified in Section 2 shall continue through the
end of the Unexpired Employment Period; provided, however, that such benefits
which may not continue pursuant to law, such as participation in a qualified
pension plan, shall terminate on the date of termination and further provided,
that Executive shall be entitled to COBRA continuation coverage and to continue
the applicable life insurance policies thereafter, at his cost ("Fringe Benefit
Continuation").
In the event Executive terminates his employment within the six (6) month period
on or immediately following a Change in Control which constitutes a termination
for Good Reason under this Agreement pursuant to Section 5(a)(iv), Executive
shall be entitled to receive from the Company an additional lump sum cash
payment in an amount sufficient to pay any excise taxes which may be imposed on
Executive pursuant to Section 4999 of the Code (or any successor provisions)
plus any excise or income tax liability on the gross up payment itself so that
on a net after tax basis Executive shall be in the same position as if the
excise tax under Section 4999 of the Code (or any successor provisions) had not
been imposed.
In the event Executive is terminated by the Company Without Cause or due to
Executive's Disability or Executive terminates his employment with the Company
for Good Reason, Executive shall have no duty to mitigate the amount of the
payment received pursuant to this Section 6(a), it being understood that
Executive's acceptance of other employment shall not reduce the Company's or the
other Company' obligations hereunder.
(b) DEATH. If Executive's employment is terminated due to death of
Executive, Executive's estate or beneficiary(ies), as the case may be, shall be
entitled to receive Executive's Prior Bonus Payment and Expense reimbursement
and Executive's spouse and covered children shall be entitled to receive Fringe
Benefit Continuation to the extent applicable.
(c) TERMINATION WITH CAUSE OR WITHOUT GOOD REASON. If the Company
terminates Executive's employment for Cause (pursuant to Section 3(a)(i)) or in
the event Executive voluntarily terminates his employment without Good Reason
(pursuant to Section 3(a)(vi)), Executive shall be entitled to his Annual Base
Salary through the date of the termination of such employment and Executive
shall be entitled to any bonuses which have been earned but not paid prior to
such termination. Executive shall not be entitled to any other bonuses.
Executive's additional benefits specified in Section 2 shall terminate at the
time of such termination and the entire outstanding balance (principal and
interest) of any loans from the Company to Executive shall be due and owing on
date of such termination. Any amounts owed by Executive to the Company hereunder
shall be set off against any amounts payable from the Company to the Executive.
(d) TERMINATION BY THE COMPANY UPON CHANGE IN CONTROL. If the
Company terminates Executive's employment for any reason in connection with a
Change in Control which is not approved by the Continuing Directors of the
Company, Executive shall receive from the Company in one lump sum, payable on
the consummation of the Change in Control an amount equal to the Severance
Payment, the Prior Bonus Payment and the Expense Reimbursement. The aforesaid
amount shall be payable in cash without discount for early payment on the
consummation of such Change in Control. In addition, any outstanding balances
(principal and interest) of any loans made by the Company to Executive shall be
forgiven on the consummation of such Change in Control. Executive (and his
spouse and children) shall be entitled to Fringe Benefit Continuation. In
addition to the aforesaid cash payment, the Company shall pay Executive, on the
consummation of the Change in Control, in one lump sum, a cash payment (i) in an
amount sufficient to cover the full tax consequences of the forgiveness of any
loans so that on a net after tax basis Executive shall be the same as if no
taxable events had occurred upon such forgiveness (ii) in an amount sufficient
to pay any excise taxes which may be imposed on Executive pursuant to Section
4999 of the Code (or any successor provisions) plus any excise or income tax
liability on the gross up payment itself so that on a net after tax basis
Executive shall be the same as if the excise tax under Section 4999 of the Code
(or any successor provisions) had not been imposed.
In the event Executive is terminated by the Company in connection with a Change
in Control which is not approved by the Continuing Directors of the Company,
Executive shall have no duty to mitigate the amount of the payment received
pursuant to this Section 6(d), it being understood that Executive's acceptance
of other employment shall not reduce the Company's obligations hereunder.
(e) VESTING TRUST. At Executive's option, the Company shall
establish a vesting trust into which the Company shall, to the extent
economically feasible, contribute and/or pledge assets to secure its severance
obligations to Executive under this Agreement.
5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Company, its successors and assigns. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all its assets to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. Executive agrees that this Agreement is personal to him and may not be
assigned by him other than by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive's legal
representative.
