HumaScan Inc.
CONTRACT OF EMPLOYMENT
This agreement, made as of the 1st day of September 1998, between HUMASCAN
INC. (the "Company"), and Xxxxx X. X. Xxxxxxxx (the "Employee").
R E C I T A L S:
The Company wishes to employ Employee on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements of the parties and other good and valuable consideration, the Company
and the Employee agree as follows:
1. Employment. The Company hereby employs the Employee as President and
Chief Executive Officer of the Company. The Company undertakes to have the
Employee elected to the Board of Directors of the Company as soon as reasonably
practicable. The Employee shall, consistent with the position and dignity of the
office of President, Chief Executive Officer and Director of the Company,
perform such duties as shall be reasonably directed by the Company's Board of
Directors from time to time.
2. Performance. The Employee agrees to serve the Company faithfully and to
the best of his ability solely under the direction of the Company's Board of
Directors. The Employee shall report solely to the Board of Directors and shall
devote his full working time, energy and skills to the performance of his duties
hereunder, provided, that the Employee shall be permitted to serve as a member
of up to three boards of directors or advisory boards of other companies or
organizations. Notwithstanding the foregoing sentence, the Employer shall not
serve on the board of directors or advisory board of any company or organization
(i) that supplies goods or materials used by the Company in the construction of
its BreastAlert units or any other products, or (ii) if such service violates
Section 9(c) of this Agreement regarding competition.
3. Term. The initial term of Employee's employment hereunder shall commence
on the date hereof and continue for twelve months. Thereafter, the term of this
Agreement shall automatically be extended for successive terms of twelve months
each, unless employee or the Company gives notice of termination to the other
within 30 days prior to the end of the initial term or any additional twelve
month term, as the case may be.
4. Compensation. The Company shall pay the Employee, commencing as of the
date of this Agreement, the following compensation for services rendered
hereunder:
(a) Salary. The Company shall pay the Employee a base salary of ONE HUNDRED
SEVENTY-FIVE THOUSAND and 00/100 DOLLARS ($175,000.00) per year during the term
of this Agreement. The Employee's salary shall be reviewed annually by the Board
of Directors of the Company in accordance with the Company's compensation
program solely for the purpose of determining increases.
(b) Bonus. During the term of employment, the Employee shall be eligible to
receive an annual bonus, to be awarded at the sole discretion of the Board of
Directors of the Company, in an amount of up to $50,000 or such greater amount
as the Employee and the Board of Directors may agree upon. The Board shall use
as a basis for determining the extent of such bonus awards the attainment of
stated goals and objectives for the Employee to be set by the Board of Directors
after consultation with the Employee. For the first year of employment
hereunder, the Company shall pay the Employee a bonus of $25,000 upon the
attainment of a goal of 750,000 BreastAlert units sold through September 1, 1999
and an additional bonus of $25,000 upon the attainment of a goal of 1,500,000
BreastAlert units sold through September 1, 1999.
(c) Options. As soon as reasonably practicable after the execution of this
Agreement, the Company shall grant to the Employee options under the Company's
1996 Stock Incentive Plan (the "Plan") to purchase 150,000
(one hundred fifty thousand) shares of the Company's common stock at a per share
exercise price equal to the fair market value of a share of the Company's common
stock as determined in accordance with the Plan. The options shall vest in
accordance with the following schedule provided that the Employee is
continuously employed by the Company through the date of vesting: (i) options
for 30,000 shares shall vest on September 1, 1998, (ii) options for 30,000
shares shall vest on March 1, 1999 and (iii) options for 30,000 shares shall
vest on each anniversary of this contract to September 1, 2001. The options
shall expire five years from the date on which they vest. From time to time, the
Board of Directors will review the performance of the employee and consider
additional option grants. The following terms shall also apply to option grants
received by the Employee:
(i) The Company represents that it has available or shall cause to be
available sufficient shares under the Plan to cover stock to be issued pursuant
to the Plan upon the Employee's exercise of the options.
