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EXHIBIT 11.1
CRYOMEDICAL SCIENCES, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is dated as of May 30, 2001 by and
between J. XXXXXX XXXXXXXX ("Employee") and CRYOMEDICAL SCIENCES, INC., a
Delaware corporation (the "Company").
1. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall be effective through December 31, 2002 (the
"Original Term"). This Agreement shall automatically renew for
successive 12-month periods (each, an "Additional Term") unless
terminated by either party. The Original Term and each
Additional Term shall each be referred to as a "Term."
2. DUTIES.
(a) POSITION. Employee shall be employed as President and
Chief Executive Officer, and as such will have
responsibility for the duties typically associated with
such positions and will report to the Company's Board of
Directors (the "Board").
(b) OBLIGATIONS TO THE COMPANY. Employee agrees to perform
to the best of his ability and experience all of the
duties and obligations reasonably required of and from
Employee pursuant to the express and implicit terms
hereof. During the term of Employee's employment
relationship with the Company, Employee further agrees
that he will devote his business time and attention to
the business of the Company.
3. AT-WILL EMPLOYMENT. The Company and Employee acknowledge that
Employee's employment is and shall continue to be at-will, as
defined under applicable law, and that Employee's employment
with the Company may be terminated by either party at any time
for any or no reason. If Employee's employment terminates for
any reason, Employee shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided
in this Agreement. The rights and duties created by this Section
3 may not be modified in any way except by a written agreement
executed by the Company.
4. COMPENSATION. For the duties and services to be performed by
Employee hereunder, the Company shall pay Employee, and Employee
agrees to accept, the salary, stock options, bonuses and other
benefits described below in this Section 4.
(a) SALARY. Employee shall receive a salary of $21,000 per
month, payable pursuant to the Company's normal payroll
practices. In the event this Agreement is extended
beyond the Original Term, the base salary shall be
reviewed at the time of such extension by the Board, and
any increase will be effective as of the date determined
appropriate by the Board.
(b) BONUSES. Employee's entitlement to incentive bonuses
from the Company is discretionary and shall be
determined by the Board in good faith based upon the
extent to which Employee's individual performance
objectives and the
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Company's financial and non-financial objectives are
achieved during the applicable bonus period.
Notwithstanding the foregoing, Employee's target bonus
for the Original Term is $200,000, of which Employee
shall receive $95,000 as a signing bonus.
(c) ADDITIONAL BENEFITS. Employee will be eligible to
participate in the Company's employee benefit plans of
general application including, without limitation, those
plans covering medical, disability and life insurance,
in accordance with the rules established for individual
participation in any such plan and under applicable law.
Employee will receive an automobile allowance of $500
per month. Employee will receive four (4) weeks paid
vacation, which shall be taken at such times as are
consistent with the needs of the Company. Employee will
be eligible for sick leave in accordance with the
policies in effect during the term of this Agreement and
will receive such other benefits as the Company
generally provides to its other employees of comparable
position and experience.
(d) STOCK OPTIONS AND OTHER INCENTIVE PROGRAMS. Employee
shall be eligible to participate in any stock option or
incentive programs available to officers of employees of
the Company. In addition, on the date hereof, the
Employee shall be grated ten-year incentive stock
options to purchase 1,000,000 shares of common stock
(the "Options") under the terms and conditions of the
Company's 19__ Stock Option/Stock Issuance Plan (the
"Plan"). The Options shall be exercisable at the fair
market value on the date of grant. Twenty-five (25)
percent of the stock option grant will be vested on date
of hire, with the final 75% vesting over the next 3
years, with 25% vesting on each anniversary of the date
of hire.
(e) REIMBURSEMENT OF EXPENSES. Employee shall be authorized
to incur on behalf and for the benefit of, and shall be
reimbursed by, the Company for reasonable business
expenses, provided that such expenses are substantiated
in accordance with Company policies.
5. CONFIDENTIAL INFORMATION
(a) Employee acknowledges that, because of his employment
hereunder, he will be in a confidential relationship
with the Company and will have access to confidential
information and trade secrets of the Company. Employee
acknowledges and agrees that the following constitutes
confidential and/or trade secret information belonging
exclusively to Company (collectively "Confidential
Information")
(i) all information related to customers including,
without limitation, customer lists, the
identities of existing, past or prospective
customers, prices charged or proposed to be
charged to customers, customer contacts, special
customer requirements and all related
information;
(ii) marketing plans, materials and techniques; and
(iii) all know-how devices, compilations of
information, copyrightable material and
technology and technical information, relating
to the business of the Company.
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(b) Employee agrees that except in the limited performance
of his duties under this Agreement, Employee shall not
use for his own benefit or disclose to any third-party
Confidential information acquired by reason of his
employment under this Agreement or his former status as
officer of the Company.
(c) This Section 5 shall survive termination of this
Agreement.
