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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, dated the 19th day of May, 1999, effective the 1st day of May,
1999, by and between UNITED DIAGNOSTIC, INC. (FORMERLY KNOWN AS NU-TECH BIO-MED,
INC.) a Delaware corporation maintaining its principal place of business at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and J.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ residing at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Executive").
WHEREAS, the Company and Executive have entered into an Amended and
Restated Employment Agreement effective May 12, 1997, and to continue through
May 11, 2000 (the "Employment Agreement"); and
WHEREAS, the Company and Executive desire to extend the term of the
Employment Agreement and to restate the Employment Agreement as extended; and
WHEREAS, the Company desires to continue to employ the Executive for an
extended term on the terms and conditions specified herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter stated, the parties hereto hereby agree as follows:
1. EMPLOYMENT. The Company agrees to employ and continue to employ Executive,
and the Executive hereby agrees to work for the Company during the Term (as
hereinafter defined). The Executive shall be employed as the Chairman, President
and Chief Executive Officer of the Company and the Chief Executive and Chief
Financial Officer of ABC. The Company shall use its best efforts to cause the
Executive to be elected to the Board of Directors of both the Company and ABC
and a director of any wholly or partially owned subsidiary in which the Company
is entitled to elect a director. In the case of the Company, best efforts shall
mean the Company causing its Board of Directors to nominate the Executive to the
shareholders of the Company for election to the Board of Directors of the
Company; in the case of ABC or any wholly or partially owned subsidiary, best
efforts shall mean the Company voting all of its shares of common stock in ABC
or any wholly or partially owned subsidiary for the election of the Executive as
a Director. The Executive agrees to serve the Company faithfully and to the best
of his ability and to perform such services and duties of an executive nature in
connection with the business, affairs and operations of the Company as may
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be reasonably and in good faith assigned or delegated to him from time to time
by or under the authority of the Board of Directors of the Company and
consistent with the position of Chief Executive Officer, and to use his best
efforts in the promotion and advancement of the company and its welfare and
business. The Executive acknowledges that the Company's present principal
administrative offices are in Wakefield, Rhode Island and that the Company
intends to establish executive offices within the City of New York, or
elsewhere. Executive shall perform his duties hereunder, to the extent as is or
may be reasonably necessary in connection therewith, at the Company's principal
executive offices; provided, however, that the Company acknowledges that
Executive 's physical presence at the Company's principal administrative or
executive offices on a daily basis throughout the term is not necessarily
required, having due regard to the ability of Executive to adequately interact
with the Company's principal business and executive offices, and with other
employees by telephone, telefax and computer, and having further regard to the
contemplated objective of implementing the Company's intended business plans and
programs which may not necessarily require extended presence in either Rhode
Island or New York. The Company acknowledges that the Executive shall be
permitted to pursue outside business interests during the Term; the management
of his personal investments; charitable work and positions on Boards of
Directors of other companies, and the rendition of business, consulting and
advisory services to others; provided, however, that such outside activities do
not interfere with the performance by Executive of his duties under this
Agreement. The Company specifically acknowledges that Executive is currently the
Chairman, President and Chief Executive Officer of PCL. Employment, consulting
or advisory services rendered by Executive to PCL is with the knowledge,
permission and consent of the Company. The Company recognizes that Executive's
services to PCL may require Executive to be in California for extended periods
of time.
2. SALARY AND OTHER COMPENSATION.
(a) BASE SALARY. The Executive's annual base salary for each year of the Term
shall be $208,000 per annum. Said salary shall be payable in accordance with the
employment practices of the Company generally, which currently calls for such
salary to be paid in equal semi-monthly payments during each year of the Term.
The Company acknowledges that Executive has, as a convenience to the Company,
deferred receipt of a portion of his salary since June, 1998 (the "Deferral").
Such Deferral shall be paid by the Company to Executive in one lump sum,
together with simple interest at the rate of 12% on such Deferral.
Upon the execution of this Agreement, the Company shall pay to Executive a
one time bonus of $50,000.
