EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between IVIVI
TECHNOLOGIES, INC., a New Jersey corporation, having a place of business at
000-X Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("EMPLOYER") and XXXXXX X.
XXXXXXXXXX ("EMPLOYEE") is hereby entered into as of December 31, 2008
("Commencement Date").
WHEREAS, Employer desires to employ Employee; and
WHEREAS, Employee is willing to accept such employment on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, Employer and Employee hereby agree as follows:
ARTICLE I
EMPLOYMENT; POSITION, DUTIES, AND RESPONSIBILITIES
1.01 EMPLOYMENT. Employer agrees to, and does hereby, employ Employee, and
Employee agrees to, and does hereby, accept such employment, upon the terms and
subject to the conditions set forth in this Agreement. Employee represents and
warrants to Employer that (a) Employee has the legal capacity to execute and
perform this Agreement, (b) this Agreement is a valid and binding agreement
enforceable against Employee according to its terms, and (c) the execution and
performance of this Agreement by Employee does not violate the terms of any
existing agreement or understanding to which Employee is a party or by which
Employee may be bound.
1.02 POSITION, DUTIES AND AUTHORITY. During the Term (as defined below),
Employee shall serve as the President and Chief Executive Officer of Employer,
and shall have such responsibilities, duties and authority as are consistent
with such positions and as may, from time to time, be reasonably assigned by the
Board of Directors of Employer (the "Board"). In addition, so long as Employee
is elected by the shareholders of Employer to serve as a director, Employee
shall serve as the Chairman of the Board. During the Term, Employee shall report
directly to the Board. During the Term, Employee shall serve Employer,
faithfully and to the best of Employee's ability, and shall devote all of
Employee's business time, attention, skill and efforts exclusively to the
business and affairs of Employer (including its subsidiaries and affiliates) and
the promotion of its interests. Notwithstanding the foregoing, Employee may
engage in charitable, educational, religious, civic and similar types of
activities (all of which shall be deemed to benefit Employer) to the extent that
such activities do not inhibit or prohibit the performance of Employee's duties
hereunder or inhibit or conflict with the business of Employer, its subsidiaries
and affiliates. In no event may Employee serve on boards of directors or
advisory committees without the prior written consent of the Board, which
consent shall not be unreasonably withheld. During the Term, Employee shall
perform his duties from Employer's primary business offices that are located in
New York, New York, subject to normal and reasonable travel requirements in
connection with his duties hereunder.
ARTICLE II
TERM
2.01 TERM OF EMPLOYMENT. Employee's employment under this Agreement shall
commence on the date on the Commencement Date and, subject to earlier
termination pursuant to Article IV hereof, shall terminate on November 30, 2011
(the "TERM"); PROVIDED, HOWEVER, that unless either party gives written notice
to the other at least 120 days prior to the expiration of the then-current Term
that such party elects not to renew this Agreement, the then-current Term shall
be automatically extended for additional one-year periods. The election of
Employer not to extend the then-current Term as provided in this Section 2.01
("Employer Non-Renewal") shall be deemed a termination by Employer under Section
4.01(D). The election of Employee not to extend the then-current Term, as
provided in this Section 2.01 ("Employee Non-Renewal") shall not be deemed a
termination for Good Reason and Employee only shall be entitled to the
compensation set forth in Section 4.02(A).
ARTICLE III
COMPENSATION AND EXPENSES
3.01 COMPENSATION AND BENEFITS. For all services rendered by Employee in any
capacity during the Term, including, without limitation, services as an officer,
director or member of any committee of Employer, or any subsidiary, affiliate or
division thereof, Employee shall be compensated as follows (subject, in each
case, to the provisions of Article IV below):
(A) BASE SALARY. During the Term, Employer shall pay to Employee a base
salary the rate of $100,000 on an annualized basis. ("BASE SALARY"), which Base
Salary shall be payable in accordance with Employer's customary payroll
practices in place from time to time, but no less frequently than twice per
month. Employee's Base Salary shall be subject to annual review and increases
effective as of the first day of each fiscal year commencing with the fiscal
year that begins April 1, 2009, which increases (if any) shall be in amounts as
the Board (or committee thereof) shall deem appropriate and substantially based
upon the overall financial performance of Employer and the individual
performance of Employee. The term "BASE SALARY" as used in this Agreement shall
refer to Base Salary as may be increased from time to time.
(B) BONUS. With respect to each fiscal year of Employer that ends
during the Term, commencing with the fiscal year ending March 31, 2009, Employee
shall be eligible to receive a cash bonus targeted to equal one hundred and
fifty percent (150%) of the amount of Base Salary earned by Employee during such
fiscal year, subject to Employer's attainment of performance goals established
by the Board (or a committee thereof) in its sole discretion and communicated to
Employee within 30 days following the beginning of such year (for fiscal year
ending March 31, 2009, as soon as practicable following the Commencement Date)
(the "BONUS"). Such performance goals shall be established such that a partial
Bonus may be earned in the event applicable performance goals are partially
attained, and a Bonus in excess of the target amount may be earned in the event
applicable performance goals are materially exceeded. The Bonus shall be paid in
a lump sum cash payment, if and to the extent earned, within 60 days following
the end of the applicable fiscal year to which the Bonus relates. To be eligible
to receive the Bonus (or any portion thereof), Employee must be employed by
Employer both at the end of the applicable fiscal year and at the time such
Bonus is to be paid hereunder.
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(C) EQUITY AWARDS. Following the Commencement Date, Employee shall be
granted shares of restricted common stock of Employer, as set forth on Annex A
hereto, and upon such terms and conditions as determined by the Board (or a
committee thereof) in its sole discretion (the "New Awards"). Notwithstanding
anything contained in this Agreement to the contrary, 100% of the New Awards
shall fully and immediately vest on the date of (i) a Corporate Transaction (as
such term is defined in the Employer's 2004 Amended and Restated Stock Option
Plan, as in effect as of the date hereof) but excluding any transaction that
constitutes a full or partial Financing (as such term is defined in Annex A
hereto); (ii) a termination of Employee's employment due to death or Disability,
or (iii) a termination of Employee's employment by Employer without Cause or by
him for Good Reason.
(D) BENEFITS. During the Term, Employee shall be entitled to
participate in all Employer's employee benefit plans and programs (excluding
severance plans, if any) as Employer generally maintains from time to time
during the Term for the benefit of its employees, in each case subject to the
eligibility requirements, enrollment criteria and other terms and provisions of
such plans or programs. Employer may amend, modify or rescind any employee
benefit plan or program and/or change employee contribution amounts to benefit
costs without notice in its discretion.
