Exhibit 10.13
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of August 11,
2003, by and between HEALTH SCIENCES GROUP, INC. (hereinafter called the
"Corporation"), a Colorado corporation, and ▇▇▇▇▇ ▇▇▇▇▇, an individual
(hereinafter called the "Executive");
WITNESSETH THAT:
WHEREAS the Corporation desires to employ the Executive as General
Manager of Corporate Operations and Executive desires to accept such employment
offered by the Corporation;
NOW, THEREFORE, the Corporation and the Executive, each intending to be
legally bound, hereby mutually covenant and agree as follows:
1. EMPLOYMENT AND TERM.
(a) Employment. The Corporation hereby offers to employ the
Executive as the General Manager of Corporate Operations ("GM") and the
Executive hereby accepts such employment, for the term set forth in Paragraph
1(b) and under the terms and conditions set forth herein.
(b) Term. The term of the Executive's employment under this
Agreement shall commence the date set forth above and end December 31, 2005 (the
"Term") and shall be automatically renewed for successive one year periods
unless either party shall have given the other at least 90 days' advance written
notice of termination prior to the end of the Term or any renewal thereof.
2. DUTIES. (a) Subject to Subsection 2(c), during the period of
employment as provided in Paragraph 1(b) hereof, the Executive shall serve as
the GM and as a member of the Board of Directors. Executive shall have authority
for supervision and implementation of operating policies of QBI and the Other
Subsidiaries (as defined herein). The Executive shall have all powers and duties
consistent with such position and as set forth in the Bylaws of the Corporation
(which shall be amended to provide for such a position) and shall report to the
Board of Directors. Executive's duties shall include the preparation of, and
supervision of the implementation of, an operational plan for the Corporation's
QUALITY BOTANICAL INGREDIENTS, INC. subsidiary ("QBI") for the quarterly periods
through December 2005, (the "QBI" Plan") and operational plans for the
Corporation's other subsidiaries, XCEL Healthcare, Inc. and BioSelect
Innovations, Inc. ("Other Subsidiaries") for the same period. In addition,
Executive shall develop a plan for suitable acquisitions by the Corporation (the
"Acquisition Plan") and take appropriate steps to identify and pursue
appropriate acquisition targets. All such plans shall be subject to Board
approval. The Executive shall devote his best reasonable efforts to fulfill
faithfully, responsibly and to the best of his ability his duties hereunder.
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(b) Corporation shall establish a separate restricted account,
which shall be funded by the proceeds raised pursuant to the Private Placement
Memorandum of even date, as described therein. Disbursements of any and all
funds from said restricted account shall require the signature of Executive.
(c) The Executive shall be based at his office in Monsey, New
York, and shall be subject to reasonable travel and commutation requirements in
order to satisfy his duties as GM.
(d) Notwithstanding the commencement date of this Agreement,
Executive shall not assume the title of GM or be required to perform any duties
of an executive of the Corporation until the Corporation has obtained Director
and Officer Liability Insurance reasonably satisfactory to the Executive. Prior
to the implementation of such insurance, the Executive's responsibilities shall
be limited to consulting with the Chief Executive Officer and the President of
the Corporation with respect to the Corporation's operations and to performing
such other tasks of a non-executive nature as he and they shall agree upon.
3. SALARY.
(a) Base Salary. For services performed by the Executive for
the Corporation pursuant to this Agreement during the period of employment as
provided in Paragraph 1(b) hereof, the Corporation shall pay the Executive a
base salary at the rate of at least $150,000 per year ("Base Salary"), payable
in substantially equal installments in accordance with the Corporation's regular
payroll practices. Any compensation which may be paid to the Executive under any
additional compensation or incentive plan of the Corporation or which may be
otherwise authorized from time to time by the Board shall be in addition to the
Base Salary.
(b) Salary Increases. During the period of employment as
provided in Paragraph 1(b) hereof, the Base Salary of the Executive shall be
reviewed at each anniversary date of this Agreement by the Board to determine
whether or not the same should be increased in light of the duties and
responsibilities of the Executive and the performance thereof, and, if it is
determined that an increase is merited, such increase shall be promptly put into
effect and the Base Salary of the Executive as so increased shall constitute the
Base Salary of the Executive for purpose of Paragraph 4(a). The Corporation
shall, pursuant to its bylaws as now in effect, defend, indemnify and hold
harmless Executive, from and against all liabilities, costs, and expenses,
including attorneys fees, to the extent permitted by law and as provided in a
separate Indemnity Agreement between the Corporation and Executive which is
annexed hereto as Schedule 3(b) and is executed simultaneously herewith. The
Corporation represents that it will obtain Directors and Officers Liability
Insurance to cover Executive in the good faith discharge of his duties and will
maintain that insurance in full force and effect during the term of Executive's
employment.
