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SEVERANCE AGREEMENT
This Agreement ("Agreement") dated May 21, 1996 by and
between U.S. Alcohol Testing of America, Inc., a Delaware corporation (the
"Company") and Robert Stutman (the "Executive").
WITNESSETH:
WHEREAS, pursuant to a Stock Purchase Agreement of even date
hereof (the "Stock Purchase Agreement") the Company purchased all of the issued
and outstanding shares of common stock of Robert Stutman Associates, Inc.
("RSA");
WHEREAS, the Executive was the majority shareholder of RSA
and the President of RSA;
WHEREAS, a condition of the Company's agreeing to purchase
all of the issued and outstanding shares of the common stock of RSA was the
Executive agreeing to become employed as the Chief Executive Officer of the
Company;
WHEREAS, since April 17, 1996, the Executive has been
employed on an at-will basis by the Company as its Chief Executive Officer;
WHEREAS, a condition subsequent to the Executive accepting
the Company's offer of employment was that the Company and the Executive enter
into this Severance Agreement which provides for the Executive's right to
severance pay upon his termination as an employee of the Company without cause;
and
WHEREAS, the compensation to be paid to the Executive by the
Company for the services to be performed is as follows:
(i) a base salary of Two Hundred Twenty Five Thousand
($225,000) Dollars per annum (the "Base Salary");
(ii) a bonus payment of fifty thousand ($50,000) dollars
payable within 120 days of substantially all of RSA's customers becoming fully
integrated into the Company's subsidiary, ProActive Synergies, Inc., provided
that such event occurs prior to July 31, 1996;
(iii) an aggregate year end bonus in respect of the
Company's fiscal year ended March 31, 1997 equal to One Hundred Thousand
($100,000) Dollars if the Company, on a consolidated basis, breaks even or Two
Hundred Fifty Thousand ($250,000) Dollars if the Company, on a consolidated
basis, makes at least Two Million Forty Thousand ($2,000,040) Dollars in net
earnings; and
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(iv) bonuses in respect of subsequent fiscal years shall
be determined by the Company's Board of Directors or the Compensation Committee.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the Company and the Executive hereby agree
as follows:
1. COMPANY'S RIGHT TO TERMINATE. Subject to the Company
fulfilling its obligations to the Executive relating to compensation and
benefits during the term of this Agreement, the Executive agrees that he will
not voluntarily leave the employ of the Company and will continue to perform the
Executive's regular duties as Chief Executive Officer of the Company.
Notwithstanding the foregoing, the Company may terminate the Executive's
employment at any time, subject to providing the benefits hereinafter specified
in accordance with the terms hereof.
2. TERMINATION OF EMPLOYMENT. The termination of the
Executive as an employee of the Company for Disability or Cause shall be on the
following terms and conditions:
(i) Disability.
Termination by the Company of the Executive's
employment based on "Disability" shall mean termination (a) because of the
Executive's inability to perform his duties with the Company on a full time
basis for four consecutive months or 180 days out of any twelve-month period, as
a result of the Executive's incapacity due to physical or mental illness; or (b)
as a result of the Executive being certified incompetent by a court of competent
jurisdiction and which appeals from such certification have expired.
(ii) Cause.
Termination by the Company of the Executive's
employment for "Cause" shall mean termination because of: (a) the Executive's
conviction of a felony; (b) any action by the Executive involving dishonesty,
fraud or gross or wilful misconduct in connection with his employment with the
Company; (c) the Executive's gross negligence in the performance of his duties
and obligations hereunder or habitual neglect of his duties; (d) the Executive's
substance abuse, including, without limitation, chronic alcoholism or drug
addiction; (e) the Executive's intentional refusal or failure to perform his
duties as the Chief Executive Officer of the Company, including, without
limitation, the intentional disregard of a lawful directive by the Board of
Directors of the Company or any committee thereof; (f) intentional conduct on
the part of the Executive which is knowingly detrimental to the best interests
of the Company; or (g) the Executive's
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failure to perform in a competent manner his duties as Chief
Executive Officer of the Company.
(iii) Notice of Termination.
Any purported termination by the Company pursuant to
Section (i) or (ii) above or for any other reason shall be communicated by
written Notice of Termination to the Executive from the President of the Company
at the direction of the Board of Directors of the Company. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
that it is without cause or the specific termination provision in this Agreement
relied upon and shall set 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.
(iv) Date of Termination.
"Date of Termination" shall mean (a) if the
Executive's employment is terminated for Disability, the date specified in the
Notice of Termination, (b) if Executive's employment is terminated for Cause,
the date specified in the Notice of Termination, (c) if the Executive's
employment is terminated for death, the date of death, and (d) if the
Executive's employment is terminated, without cause, the date on which a Notice
of Termination is given.
3. CERTAIN BENEFITS UPON TERMINATION. (i) If the Executive's
employment is terminated by the Company other than for Cause, Disability or
death, then the Executive shall be entitled to the benefits provided below:
(a) the Company shall pay the Executive his full Base
Salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given plus credit for any vacation earned but not taken
and the amount, if any, of any bonus for a past fiscal year which has not yet
been awarded or paid to the Executive.