(E) VACATION DAYS. During the Term, Employee shall be entitled to paid
vacation days in accordance with Employer's policies with respect to such
vacation days in place from time to time; provided, however, that Employee shall
accrue or earn no less than 20 paid vacation days per calendar year.
3.02 EXPENSES. Employee shall be entitled to receive reimbursement from
Employer for all reasonable out-of-pocket expenses incurred by Employee during
the Term in connection with the performance of Employee's duties and obligations
under this Agreement, according to Employer's expense account and reimbursement
policies in place from time to time and provided that Employee shall submit
reasonable documentation with respect to such expenses.
ARTICLE IV
TERMINATION
4.01 EVENTS OF TERMINATION. This Agreement and Employee's employment hereunder
shall terminate upon the occurrence of any one or more of the following events:
(A) DEATH. In the event of Employee's death, this Agreement and
Employee's employment hereunder shall automatically terminate on the date of
death.
(B) DISABILITY. To the extent permitted by law, in the event of
Employee's physical or mental disability that prevents Employee from performing
Employee's duties under this Agreement for a period of at least 120 consecutive
days in any 12-month period or 150 non-consecutive days in any 12-month period,
Employer may terminate this Agreement and Employee's employment hereunder upon
written notice to Employee given within 30 days of the Employer's incurrence of
such right.
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(C) TERMINATION BY EMPLOYER FOR CAUSE. Employer may, at its option,
terminate this Agreement and Employee's employment hereunder for Cause (as
defined herein) upon giving notice of termination to Employee. As used in this
Agreement, the term "CAUSE" shall mean Employee's (i) conviction of, plea of
guilty or NOLO CONTENDRE to, or confession of guilt of, a felony, (ii)
commission of a fraudulent, illegal or dishonest act (which dishonest act result
in material damage to Employer) in respect of Employer or any of its affiliates
or subsidiaries, (iii) willful misconduct or gross negligence that reasonably
could be expected to be injurious in the reasonable discretion of Employer to
the business, operations or reputation of Employer or any of its affiliates or
subsidiaries (monetarily or otherwise), (iv) material violation of Employer's
policies or procedures in effect from time to time; provided, however, to the
extent such violation is subject to cure, Employee will have a reasonable
opportunity to such violation after written notice thereof, (v) after a written
warning and a reasonable opportunity to cure non-performance, continued failure
to perform Employee's duties as assigned, in accordance with the terms of this
Agreement, to Employee from time to time, or (vi) other material breach of this
Agreement (including, without limitation, any breach of Employee's obligations
under Article V hereof).
(D) WITHOUT CAUSE BY EMPLOYER. Subject to Section 4.02, Employer may,
at its option, at any time terminate this Agreement and Employee's employment
hereunder for no reason or for any reason whatsoever (other than for Cause or as
a result of Employee's death or Disability) by giving 30 days prior written
notice of termination to Employee.
(E) TERMINATION BY EMPLOYEE. Employee may terminate this Agreement and
Employee's employment hereunder with or without Good Reason (as defined below)
by giving 30 days prior written notice of termination to Employer; provided,
however, that Employer reserves the right to accept Employee's notice of
termination and to accelerate such notice and make Employee's termination
effective immediately, or on any other date prior to Employee's intended last
day of work as Employer deems appropriate. For purposes of this Agreement, "GOOD
REASON" shall mean, in the absence of the prior written consent of Employee:
(i) the failure of Employer or its successor to pay any
amounts due to Employee or to fulfill any other material obligations to Employee
under this Agreement, other than failures that are remedied by Employer or its
successor within 30 days after receipt of written notice thereof given by
Employee;
(ii) action by Employer or its successor that results in a
material diminution in Employee's title, position, authority or duties from
those contemplated in Section 1.02;
(iii) any material reduction in the amount of D&O liability
insurance coverage in effect as of the Commencement Date; or
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(iv) an Employer Non-Renewal.
Notwithstanding the foregoing, placing Employee on a paid leave for up
to 90 days, pending a determination of whether there is a basis to terminate
Employee for "Cause," shall not constitute a "Good Reason." Employee shall be
deemed to have consented to any act or event that would otherwise give rise to
"Good Reason" unless Employee provides written notice of termination for Good
Reason to Employer within 90 days following the action or event constituting
Good Reason and that he had provided Employer the opportunity to cure (if
curable) within 30 days following the action or event constituting Good Reason.
(F) MUTUAL AGREEMENT. This Agreement and Employee's employment
hereunder may be terminated at any time by the mutual agreement of Employer and
Employee.
(G) EXPIRATION OF TERM. This Agreement and Employee's employment
hereunder shall automatically terminate upon the expiration of the Term in
accordance with the 120 day notice provision herein, and any such expiration
shall be deemed either an Employer Non-Renewal or an Employee Non-Renewal, as
the case may be.
4.02 EMPLOYER'S OBLIGATIONS UPON TERMINATION.
(A) FOR CAUSE; OTHER THAN FOR GOOD REASON. If, during the Term, (i)
Employer shall terminate this Agreement and Employee's employment hereunder for
Cause, or (ii) Employee shall terminate this Agreement and Employee's employment
hereunder other than for Good Reason, Employer's sole obligation to Employee
under this Agreement or otherwise shall be to, on Employer's next regular pay
date following the date of termination, (i) pay to Employee any Base Salary
earned, but not yet paid to Employee, prior to the date of such termination,
(ii) pay to Employee any accrued, but unused, vacation days through the date of
termination, and (iii) reimburse Employee for any expenses incurred by Employee
through the date of termination in accordance with Section 3.02 (collectively,
the "ACCRUED OBLIGATIONS"). All vested equity awards shall remain in effect
pursuant to their existing terms.
(B) EXPIRATION OF TERM (EMPLOYEE NON-RENEWAL). Upon the expiration of
the Term pursuant to or following an Employee Non-Renewal, or if this Agreement
and the Employee's employment terminates at any time or for any reason following
an Employee Non-Renewal, Employer's sole obligation to Employee under this
Agreement or otherwise shall be to pay to Employee the Accrued Obligations,
which Accrued Obligations shall be paid or provided in the manner and at the
time described in Section 4.02(A) above. All vested equity awards shall remain
in effect pursuant to their existing terms.