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4. BONUS. For 2003, the Executive shall receive a bonus equal to the
greater of 2% of QBI earnings before taxes and before deducting any corporate
overhead charges or any portion of Executive's Base Salary for the quarter ended
December 31, 2003, or such sum as determined by the Board. For each subsequent
calendar year or portion thereof during the term of employment as provided in
Paragraph 1(b), the Executive shall receive a cash bonus of 2% of QBI's earnings
before taxes computed as aforesaid for such period unless otherwise agreed to by
the Corporation and the Executive.
5. OTHER BENEFITS. In addition to the Base Salary and the bonuses which
may be paid to the Executive pursuant to Paragraph 4, the Executive shall also
be entitled to the following:
(a) Participation in Benefit Plans. The Executive shall be
entitled to participate in all retirement, health, welfare, fringe benefit and
executive perquisite plans, programs and arrangements of the Corporation or QBI
to the extent the Corporation makes such benefits available to any executives of
the Corporation. Accordingly, Executive shall be entitled to participate under
the terms of such plans, programs and arrangements including a 401(k) plan and a
PPO medical plan, an automobile reimbursement plan for up to $350 per month
(covering cost of lease, insurance, license, gas and maintenance) dental and
vision plan, and disability insurance, which benefits are summarized on Schedule
5(a) attached hereto.
(b) Expense Reimbursement. The Corporation shall reimburse the
Executive for all reasonable business expenses and disbursements incurred by him
in the course of the performance of his duties under this Agreement upon
presentation by Executive of valid receipts and invoices therefore utilizing
procedures as established by the Corporation from time to time.
(c) Vacation and Holidays. The Executive shall be entitled to
four (4) weeks of vacation (subject to the Corporation's policies in effect from
time to time) during each year of this Agreement, or such greater period as the
Board shall approve, to paid holidays given by the Corporation to its executives
generally, and the Jewish Sabbath and Jewish Holidays without reduction in
salary or other benefits subject to reasonable limits on accrual as the Board
may determine.
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(d) Stock Option Plans. Concurrently herewith Executive is
being granted Stock Purchase Options pursuant to the Corporation's 2003 Stock
Option, Deferred Stock and Restricted Stock Plan ("2003 Stock Plan") and the
Stock Option Agreement, copies of which are annexed hereto as Schedule 5(d).
6. TERMINATION. Unless earlier terminated in accordance with the
provisions of this Paragraph 6, the Corporation shall continue to employ the
Executive and the Executive shall remain employed by the Corporation during the
entire term of this Agreement as set forth in Paragraph 1(b). Paragraph 7 hereof
sets forth certain obligations of the Corporation in the event that the
Executive's employment hereunder is terminated. Certain capitalized terms used
in this Paragraph 6 and in Paragraph 7 hereof are defined in Paragraph 6(d)
below.
(a) Death or Disability. Except as otherwise provided in
Paragraph 7(b) with respect to certain post-Date of Termination payment
obligations of the Corporation, this Agreement shall terminate immediately as of
the Date of Termination (with the exception of Section 8, 10 and 11) in the
event of the Executive's death or in the event that the Executive becomes
mentally disabled. The Executive will be deemed to be mentally disabled upon the
earlier of (i) the end of a six (6) consecutive month period (or 6 months within
a one year period) during which, by reason of mental injury or disease, the
Executive has been unable to perform substantially the Executive's usual and
customary duties under this Agreement or (ii) the date that a reputable
physician selected jointly by the Board and the Executive (or if the Executive
is clearly unqualified to make such selection, the person then authorized to
make health care decisions for the Executive) determines in writing that the
Executive will, by reason of mental injury or disease, be unable to perform
substantially all of the Executive's usual and customary duties under this
Agreement for a period of at least six (6) consecutive months (or 6 months
within a one year period). If any questions arise as to whether the Executive is
mentally disabled, upon reasonable request therefor by the Board, the Executive
shall submit to a medical examination for the purpose of determining the
existence, nature and extent of any such mental disability. In accordance with
Paragraph 13, the Board shall promptly give the Executive written notice of any
such determination of the Executive's mental disability and of the decision of
the Board to terminate the Executive's employment by reason thereof.
