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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of this 1st day of September,
1998, between CRYSTAL MEDICAL PRODUCTS, INC., an Illinois corporation (the
"Company") and COLIN BARNSTABLE ("Employee").
BACKGROUND
The Company is in the business of development and marketing of a
commercially feasible device to identify pathogens in foods, bodily fluids or
tissue through an electronic measurement technique. The principal office of the
Company is located at 321 Spruce Street, 525 Bank Towers, Scranton,
Pennsylvania. The Company services, or will service, customers on a nationwide
basis.
The Company desires to employ Employee as its Vice President for
Research and Development and Employee desires to accept such positions and to be
employed by Company.
Employee, in the course of employment, will have access to confidential
and proprietary information of the Company and will likely build personal
relationships with the employees, customers and suppliers of the Company. It is
important to the Company that Employee not compete or interfere with, divulge
confidential information of, or otherwise harm it. Therefore, as a precondition
to Employee's employment, and in consideration thereof, the Company is requiring
Employee to enter into this Agreement, which includes certain restrictions on
Employee's right to engage in activities competitive with the Company or to
interfere with its business and on Employee's use of confidential information of
the Company, as more fully set forth below.
NOW, THEREFORE, in consideration of the foregoing, the covenants
contained herein and the employment of Employee by the Company, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. Employment. Subject as provided in this Agreement, the Company
hereby employs Employee, and Employee hereby accepts employment by the Company.
During the period of his employment hereunder, Employee shall serve as the Vice
President for Research and Development of the Company, or in such other capacity
as may be determined from time to time by its Board of Directors. Employee shall
perform such duties and have such responsibilities as are consistent with the
position of Vice President for Research and Development (or such other office as
may be hereafter held by him), including such duties and responsibilities as
shall be assigned him from time to time by the Board of Directors. Employee
shall devote his best efforts to the promotion of the business and affairs of
the Company and shall perform faithfully and to the fullest extent of his
ability all duties which relate to his position of employment by the Company.
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2. Term. Employee's employment hereunder shall commence on September 1,
1998 and continue for a period of five (5) years ending on August 31, 2003
(Initial Term) unless sooner terminated, as provided in Section 4 hereof.
3. Renewal. At the end of the Initial Term, this Agreement will renew
automatically for successive one (1) year renewal terms, unless either party
gives written notice not to renew sixty (60) days prior to the end of the
Initial Term or any Renewal Term.
4. Termination.
4.1 Death. This Agreement shall terminate immediately upon the
death of Employee.
4.2 Termination for Cause. This Agreement shall terminate
immediately if the Board of Directors of the Company discharges Employee for
cause, in which event the Company shall not be obligated to make any further
payments hereunder other than amounts accrued as of the date of termination.
"Cause" shall mean, and be limited to, the following, to be determined in the
sole judgment of the Board of Directors, reasonably exercised, at a meeting. At
least thirty (30) days' written notice will be given to Employee, who shall have
the opportunity to attend with counsel, and be heard at such meeting:
(i) Employee's fraud, misappropriation, embezzlement
or willful misconduct;
(ii) Employee's material violation of any provision
of this Agreement; or
(iii) Employee's conviction of a felony involving
moral turpitude.
4.3 Special Termination. This Agreement shall terminate if
there is not an initial registration of the Company's stock under Section 5 of
the Securities Act of 1933, as amended (a "Public Offering") by January 30,
1999, in which event the Company shall not be obligated to make any further
payments hereunder other than amounts accrued as of the date of termination.
5. Compensation.
5.1 Base Salary. The Company shall pay, and Employee shall
accept, as base compensation during the term of his employment hereunder, a
salary at the annual rate of One Hundred Thousand Dollars ($100,000). Such base
salary shall be paid to Employee in equal installments on the first day of each
calendar month during the term hereof or in accordance with established pay
periods of the Company, but in no event less frequently than monthly.
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5.2 Bonus. The Company will pay Employee a bonus of Fifty
Thousand Dollars ($50,000). Employee shall also be eligible for such additional
bonuses as may be approved from time to time by the Board of Directors, whether
for all employees generally or for senior management.
5.3 Stock Options. Subject to shareholder approval of the
Company's Stock Option Plan (the "Plan"), the Company shall grant Employee
options to acquire up to two hundred fifty thousand (250,000) shares of the
Company's Common Stock, pursuant to all the terms and conditions of the Plan and
the form of grant attached hereto.
6. Benefits. During the term of his employment, Employee shall be
entitled to receive or participate in such employee benefits of the Company as
are made available generally to the members of its executive management, such as
vacations, holidays, medical, dental and other insurance coverage or qualified
retirement plans which may be established by the Company.