6. COMPANY PROPERTY.
(a) Any patents, inventions, discoveries, applications or
processes, software and computer programs devised,
planned, applied, created, discovered or invented by
Employee in the course of his employment under this
Agreement and which pertain to any aspect of the
business of the Company, or its subsidiaries, affiliates
or customers, shall be the sole and absolute property of
the Company, and Employee shall make prompt report
thereof to the Company and promptly execute any and all
documents reasonably requested to assure the Company the
full and complete ownership thereof.
(b) All records, files, lists, drawings, documents,
equipment and similar items relating to the Company's
business which Employee shall prepare or receive from
the Company shall remain the Company's sole and
exclusive property. Upon termination of this Agreement,
Employee shall return promptly to the Company all
property of the Company in his possession and Employee
represents that he will not copy, or cause to be copied,
printed summarized or compiled, any software, documents
or other materials originating with and/or belonging to
the Company. Employee further represents that he will
not retain in his possession any such software,
documents or other materials in machine or human
readable forms.
(c) This Section 6 shall survive termination of this
Agreement.
7. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS.
(a) TERMINATION OF EMPLOYMENT. Employee's employment shall
terminate immediately upon a Change of Control (as
defined below) or his death, and may be terminated upon
the occurrence of any of the following events:
(i) The effective date of a written notice sent to
the Company from Employee stating that Employee
is electing to terminate his employment with the
Company other than as a result of a
"Constructive Termination" (as defined below)
("Voluntary Termination");
(ii) The Company's determination that it is
terminating Employee without Case (as defined
below), which determination may be made by the
Company at any time at the Company's sole
discretion, for any reason or no reason
("Termination Without Cause");
(iii) Employee's Constructive Termination (as defined
below);
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(iv) The Company's reasonable, good faith
determination that it is terminating Employee
for Case ("Termination for Cause"); or
(v) Employee's Disability.
(b) SEVERANCE BENEFITS. Employee shall be entitled to
receive severance benefits upon termination of
employment only as set forth in this Section 7(b).
(i) VOLUNTARY TERMINATION. If Employee's employment
terminates by Voluntary Termination, then
Employee shall not be entitled to receive
payment of any severance benefits. Employee will
receive payment for all salary and vacation
accrued s of the date of Employee's termination
of employment, and Employee's benefits will be
continued under the Company's then existing
benefit plans and policies in accordance with
such plans and policies in effect on the date of
termination and in accordance with applicable
law.
(ii) INVOLUNTARY TERMINATION. If Employee's
employment terminates due to Termination Without
Cause or Constructive Termination (collectively,
"Involuntary Termination");
(1) Employee will be entitled to receive
payment of severance benefits equal to
Employee's regular monthly salary for an
additional twelve (12) months following
the date of such Involuntary Termination
(the "Severance Period"), such payment
to be made ratably over the Severance
Period according to the Company's
standard payroll schedule;
(2) Health insurance benefits with the same
coverage provided to Employee prior to
the termination (e.g. medical, dental,
optical, mental health) and in all other
respects significantly comparable to
those in place immediately prior to the
termination will be provided at the
Company's cost over the Severance
Period; and
(3) Any unvested stock options or shares of
restricted stock held by Employee as of
the date of Employee's termination of
employment shall continue to vest
through the end of the Severance Period
according to the vesting schedule set
forth in any agreement between Employee
and the Company governing the issuance
to Employee of such securities.
(iii) TERMINATION FOR CAUSE. If Employee's employment
is terminated for Cause, then Employee shall not
be entitled to receive payment of any severance
benefits. Employee will receive payment for all
salary and vacation accrued as of the date of
Employee's termination of employment and
Employee's benefits will be continued under the
Company's then existing benefit plans and
policies in accordance with such plans and
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policies in effect on the date of termination and in
accordance with applicable law.
(iv) TERMINATION BY REASON OF DEATH OR DISABILITY. In the
event that Employee's employment with the Company
terminates as a result of Employee's death or Disability
(as defined below), Employee or Employee's estate or
representative will receive all salary and vacation
accrued as of the date of Employee' death of Disability
and any other benefits payable under the Company" then
existing benefit plans and policies in accordance with
such plans and policies in effect on the date of death
or Disability and in accordance with applicable law.
(v) CHANGE OF CONTROL. Notwithstanding the preceding clause
of this Section 7(b), upon a Change of Control:
(1) Employee will be entitled to receive payment of
severance benefits equal to Employee's regular
monthly salary for a period of twelve (12)
months following said Change of Control (the
"Change of Control Severance Period"), such
payment shall be made ratably over the Change of
Control Severance Period according to the
Company's standard payroll schedule;
(2) Health insurance benefits with the same coverage
provided to Employee prior to the Change of
Control (e.g. medical, dental, optical, mental
health) and in all other respects significantly
comparable to those in place immediately prior
to the Change of Control will be provided at the
Company's cost over the Change of Control
Severance Period; and
(3) Any unvested stock options or shares of
restricted stock held by Employee on the date of
the Change of Control such securities shall vest
immediately.