(b) Discharge For Cause or Resignation For Good Reason. In
accordance with the procedures hereinafter set forth, the Board may discharge
the Executive from his employment hereunder for Cause and the Executive may
resign from his employment hereunder for Good Reason. Except to the extent
otherwise provided in Paragraph 7(a) (in the case of a discharge for Cause) or
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Paragraph 7(c) (in the case of discharge without cause or a resignation for Good
Reason) with respect to certain post-Date of Termination obligations of the
Corporation, this Agreement shall terminate immediately as of the Date of
Termination (with the exception of Sections 8, 10 and 11) in the event the
Executive is discharged for Cause or resigns for Good Reason. Any discharge of
the Executive by the Board for Cause or resignation by the Executive for Good
Reason shall be communicated by a Notice of Termination to the Executive (in the
case of discharge) or to the Board (in the case of resignation) given in
accordance with Paragraph 13 of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) specifies the termination date (which date shall be the date of giving of
such notice when Executive is terminated for Cause). In the case of a discharge
of the Executive for Cause, the Notice of Termination shall include a copy of a
resolution duly adopted by the Board at a meeting of the Board called and held
for such purpose, finding that, in the opinion of the Board, the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a Notice of
Termination.
(c) Definitions. For purposes of this Paragraph 6 and
Paragraph 7 hereof, the following capitalized terms shall have the meanings set
forth below:
(i) "EARNED OBLIGATIONS" shall mean, as of the Date of
Termination, the sum of (A) the Executive's Base Salary under Paragraph 3
through the Date of Termination to the extent not theretofore paid, (B) the
amount of any bonus, incentive compensation, deferred compensation and other
cash compensation accrued by the Executive as of the Date of Termination to the
extent not theretofore paid, (C) any vacation pay, expense reimbursements and
other cash entitlements accrued by the Executive as of the Date of Termination
to the extent not theretofore paid and (D) Stock Options which have vested as of
the Date of Termination. For the purpose of this Paragraph 6(c)(i), wherever
possible amounts shall be deemed earned proportionately over the period during
which they are earned, except in the case of Stock Options, which shall be
deemed Earned Obligations only to the extent that they have vested as of the
Date of Termination.
(ii) "CAUSE" shall mean (i) a material act of
dishonesty in connection with the Executive's responsibilities as an employee,
(ii) the Executive's conviction of, or plea of nolo contendere to, a felony or a
crime involving moral turpitude or a crime which reflects materially adversely
on the Corporation or its reputation, (iii) the Executive's gross misconduct or
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willful failure to carry out his duties, which misconduct or willful failure has
a material adverse effect on the Corporation, (iv) the material breach by
Executive of his obligations to the Corporation having a material adverse effect
on the Corporation. The Corporation acknowledges that failure to achieve
financial targets or milestones shall not constitute Cause.
(iii) "DATE OF TERMINATION" shall mean (A) in the
event of a discharge of the Executive by the Board for Cause or a resignation by
the Executive for Good Reason, the date the Executive (in the case of discharge)
or the Board (in the case of resignation) receives a Notice of Termination, as
the case may be, (B) in the event of the Executive's death, the last day of the
month following the month in which Executive's death occurs, and (C) in the
event of termination of the Executive's employment by reason of mental
disability pursuant to Paragraph 6(a), the date the Executive receives written
notice of such termination (or, if later, six (6) months from the date the
Executive's disability began).
(iv)"GOOD REASON" shall mean any of the following:
(A) without Executive's consent, or in the absence of Cause, (i) a material
reduction in job duties and responsibilities inconsistent with Executive's
position with the Corporation in effect immediately prior to such reduction,
(ii) any reduction of Executive's Base Salary below $150,000, or (iii) without
the Executive's prior approval, the relocation of QBI to a facility or location
more than 75 miles from the QBI's current location in New Jersey; or (B) any
material failure by the Corporation (after a 30 day cure period after written
notice to the Corporation from Executive specifically describing the material
failure) to comply with any of the provisions of this Agreement, other than any
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is promptly remedied by the Corporation.
(v)"WITHOUT GOOD REASON" shall mean a termination by
Executive at any time during the Term of any renewal thereof for any reason
other than as set forth in Section 6(c)(iv).
7. OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
(a) Discharge For Cause or Resignation Without Good Reason. In
the event of a discharge of the Executive for Cause pursuant to Paragraph 6(b)
or resignation by the Executive Without Good Reason as defined in Paragraph
6(c)(v):
(i) the Corporation shall pay to the Executive all
Earned Obligations in a lump sum in cash within ninety (90) days after the Date
of Termination (except with respect to vested Stock Options, in which case the
provisions of the 2003 Stock Plan shall apply); and
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(ii) the Executive shall be entitled to receive all
benefits earned by him as of the Date of Termination under all qualified and
nonqualified retirement, pension, profit sharing and similar plans of the
Corporation in such manner and at such time as are provided under the terms of
such plans and arrangements; and
(iii) the Corporation shall cooperate so as to enable
the Executive at his cost to obtain the continuation of benefits pursuant to
COBRA at Executive's cost for the shorter of (a) two (2) years or (b) the
maximum legal period for which COBRA may be extended; and
(iv) except as otherwise provided by law or in this
Agreement, all other obligations of the Corporation hereunder shall cease
forthwith.
(b) Death or Disability.
(i) In the event this Agreement terminates pursuant to
Paragraph 6(a) by reason of the death or mental disability of the Executive, the
Corporation shall pay all Earned Obligations through the Date of Termination to
the Executive, or to his heirs or estate in the event of the Executive's death,
in a lump sum in cash within ninety (90) days after the Date of Termination
(except as to vested Stock Options, in which case the provisions of the 2003
Stock Plan shall apply); and
(ii) In the event this Agreement terminates pursuant
to Paragraph 6(a) by reason of the mental disability of the Executive, the
Corporation shall continue to pay to the Executive, for a period of twelve (12)
months from the Date of Termination, reduced dollar-for-dollar by the amount of
any disability benefits paid to the Executive in accordance with any disability
policy or program of the Corporation or procured by the Corporation, (A) the
Base Salary in effect on the Date of Termination as determined under Paragraph
3; and (B) all other benefits to which Executive would have been entitled as if
he had continued to be employed by the Corporation for such 12 month period,
provided that with respect to Executive's bonus as provided in Paragraph 4, the
Corporation shall only be required to pay any amount earned to the date of
disability; and
(iii) In the event this Agreement is terminated
pursuant to Paragraph 6(a) by reason of the death or mental disability of the
Executive, the Executive, or his beneficiary, heirs or estate in the event of
the Executive's death, shall be entitled to receive all benefits earned by him
as of the Date of Termination under all qualified and nonqualified retirement,
pension, the 2003 Stock Plan, profit sharing and similar plans of the
Corporation in such manner and at such time as are provided under the terms of
such plans and arrangements; and
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(iv) In the event this Agreement is terminated
pursuant to Paragraph 6(a) by reason of the death or mental disability of the
Executive, except as otherwise provided by law or in this Agreement, all other
obligations of the Corporation hereunder shall cease forthwith, except that
Executive shall be entitled to continue to receive long term disability benefits
generally provided to executives of the Corporation under the Corporation's
benefits programs for its executives in accordance with the terms of such
programs.
(c) Termination Without Cause or With Good Reason. In the
event this Agreement is terminated by the Corporation without cause or by the
Executive for Good Reason, the Executive shall be entitled to continue to
receive from the Corporation, as liquidated damages, the following:
(i) As severance compensation, the lesser of one year
of the Base Salary in effect on the Date of Termination or the amount of Base
Salary he would have received as if his employment had continued hereunder,
through the end of the Term;
(ii) Any unpaid reimbursable expenses and vacation pay
outstanding as of the Date of Termination;
(iii) The amount of any bonus, incentive compensation,
deferred compensation, and other cash compensation which would have been paid to
Executive if his employment had continued hereunder, through the end of the
Term;
(iv) Participation on the same basis in all benefits
Executive received under Paragraph 5(a) in which he was participating on the
Date of Termination until the end of the period that he receives the severance
compensation payments under Paragraph 7(c)(i);
(v) During the period that he receives severance
compensation, all rights granted to him under the 2003 Stock Plan and pursuant
to the Stock Option Agreement entered into between the Corporation and the
Executive.
8. NON-COMPETITION. The Executive agrees that during the term of his
employment hereunder and for two years thereafter, he will not, directly or
indirectly (i) own, manage, operate, control or participate in any manner in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director, principal, consultant, agent or otherwise with, or
have any financial interest in, or aid or assist anyone else in the conduct of,
any business, venture or activity which is engaged in the business of the
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Corporation or any of its subsidiaries at the time of the Termination of his
employment; or (ii) recruit or otherwise seek to induce any employees of the
Corporation or any of its subsidiaries to terminate their employment or violate
any agreement with or duty to the Corporation or any of its subsidiaries
provided the Corporation is not in breach of its obligations to Executive under
this Agreement. Executive also agrees that in the event of a sale of the
business he will agree not to compete with the business of the Corporation at
the time of the sale, for a period of two years after the closing of such sale,
provided during such period he is paid his Base Salary. In the event any
provision in this Section 8 is deemed unenforceable, it shall be equitably
adjusted rather than eliminated to the extent attainable. Furthermore, ownership
of stock not to exceed 2% of the voting stock of any publicly held corporation
is not deemed in competition with the Corporation.
