EMPLOYMENT AGREEMENT BETWEEN ARBIOS SYSTEMS, INC. AND AMY FACTOR
EXHIBIT
10
BETWEEN
▇▇▇▇▇▇
SYSTEMS, INC. AND ▇▇▇ FACTOR
This
Employment Agreement (this “Agreement”) is entered into by and between ▇▇▇▇▇▇
Systems, Inc., a Nevada corporation (the “Company”), and ▇▇▇ Factor ("Factor"),
effective as of March 31, 2005 (the “Effective Date”).
A. Factor
has been a consultant to the Company, through AFO Advisors, LLC, for the past 16
months and is familiar with the Company’s technology and
operations.
B. The
Company believes that it is in its best interest to retain the services of
Factor, and Factor is willing to provide such services on the terms and
conditions of this Agreement.
C. Factor
currently is, and will throughout the term of this Agreement, be employed by the
Company on the terms and conditions of this Agreement.
Therefore,
the parties agree as follows:
1. Services. During
the term of this Agreement, Factor shall serve, on a full time basis, as interim
Chief Executive Officer of the Company and, if requested by the Board of
Directors of the Company, the interim Chief Executive Officer of ▇▇▇▇▇▇
Technologies, Inc. Commencing on the Effective Date, Factor shall also be
appointed to serve on the Board of Directors of the Company and on the Board of
Directors of ▇▇▇▇▇▇ Technologies, Inc. As interim Chief Executive Officer,
Factor will report to the Company's board of directors (the "Board of
Directors"), and shall have such duties consistent with that of a Chief
Executive Officer that may from time to time be designated or assigned to Factor
pursuant to the directives of the Board of Directors, including those set forth
in Section 4.4 below. Factor shall perform faithfully the duties assigned to her
to the best of her ability.
2. Term. The
term of this Agreement shall commence on the Effective Date and, subject to
Paragraph 7, shall remain in full force and effect until a permanent CEO is
hired by the Company (the “Term”).
3. Place
of Services. Factor
shall perform the services at the offices of AFO
Advisors, LLC in
Madison, New Jersey, unless otherwise agreed upon by the parties. The Company
shall reimburse Factor for all reasonable out-of-pocket expenses incurred in
connection with the performance of the services hereunder, including, without
limitation, travel, lodging, base telephone, long distance charges incurred in
connection with services provided under this Agreement, monthly fax charges,
monthly internet charges, costs of a copy machine, and other reasonable office
equipment and supplies. Factor shall submit a statement, with reasonable backup
documentation, for such reimbursable expenses on a monthly basis, and the
Company shall reimburse such expenses within 10 days.
4. Base
Salary and Benefits. The
Company shall pay Factor the amounts set forth in this Paragraph 4.
4.1 Base
Salary. For all
services to be rendered by Factor pursuant to this Agreement, the Company agrees
to pay Factor a base salary (the “Base Salary”) at a monthly rate of $25,000,
which is equivalent to $300,000 on an annualized basis. The Base Salary shall be
paid biweekly, in accordance with the Company’s normal payroll policies, for the
services provided during the month.
4.2 Stock
Options.