(b) BENEFITS. The Executive will be entitled to four (4) weeks vacation (which
shall accrue and for which Executive may elect to be paid in cash for any unused
portion), holiday,
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sick time (up to 15 days per year, which may be accrued and which shall be paid
for any unused portion) and health insurance benefits according to the standard
benefit policies applicable to other employees of the Company and to long term
disability benefits of not less than 60% of Executive's Base Salary. The Company
shall also obtain for the benefit of the Executive a life insurance policy
providing for a death benefit of $500,000 payable to a beneficiary named and
designated by the Executive. Executive shall further be reimbursed for cellular
telephone expenses and shall be provided with reasonable office accommodations
at such place, when ultimately established, and with secretarial assistance.
(c) AUTOMOBILE ALLOWANCE. The Company shall provide the Executive with an
automobile allowance of $600 per month during the Term. The Company shall
reimburse the Executive for the expenses incurred and paid by him for the
insurance, repair, gas, maintenance, garage, and mobile telephone expenses.
(d) TRAVEL AND ENTERTAINMENT EXPENSES. The Company shall reimburse the Executive
for reasonable travel and entertainment expenses incurred and paid by him in
connection with and during the Term and in furtherance of the interests of the
Company.
(e) WITHHOLDING. All references herein to compensation to be paid to the
Executive are to the gross amounts thereof which are due hereunder. The Company
shall have the right to deduct therefrom: (i) all taxes which may be required to
be deducted or withheld under any provisions of the law now in effect or which
may become effective any time during the term of this Agreement; and (ii) all
benefits costs payable by the Company's similarly situated salaried employees.
(f) RELOCATION. The Company acknowledges that Executive has spent a substantial
part of his time in California relating to the interest of the Company in PCL.
The Company agrees to reimburse Executive for all reasonable relocation expenses
in connection with Executive's relocation to New York. Reimbursement shall be
made by the payment to Executive of the sum of $5,000 per month commencing May
1, 1999 and continuing for 11 consecutive months thereafter.
3. TERM AND TERMINATION.
(a) TERM. The term of this Agreement shall be for a period of three (3) years
commencing as of May 1, 1999 and continuing through April 30, 2002 (the "Term")
unless sooner terminated in accordance with the provisions of this Section 3.
(b) MUTUAL CONSENT. This Agreement and the Executive's employment hereunder may
be terminated at any time by the mutual consent, in writing, of the parties
hereto.
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(c) FOR CAUSE. The Executive's employment hereunder may be terminated at any
time by the majority vote of the Board of Directors of the Company taken at any
regular or special meeting at which the Executive has been afforded the
opportunity to participate (without considering the vote of the Executive for
any purpose other than for purposes of establishing a quorum), and shall be
effective upon written notice of actual termination for cause to the Executive
which, for the purposes of the foregoing, shall solely be made upon a
determination made in good faith by the Company's Board of Directors, and upon
written notice from the Company that Executive has committed an act of personal
dishonesty intended to result in a substantial personal benefit or enrichment of
the Executive at the expense of the Company.
Upon termination for cause as provided in this subsection (c), the
Executive shall not be entitled to receive any compensation or other benefits
pursuant to this Agreement except for any compensation or benefits accrued under
the terms of this Agreement that remains unpaid as of the termination date
specified in the above-mentioned notice of actual termination for cause.
(d) WITHOUT CAUSE. The Company may, at its option, terminate this Agreement at
any time without cause upon written notice to the Executive, subject to payment
to Executive of a severance payment as hereinafter provided. Except as provided
in subsection (i) hereof, in the event of termination without cause pursuant to
this subsection (d) during the Term of this Agreement, the Executive shall be
entitled to receive a severance payment equal to the sum of the amount of base
salary that would otherwise be payable to the Executive for the unexpired
portion of the Term plus an additional sum equal to one (1) years base salary,
plus, if applicable, the amount due to the Executive pursuant to subsection (h)
hereof. Such severance payments shall be paid by the Company to the Executive in
a single lump sum payment upon termination.
