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EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated September 25, 1996, and has been entered into
between Personal Diagnostics, Incorporate, hereinafter called the Employer, and
John H. Michael, hereinafter called the Employee.
In consideration of the mutual covenants set forth herein, the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
2. TERM: Subject to the provisions for termination as hereinafter
provided, the term of this agreement shall begin on September 25, 1996 and shall
terminate on September 24, 1999 (being three years after the commencement date),
with the right on the part of the Employee to extend this agreement for an
additional term of three years upon written notice to the Employer not less than
two months prior to the expiration of the first three year term.
3. COMPENSATION: For all services rendered by the Employee under this
agreement, the Employer shall pay to the Employee a salary payable in monthly or
quarterly installments as directed by the Employee. Such salary shall be
$175,000 per annum.
In the event that the Employee shall renew this agreement for an
additional three year term, the Employee's salary shall be determined (prior to
the outset of such term) by the Employer but such salary shall in no event be
less than $175,000.
Employee shall also be eligible to receive additional compensation in
the form of an annual bonus in an amount to be set by the Board of Directors in
their sole discretion.
4. DUTIES: The Employee is engaged as President and Chief Executive
Officer of the Employer. His duties shall be consistent with the
responsibilities of such offices. He shall be in full control of the operations
of the Employer, subject only to the directions of the Board of Directors of the
Employer.
5. EXTENT OF SERVICES: The Employee shall devote substantial time,
attention, and energies to the business of the Employer. Employer acknowledges
that Employee will devote some of his time to his other business interests but
he will devote sufficient time to the business of the Employer to fulfill his
responsibilities.
6. WORKING FACILITIES: Employee shall be furnished with a private
office and such other facilities and services as are suitable to his position
and adequate for the performance of his duties.
7. VACATIONS: The Employee shall be entitled each year to reasonable
vacations consistent with his position and office. Employee's compensation shall
be paid in full during such vacations.
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8. INDUCEMENTS TO EMPLOYEE TO ENTER EMPLOYMENT AGREEMENT:
(a) Bonus-Stock Option Exercise. The Company grants to
Employee a cash bonus of $150,000 payable January 2, 1997. Employee agrees to
exercise immediately (September 25, 1996) existing, vested incentive stock
options to purchase 150,000 shares at $.70 per share. The Company advances
$105,000 to Employee to consummate this exercise. Employee will repay this
advance to the Company on January 2, 1997 upon receipt of the bonus.
(b) Loan. In addition to the stock option advance referred to
in Paragraph 8(a) the Employee is granted the right to borrow from the Company
up to $250,000 at the prevailing prime rate up to a maximum of 9%. Interest will
be calculated, accrued and paid at the end of each fiscal year. Any such
borrowing must be repaid within 120 days of the termination of this contract.
(c) Automobile. The Company will provide Employee with the
use of an automobile of a type consistent with his position.
9. TERMINATION:
(a) If the Employee is unable to perform his services by
reason of illness or incapacity for a period exceeding six months, the
compensation otherwise payable to him during the continued period of such
illness or incapacity shall be reduced by 25%. The Employee's full compensation
shall be reinstated upon his return to full employment and the discharge of his
duties hereunder. Notwithstanding anything herein to the contrary, the Employer
may terminate this agreement at any time after the Employee shall be absent from
his employment, for whatever cause, for a continuous period exceeding twelve
months, and all obligations of the Employer hereunder shall cease upon any such
termination.
(b) The Employer shall have the right to terminate this
agreement for cause at any time if and only if the Board of Directors shall have
determined that (i) the Employee has willfully engaged in fraudulent conduct to
the material detriment of the Employer or (ii) the Employee has engaged in
practices which constitute a gross disregard for his responsibilities as an
employee of the Employer after receipt of notice from the Employer.
10. FRINGE BENEFITS: Employee shall be entitled to participate in and
receive any fringe benefits, generally offered to management employees of the
Employer, including, but not limited to, participation in any retirement
benefits, group life insurance and medical benefits. In addition, the Employee
shall be entitled to participate in any profit-sharing plan maintained by the
Employer for its employees. The Employee is entitled to reimbursement for any
medical or dental costs not covered by a plan maintained by the Company.
11. CONFIDENTIAL INFORMATION:
(a) The Employer and the Employee recognize that the Employee
is employed in a capacity which, from time to time, he shall acquire
confidential information concerning the Employer and its business. As used in
this agreement, "Confidential Information" means trade
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secrets, proprietary data, customer lists and any other information disclosed to
or acquired by the Employee in the course of his employment (including
information developed or originated by the Employee himself) that:
(i) is not generally known to the trade or industry
in which the Employer is engaged; and
(ii) concerns any of the following:
(A) the Employer's customers or suppliers,
the actual or anticipated requirements of such customers and suppliers, or the
Employer's actual or anticipated contractual or financial relationships with its
customers or suppliers.
(b) The Employee agrees that both during and after the term
of his employment he shall not disclose, disseminate or use for the benefit of
himself or others any Confidential Information, except (i) as authorized by the
Board of Directors of the Employer or (ii) to the extent that such information
has entered the public domain and ceased to be confidential.
12. SEVERABILITY: If any provision of this agreement, and in
particular any obligation undertaken by the Employee herein, is deemed invalid
in any respect under applicable law, the provision shall, if possible, be
enforced to the extent reasonable under the circumstances. To the extent that
the provision or any part of the provision remains unenforceable, it shall be
deemed not to constitute part of the agreement. In any case, the remaining
provisions of the agreement shall not be affected, and shall remain valid and be
enforced to the fullest extent allowed by law.
13. SPECIFIC ENFORCEMENT:
(a) The Employee acknowledges that his failure to fulfill his
obligations under Sections 11 and 12 of this agreement would substantially and
irreparably jeopardize the value of the Employer's assets, and that the remedies
at law for any breach by him of his obligations would prove inadequate. The
Employee therefore agrees that the Employer shall be entitled to sue in equity
to enjoin any breach or anticipated breach by him of Sections 11 and 12 of this
agreement, and he hereby waives the defense, in any such action or proceeding
brought by the Employer, that an adequate remedy at law exists.
(b) This Section 13 shall not be deemed to limit the
Employer's rights to any remedies to which it may be entitled under law,
including the recovery of monetary damages from the Employee.
14. NOTICES. Any notice required or permitted to be given under this
agreement shall be sufficient if in writing, and if sent by registered mail to
his residence in the case of the Employee, or to its principal office in the
case of the Employer.
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15. WAIVER OF BREACH: The waiver by either party hereto of a breach of
any provision of this agreement by the other party hereto shall not operate or
be construed as a waiver of any subsequent breach by the latter.
16. ASSIGNMENT: The rights and obligations of the Employer under this
agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer; provided, however, that no assignment of this
agreement shall relieve the Employer of its obligations hereunder.
17. ENTIRE AGREEMENT: This instrument contains the entire agreement of
the parties. It may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement, waiver, change, modification,
extension, or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this agreement
on the date first set forth above.
ATTEST: PERSONAL DIAGNOSTICS, INC.
_____________________________ By:_____________________________________
, Secretary
________________________________________
John H. Michael, Employee
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