Incentive compensation in the form of 5-year non-qualified stock options to
purchase an aggregate of 200,000 shares of the Company’s common stock. Of the
foregoing stock options, options to purchase 97,000 shares of the Company’s
common stock shall be granted pursuant to the Company’s 2001 Stock Option Plan,
and options to purchase 103,000 shares of the Company’s common stock shall be
granted pursuant to the Company’s 2005 Stock Incentive Plan. If the stockholders
of the Company do not approve the 2005 Stock Incentive Plan by July 15, 2005
then the options for the 103,000 shares granted under the 2005 Stock Incentive
Plan will be cancelled and the Company will, on the date of such cancellation,
issue to Factor a 5-year stock purchase warrant (the “Warrant”) having the same
exercise price as the options granted under the 2005 Stock Incentive Plan and a
similar cashless exercise provision. A registration statement on Form S-8 for
the 2005 Stock Incentive Plan (and the options granted to Factor) will be filed
within by no later than July 31, 2005. If the Company issues the Warrant to
Factor, the Company shall cause a registration statement registering the shares
of common stock underlying the Warrant to be filed with the Securities and
Exchange Commission by no later than July 31, 2005. The options will have an
exercise price of $1.65 per share (the closing market price of the common stock
on the Effective Date) and will have the cashless exercise provision permitted
under the 2001 Stock Option Plan. Options to purchase 80,000 shares will vest on
the Effective Date, and the options for the remaining 120,000 shares will vest
in monthly installments of 6,000 shares commencing on April 1, 2005. The vesting
of these options will be accelerated to be immediately and fully (100%) vested
when the Company recruits a CEO who is hired by the Board of Directors. If
Factor terminates this Agreement for any reason other than a breach by the
Company, or if the Company terminates this Agreement “for cause” (as defined in
Section 7.2 below) before all of the remaining 120,000 options have vested, all
unvested options will be forfeited. If the Company terminates this Agreement for
any reason other than cause, the options will thereupon immediately and fully
(100%) vest. Factor will, so long as Factor continues to be a member of the
Board of Directors, have the remainder of the five year option term to exercise
the options or, if Factor is no longer a member of the Board of Directors, then
Factor will have one year after the termination date to exercise the
options.
4.3 Discretionary
Stock Options. If the
Board of Directors elects to grant stock options to management personnel, it may
in, its sole discretion, also grant additional stock options to Factor. The
number of stock options and terms of such discretionary stock options, if any,
shall be determined by the Board of Directors.
4.4 Performance-Based
Bonus. Based
on the performance of Factor, Factor shall be paid a discretionary cash bonus
(the “Cash Bonus”), the amount of which to be determined in the reasonable
discretion of the Board of Directors (without the vote of Factor). The Cash
Bonus, if earned, shall be paid by March 2006; provided, however, that if a CEO
is hired within twelve months following the Effective Date, the Cash Bonus, if
any, shall be payable within 10 business days after the CEO begins employment
with the Company. The Cash Bonus payable by the Company to Factor shall not
exceed 30% of the annualized Base Fee, and shall be based on the Board of
Director’s review of Factor’s performance assisting the Company’s efforts in the
following areas:
| a. |
Increasing
the awareness of the Company within the investment
community. |
| b. |
Listing
of the Company’s common stock on AMEX or Nasdaq. |
| c. |
Expanding
the management and Board of Directors with quality
personnel. |
| d. |
Raising
additional equity capital for the Company by the end of the Term from
investors or strategic partners (other than through the exercise of any of
the warrants that are outstanding as of the Effective
Date). |
| e. |
Meeting
the Company’s milestones for SEPET and HepatAssist-2 technology, as
outlined in the Company’s Prospectus, dated February 22,
2005. |
| f. |
Implementing
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act provisions that apply to the Company.
|
4.5 Paid
Time Off. Factor
shall be entitled to four (4) weeks of paid time off during which it shall not
be required to perform any services hereunder, which period shall be pro rated
during the Term.
4.6 Benefits.
| a. |
The
Company will reimburse Factor for expenses related to maintaining her
current medical, dental and vision coverage in the amount of $460/month.
The Company shall not be obligated to include Factor in its medical,
dental or visions policies. |
| b. |
The
Company shall provide term life insurance on the life of Factor in the
amount of $500,000 throughout the Term, with Factor to determine the
beneficiary. |
| c. |
Short-term
and long-term disability insurance throughout the
Term. |
| d. |
Such
other benefits as provided to other senior executives of the
Company. |
4.7 A 401K
plan. Factor
shall have a right to participate in a 401K plan with the Company to match at a
rate of 50% of the amount Factor contributes up to 6% of total compensation per
annum.