(C) DEATH; DISABILITY. If, during the Term, this Agreement and
Employee's employment hereunder shall terminate as a result of Employee's death
or Disability, Employer shall pay or provide to Employee or Employee's heirs,
beneficiaries, assigns or estate, as applicable, the Accrued Obligations, which
Accrued Obligations shall be paid or provided in the manner and at the time
described in Section 4.02(A) above. All equity awards vested at the time of
death shall be transferred to Employee's estate, subject to the terms of the
Plan. In addition, upon either such event (i) each of the New Awards shall be
deemed fully vested and (ii) Employee, or his estate or beneficiary, as
applicable, shall receive the Severance Benefit (as defined below). For purposes
of this Section 4.02, the Severance Benefit shall equal the product of (a) the
Severance Base (as defined in Section 4.02(E)(i) below), multiplied by (b) 200%,
which amount shall be paid on the 60th day following such event.
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(D) WITHOUT CAUSE; FOR GOOD REASON. If, during the Term, Employer shall
terminate this Agreement and Employee's employment hereunder without Cause and
other than as a result of Employee's death or Disability or Employee shall
terminate this Agreement and Employee's employment hereunder for Good Reason,
Employer's sole obligation to Employee under this Agreement or otherwise shall
be to: (i) pay to Employee the Accrued Obligations, which Accrued Obligations
shall be paid or provided in the manner and at the time described in Section
4.02(A) above, and (ii) subject to Employee's execution, delivery and
non-revocation of a general release in a form generally utilized by the Employer
with respect to other executive officers within 50 days following Employee's
last day of employment with Employer (the "RELEASE") (which Release, among other
things, will be provided by Employer to Employee within 5 days of Employee's
last day of employment with Employer and will include a general release of
Employer, its affiliates and subsidiaries and their respective officers,
directors, managers, members, shareholders, partners, employees and agents from
all liability, in such form determined by Employer in its sole discretion), both
(1) provide Employee a Severance Benefit on the 60th day following such
termination of employment, and (2) cause each of the New Awards to be deemed
fully vested. For purposes of this paragraph, the Severance Benefit shall equal
the product of (a) the Severance Base, multiplied by (b) 200%.
(E) THE SEVERANCE PAYMENT.
(i) For purposes of this Section 4.02, the Severance Benefit
shall be made in the form of a lump sum cash payment. For purposes of this
Section 4.02, the Severance Base shall equal the sum of (a) the then current
Base Salary, plus (b) the most recently paid Bonus (provided, however, that if
the applicable termination of employment occurs prior to payment of the Bonus
with respect to the fiscal year ending March 31, 2009, then the Bonus shall be
deemed to equal $150,000).
(ii) In the event Employee shall become entitled to receive
the Severance Benefit hereunder, then he shall also be entitled to receive
reimbursement for premium costs that he incurs with respect to COBRA
continuation coverage for himself and his eligible dependents for a period of 18
months (such reimbursements shall cease when Employee becomes eligible for
coverage under any other group health care plan). Such reimbursements must be
submitted by Employee in writing on a monthly basis within 14 days of the date
the monthly premium is paid (each such monthly premium must be paid within the
applicable COBRA deadline) and the reimbursement will be paid, net of tax, to
Employee within 30 days of its receipt of the reimbursement request.
(iii) In addition to the payments and benefits set forth in
this Section 4.02, amounts that are vested benefits or that Employee is
otherwise entitled to receive under any plan, program, policy or practice (with
the exception of those relating to severance) on the date of termination, shall
be payable in accordance with such plan, policy, practice or agreement.
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(F) NO MITIGATION; NO OFFSET. In the event of any termination of
Employee's employment under this Section 4.02, Employee shall be under no
obligation to seek other employment and there shall be no offset against amounts
due Employee under this Agreement on account of any compensation attributable to
any subsequent employment that he may obtain except as specifically provided in
this Section 4.02. Notwithstanding anything contained in this Agreement to the
contrary, all compensation and benefits payable under this Section 4.02 shall be
reduced by any other compensation and benefits payable under any severance or
change-in-control plan, program, policy or arrangement of Employer in which
Employee is a participant and under which he has actually and previously
received compensation and/or benefits.
ARTICLE V
CONFIDENTIALITY, ASSIGNMENT OF DEVELOPMENTS, NON-COMPETITION,
NON-SOLICITATION AND OTHER COVENANTS
5.01 CONFIDENTIALITY. While working or performing services for Employer or
otherwise, Employee may previously have developed or acquired, or may in the
future develop or acquire, knowledge in Employee's work or from directors,
officers, employees, agents or consultants of Employer and its affiliates and
subsidiaries (collectively, the "COMPANY") or otherwise of Confidential
Information relating to the Company, its business, potential business or that of
its customers and vendors. "CONFIDENTIAL INFORMATION" includes all trade
secrets, know-how, show-how, theories, technical, operating, financial, and
other business information, whether or not reduced to writing or other medium
and whether or not marked or labeled confidential, proprietary or the like,
specifically including, but not limited to, information regarding source codes,
software programs, computer systems, algorithms, formulae, schematics, concepts,
creations, costs (including, without limitation, manufacturing costs), plans,
materials, enhancements, research, specifications, works of authorship,
techniques, documentation, models and systems, sales and pricing techniques,
designs, inventions, discoveries, products, improvements, modifications,
methodology, processes, concepts, records, files, memoranda, reports, plans,
proposals, price lists, client, customer, and supplier lists and information,
product development and project procedures. Confidential Information does not
include general skills, experience or information that is generally available to
the public, other than information which has become generally available as a
result of Employee's direct or indirect act or omission.
With respect to Confidential Information of the Company and its
customers and vendors:
(A) Employee has used, and will use, Confidential Information only in
the performance of Employee's duties for Employer. Employee has not used, and
will not use, Confidential Information at any time (during or after Employee's
employment with Employer) for Employee's personal benefit, for the benefit of
any other individual or entity, or in any manner adverse to the interests of the
Company and its customers and vendors;
(B) Employee has not, and will not disclose, Confidential Information
at any time (during or after Employee's employment with Employer) except to
authorized Employer personnel, unless Employer consents in advance in writing,
the Confidential Information indisputably becomes of public knowledge or enters
the public domain (other than through Employee's direct or indirect act or
omission), or the disclosure of which is required by law and reasonable written
notice has been provided to Employer sufficient to enable Employer to contest
the disclosure;
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(C) Employee has safeguarded, and will safeguard, the Confidential
Information by all reasonable steps and abide by all policies and procedures of
Employer in effect from time to time regarding storage, copying, destroying,
publication or posting, or handling of Confidential Information, in whatever
medium or format the Confidential Information takes;
(D) Employee acknowledges that Employer may be required to sign
non-disclosure or confidentiality agreements with customers or vendors,
prospective customers or vendors, and other third parties in which Employer
agrees that its employees and agents will not disclose Confidential Information
of such customers or vendors, prospective customers or vendors, or other third
parties. By executing this Agreement, Employee acknowledges and agrees that
Employer may rely, and will rely, on this Agreement for purposes of entering
into such other agreements. Further, Employee will execute and abide by all
confidentiality agreements reasonably requested by Employer's customers or
vendors, prospective customers or vendors, and other third parties; and
(E) Employee will return all materials, substances, models, software,
prototypes and the like containing and/or relating to Confidential Information,
together with all other property of the Company (all of which shall remain the
exclusive property of the Company) and its clients and customers, to Employer
when Employee's employment relationship with Employer terminates or otherwise on
demand. Employee shall not retain any copies or reproductions of correspondence,
memoranda, reports, notebooks, drawings, photographs, databases, diskettes, or
other documents or electronically stored information of any kind relating in any
way to the business, potential business or affairs of the Company and its
clients and customers.
