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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 Brian 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 an officer and shareholder 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 Director of Sales and Marketing of
the Company.
WHEREAS, since April 17, 1996, the Executive has been
employed on an at-will basis by the Company and effective as of the date hereof
is employed by the Company on an at-will basis as its Director of Sales and
Marketing;
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
or his resignation as an employee of the Company; 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 One Hundred Thirty Thousand
($130,000) Dollars per annum (the "Base Salary");
(ii) a bonus payment of Thirty Thousand ($30,000)
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 Thirty Thousand ($30,000)
Dollars if the goals set forth in the business plan to be prepared by the
Executive, subject to approval by the Company's Board of Directors, are met; and
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(iv) bonuses in respect of subsequent fiscal years shall
be determined by the Company's Board of Directors or Compensation Committee.
NOW, THEREFORE, in consideration of the premises of the
mutual agreements contained herein, the Company and the Executive hereby agree
as follows:
1. COMPANY'S AND EXECUTIVE'S RIGHT TO TERMINATE. The Company
may terminate the Executive's employment at any time, subject to providing the
benefits hereinafter specified in accordance with the terms hereof. The
Executive may terminate his employment at any time.
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 an employee 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 failure to perform his duties in a competent manner.
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(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 Chief Executive Officer
or 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, (d) if the Executive's
employment is terminated, without cause, the date on which a Notice of
Termination is given and (e) if the Executive voluntarily resigns his
employment, the effective date of such resignation.
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 employment with a new
employer, his automobile allowance and
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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) or death, 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 fiscal year
which has not yet been awarded or paid to the Executive.
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(iv) If the Executive voluntarily terminates his
employment he shall be entitled to the benefits specified 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; and
(b) If such termination takes place during the
period commencing August 21, 1996 and ending May 20, 1998 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
$130,000; or
(c) If such termination takes place during the
period commencing May 21, 1998 and ending May 20, 1999, 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
fifty (50%) percent of 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 May 20, 1999.
(v) 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.
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.
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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.
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
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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 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:______________________________________
_________________________________________
BRIAN STUTMAN
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