(ii) All unvested options will become exercisable immediately upon a
merger, consolidation, acquisition of property or stock, reorganization (other
than a mere reincorporation or the creation of a holding company) or liquidation
of the Company, as a result of which the shareholders of the Company receive
cash, stock or other property in exchange for or in connection with their shares
of the Company's Common Stock. In addition, such options shall become
immediately exercisable in the event of a change in control of the Company. A
change in control of the Company shall be deemed to occur if (a) the Company is
merged with or into or consolidated with another corporation or other entity
under circumstances where the shareholders of the Company immediately prior to
such merger or consolidation do not own after such merger or consolidation
shares representing at least fifty percent of the voting power of the Company or
the surviving or resulting corporation or other entity, as the case may be, or
(b) if the Company is liquidated or sells or otherwise disposes of substantially
all of its assets to another corporation or entity, or (c) if any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) shall become the beneficial owner (within the meaning of Rule 13d-3
under such Act) of thirty (30%) percent or more of the Common Stock of the
Company other than pursuant to a plan or arrangement entered into by such person
and the Company or otherwise approved by the Board of Directors; provided,
however, clause (c) above shall not apply with respect to Travelers Group Inc.
unless Travelers Group Inc. becomes a beneficial owner of forty (40%) percent of
more of the Common Stock of the Company. The Employee and the Company may agree
upon other performance based milestones to cause the accelerated vesting of
unvested options.
(iii) In the event that the acceleration of any option to be granted to
the Employee (the "Accelerated Options") (1) constitutes a "parachute payment"
within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and (2) but for this provision, would be subject to the
excise tax imposed by section 4999 of the Code (the "Excise Tax"), then the
amount of the Accelerated Options may be reduced to the largest amount which the
Employee, in his sole discretion, determines would result in no portion of the
Accelerated Options (or only such portion thereof as is acceptable to the
Employee) being subject to the Excise Tax. The determination by the Employee of
any reduction shall be conclusive and binding upon the Company. The Company
shall reduce such Accelerated Options only upon written notice by the Employee
indicating the amount of such reduction.
(d) Housing Allowance. Employee shall receive a $1,000.00 per month housing
allowance.
(e) Employee Benefit Plans. Employee shall participate in all medical,
pension and welfare plans, programs and benefits (the "Plans") that are
generally made available to executives of the Company and such other Plans as
may be deemed appropriate by the Board of Directors.
(f) Fringe Benefits. Employee shall be entitled to such perquisites that
are generally made available to executives of the Company or as may be deemed
appropriate by the Board of Directors. Employee will be entitled to four (4)
weeks paid vacation per year.
5. Disability. If Employee becomes incapacitated by reason of mental or
physical disability, during the term hereof, so that he is unable to perform his
principal duties and services on a full time basis for a period of three (3)
consecutive months, the Company may terminate the Employee's employment
hereunder by notice in
writing to the Employee. Upon such termination, Employee shall be entitled to
all accrued and unpaid salary through the date of such termination any benefits
due under any disability policy maintained by the Company for Employee's
benefit.
6. Death. The Employee's employment hereunder shall terminate automatically
upon the death of Employee during the term of this Agreement. The Employee's
personal representative shall be entitled to receive insurance proceeds similar
to those furnished to all employees of the Company.