5.02 ASSIGNMENT OF DEVELOPMENTS. Employee has disclosed, and will disclose,
promptly and fully to Employer and to no one else: (i) all inventions, ideas,
improvements, discoveries, works modifications, processes, software programs,
works of authorship, documentation, formulae, techniques, designs, methods,
trade secrets, technical specifications and technical data, know-how and
show-how, concepts, expressions or other developments whatsoever or any interest
therein (whether or not patentable or registrable under copyright, trademark or
similar statutes or subject to analogous protection) made, authored, devised,
developed, discovered, reduced to practice, conceived or otherwise obtained by
Employee (collectively, together with all patent rights, copyrights, trade
secret rights and other intellectual property rights, worldwide, and the right
to xxx for present, past and future infringements thereof, the "DEVELOPMENTS"),
solely or jointly with others, during the course of Employee's employment with
Employer (whether prior to or after the date of this Agreement) that (a) are
related to the business of the Company or any of the products or services being
researched, developed, distributed, manufactured or sold by the Company or which
may be used in relation therewith or (b) result from tasks assigned to Employee
by the Company; (ii) any Development that is related to the business of the
Company and in which Employee had an assignable interest at the time of
Employee's first employment by Employer; or (iii) any Development made using the
time, materials or facilities of the Company, even if such Development does not
relate to the business of the Company. The determination as to whether a
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Development is related to the business of the Company shall be made solely by an
authorized representative of Employer. Any Development relating to the business
of the Company and disclosed to the Company within one year following the
termination of Employee's employment with Employer shall be deemed to fall
within the provisions of this Section 5.02. The "BUSINESS OF THE COMPANY" as
used in this Section 5.02 includes the actual business currently conducted by
the Company, as well as any business conducted by the Company during the course
of Employee's employment prior to the Original Agreement Date and any business
in which the Company is actively engaged in the development of at any time
during the period of Employee's employment. Employee agrees that, to the maximum
extent possible, all such Developments listed above and the benefits thereof are
and shall immediately become the sole and absolute property of Employer from
conception, as "works made for hire" (as that term is used under the U.S.
Copyright Act of 1976, as amended) or otherwise. Employee shall have no interest
in any Developments. To the extent that title to any Developments or any
materials comprising or including any Developments does not, by operation of
law, vest in Employer, Employee hereby irrevocably assigns to Employer all of
Employee's right, title and interest (including, without limitation, tangible
and intangible rights such as patent rights, trademarks, copyrights and all
other intellectual property rights, worldwide, and the right to xxx for present,
past and future infringements thereof) that Employee may have or may acquire in
and to all such Developments, benefits and/or rights resulting therefrom, and
agrees promptly to execute any further specific assignments related to such
Developments, benefits and/or rights at the request of Employer. Employee also
hereby assigns to Employer, or waives if not assignable, all of Employee's
"moral rights" in and to all such Developments, and agrees promptly to execute
any further specific assignments or waivers related to moral rights at the
request of Employer. Employee represents and warrants to Company that Employee
has at no time assigned or otherwise transferred any interest in any Development
(including, but not limited to, any Developments arising in connection with
Employee's employment prior to the Original Agreement Date), to any third party,
or granted any third party any license, permission, or other right with respect
to any such Development, or permitted any lien, security interest or other
encumbrance to be imposed on any such Development, or entered into any contract
or other arrangement pursuant to which Employee has agreed to do any of the
foregoing.
Employee agrees to assist Employer without charge for so long as
Employee is an employee of Employer and for as long thereafter as may be
necessary (but at Employer's expense including reasonable compensation to
Employee if Employee is no longer an employee of Employer): (1) to apply,
obtain, register and renew for, and vest in, Employer's benefit alone (unless
Employer otherwise directs), patents, trademarks, copyrights, mask works, and
other protection for such Developments in all countries, and (2) in any
controversy or legal proceeding relating to Developments. In the event that
Employer is unable to secure Employee's signature after reasonable effort in
connection with any patent, trademark, copyright, mask work or other similar
protection relating to a Development, Employee hereby irrevocably designates and
appoints Employer and its duly authorized officers and agents as Employee's
agent and attorney-in-fact, to act for and on Employee's behalf and stead to
execute and file any such application and to do all other lawfully permitted
acts to further the prosecution and issuance of patents, trademarks, copyrights,
mask works or other similar protection thereon with the same legal force and
effect as if executed by Employee.
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Notwithstanding the foregoing, this Section 5.02 shall not cover
Developments to the extent that California Labor Code Section 2870(a) prohibits
the assignment thereof. Section 2870(a) provides as follows:
"Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in
an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without
using the employer's equipment, supplies, facilities, or trade secret
information except for those inventions that either: (1) Relate at the
time of conception or reduction to practice of the invention to the
employer's business, or actual or demonstrably anticipated research or
development of the employer [or] (2) Result from any work performed by
the employee for the employer."
5.03 OBLIGATIONS TO OTHER PERSONS. Employee hereby represents and warrants that
Employee does not have any non-disclosure, non-compete, non-solicitation or
other obligations to any previous employer or other individual or entity that
would prohibit, limit, conflict or interfere with the performance of Employee's
duties for Employer or Employee's other obligations under this Agreement.
Employee will not disclose to the Company or its customers and clients or induce
the Company or its customers and clients to use any secret confidential
information or material belonging to others, including Employee's former
employer.