7. Automobile; Expense Reimbursement.
7.1 The Company shall pay Employee a reasonable car allowance
of up to Nine Hundred Dollars ($900) per month.
7.2 The Company shall reimburse Employee for job-related
expenses incurred by him, including expenses for: travel, hotel, meals, cellular
phone, business-related entertainment, postage, telephone and office supplies.
Employee shall promptly submit to the Company, at least monthly, an itemization
of his job-related expenses incurred, with such documentation as the Company may
reasonably require, and the Company shall reimburse him therefor within ten (10)
days from the date of such submission. The quality and types of expenses to be
reimbursed shall be agreed in advance with the Company and shall be consistent
with the Company's budget.
8. Change in Control.
8.1 A "Change in Control" shall be deemed to have occurred if
there is a sale of the Company or if a meeting of the shareholders of the
Company involving a contest for the election of directors results in a new Board
of Directors of which the directors of the Company immediately prior to such
meeting no longer constitute a majority of the Board.
8.2 If, after a Change in Control, Employee resigns as a
result of his reasonable determination that he is unable to exercise the
authorities, powers, functions or duties attached to his position as
contemplated by this Agreement, Employee shall be entitled to a lump sum payment
equal to the amount of his salary for the remainder of the term of this
Agreement.
9. Definitions.
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9.1 "Affiliate" means any Entity owned or controlled by, or
under common control with, the Company.
9.2 "Competitor" means any individual or Entity which is
currently engaged in, or shall conduct or be engaged in, development or
marketing of a device to identify pathogens in foods, bodily fluids or tissue
through an electronic measurement technique or in any other business or activity
in which the Company is engaged during the term of Employee's employment by the
Company.
9.3 "Confidential Business Information" means all information
(whether or not in written or tangible form) which is not generally known or
available to the public or a Competitor, the knowledge of which could benefit a
Competitor. Confidential Business Information includes any and all information
of a confidential, proprietary or secret nature which is or may be either
applicable to or related in any way to the business, present or future, of the
Company or any Affiliate, the business of any customer of the Company or any
Affiliate and shall include, but not be limited to, trade secrets, processes,
formulas, data, algorithms, source codes, object codes, documentation,
flow-charts, drawings, correspondence, know-how, improvements, inventions,
techniques, concepts, technologies, programs, designs, personnel records,
marketing plans and strategies, customer lists, projections, financial
information, internal accounting statistics, pricing and bidding policies and
practices, costing information, salaries, proposals to licensors or customers,
any data, confidential information or property entrusted to the Company or any
Affiliate by any licensors or customers and confidential information concerning
customers or employees of the Company or any Affiliate.
9.4 "Confidential Materials" means all documents, materials,
programs, recordings or any other tangible media (including, without limitation,
copies or reproductions of any of the foregoing) in which any Confidential
Business Information may be contained.
9.5 "Entity" means any partnership, corporation, trust, joint
venture, association or other business enterprise in any form.
10. Confidentiality.
10.1 Employee acknowledges that in the course of, or incident
to, his employment with the Company, Employee will likely obtain from the
Company Confidential Business Information. Employee acknowledges that all
Confidential Business Information and all Confidential Materials are, and shall
remain, the exclusive property of the Company.
10.2 Employee shall hold and maintain in the strictest
confidence and duly safeguard all Confidential Business Information, and shall
not, directly or indirectly, disclose, communicate or divulge the same to any
person or Entity other than in connection with his business activities on behalf
of the Company or any Affiliate, or use or otherwise exploit the
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same for the direct or indirect benefit of any person or Entity other than the
Company or its Affiliate. Notwithstanding the foregoing or any other provision
of this Agreement, Employee may disclose Confidential Business Information or
Confidential Materials (i) if and to the extent required by law, including
pursuant to a judicial or administrative order or ruling (provided that, to the
extent reasonably possible, the Company is given prior notice to enable it to
seek a protective order) and (ii) in order to enforce his rights in any action,
suit or proceeding against or involving the Company.
10.3 In the event of termination of Employee's employment with
the Company for any reason, whether voluntary or involuntary or by either party,
Employee shall return immediately to the Company all Confidential Materials and
Confidential Business Information in Employee's possession or within Employee's
control, in whatever form, written, photographic, computer disk, other media or
otherwise, and all keys, credit cards, business card files, product samples and
other property belonging to the Company.
10.4 The restrictions in this Section 10 shall survive the
termination of Employee's employment and of this Agreement for any reason
whatsoever.