(b) in lieu of any further salary, bonuses or benefits
payments to the Executive for periods subsequent to the Date of Termination, the
Company shall pay as severance pay to the Executive on the 30th day following
the Date of Termination a lump sum amount equal to the total amount of the Base
Salary that would have been paid to the Executive had he not been terminated
during the period commencing on the Date of Termination and ending on May 20,
1999;
(c) the Company shall maintain in full force and effect,
for the Executive's continued benefit until the earlier of (A) May 20, 1999 or
(B) the Executive's commencement of full time
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employment with a new employer, his automobile allowance and all life insurance,
medical, health and accident, and disability plans, programs or arrangements in
which the Executive was entitled to participate immediately prior to the Date of
Termination, provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive was entitled to receive under such plans
and programs;
(ii) If the Executive's employment is terminated for
Disability under Section 2(i)(b) the Executive shall be entitled to the benefits
provided below:
(a) the Company shall pay the Executive his full Base
Salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given plus credit for any vacation earned but not taken
and the amount, if any, of any bonus for a past fiscal year which has not yet
been awarded or paid to the Executive;
(b) in lieu of any further salary, bonuses or benefits
payments to the Executive for periods subsequent to the Date of Termination, the
Company shall pay as severance pay to the Executive on the 30th day following
the Date of Termination a lump sum amount equal to the annual Base Salary that
would have been paid to the Executive had he not been terminated during the
period commencing on the Date of Termination and ending on the earlier of four
months after the Date of Termination or May 20, 1999;
(c) the Company shall maintain in full force and effect,
for the Executive's continued benefit until the earlier of four months after the
Date of Termination and May 20, 1999 his automobile allowance and all life
insurance, medical, health and accident, and disability plans, programs or
arrangements in which the Executive was entitled to participate immediately
prior to the Date of Termination, provided that the Executive's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that the Executive's participation in any such plan
or program is barred, the Company shall arrange to provide the Executive with
benefits substantially similar to those which the Executive was entitled to
receive under such plans and programs;
(iii) If the Executive's employment is terminated for
Cause, Disability under Section 2(i)(a), death or the voluntary termination or
resignation of employment by the Executive, the Executive shall be paid his full
Base Salary through the Date of Termination at the rate in effect at the time
the Notice of Termination is given plus credit for any vacation earned but not
taken and the amount, if any, of any bonus for a past
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Richard A. Siracusa, Esq.
May 23, 1996
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fiscal year which has not yet been awarded or paid to the Executive.
(iv) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other employment
or otherwise, nor shall the amount of any payment provided for in this Section 3
be reduced by any compensation earned by the Executive as the result of
employment by another employer after the Date of Termination, or otherwise.
4. TERM OF AGREEMENT. This Agreement shall terminate May 20,
1999.
5. RELEASE OF COVENANT NOT TO COMPETE. If the Executive is
terminated without Cause during the term of this Agreement or if the Company
ceases to exist other than by reason of a merger, consolidation, sale of assets
or similar transaction, the Executive shall no longer be bound by the terms of
Sections 6.1 and 6.2 of the Stock Purchase Agreement and the Executive shall
have the right to use his name in connection with any business he enters into.
6. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be
binding upon and shall inure to the benefit of the respective successors,
assigns, legal representatives and heirs of the parties hereto.
7. NOTICE. Any and all notices or other communications or
deliveries required or permitted to be given or made shall be in writing and
delivered personally, or sent by certified or registered mail, return receipt
requested and postage prepaid, or sent by overnight courier service as follows:
If to the Company, at:
U.S. Alcohol Testing of America, Inc.
10410 Trademark Street
Rancho Cucamonga, California 91730
Attention: President
with a copy to:
Gold & Wachtel, LLP
110 East 59th Street
New York, New York 10022
Attention: Robert Berend, Esq.
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Richard A. Siracusa, Esq.
May 23, 1996
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If to the Executive, at:
c/o Edward D. Feldstein, Esq.
Roberts, Carroll, Feldstein & Peirce
10 Weybosset Street
Providence, Rhode Island 02903-2808
or at such other address as any party may specify by notice given to such other
party in accordance with this Section 7. The date of giving of any such notice
shall be the date of hand delivery, two days after the date of the posting of
the mail or the date when deposited with the overnight courier.
8. WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
9. ENTIRE AGREEMENT. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
10. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
12. GOVERNING LAW. This Agreement shall be construed (both as
to validity and performance) and enforced in accordance with, and governed by,
the laws of the State of California applicable to contracts to be performed
entirely within that State, without giving effect to the principles of conflicts
of law. Any suit or proceeding arising out of this Agreement shall be brought
only in a federal or state court located in the County of Palm Beach, State of
Florida or County of San Bernadino, State of California; provided, however, that
neither party waives its right
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Richard A. Siracusa, Esq.
May 23, 1996
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to request the removal of such action or proceeding from the state court to a
federal court in such jurisdiction. The parties hereto each waive any claim that
such jurisdiction is not a convenient forum for any such suit or proceeding and
the defense of lack of personal jurisdiction.
IN WITNESS WHEREOF, this Agreement has been executed on May
21, 1996.
U.S. ALCOHOL TESTING OF AMERICA, INC.
By:__________________________________
_____________________________________
ROBERT STUTMAN
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