5.04 COVENANT AGAINST COMPETITION AND SOLICITATION.
(A) Employee acknowledges and understands that, in view of the position
that Employee holds or will hold as an employee of Employer, Employee's
relationship with Employer will afford Employee extensive access to Confidential
Information of the Company. Employee therefore agrees that during the course of
Employee's employment with Employer and for a period of 24 months after
termination of Employee's employment with Employer (for any reason or no reason)
(collectively, "RESTRICTED PERIOD"), Employee shall not, anywhere in the world,
either directly or indirectly, as an owner, stockholder, member, partner, joint
venturer, officer, director, consultant, independent contractor, agent or
employee, with or without remuneration, engage in any business or other
commercial activity that is engaged in the business of (i) designing, developing
and/or commercializing electrotherapeutic technologies or (ii) designing,
developing, marketing, selling, distributing and/or providing any products or
services that are of the same nature as a product or service provided by the
Company or a product or service that the Company is developing or seeking to
provide and of which Employee has knowledge. Notwithstanding the foregoing,
nothing herein shall be deemed to prohibit Employee's ownership of less than 2%
of the outstanding shares of any publicly traded corporation that conducts a
business competitive with that of Employer.
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(B) Employee further agrees that, during the Restricted Period,
Employee shall not, directly or indirectly, either on Employee's own behalf or
on behalf of any other individual or commercial enterprise: (i) contact,
communicate, solicit or transact any business with or assist any third party in
contacting, communicating, soliciting or transacting any business with (x) any
of the customers or vendors of the Company, (y) any prospective customers or
vendors of the Company being solicited at the time of Employee's termination, or
(z) any individual or entity who or which was within the most recent twelve (12)
month period a customer or vendor of the Company, for the purpose of inducing
such customer or vendor or potential customer or vendor to be connected to or
benefit from any competitive business or to terminate its or their business
relationship with the Company; (ii) solicit, induce or assist any third party in
soliciting or inducing any individual or entity who is then (or was at any time
within the preceding 12 months) an employee, consultant, independent contractor
or agent of Company) to leave the employment of the Company or cease performing
services for the Company; (iii) hire or engage or assist any third party in
hiring or engaging, any individual or entity that is or was (at any time within
the preceding 12 months) an employee, consultant, independent contractor or
agent of the Company, or (iv) solicit, induce or assist any third party in
soliciting or inducing any other person or entity (including, without
limitation, any third-party service provider or distributor) to terminate its
relationship with the Company or otherwise interfere with such relationship.
5.05 NON-DISPARAGEMENT. Employee will not at any time (during or after
Employee's employment with Employer) disparage the reputation of Employer, its
affiliates and their respective clients, customers and its or their respective
officers, directors, agents or employees. Employer will cause its officers,
directors, agents and/or employees to not at any time (during or after
Employee's employment with Employer) disparage the reputation of Employee.
5.06 COOPERATION. Employee agrees to cooperate both during and after Employee's
employment with Employer, at Employer's sole cost and expense, with the
investigation by the Company involving the Company or any employee or agent of
the Company.
5.07 REASONABLE RESTRICTIONS/DAMAGES INADEQUATE REMEDY; BREACHES.
(A) Employee acknowledges that the restrictions contained in this
Article V are reasonable and necessary to protect the legitimate business
interests of the Company and that any breach or threatened breach by Employee of
any provision contained in this Article V will result in immediate irreparable
injury to the Company for which a remedy at law would be inadequate. Employee
understands that the Employer's business is global and, accordingly, the
restrictions can not be limited to any particular geographic area. Employee
further acknowledges that the restrictions contained in this Article V will not
prevent Employee from earning a livelihood during the applicable period of
restriction. Accordingly, Employee acknowledges that Company shall be entitled
to temporary, preliminary and permanent injunctive or other equitable relief in
any court of competent jurisdiction (without being obligated to post a bond or
other collateral) and to an equitable accounting of all earnings, profits and
other benefits arising, directly or indirectly, from such violation, which
rights shall be cumulative and in addition to (rather than instead of) any other
rights or remedies to which the Company may be entitled at law or in equity. In
addition (and not instead of those rights), Employee further covenants that
Employee shall be responsible for payment of the fees and expenses of the
Company's attorneys and experts, as well as the Company's court or other forum
costs, pertaining to any suit, arbitration, mediation, action or other
proceeding (including the costs of any investigation related thereto) arising
directly or indirectly out of Employee's violation or threatened violation of
any of the provisions of this Article V.
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(B) Notwithstanding the foregoing, in the event Employee breaches or
threatens to breach any term or condition of this Agreement, including the
provisions of Section 5.04 or other sections of this Article V, whether or not
any court of competent jurisdiction shall determine that any one or more of the
provisions contained in this Article V, including Section 5.04, is
unenforceable, it shall constitute a material breach of this Agreement and in
addition to and not instead of the Company's other remedies hereunder or
otherwise at law or in equity, Employee shall be required to, upon written
notice from the Company, return the payments paid by the Company pursuant to
Section 4.02 of this Agreement, less the greater of: (a) $500, or (b) 5% of the
payments paid by Employer hereunder. However, the Company will not demand
repayment if such breach is (in the good faith discretion of the Company)
subject to cure and is cured to the Company's satisfaction by Employee within 5
calendar days following such notice of such breach. Without limitation, in no
event shall any breach of the provisions of Section 5.04 be subject to cure.
Employee agrees that if Employee is required to return the payments, this
Agreement shall continue to be binding on Employee and the Company shall be
entitled to enforce the provisions of this Agreement as if the payments had not
been repaid to the Company. In the event the Company provides written notice to
Employee of a breach or threatened breach, the Company, at the direction of the
Board, shall have the right to suspend all further payment obligations to
Employee hereunder and shall have no further payment obligations unless a court
of competent jurisdiction finds that Employee has not breached his obligations
under this Agreement. In the event of a threatened breach that has been cured to
the Company's satisfaction within 5 days of notice to Employee, the Company
shall resume making payments pursuant to this Agreement. In addition to the
foregoing and any other rights to which the Company may be entitled, at law or
in equity (and not instead of such rights), the Company shall have the right to
collect from Employee payment of the reasonable fees and expenses of the
Company's attorneys and experts, as well as the Company's court or forum costs,
pertaining to any suit, arbitration, mediation, action or other proceeding
(including the costs of any investigation related thereto) arising directly or
indirectly out of Employee's breach of any of the provisions of this Agreement.
In the event of a breach or threatened breach, the Company reserves to itself
all remedies available to it under this Agreement or otherwise at law or in
equity.
5.08 SEPARATE COVENANTS. In the event that any court of competent jurisdiction
shall determine that any one or more of the provisions contained in this Article
V shall be unenforceable in any respect, then such provision shall be deemed
limited and restricted to the extent that the court shall deem the provision to
be enforceable. It is the intention of the parties to this Agreement that the
covenants and restrictions in this Article V be given the broadest
interpretation permitted by law. The invalidity or unenforceability of any
provision of this Article V shall not affect the validity or enforceability of
any other provision hereof. The covenants and restrictions contained in this
Article V shall be deemed a series of separate covenants and restrictions one
for each of the fifty states of the United States of America. If, in any
judicial or arbitration proceedings, a court of competent jurisdiction or
arbitration panel should refuse to enforce all of the separate covenants and
restrictions in this Article V, then such unenforceable covenants and
restrictions shall be eliminated from the provisions of this Agreement for the
purpose of such proceeding to the extent necessary to permit the remaining
separate covenants and restrictions to be enforced in such proceeding.