11. Company's Rights to Certain Discoveries.
11.1 Employee shall disclose promptly to the Company any and
all concepts, inventions, improvements, discoveries, developments, techniques,
modifications, procedures, formulas, ideas, trade secrets, innovations, systems,
programs, know-how or designs (collectively, the "Discoveries") related to the
business or activities of the Company that he conceives, develops or reduces to
practice during the time that he is employed by the Company. Employee agrees
that all his right, title and interest in such Discoveries shall belong to the
Company, in confirmation of which he shall execute deeds of assignment of such
right, title and interest to the Company, its nominees, successor or assigns,
whenever requested, without demanding separate or additional compensation
therefor. All of the foregoing shall be subject to the same confidentiality,
nonuse and nondisclosure requirements as are prescribed in Section 10 hereof.
Any of the Discoveries related to the business of the Company that Employee may
reduce to practice, or apply for a copyright or patent on, during the first two
(2) years after termination of his employment hereunder shall be presumed to
have been conceived by him during the time of such employment and, as such,
shall belong to the Company, and the burden shall be upon Employee, if he
contends it was not, to prove it was not by clear and convincing evidence.
11.2 Employee shall assist the Company and its nominees,
successors or assigns (at its or their request) in every proper way during and
following the period of his employment (entirely at its or their expense) to
obtain and maintain for its or their own benefit copyrights or patents in any
and all countries for all Discoveries described in Section 11.1 hereof. Such
assistance shall include, but not be limited to, the execution and delivery of
all lawful papers and documents of every nature which relate to the securing and
maintenance of such
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copyrights and patent rights, and the performance of all other lawful acts, such
as the giving of testimony in any interference proceedings, infringement suits
or other litigation, as may be deemed necessary or advisable by the Company or
its nominees, successors or assigns.
12. Non-Competition and Non-Interference. During the entire term of
Employee's employment with the Company, and for a period of five (5) years
following the cessation of such employment, for any reason, whether voluntary or
involuntary, or by either party, within the United States (and in such other
countries in which the Company is actively conducting, or seeking to conduct,
its business), Employee shall not, without prior written authorization of the
Company, directly or indirectly (i) compete with the Company, including, but not
limited to, own, manage, invest or acquire any economic stake or interest in,
assist or advise or otherwise engage or participate in any manner whatsoever in,
any Competitor (whether as a proprietor, partner, shareholder, investor,
manager, director, officer, employee, venturer, representative, agent, broker,
independent contractor, consultant, lender, guarantor, adviser or otherwise) or
(ii) solicit, induce or influence, or attempt to induce or influence, any
employee, customer, supplier, consultant or other business contact of the
Company to terminate, reduce, discourage or otherwise materially harm any
business relationship with, or commitment to, the Company or otherwise divert
from the Company any trade or business conducted by the Company. Nothing herein
set forth shall prohibit Employee from owning securities of any public company
(other than the Company), provided that Employee shall not own more than one
percent (1%) of any class of publicly-traded equity securities. EMPLOYEE
ACKNOWLEDGES THAT THE RESTRICTION SET FORTH HEREIN IS REASONABLE AND NECESSARY
TO PROTECT THE LEGITIMATE BUSINESS INTERESTS OF THE COMPANY AND THAT EMPLOYEE
HAS SUFFICIENT SKILLS, TRAINING, EDUCATION AND EXPERIENCE TO OBTAIN SATISFACTORY
EMPLOYMENT TO PROVIDE FOR HIS FINANCIAL NEEDS DURING THE PERIOD SPECIFIED HEREIN
WHILE COMPLYING WITH THE TERMS AND THE SPIRIT OF THE COVENANT SET FORTH IN THIS
SECTION 12.
13. Remedies.
13.1 The parties acknowledge that the Company is engaged in a
competitive business and that the provisions and restrictions set forth herein
regarding confidentiality, Discoveries, non-competition and non-interference are
reasonable and necessary for the protection of the legitimate interests of the
Company. Employee further acknowledges that the Company's rights protected by
the provisions and restrictions hereof are unique and that in the event of any
breach or threatened breach or violation of any of these rights by Employee, the
Company has no adequate remedy at law and such breaches or violations are likely
to result in irreparable harm and injury to the Company. Therefore, Employee
agrees that, upon a breach or threatened breach or violation of the provisions
or restrictions hereof by Employee, the Company shall be entitled to obtain
specific performance, temporary and permanent injunctive relief, as well as an
equitable accounting of all profits and benefits arising therefrom, in addition
to other rights and remedies, at law or in equity, which may be available to it.