4.8 Indemnification
Agreement. The
Company and Factor shall enter into an Indemnification Agreement in the form of
that attached hereto as Exhibit “A” concurrently with the execution of this
Agreement.
4.9 Reimbursement
of Legal Fees. The
Company will reimburse Factor for reasonable legal expenses she incurs in
connection with the review of this Agreement.
5. Termination.
5.1 Termination
Without Cause. This
Agreement may be terminated by either party, with or without cause, upon 30
days’ prior written notice.
5.2 Termination
With Cause. The
Company may terminate this Agreement “for cause”, and without prior written
notice except in the event of termination for the reason set forth in clause
(2). “For cause” termination shall mean (and shall be limited to): (1)
commission of any fraud, misappropriation or engaging in willful misconduct in
the performance of Factor’s services hereunder; (2) gross negligence in the
performance of Factor’s services hereunder which is not cured within 10 days
after written notice of such conduct has been given by the Company (provided,
however, that such notice must only be given twice by the Company); (3) engaging
in illegal activities or engaging in other wrongful conduct that has a material
adverse effect on the Company; (4) conviction of a felony; or (5) breach of the
obligations set forth in Paragraph 6 hereof.
5.3 Obligations
After Termination. If this
Agreement is terminated by either party, with or without cause, the Company
shall pay Factor the Base Salary and accrued time off then due and owing through
the date of termination. Options shall be treated as set forth in Paragraph 4.2.
Thereafter, all of the Company’s obligations and Factor’s obligations under this
Agreement shall cease, and no further monies or compensation shall be owing to
Factor in connection with this Agreement; provided, however that the obligations
of Factor pursuant to Paragraph 6 shall remain in full force and effect for the
term set forth therein, and the terms set forth in the Indemnification Agreement
shall remain in effect in accordance with the terms of that
agreement.
6. Covenants. Factor
shall not to, directly or indirectly, on her own or by, through or for any other
person or entity:
6.1 Disclose
or use any Confidential Information (as defined below) except as required in the
performance of her services hereunder. Factor acknowledges that the Company’s
business and success depend in large part upon the use and protection of
Confidential Information and agree at all times (during the Term and at all
times thereafter) to hold the Confidential Information in the strictest
confidence. “Confidential Information” means any and all proprietary
information, technical data, trade secrets or know-how of the Company or of the
Company’s clients, customers, suppliers, or consultants, including, but not
limited to, any and all research, product plans, products, services, marketing
plans, business plans, software, databases, developments, Inventions (as defined
below), processes, formulas, technology, designs, drawings, operating
procedures, trade secrets, marketing, finances or other technical, financial, or
business information or plans pertaining to the Company or disclosed to Factor
by the Company or any of its employees, clients, customers, consultants, or
contractors, either directly or indirectly, in writing, orally or by drawings or
observation of parts, equipment, software, databases or other tangible or
intangible things or activities. Confidential Information does not include any
of the foregoing which (a) has become publicly known and made generally
available through no wrongful act of (i) Factor or (ii) of others who were under
confidentiality obligations to the Company known to Factor, (b) is received by
Factor from a third party and is not subject to an obligation of confidentiality
owed to such third party, or (c) is independently developed by Factor without
use of the Company’s Confidential Information. “Inventions” shall mean all
inventions, products, processes, machines, original works of authorship,
developments, concepts, improvements, enhancements, designs, discoveries,
techniques, methods, technologies, data, media, derivative works, ideas,
trademarks, or trade secrets, whether or not patentable or registrable under
copyright or other laws, rules or regulations, which Factor may solely or
jointly (with the Company) conceive or develop or reduce to practice, or cause
to be conceived or developed or reduced to practice in the performance by Factor
of services hereunder, related to products assembled, produced, manufactured,
distributed, or sold by the Company during the Term.