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ARTICLE VI
TAX MATTERS
6.01 WITHHOLDING. Employer may withhold from any amounts payable under this
Agreement such federal, state and local taxes as may be required to be withheld
pursuant to any applicable law or regulation.
6.02 SECTIONS 280G/4999 GOLDEN PARACHUTE TAX. If during or after the Employee's
employment with Employer, Employee becomes subject to the excise tax imposed by
Internal Revenue Code ("IRC") Section 4999 (the "Parachute Excise Tax"), the
parties agree that if the aggregate of all "parachute payments" (as such term is
used under IRC Section 280G) exceeds 300% of the "base amount" (as such term is
used under IRC Section 280G) by less than $50,000, then the parachute payment
shall be reduced to 299.99% of such base amount, with such reduction being
determined by Employee in his sole discretion.
6.03 SECTION 409A.
(A) FULL COMPLIANCE. It is the intent of the parties that all
compensation and benefits payable or provided to the Executive (whether under
this Agreement or otherwise) shall fully comply with the requirements of IRC
Section 409A such that no amounts payable hereunder shall be subject to
"additional tax" within the meaning of IRC Section 409A. Employer agrees that it
will not, without Employee's prior written consent, take any action, or refrain
from taking any action, that would result in the imposition of "additional tax",
interest and/or penalties upon Employee under IRC Section 409A.
(B) SEPARATE PAYMENTS. Notwithstanding anything contained in this
Agreement to the contrary, each and every payment made under this Agreement
shall be treated as a separate payment and not as a series of payments.
(C) SPECIFIED EMPLOYEE. Notwithstanding anything contained in this
Agreement to the contrary, if Employee is a "specified employee" (determined in
accordance with IRC Section 409A and Treasury Regulation Section 1.409A-3(i)(2))
as of the termination of Employee's employment with Employer, and if any
payment, benefit or entitlement provided for in this Agreement or otherwise both
(i) constitutes a "deferral of compensation" within the meaning of IRC Section
409A ("Nonqualified Deferred Compensation") and (ii) cannot be paid or provided
in a manner otherwise provided herein or otherwise without subjecting Employee
to additional tax, interest and/or penalties under IRC Section 409A, then any
such payment, benefit or entitlement that is payable during the first 6 months
following the date of termination shall be paid or provided to Employee in a
lump sum cash payment to be made on the earlier of (x) Employee's death or (y)
the first business day of the seventh calendar month immediately following the
month in which the date of termination occurs.
(D) CHANGE IN CONTROL. Notwithstanding anything contained in this
Agreement to the contrary, any payment or benefit that (i) qualifies as
Nonqualified Deferred Compensation and (ii) is paid or distributed due to a
Change in Control, whether pursuant to this Agreement or otherwise, shall only
be paid or distributed if such event that qualifies as a Change in Control under
this Agreement also qualifies as either a "change in the ownership or effective
control of a corporation" or a "change in the ownership of a substantial portion
of the assets of a corporation" in accordance with Treasury Regulation
1.409A-3(i)(5).
13
(E) EXPENSE REIMBURSEMENTS. Notwithstanding anything contained in this
Agreement to the contrary, except to the extent any reimbursement, payment or
entitlement under this Agreement does not qualify as Nonqualified Deferred
Compensation, (i) the amount of expenses eligible for reimbursement or the
provision of any in-kind benefit (as defined in IRC Section 409A) to Employee
during any calendar year will not affect the amount of expenses eligible for
reimbursement or provided as in-kind benefits to Employee in any other calendar
year, (ii) the reimbursements for expenses for which Employee is entitled shall
be made on or before the last day of the calendar year following the calendar
year in which the applicable expense is incurred and (iii) the right to payment
or reimbursement or in-kind benefits may not be liquidated or exchanged for any
other benefit.
(F) REIMBURSEMENT OF EXPENSES IN CONNECTION WITH A SEPARATION FROM
SERVICE. Notwithstanding anything contained in this Agreement to the contrary,
any payment or benefit paid or provided under Section 4.02 above or otherwise
paid or provided due to a "separation from service" (as such term is described
and used in IRC Section 409A and the Treasury Regulations promulgated
thereunder) that is exempt from IRC Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(v) shall be paid or provided to Employee only to the
extent the expenses are not incurred or the benefits are not provided beyond the
last day of the second taxable year of Employee following the taxable year of
Employee in which the separation from service occurs; PROVIDED, HOWEVER that
Employer reimburses such expenses no later than the last day of the third
taxable year following the taxable year of Employee in which the separation from
service occurs.
(G) INVOLUNTARY SEPARATION DUE TO GOOD REASON. Notwithstanding anything
contained in this Agreement to the contrary, Employee may only terminate his
employment for Good Reason in accordance with Section 4.02(E) above only if such
termination of employment complies with Treasury Regulation Section
1.409A-1(n)(2). It is the intent of the parties that the definition of Good
Reason and the separation-from-service procedures specified in Article IV fully
comply with Treasury Regulation Section 1.409A-1(n)(2).
(H) DISPUTE RESOLUTION PAYMENTS. Any dispute resolution payment
(including related reimbursable expenses, fees and other costs) that does not
qualify as a "legal settlement" in accordance with Treasury Regulation
1.409A-1(b)(11) (as determined by Employer in its sole discretion) shall be paid
by Employer to Employee not later than the last day of Employee's taxable year
following the year in which the dispute is resolved.
6.04 SECTION 83. It is the intent of the parties that the New Awards be taxed
under IRC Section 83. Employee may - but is not obligated to - make an election
under IRC Section 83(b) within 30 days of the date of grant of the New Awards
subject to and in accordance with applicable regulations and notice to Employee.
14
6.05 SECTION 162(m). It is the intent of the parties that the New Awards not
qualify as "performance-based compensation" (as such term is described in Code
Section 162(m)(4) and Treasury Regulation Section 1.162-27(e)).
ARTICLE VII
MISCELLANEOUS
7.01 BENEFIT OF AGREEMENT AND ASSIGNMENT. This Agreement shall inure to the
benefit of Employer, its affiliates and subsidiaries, and its and their
respective successors and assigns (including, without limitation, the purchaser
of all or substantially all of any of its or their respective assets) and shall
be binding upon Employer and its successors and assigns. This Agreement shall
also inure to the benefit of and be binding upon Employee and Employee's heirs,
administrators, executors and assigns. Employee may not assign or delegate
Employee's duties under this Agreement, without the prior written consent of
Employer.