(vi) NONCOMPETE. If Employee, directly or indirectly, shall
at any time during a Severance Period or a Change of
Control Severance Period, as an owner (other than a
shareholder in a publicly traded company), officer,
principal, agent, advisor, partner, member, director,
or employee of a business that directly competes with
the business conducted by the Company on the date of
Employee's termination of employment, then effective
upon Employee's commencement of such activities,
Employee shall not receive any severance payment or
other benefits under Sections 7 (b)(ii) or (v) beyond
what he would have received had he been Terminated for
Cause.
8. DEFINITIONS. For purposes of this Agreement,
(a) "Cause" for Employee's termination will exist at any time after
the happening of one or more of the following events:
(i) Employee's willful misconduct or gross negligence in
performance of his duties hereunder, including
Employee's refusal to comply in any material
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respect with the legal directives of the Board so long
as such directives are not inconsistent with the
Employee's position and duties, and such refusal to
comply is not remedied within fifteen (15) working days
after written notice from the Company, which written
notice shall state that failure to remedy such conduct
may result in Termination for Cause;
(ii) Dishonest or fraudulent conduct related and materially
adverse to the activities of the Company, a deliberate
attempt to do a material injury to the Company, or
conduct that materially discredits the Company or is
materially detrimental to the reputation of the Company,
including conviction of a felony; or
(iii) Employee's knowing and intentional material breach of
this Agreement, including without limitation, Employee's
theft or other misappropriation of the Company's
proprietary information.
(b) "Constructive Termination" shall be deemed to occur if (I)(1)
there is a significant reduction in Employee's duties, positions
or responsibilities causing such position to be of reduced
stature or responsibility or, (2) a reduction in Employee's base
compensation or benefits; and (ii) within the 60-day period
immediately following such material change or reduction
Employee elects to terminate his employment voluntarily.
(c) "Disability" shall mean that Employee has been unable to perform
his duties hereunder as the result of his incapacity due to
physical or mental illness, and such inability, which continues
for at least 60 consecutive calendar days or 90 calendar days
during any consecutive twelve-month period, if shorter, after
its commencement, is determined to be total and permanent by an
independent and impartial physician selected by the Company and
its insurers and acceptable to Employee or to Employee's legal
representative (with such agreement or acceptability not to be
unreasonably withheld).
(d) "Change of Control" shall mean the occurrence of any of the
following events: (i) an acquisition of the Company by another
entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization,
merger or consolidation but excluding any merger effected
exclusively for the purpose of changing the domicile of the
Company), or (ii) a sale of all or substantially all of the
assets of the Company (collectively a "Merger"), so long as in
either case (x) the Company's stockholders of record immediately
prior to such Merger will, immediately after such Merger, hold
less than 50% of the voting power of the surviving or acquiring
entity, or (y) the Company's stockholders of record immediately
prior to such Merger will, immediately after such Merger, hold
less than 60% of the voting power of the surviving or acquiring
entity and a majority of the members of the Board of Directors
of the surviving or acquiring entity immediately after such
Merger were not members of the Board of Directors of the Company
immediately prior to such Merger.
9. SUCCESSORS. Any successor to the Company (whether direct or indirect
and whether by purchase, loan, merger, consolidation, liquidation or
otherwise) or to all or substantially
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all of the Company's business and/or assets shall assume the obligations
under this Agreement and agree expressly to perform the obligations
under this Agreement in the same manner and to the same extent as the
Company would be required to perform such obligations in the absence of
a succession. The terms of this Agreement and all of Employee's rights
hereunder shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
10. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. Employee shall not be required to mitigate
the amount of any payment contemplated by this Agreement
(whether by seeking new employment or in any other manner), nor,
except as otherwise provided in this Agreement, shall any such
payment be reduced by any earnings that Employee may receive
from any other source.
(b) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the parties.
(c) SOLE AGREEMENT. This Agreement, including any exhibits hereto,
constitutes the sole agreement of the parties and supersedes
all oral negotiations and prior writings with respect to the
subject matter hereof, including the Employment Agreement, dated
May 30, 2001 between the Company and Employee.
(d) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt,
when delivered personally or by a nationally-recognized delivery
service (such as Federal Express or UPS), or 48 hours after
being deposited in the U.S. mail as certified or registered mail
with postage prepaid, if such notice is addressed to the party
to be notified at such party's address as set forth below or as
subsequently modified by written notice.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of California, without giving effect to the
principles of conflict of laws.
(f) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that
the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement
shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
(g) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
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The parties have executed this Agreement as of the date first written above.
CRYOMEDICAL SCIENCES, INC.
By: /s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
Title: Director
/s/ J. XXXXXX XXXXXXXX 4/19/2001
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J. Xxxxxx Xxxxxxxx
Address: 0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