6. JOINT AND SEVERAL LIABILITY.
(a) NO DUPLICATION OF PAYMENTS. The Company and its Affiliates shall
be jointly and severally liable for any amounts payable to Executive under this
Agreement. Any amounts payable to Executive shall be paid in the first instance
by the Company, and to the extent not paid by the Company shall be paid by its
Affiliates. In no event shall any amount payable pursuant to this Agreement be
paid by the Company and its Affiliates and Executive shall not be entitled to
receive duplicate benefits or payments under any of the provisions of this
Agreement.
(b) NEW SUBSIDIARIES. Any subsidiary of the Company that is formed
or acquired on or after the date hereof shall be required to become a signatory
to this Agreement and shall become jointly and severally liable with the Company
for the obligations hereunder.
(c) SALE OF SUBSIDIARIES. Upon the sale of the stock or
substantially all of the assets of any subsidiary of the Company, which is
approved by the Board, such subsidiary shall be automatically released from its
obligations hereunder and shall not be considered as having any continuing
liability for the obligations hereunder, and Executive shall be released from
his obligations to such subsidiary hereunder.
7. SECURITIES IN LIEU OF CASH NOT A DEFAULT. Notwithstanding any
provision in this Agreement, the Company may, in its reasonable discretion, make
any payment due to Executive, or his beneficiary(ies), pursuant to the
Agreement, using Securities issued by the Company in lieu of cash, except for
payments due for termination pursuant to Section 4(d), provided however, the
Company must have a reasonable good faith belief that payment to Executive of
cash for amounts due pursuant to any of the terms of the Agreement (except
Section 4(d)) would unduly burden the Company and its ability to conduct its
business. Any payment made in lieu of cash pursuant to this Section 7 shall not
be considered an event of default under the Agreement. For purposes of this
Section 7 "Securities" is defined as, but is not limited to common stock,
preferred stock, notes, or accruals carried on the Company's books for salary or
expenses payable to Executive.
8. GOVERNING LAW. This Agreement shall be construed in accordance with,
and its validity, interpretation, performance and enforcement and shall be
governed by, the laws of the State of California without regard to conflicts of
law principles thereof. Substantial obligations under this Agreement are to be
performed in San Diego, California. The parties select San Diego, California,
as the proper and sole venue for any action filed to enforce, construe, or
interpret this Agreement.
9. ENTIRE AGREEMENT. This instrument contains the entire understanding
and agreement among the parties relating to the subject matter hereof, except as
otherwise referred to herein, and supersedes all other prior agreements and
undertakings, both written and oral, among the parties with respect to the
subject matter hereof. Neither this Agreement nor any provisions hereof may be
waived or modified, except by an agreement in writing signed by the party(ies)
against whom enforcement of any waiver or modification is sought.
10. SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect, or to any
extent, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11. NOTICES. Any notice required or permitted to be given under the
provisions of this Agreement shall be in writing and delivered by courier or
personal delivery, facsimile transmission (to be followed promptly by written
confirmation mailed by certified mail as provided below) or mailed by certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
If to Executive: Xx. Xxxxxx Xxxxxxx
/Illegible/
If delivered personally, by courier or facsimile transmission (confirmed as
aforesaid and provided written confirmation and receipt is obtained by the
sender), the date on which a notice is delivered or transmitted shall be the
date on which such delivery is made. Notices given by mail as aforesaid shall be
effective and deemed received upon the date of actual receipt or upon the third
business day subsequent to deposit in the U.S. mail, whichever is earlier.
Either party hereto may change its or his address specified for notices herein
by designating a new address by notice in accordance with this Section 12.
12. NO UNDUE INFLUENCE. This Agreement is executed voluntarily and
without any duress or undue influence. Executive acknowledges that he has read
this Agreement and executed it with his full and free consent. No provision of
this Agreement shall be construed against any party by virtue of the fact that
such party or its counsel drafted such provision or the entirety of this
Agreement.
13. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and both of which taken
together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of
the date first above written.
EXECUTIVE: COMPANY:
NatureWell, Incorporated,
a Delaware Corporation
/S/ Xxxxxx Xxxxxxx By: /s/ Xxxxx Arabia
-------------------------- --------------------------
Xxxxxx Xxxxxxx Xxxxx Arabia, CEO
AFFILIATES:
Diagnos Tech, Inc.,
a California corporation
By: /S/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx, Chairman and CEO
Nasal Mist, Inc.,
a California corporation
By: /S/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx, Chairman and CEO