7.02 NOTICES. All notices, requests, demands and other communications required
or permitted hereunder shall be given in writing and shall be deemed to have
been duly given (i) on the date delivered if personally delivered, (ii) upon
receipt by the receiving party of any notice sent by registered or certified
mail (first-class mail, postage pre-paid, return receipt requested) or (iii) on
the date targeted for delivery if delivered by nationally recognized overnight
courier or similar courier service, in each case addressed to the Employer or
Employee, as the case may be, at the respective addresses indicated in the
caption of this Agreement or such other address as either party may in the
future specify in writing to the other. In addition, a copy (which shall not
itself constitute notice) of any notice sent to Employer hereunder shall be sent
to: Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxxx, Esq.
7.03 ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties hereto with respect to the terms and conditions of Employee's employment
during the Term and activities following termination of this Agreement and
supersedes any and all prior agreements and understandings, whether written or
oral, between the parties with respect to the subject matter of this Agreement
This Agreement may not be changed or modified except by an instrument in writing
signed by an authorized representative of the Board and Employee.
7.04 INDEMNIFICATION. Employer shall indemnify Employee against all claims
arising out of Employee's actions or omissions occurring during Employee's
employment with Employer to the fullest extent provided (A) by Employer's
Certificate of Incorporation and/or Bylaws, and (B) under the New Jersey General
Corporation Law, as each may be amended from time to time. Employer shall
maintain a Directors & Officers liability insurance policy ("D&O Coverage")
covering Employee to the extent Employer provides such coverage for its other
executive officers. Employer shall advance to Employee all reasonable costs and
expenses incurred by him in connection with any proceeding involving and that
are subject to indemnification within 20 days after receipt by Employer of a
written request for such advance. Such request shall include an undertaking by
Employee to repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such costs and
expenses.
15
7.06 NO ATTACHMENT. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect; provided, however, that nothing in this Section 7.06 shall
preclude the assumption of such rights by executors, administrators or other
legal representatives of Employer or his estate and their assigning any rights
hereunder to the person or persons entitled thereto.
7.07 SOURCE OF PAYMENT. All payments provided for under this Agreement shall be
paid in cash from the general funds of Employer. Employer shall not be required
to establish a special or separate fund or other segregation of assets to assure
such payments, and, if Employer shall make any investments to aid it in meeting
its obligations hereunder, Employee shall have no right, title or interest
whatever in or to any such investments except as may otherwise be expressly
provided in a separate written instrument relating to such investments. Nothing
contained in this Agreement, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between Employer and Employee or any other person. To the extent
that any person acquires a right to receive payments from Employer hereunder,
such right, without prejudice to rights which employees may have, shall be no
greater than the right of an unsecured creditor of Employer.
7.08 NO WAIVER. The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.
7.09 HEADINGS. The Article and Section headings in this Agreement are for the
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
7.10 GOVERNING LAW; JURISDICTION; JURY TRIAL WAIVER. Any and all actions or
controversies arising out of this Agreement or Employee's employment, including,
without limitation, tort claims, shall be construed and enforced in accordance
with the internal laws of the State of New Jersey, without regard to the choice
of law principles thereof. With respect to any such actions or controversies,
Employer and Employee hereby (a) irrevocably consent and submit to the sole
exclusive jurisdiction of the United States District Court for the District of
New Jersey or the Superior Courts of New Jersey (and of the appropriate
appellate courts therefrom), (b) irrevocably waive, to the fullest extent
permitted by law, any objection that any of them may now or hereafter have to
the laying of the venue of any such actions or controversies in any such court
or that any such any such actions or controversies which is brought in any such
court has been brought in an inconvenient forum, and (c) IRREVOCABLY WAIVE ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY SUCH ACTIONS OR CONTROVERSIES AND
REPRESENTS THAT SUCH PARTY HAS CONSULTED WITH COUNSEL SPECIFICALLY WITH RESPECT
TO THIS WAIVER.
7.11 VALIDITY. The invalidity or enforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
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7.12 CONTROLLING DOCUMENT. If any provision of any agreement, plan, program,
policy, arrangement or other written document between or relating to Employer
and Employee conflicts with any provision of this Agreement, the provision of
this Agreement shall control and prevail.
7.13 COUNTERPARTS. This Agreement may be executed in one more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
7.14 AGREEMENT TO TAKE ACTIONS. Each party to this Agreement shall execute and
deliver such documents, certificates, agreements and other instruments, and
shall take all other actions, as may be reasonably necessary or desirable in
order to perform his/her or its obligations under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the date first written above.
EMPLOYER:
IVIVI TECHNOLOGIES, INC.
BY: /s/ Xxxxx Xxxxxx, EVP
Ivivi Technologies, Inc.
EMPLOYEE:
/s/Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx, individually
18
ANNEX A
TO XXXXXX X. XXXXXXXXXX EMPLOYMENT AGREEMENT
DESCRIPTION OF THE NEW AWARDS (AS DEFINED IN THE EMPLOYMENT AGREEMENT)
Subject to (and as soon as practicable following) the approval of the
stockholders of Employer of a new equity incentive plan for key employees of
Employer providing for awards of stock options, restricted stock and other
equity based awards, and authorizing shares of common stock of Employer ("Common
Stock") sufficient to meet the obligations of the Employer under this Annex A
(the "New Plan"), Employee shall be granted shares of restricted common stock of
Employer ("Restricted Shares") on the terms and conditions described below and
upon such additional terms and conditions appropriate and typical for grants to
senior executives of publicly traded companies (the "Stock Grants").
The Stock Grants shall be comprised of (i) a grant of 500,000 Restricted Shares
(the "Time Vesting Grant"), (ii) a grant of 1,000,000 Restricted Shares (the
"Performance Vesting Grant") subject to the performance vesting described below
and (iii) a grant of 2,000,000 Restricted Shares (the "Financing Success
Grant"), subject to adjustment and vesting, only if Employer successfully
completes a financing or series of financings in an aggregate amount up to $20
million (each a "Financing" and collectively, the "Financings") prior to the
second anniversary of the date of this Agreement (the "Financing Deadline") and
as further described below. For purposes of the foregoing, to the extent the
source of any financing (whether by debt, equity or otherwise) is from Employee
or any of his affiliates, such amounts shall be excluded from the amount of any
Financing.