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13.2 If Employee violates any restrictive covenant contained
herein and the Company institutes action for equitable relief, the Company, as a
result of the time involved in obtaining such relief, shall not be deprived of
the benefit of the full restriction period as set forth in Section 12.
Accordingly, such period shall be deemed to have the duration specified in
Section 12 hereof, computed from and commencing on the date on which relief is
granted by a final order from which there is no appeal.
13.3 Each provision hereof, including, without limitation, the
periods of time, geographical areas and types and scopes of duties of, and
restrictions on the activities of, Employee specified herein are divisible, and
if any portion thereof (including any sentence, clause or part) shall be held
contrary to law or invalid or unenforceable in any respect in any jurisdiction,
or as to one or more periods of time, areas or business activities, the
remaining provisions shall not be affected, but shall remain in full force, and
any such invalid or unenforceable provision shall be deemed, without further
action on the part of any person, modified, amended and limited to the extent
necessary to render the same valid and enforceable in such jurisdiction.
13.4 In order to enable the Company to enforce Sections 10, 11
and 12, Employee, regardless of his residence, and the Company hereby consent to
the personal jurisdiction of any federal or state court of competent
jurisdiction in the Eastern District of Pennsylvania and to the receipt of
service of process in any action brought hereunder in the manner provided in
Section 14 for the giving of notices.
14. Notices. Any notice required or permitted hereunder shall be
delivered personally or sent by facsimile transmission, national courier service
guaranteeing overnight delivery, or registered or certified mail, with all
postage or other delivery charges prepaid, to the respective parties hereto at
the addresses set forth below, or to such other address, or in care of such
other person, as any party shall from time to time designate by due notice
hereunder. Any notice hereunder shall be deemed given when received by the
person to whom or which addressed.
If to the Company:
Crystal Medical Products, Inc.
321 Spruce Street
525 Bank Towers
Scranton, PA 18503
Facsimile Number: (717) 347-1734
With copies to:
George Ginader, CPA
Ginader Jones & Co.
321 Spruce Street
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525 Bank Towers
Scranton, PA 18503
and
John W. Pelino, Esquire
Pelino & Lentz, P.C.
One Liberty Place, 32nd floor
1650 Market Street
Philadelphia, PA 19103-7393
to Barnstable:
Colin Barnstable
41 Greenway Street
Hamden, CT 06517
15. Miscellaneous.
15.1 Employee represents and warrants to the Company that
Employee's commencement of the employment contemplated hereby will not violate
or cause a breach of any covenant, agreement or instrument to which Employee is
a party or by which Employee is bound.
15.2 This Agreement, its interpretation, performance and
enforcement, and the rights and remedies of the parties hereto, shall be
governed and construed according to the laws of the Commonwealth of
Pennsylvania, without regard to the principles of conflict of laws.
15.3 The Company reserves the right to waive the restrictive
covenants contained herein, or any one of them, provided that any waiver shall
be in writing executed by such person as shall be specifically authorized for
such purpose by its Board of Directors (not including Employee). A waiver of any
condition or breach of any term or covenant shall not be deemed or construed as
a further or continuing waiver of such condition or breach of any other term or
covenant set forth in this Agreement.
15.4 This Agreement represents the entire agreement and
understanding of the parties and supersedes all prior agreements and
understandings, both written and oral, between the parties hereto with respect
to the subject matter hereof.
15.5 This Agreement shall not be modified or amended except by
a writing signed by each of the parties hereto. The Company may assign this
Agreement to any person or Entity which may become a successor in interest to
the Company by acquisition of all or substantially all of the Company's assets
or business, whether by merger, consolidation, reorganization, purchase or
otherwise. This Agreement is a personal service contract and, as such, shall not
be assignable, in whole or part, by Employee.
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15.6 Subject as aforesaid, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.
15.7 The Company shall indemnify and defend Employee to the
fullest extent permitted by law from and against all suits, actions,
proceedings, obligations, liabilities, and all costs and expenses incurred in
connection therewith, suffered or incurred by Employee arising out of or in
connection with his employment hereunder and shall advance to Employee all
expenses he may incur in any such action unless prohibited by law. The Company's
Bylaws shall contain the broadest available indemnification provisions for the
purpose of implementing this provision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
CRYSTAL MEDICAL PRODUCTS, INC.
BY:/S/ HERBERT LOTMAN
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NAME:HERBERT LOTMAN
TITLE:CHAIRMAN
/S/ COLIN BARNSTABLE
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COLIN BARNSTABLE
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