9. THIS PARAGRAPH INTENTIONALLY LEFT BLANK
10. CONFIDENTIALITY/INVENTION ASSIGNMENT AGREEMENT.
(a) Confidentiality. For the term of this Agreement and
thereafter, Executive will hold for the benefit of the Corporation, its
affiliates, subsidiaries, related entities, and designees, and shall not
disclose to any person or entity other than the Corporation or persons or
entities designated in writing by the Corporation any "Confidential Information"
of the Corporation, its subsidiaries, related entities and designees. The term
"Confidential Information" shall mean and refer to any proprietary information,
technical data, trade secrets or know-how, including, but not limited to,
research, product plans, products, services, procedures, plans, strategies,
customer and partner lists and partners and customers (including, but not
limited to, customers and partners of the Corporation or its subsidiaries on
whom Executive called or with whom Executive became acquainted), market
information, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing and other business methods, finances or other business information
disclosed to Executive by the Corporation or any of its subsidiaries either
directly or indirectly in writing, orally or by drawings or observation of parts
or equipment.
(b) Exclusions. The Executive's obligations regarding the
Confidential Information shall not apply to:
(i) Confidential Information which was already known
to Executive prior to Executive's employment by the Corporation;
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(ii) Confidential Information which was generally
available to the public prior to receipt by Executive during the course of his
employment, or which later becomes available to the public through no fault of
Executive; or
(iii) Confidential Information which is disclosed to
Executive by a third party who has the right to make such disclosure.
(c) Termination of Employment. Immediately upon notice of
termination of employment, Executive shall give to the Corporation the originals
and all copies of all documents, correspondence, memoranda, records, notes,
manuals, materials, customer and prospective customer lists and information,
including without limitation computer data, and other things relating, either
directly or indirectly to the Corporation's and its subsidiaries' business,
including, but not limited to, Confidential Information in Executive's
possession, custody or control.
(d) Invention Assignment Agreement. Executive agrees to
execute reasonable confidentiality and assignment of invention agreements as
requested by the Corporation, including the standard form of the Corporation's
confidentiality and invention assignment agreement to be signed by all employees
of the Corporation.
11. STANDOFF AGREEMENT. Executive and each transferee of the shares of
the Corporation's Common Stock held by Executive agrees not to sell, make any
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any securities of the Corporation held by Executive without the prior written
consent of the Company or the principal underwriter managing any underwritten
public offering of the Company's securities, for such period from the effective
date of the offering as the managing underwriters shall request (but not to
exceed the longest period provided in any agreements with other executives but
not earlier than one hundred eighty (180 days), and further agrees to execute
any agreement reflecting the above provisions as may be requested by the
underwriters at the time of any such public offering.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the heirs and representatives of the Executive and the successors
and assigns of the Corporation. The Corporation shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
significant portion of its assets, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform this Agreement if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor of the Corporation in accordance with the operation
of law and such successor shall be deemed the "Corporation", for purposes of
this Agreement.
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13. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) if to the Board or the Corporation to:
HEALTH SCIENCES GROUP, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
(b) if to the Executive, to:
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Such addresses may be changed by written notice sent to the other party
at the last recorded address of that party.
14. NO ASSIGNMENT. Except as otherwise expressly provided herein, this
Agreement is not assignable by any party and no payment to be made hereunder
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or other charge.
15. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
16. JURISDICTION AND GOVERNING LAW. Jurisdiction over disputes with
regard to this Agreement shall be exclusively in the courts of the state of New
Jersey, and this Agreement shall be construed and interpreted in accordance with
and governed by the laws of the state of New Jersey.
17. SEVERABILITY. If any provision of this Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
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18. PRIOR UNDERSTANDINGS AND AMENDMENTS. This Agreement embodies the
entire understanding of the parties hereof, and supersedes all other oral or
written agreements or understandings between them regarding the subject matter
hereof. No change, alteration or modification hereof may be made except in a
writing, signed by each of the parties hereto. The headings in this Agreement
are for convenience and reference only and shall not be construed as part of
this Agreement or to limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
EXECUTIVE:
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▇▇▇▇▇ ▇▇▇▇▇
CORPORATION:
HEALTH SCIENCES GROUP, INC.
By:
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Its:
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