TIME VESTED GRANT
The Restricted Shares subject to the Time Vesting Grant shall vest with respect
to one-third of such shares on each of the first three anniversaries of the
Commencement Date, subject to Employee's continuous employment with Employer
through each such vesting date.
PERFORMANCE VESTING GRANT
The Restricted Shares subject to the Performance Vesting Grant shall vest upon
the attainment of the performance goals described below, subject to Employee's
continuous employment with Employer through each such vesting date. One-third of
such shares shall vest when the "market capitalization" of Employer equals or
exceeds $20 million (subject to equitable adjustment in connection with any
capital raising transaction as determined by the Compensation Committee). An
incremental one-third of such shares shall vest when the "market capitalization"
of Employer equals or exceeds $60 million (subject to equitable adjustment in
connection with any capital raising transaction as determined by the
Compensation Committee). The final one-third of such shares shall vest when the
"market capitalization" of Employer equals or exceeds $120 million (subject to
equitable adjustment in connection with any capital raising transaction as
determined by the Compensation Committee). For such purpose, "market
capitalization" means the aggregate market value of all of the outstanding
shares of Employer's publicly traded common stock, based upon the closing price
of such stock on the applicable securities exchange on which such stock trades,
and determined based upon a 20-day rolling average of such closing prices.
19
FINANCING SUCCESS GRANT
Vesting of the Restricted Shares is subject to Employee's continuous employment
with Employer through each such vesting date. Upon an aggregate of $20 million
of financings being completed, no future awards of Restricted Stock under the
Financing Success Grant shall be granted.
Notwithstanding anything herein to the contrary, the 2,000,000 Restricted Shares
subject to the Financing Success Grant shall be equitably adjusted, up or down,
so that, upon each Financing, the sum of all Restricted Shares subject to the
Time Vesting Grant (whether vested or unvested), plus the Restricted Shares
subject to the Performance Vesting Grant (whether vested or unvested), plus
Restricted Shares subject to the Financing Success Grant (as adjusted and
whether vested or unvested) shall equal 10% of (i) the Employer's outstanding
shares of common stock as of the date of this Agreement (not including any
shares of Common Stock issuable upon exercise of outstanding options and
warrants); plus (ii) all of the shares of Common Stock issued in connection with
the Financings; plus (iii) all of the shares of Common Stock issuable upon
conversion of any convertible notes or convertible preferred stock issued in
Financing; plus (iv) all of the shares of Common Stock issuable upon exercise of
warrants issued in the Financing; PROVIDED, HOWEVER, that the Restricted Shares
applicable to the Financing Success Grant that relate to 10% of warrants issued
in connection with a Financing will not vest until such time as such warrants
are actually exercised by the holder of such warrants; plus (v) the number of
Restricted Shares (as adjusted as described above), which shall be calculated by
adding the number of shares under clauses (i) through (iv), and dividing such
sum by the number nine (9).
EXAMPLE ONE. For greater clarity, by way of example, assume that the
total number of outstanding shares of Common Stock as of the date of
this Agreement equals 11 million (excluding the 3,500,000 Restricted
Shares to be granted to the Employee under the terms of this
Agreement). Also assume that Employer consummates a Financing of $5
million, and in connection with which Employer issues 10 million
additional shares of Common Stock. The number of Restricted Shares
relating to the Financing Success Grant shall be equitably adjusted,
and vest, as follows:
The total number of shares of outstanding Common Stock now
equals 11 million, plus 10 million, or 21 million. 21 million
(clauses (i) through (iv) in the formula above) divided by 9
equals 2,333,333, which equals the total number of Restricted
Shares that should be held by Employee. Of such 2,333,333, (i)
500,000 relate to the Time Vesting Grant, and (ii) 1,000,000
relate to the Performance Vesting Grant. Therefore, the total
number of Restricted Shares relating to the Financing Success
Grant is reduced to 833,333, all of which shall become vested
as of the closing of such Financing.
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EXAMPLE TWO. Now, by way of further example, assume that Employer
consummates another Financing of $10 million, and in connection with
which Employer issues 10 million additional shares of Common Stock. The
number of Restricted Shares relating to the Financing Success Grant
shall be equitably adjusted, and vest, as follows:
The total number of shares of outstanding Common Stock now
equals 21 million, plus 10 million, or 31 million. 31 million
(clauses (i) through (iv) in the formula above) divided by 9
equals 3,444,444, which equals the total number of Restricted
Shares that should be held by Employee (including those that
already vested as part of the Example One). Of such 3,444,444,
(i) 500,000 relate to the Time Vesting Grant, (ii) 1,000,000
relate to the Performance Vesting Grant and (iii) 833,333
relate to the Financing Success Grant that became fully vested
in connection with Example One. Therefore, the total number of
Restricted Shares relating to the Financing Success Grant is
increased by 1,111,111 shares, all of which shall become
vested as of the closing of such Financing.
EXAMPLE THREE. Now, by way of further example, assume that Employer
consummates another Financing of $10 million, and in connection with
which Employer issues 10 million additional shares of Common Stock. The
number of Restricted Shares relating to the Financing Success Grant
shall be equitably adjusted, and vest, as follows:
The total number of shares of outstanding Common Stock now
equals 31 million, plus 10 million, or 41 million. 41 million
(clauses (i) through (iv) in the formula above) divided by 9
equals 4,555,555, which equals the total number of Restricted
Shares that should be held by Employee (including those that
already vested as part of the Example One). Of such 4,555,555,
(i) 500,000 relate to the Time Vesting Grant, (ii) 1,000,000
relate to the Performance Vesting Grant and (iii) 1,944,444
relate to the Financing Success Grant that became fully vested
in connection with Example One and Example Two. Therefore, the
total number of Restricted Shares relating to the Financing
Success Grant is increased by 1,111,111 shares, all of which
become vested as of the closing of such Financing.
As a result of the full $20 million financing being completed, no
future awards of Restricted Stock under the Financing Success Grant
shall be granted.
GENERAL PROVISIONS
The Stock Grants shall vest in accordance with the terms and conditions
described above. The Stock Grants, if and to the extent not yet vested, shall
terminate upon the 10th anniversary of the Commencement Date, or upon such
earlier date in connection with Employee's termination of employment as provided
for in this Agreement, except that the Financing Success Grant shall no longer
be subject to further vesting following the Financing Deadline.
Employer shall use reasonable efforts to obtain the approval of Employer's
stockholders of the New Plan by no later than March 31, 2009. Notwithstanding
the foregoing, in the event that the stockholders do not approve the New Plan,
Employer shall provide Employee with an alternative incentive compensation award
or arrangement that provides the after-tax economic equivalent of the Stock
Grants, which alternative arrangement shall be subject to Employee's reasonable
consent and approval.
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