(e) DEATH OF EXECUTIVE. The Executive's employment under this Agreement will
terminate immediately upon his death, in which event there shall be paid to
Executive's estate, as a death benefit, the remaining amount of Executive's base
salary for the remainder of the Term following the date of death, payable upon
notice to the Company of the appointment of a personal representative or
executor.
(f) DISABILITY OF EXECUTIVE. In the event that the Executive shall suffer
permanent and total physical or mental disability or incapacity, this Agreement
may be terminated by the Company, and the Executive will be paid his accrued but
unpaid salary to the date of such disability or incapacity. In the event of
termination pursuant to this subsection (f), the Executive shall also be
entitled to receive disability payments in the aggregate equal to his bi-weekly
salary for the then-remaining Term of this Agreement, payable on the Company's
normal payroll dates, provided that such disability payments shall be reduced by
the amount of
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disability insurance proceeds, if any, payable to the Executive pursuant to any
disability insurance policy provided and paid for by the Company on behalf of
the Executive.
(g) BY EXECUTIVE FOR GOOD REASON. The Executive may, at any time, at his option,
terminate this Agreement upon written notice to the Company for Good Reason. For
the purpose of this subsection (g), Good Reason shall mean (i) the material
breach by the Company of its obligations under this Agreement, (ii) the
diminution of Executive's duties without the written consent of Executive, or
(iii) the removal of Executive as a Director of the Company or any of the
Company's principal wholly owned or partially owned subsidiaries without cause
or the non-election of Executive as a Director of the Company or any of the
Company's principal wholly owned or partially owned subsidiaries.
(h) FAILURE TO RENEW. If the initial three year Term of this Agreement expires
and Executive and the Company fail to agree upon mutually acceptable terms for
renewal within 30 days prior to the date of expiration of the Term, then in such
case, the Executive shall be paid a severance benefit equal to the sum of
$208,000, payable in one lump sum payment upon the expiration of the Term of
this Agreement.
(i) CHANGE OF CONTROL. Upon the occurrence of a Change of Control Transaction
(as hereinafter defined) during the Term, beginning on the date of such
occurrence and continuing for a period of one (1) year thereafter (the "Change
of Control Period"), in the event of the first to occur of the termination of
the Executive's employment for any reason other than for cause (as defined in
subsection (c) hereof) or the resignation of the Executive (for any reason)
during the Change of Control Period, the Executive shall be entitled to a sum
equal to the balance of the base salary for the unexpired portion of the Term
plus $208,000 payable in a single lump sum payment upon the date of termination
or resignation as the case may be. For purposes hereof, a "Change of Control
Transaction" shall mean any one of the following events:
(i) any "person" (other than a "person" owning 10% or more of the issued
and outstanding Common Stock of the Company on the date hereof) (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Act")) becomes a "beneficial owner" (as such term
is defined in Rule 13d-3 promulgated under the Act) (other than the
Executive, the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company) directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; or
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(ii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation or other entity, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 25% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (b) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as hereinabove defined)
acquires more than 25% of the combined voting power of the Company's then
outstanding securities; or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
(iv) a majority of the current members of the Board no longer continue to
serve as directors or, in the case of the resignation or removal of any
current director, his successor is not elected by the remaining current
directors of the Company.
4. NONCOMPETITION AGREEMENT.
(a) Except as provided in the next sentence, during the Term, the Executive
shall devote such time and effort to the business of the Company and is
reasonably necessary to fulfill his duties. The Executive may pursue other
outside business interests and activities pursuant to the terms and conditions
of Section 1 hereof.