6.2 Claim
ownership of any concept, design, work product, finished product, idea,
Invention, research, or product development efforts undertaken by the Company
(collectively, the “Intellectual Property”). Factor acknowledges that the
Intellectual Property, the Inventions, and the Confidential Information are the
sole and exclusive property of the Company.
6.3 Keep any
records of the Company following request by the Company for the return of the
records. Immediately upon request by the Company, Factor shall deliver to the
Company (and will not keep in Factor’s possession, recreate, copy, or deliver to
anyone else) any and all devices, records, data, notes, reports, proposals,
lists, correspondence, specifications, drawings blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items owned or developed or in the possession of the Company, including those
developed by Factor under this Agreement.
7. Survivability. The
terms, provisions and obligations contained in Paragraphs 4 and 6 of this
Agreement and in the Indemnification Agreement shall survive the termination of
this Agreement.
8. Injunctive
Relief. Factor
recognizes and agrees that because of the nature of the business of the Company,
it would be difficult to determine actual damages if Factor breached any of the
covenants contained in Paragraph 6 hereof. In the event of a breach or
threatened breach of Paragraph 6 of this Agreement, the injury suffered by the
Company may not be fully compensable in money damages alone; accordingly, the
Company will, in addition to other available legal or equitable remedies, be
entitled to seek in a court of competent jurisdiction the remedies of
injunction, specific performance and other equitable relief to prevent a breach
or threatened breach without having to post bond or other security or prove
damages. Nothing set forth in this Paragraph shall prevent the Company from
seeking monetary damages or other relief in the event of a breach of Paragraph 6
or any other paragraph of this Agreement.
9. Notices. All
notices under this Agreement shall be in writing and shall be deemed received
and become effective only when (a) delivered in person to the recipient;
(b) delivered by reputable overnight courier, with a receipt being provided
to the sender; (c) delivered by facsimile, with telephonic or electronic
confirmation of receipt to the sender. Refusal to accept delivery shall be
deemed delivery. Notices are to be addressed to the Company and Factor as set
forth below. Notice of change of address shall be effective upon delivery in
accordance with this paragraph.
The
Company’s notice address is:
▇▇▇▇▇▇
Systems, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Factor’s
notice address is:
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
10. Entire
Agreement. This
Agreement and the Indemnification Agreement constitute the final, complete,
exclusive, and entire statement of the terms of this Agreement and supersede in
their entirety all prior and contemporaneous agreements, statements, term
sheets, discussions, negotiations, and undertakings of the Company and Factor
with respect to the subject matter hereof, whether written or oral, express or
implied.
11. Amendments. This
Agreement may not be amended except by a writing signed by each of the
parties.
12. Severability. The
invalidity or unenforceability of any provision of this Agreement as determined
by a court or arbitrator shall not affect any of the other provisions hereof.
The invalid or unenforceable provision shall be limited to the extent required
to make it valid and enforceable, and, if necessary, severed from this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect.
13. Acknowledgment. Factor
acknowledges that it has consulted with or has had the opportunity to consult
with independent counsel regarding this Agreement and has been advised to do so.
Factor further acknowledges that Factor has read and understands all of the
terms and obligations contained in this Agreement. This Agreement has been
negotiated by the parties, and is to be construed in accordance with its fair
meaning, and any rule of construction that would require an interpretation
against the drafter is of no application and is hereby expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intentions of the parties.
14. Applicable
Law. This
Agreement shall be governed by the internal substantive laws, but not the choice
of law rules, of the State of New Jersey.
15. Counterparts;
Facsimile. This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original and all of which together shall constitute one and the
same instrument. Facsimile signatures shall be effective to bind the parties,
but the parties shall exchange originally signed copies of this Agreement on a
reasonably prompt basis.
The
parties have duly executed this Agreement as of the date first written
above.
| ▇▇▇▇▇▇ Systems, Inc. | |||
| By: | |||
| Name: | |||
| Title: | |||
| ▇▇▇ Factor | |||
| By: | |||
| Name: ▇▇▇ Factor |