7. Company's Right to Terminate. The Company may terminate Employee's
employment hereunder for Cause at any time after the effective date hereof by
written notice to Employee. From and after the date of such termination, the
Company shall have no further obligation hereunder to provide compensation or
benefits to Employee. If Employee is terminated by reason of death or disability
or for a reason other than cause, or if this Agreement is not automatically
extended upon the election of the Company, the Employee shall be paid a minimum
of six (6) months base salary as severance pay, and Employee shall have no
further right to compensation upon payment of such minimum amount. For the
purpose of this Agreement "cause" means any of the following:
(i) A breach by the Employee of Section 9(d) of this Agreement;
(ii) A material breach of any other provision of this Agreement by the
Employee, including the Employee's failure to materially perform his duties
hereunder (other than a breach resulting from the Employee's incapacity due to
physical or mental illness), if that breach is not remedied within thirty (30)
days after written notice is given to the Employee describing the acts alleged
to constitute the breach;
(iii) A act of fraud, misappropriation, embezzlement or similar willful
and malicious conduct by the Employee against the Company; or
(iv) Indictment of the Employee for a felony or any conviction of, or
guilty plea or plea of nolo contendere by the Employee to, a crime involving
moral turpitude if that crime of moral turpitude tends or would reasonablely
tend to bring the Corporation into disrepute or expose it to unfavorable
publicity.
8. Employee's Right to Terminate. Employee may terminate his employment
hereunder at any time, and in the event of a termination by employee for "good
reason", he shall be entitled to the severance pay provided in section 7, where
"good reason" is defined as a reduction in pay, title or responsibility, a
transfer over the Employee's objection to a location more than seventy-five (75)
miles from the Company's office in Cranford, New Jersey, or the Company's
failure to have the Employee elected, or re-elected, to the Board of Directors
of the Company.
9. Employee's Undertakings. (a) Employee agrees to devote Employee's full
working time, attention, knowledge and skills to the Company's business and
operation to the degree required adequately to perform Employee's assigned
duties, and to use Employee's best efforts to promote the interests of the
Company.
(b) Upon termination of employment hereunder, Employee will immediately
surrender to the Company originals and all copies of correspondence, books,
lists, records, reports, samples, equipment, contracts and other written
memoranda or documents relating to the business of the Company and all other
property obtained from, relating to, or belonging to the Company.
(c) Employee agrees that during the term of this Agreement and for a period
of twelve (12) months after termination of employment with the Company, the
Employee will not directly or indirectly own, manage, join, control, be employed
by or participate in the ownership, management, operation or control of, or be
connected in any manner with any business engaged in the development,
manufacture or sale of any breast thermal activity test products or any other
products being developed, manufactured or sold by the Company at the time of
such termination; provided, however, this provision shall apply only to those
businesses located in any jurisdiction in the United States in which the
Company's products are sold in the one year period ending on the date of
termination. Notwithstanding the foregoing sentence, following the date of the
Employee's termination with the Company, the
Employee shall be entitled to manage, join, be employed by or participate in the
management or operation of any branch or division of any business so long as
such branch or division does not engage in the development, manufacture or sale
of any breast thermal activity test products or any other products being
developed, manufactured or sold by the Company at the time of such termination
and such business employs at least four hundred (400) people; provided, however,
in no event shall the Employee be entitled to serve on the board of directors of
such a business during the term of this Agreement and for a period of twelve
(12) months thereafter. The Employee further agrees that during such twelve (12)
month period, the Employee, or any agent of the Employee will not solicit, in
competition with the business of the Company, business from any customer or
prospect known to the Employee to be a customer or prospect of the Company.
Notwithstanding the foregoing, the beneficial ownership by the Employee
(including ownership by any one or more members of his immediate family and any
entity under his direct or indirect control) of less then five percent (5%) of
the outstanding shares of capital stock of any corporation which may be engaged
in any of the same lines of business as the Company's business shall not
constitute a breach of the convents contained in this Agreement.