(b) In addition, during the Term, and for a period of one (1) year thereafter,
the Executive will not, without the express written consent of a majority of the
Board of Directors of the Company, engage, participate or invest in, as owner,
part-owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity, any business organization anywhere in the
United States where the Company then conducts business which is engaged in the
business of conducting research regarding or developing or marketing any
chemotherapy sensitivity assay (which shall include any in vitro method of
assessing the sensitivity of any tumor or cancer to chemotherapeutic drugs),
directly or by contract, if the Executive's responsibilities on behalf of such
business organization require him to be involved (whether in a supervisory,
research or advisory capacity) in the business of conducting such activities
services; provided that the Executive may make passive investments in an
enterprise engaged in such business, the shares of ownership of which are
publicly traded.
5. INVENTIONS; TRADE SECRETS.
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(a) The employee understands and agrees that his employment creates a
relationship of confidence and trust between him and the Company with respect to
(i) all Proprietary Information (as defined below) and (ii) the confidential
information of others with which the Company has a business relationship. The
Executive agrees that during his employment by the Company and for a period of
two (2) years after its termination, the Executive will keep in confidence and
trust all such information, and will not use or disclose any such information
without the written consent of the Company, except as may be necessary in the
ordinary course of performing his duties to the Company. "Proprietary
Information" means information that the Company possesses or has rights to which
has commercial value in the Company's business, including, without limitation,
trade secrets, product ideas, processes, formulas, designs, software,
improvements, inventions, data and know-how, copyrightable materials, marketing
plans and strategies, sales and financial reports and forecasts and customer
lists, provided that "Proprietary Information" shall not include any such
information which is generally known to the public or in the trade unless such
knowledge results from a breach of this Agreement by the Executive.
(b) The Executive further agrees that:
(i) All Proprietary Information shall be the sole property of the Company
and its assigns, and the Company and its assigns shall be the sole owner of
all trade secrets, patents, copyrights, and other rights in connection
therewith. The Executive hereby assigns to the Company any rights he may
have or acquire in such Proprietary Information.
(ii) All documents, records, apparatus, equipment and other physical
property, whether or not pertaining to Proprietary Information, furnished
to the Executive by the Company or produced by him or others in connection
with his employment shall be and remain the sole property of the Company.
The Executive shall return to the Company all such materials and property
as and when requested by the Company. Even if the Company does not so
request, the Executive shall return all such materials and property upon
termination of his employment for any reason, and will not take with him
any such material or property or any reproduction thereof upon such
termination.
(iii) The Executive will promptly disclose to the Company, or any persons
designated by it, all improvements, inventions, works of authorship,
formulas, ideas, processes, techniques, know-how and data, whether or not
patentable (collectively, "Inventions"), made or conceived, reduced to
practice or learned by him, either alone or jointly with others, in the
course of his employment or which is otherwise subject to Section 6(b)(iv).
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(iv) All Inventions which the Executive conceives, develops or has
developed (in whole or in part, either alone or jointly with others) during
the term of his employment with the Company which relate at the time of
conception or reduction to practice thereof to the actual business of the
Company or to its actual research and development, or which result from any
work performed by the Executive for the Company or which are developed on
Company time or through the use of the Company's Proprietary Information or
other resources, shall be the sole property of the Company and its assigns
(and to the fullest extent permitted by law shall be deemed works made for
hire), and the Company and its assigns shall be the sole owner of all
patents, copyrights and other rights in connection therewith. The Executive
hereby assigns to the Company any rights he may have or acquire in such
Inventions.
(v) With respect to Inventions described in subsection (iv) above, the
Executive will assist the Company in every proper way (but at the Company's
expense) to obtain and from time to time enforce patent, copyrights or
other rights on said Inventions in any and all countries, and will execute
all documents reasonably necessary or appropriate for this purpose. The
Executive agrees that this obligation shall survive the termination of his
employment, but the Company shall compensate him at a reasonable rate after
such termination for time actually spent by him at the Company's request on
such assistance. In the event that the Company is unable for any reason
whatsoever to secure the signature of the Executive to any document
reasonably necessary or appropriate for any of the foregoing purposes,
(including renewals, extensions, continuations, divisions or continuations
in part), the Executive hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as his agents and
attorneys-in-fact to act for and on his behalf and instead of him, but only
for the purpose of executing and filing any such document and doing all
other lawfully permitted acts to accomplish the foregoing purposes with the
same legal force and effect as if executed by the Executive.
(c) The Executive represents that his execution of this Agreement, his
employment with the Company and his performance of his proposed duties for the
Company in the development of its business will not violate any obligations he
may have to any former employer or any other third party, including any
obligations to keep confidential any proprietary or confidential information.
The Executive represents that he has not entered into, and will not enter into,
any agreement which conflicts with or would, if performed by the Executive,
cause him to breach this Agreement.
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(d) In the course of performing his duties to the Company, the Executive agrees
that he will not utilize any proprietary or confidential information of any
former employer in any manner that would violate any obligation to which the
Executive is subject.
6. REMEDIES.
(a) If the parties should disagree as to any matter at law under this Agreement,
the dispute shall be arbitrated in the City of New York under the auspices of
the American Arbitration Association. The party desiring arbitration shall serve
upon the other party by certified mail, return receipt requested, a written
demand that the dispute by submitted to arbitration. Each party shall pay
one-half the fees and expenses of the arbitrator appointed pursuant to the
procedures of the American Arbitration Association. The decision or the
arbitrator shall be binding upon the parties. Judgment upon the award rendered
may be entered and enforced in any court of competent jurisdiction. Refusal of
either party to participate in binding arbitration concerning any disagreement
of the provisions hereunder shall be considered a breach of this Agreement.
(b) The Executive recognizes and acknowledges that in the event of any default
in, or breach of any of, the terms, conditions and provisions of Sections 5 or 6
of this Agreement (either actual or threatened) by the Executive, the Company's
remedies at law may be inadequate. Accordingly, Executive agrees that in such
event, the Company shall have the right to specific performance and/or
injunctive relief directly through judicial process without proceeding to
arbitration under Section 7(a) in addition to any and all other remedies and
rights at law or in equity, and such rights and remedies shall be cumulative.
7. SURVIVAL. The covenants and agreements contained in Section 5 and 6 hereof
shall survive notwithstanding termination of the Executive's employment.
8. RESTRICTION OF ALIENATION. The payments which shall become due and payable to
the Executive or his estate under this Agreement shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to so anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge the same shall be void. Such
payments shall not in any manner be liable or subject to the Executive's debts,
contracts, liabilities, engagements or torts.
9. AGREEMENT BINDING ON SUCCESSORS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their legal representatives,
heirs, successors, and assigns. Nothing in this Agreement, express or implied,
is intended to confer on any person other than the parties and their respective
assigns any rights or remedies under or by this Agreement.
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10. NOTICES. All notices, requests, waivers, demands, and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if mailed, exclusive of the date of deposit in
the U.S. mail, postage prepaid by certified or registered mail, return receipt
requested, as follows:
(a) To the Executive: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) To the Company: United Diagnostic, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
Any such written notice shall be effective upon receipt, but not later than four
(4) days after the deposit with the U.S. Postal Service. Either party may change
such address by notice to the other party. Any other written notice shall be
effective upon receipt by the respective party.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement represents the entire
agreement between the parties, and no other prior written or oral representation
or understanding shall have any further force or effect. This Agreement may be
modified only by a subsequent writing signed by all parties hereto.
12. SEPARABILITY. The invalidity of any section or subsection hereof shall not
affect the validity of any other section or subsection hereof.
13. WAIVERS. The failure of any of the parties to this Agreement to require the
performance of a term or obligation or to exercise any right under this
Agreement or the waiver by any of the parties to this Agreement of any breach
hereunder shall not prevent subsequent enforcement of such term or obligation or
exercise of such right or the enforcement at any time of any other right
hereunder or be deemed a waiver of any subsequent breach of the provision so
breached, or of any other breach, hereunder.
14. GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the State of New York, and shall not be modified or discharged in whole
or in part except by an agreement in writing signed by the parties hereto.
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15. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be considered to be an original, and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
UNITED DIAGNOSTIC, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Secretary
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (Executive)
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