(d) The Employee shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data of the Company
obtained by the Employee during employment by the Company. The Employee shall
not during employment hereunder or for a period of five (5) years after the
termination of such employment, communicate or divulge any such information,
knowledge or data to any person, firm or corporation other than the Company, or
persons, firms or corporations designated by the Company. This Section shall not
apply to any information which (i) is or becomes generally available to the
public or a third party without obligation of confidence other than as a result
of a disclosure directly or indirectly by the Employee, or (ii) the Employee is
required to disclose pursuant to subpoena, court order or other governmental
process. In the event disclosure is necessary pursuant to the provisions of
clause (ii) of the preceding sentence, the Employee shall promptly, but in no
event more than three (3) business days after learning of such subpoena, court
order, or other governmental process, notify the Company and, at the Company's
expense, (a) take all reasonable action requested by the Company to defend
against the enforcement of such subpoena, court order or other governmental
process, and (b) permit the Company to intervene and participate with counsel of
its choice in any proceeding relating to the enforcement thereof. During the
term of the Employee's employment and for a period of twelve (12) months after
the end or termination of such employment, the Employee will not, directly or
indirectly, solicit or induce any employee of the Company to leave his or her
employment, nor will the Employee in any capacity hire or cause to be hired any
person who within twelve (12) months prior thereto shall have been employed as
an employee of the Company, for any employment, nor shall the Employee, directly
or indirectly, aid or assist any other person, firm or corporation to do any of
the aforesaid acts.
(e) The parties hereto agree and stipulate that the foregoing restraints
shall be enforceable through injunction as well as an action for damages, that
such restraints upon the Employee are reasonable with regard to their
limitations and necessary for the protection of the Company and its business,
and that such restraints will not be unduly burdensome for Employee.
10. Conflict of Interest. After the date of this Agreement and during the
term of the Employee's employment hereunder, Employee will not, at any time,
enter into, on behalf of the Company or cause the Company to enter into,
directly or indirectly any transactions with any business organization in which
he or any member of his immediate family may be interested as a partner,
trustee, director, officer, employee, shareholder, lender of money or guarantor.
However, Employee may cause the Company to enter into any such transaction if
the terms of any such transaction are approved by the Company's Board of
Directors in accordance with applicable law.
11. Representation by the Employee. The Employee is not a party to any
agreement, contract or understanding which in any way restricts or prohibits him
from fulfilling his obligations hereunder in accordance with the terms of this
Agreement.
12. Representation by the Company. The Company is duly authorized to
execute and deliver this Agreement, which has been approved by its Board of
Directors. This Agreement constitutes the binding obligation of the Company
enforceable against it in accordance with its terms.
13. Expenses. During the term of employment, all travel and other
reasonable business expenses incident to the rendering of services by the
Employee under this Agreement will be paid or reimbursed by the Company subject
to the submission of appropriate vouchers and receipts in accordance with the
Company's policy from time to time in effect.
14. Notices. All notices, requests and other communications pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given,
if delivered in person or by courier, telegraphed, telexed or by facsimile
transmission or five business days after being sent by registered or certified
mail, return receipt requested, postage paid, addressed as follows:
If to the Employee:
Xxxxx X. X. Xxxxxxxx
000 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
If to the Company:
HumaScan Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Chairman of the Board
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxx Xxxxxx, Esq.
Xxxxxxxx, Mollen and Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Any party may, by written notice to the other in accordance with this Section
13, change the address to which notices to such party are to be delivered or
mailed.
15. Miscellaneous. This Agreement sets forth the entire understanding
of the parties and cancels and supersedes all prior agreements and
understandings, either written or oral, between the Company (including its
predecessors) and the concerning the Company's employment of the Employee. No
statement, representation, warranty or covenant has been made by either party,
except as expressly set forth herein. This Agreement shall not be changed or
terminated orally, and it shall not be assignable by the Employee, but the
benefits and obligations hereunder shall be binding upon and inure to the
benefit of and be enforceable by the respective heirs and personal
representatives of the employee and upon the successors and assigns of the
Company. This Agreement shall be construed and enforced in accordance with the
laws of New Jersey. If any provision of this Agreement is held to be void or
unenforceable, the remaining provisions shall be unaffected thereby and shall
continue in full force and
effect. The Company shall reimburse the Employee for his reasonable legal
expenses incurred in connection with the negotiation and execution of this
Agreement, provided that such reimbursement shall not exceed $1,000.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
HUMASCAN INC.
By______________________________________
Xxxxxxxxx X. Xxxxxxx
For the Board of Directors
----------------------------------------
Xxxxx X. X. Xxxxxxxx
