EXHIBIT 99.1
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EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 24th day of March, 2006 by and among Pharma-Bio
Serv, Inc., a Delaware corporation with its principal office at 373 Mendez Vigo,
Suite 110, Dorado, Puerto Rico 00646 ("PHARMA-BIO" or "PBS"), Plaza Consulting
Group, a Puerto Rico corporation with its principal office at 373 Mendez Vigo,
Suite 110, Dorado, Puerto Rico 00646 (both hereinafter "the Company"), and
Manuel Morera, residing at 3205 Isla Verde Ave, Cond. The Galaxy, Apt 1003,
Carolina, PR 00979-4948 ("Executive").
WITNESSETH:
WHEREAS, the Company has engaged Executive as Vice President--Finance &
Administration and Chief Financial Officer (CFO) of the Company and desires to
obtain the benefits of Executive's knowledge, skill and ability in connection
with the management and administration of all aspects of the Company's financial
accounting, reporting, controls and public securities and to employ Executive on
the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to engage Executive to serve at its Vice
President--Finance & Administration and CFO on and subject to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises set forth in this
Agreement, the parties agree as follows:
1. Employment and Duties
(a) Subject to the terms and conditions hereinafter set forth,
Pharma-Bio or the Company hereby employ Executive as Vice President--Finance &
Administration and CFO during the Employment Term, as hereinafter defined. As
Vice President--Finance & Administration and CFO of PHARMA-BIO or the Company,
or any of its subsidiaries, Executive shall have the duties and responsibilities
including but not limited to the following: (i) preparing all monthly, quarterly
and annual financial statements; (ii) preparing and providing with the
assistance of the Company's accounting staff, the financial information required
to comply with the filing requirements of all local, state and federal
regulatory agencies, commissions or departments; (iii) developing and
implementing proper internal accounting controls throughout the Company and such
controls shall be consistent with Sarbanes Oxley; (iv) preparing monthly,
quarterly and annual budgets consistent with the Company business plan; (v)
managing and administration of all aspects of the Company's public securities;
books and records; transfers; etc.; (vi) Executive shall report to PHARMA-BIO's
President and CEO ("President & CEO") and to PBS' audit committee of the Board
of Directors (the "Audit Committee"); and (vii) Executive shall also perform
such other duties and responsibilities as may be determined by the President &
CEO and the Audit Committee, as long as such duties and responsibilities are
consistent with those of the Vice President--Finance & Administration and CFO of
a public corporation.
(b) The "Term" shall mean the period commencing on the date of
this Agreement and ending one (1) year from the date of this Agreement, unless
terminated earlier pursuant to Section 5 of this Agreement. The Term may be
extended for a period of up to two additional years subject to the approval of
the President & CEO, the Executive, and Audit Committee.
2. Executive's Performance - Executive hereby accepts the employment
contemplated by this Agreement. During the Term, Executive shall perform his
duties diligently, in good faith and in a manner consistent with the best
interests of Pharma-Bio or the Company, and, during the Employment Term, he
shall devote substantially all of his business time to the performance of his
duties under this Agreement.
3. Compensation and Other Benefits
(a) For his services during the Employment Term, the Company shall
pay Executive a salary ("Salary") at the annual rate of $80,000. Salary shall be
paid in such installments as the Company regularly pays its executive officers,
but not less frequently than semi-monthly.
(b) Also, for his services during the Employment Term, PHARMA-BIO
shall issue to Executive incentive stock options ("Stock Options") to purchase
90,000 shares of PBS common stock, at market value as of the date of this
agreement, pursuant to PBS' 2006 Long-Term Incentive Plan, however, such stock
options shall vest over a three (3) year period (30,000 per year) and therefore,
the stock options to purchase the remaining 60,000 shares are subject to the
continued employment of the Executive after the Term of this Agreement which is
also subject to the prior approval by the President & CEO and Audit Committee.
(c) In addition to Salary and Stock Options, Executive shall
receive the following benefits during the Employment Term:
(i) Such insurance, including major medical health insurance
and life insurance, as the Company provides its executive officers, which
benefits will not be less than the insurance benefits provided by PHARMA-BIO or
the the Company to its executive officers.
(ii) Fifteen Vacation Paid Days.
(iii) Eligibility to participate in such pension and other
benefit plans that are available to executive officers of the Company or
PHARMA-BIO
(iv) Payment of continued education seminars that the
Executive considers would be relevant for his professional development and for
the best interest of the Company, as well as to comply with the continued
education requirements of the Puerto Rico State Board of Accountants and the
American Institute of Certified Public Accountants. The Company will compensate
the Executive for the time required to attend such seminars.
4. Reimbursement of Expenses - The Company shall reimburse Executive,
upon presentation of proper expense statements, for all authorized, ordinary and
necessary out-of-pocket expenses reasonably incurred by Executive during the
Term in connection with the performance of his services pursuant to this
Agreement in accordance with the Company's expense reimbursement policy.
5. Termination of Employment
(a) This Agreement and Executive's employment hereunder shall
terminate immediately upon his death.
(b) This Agreement and Executive's employment pursuant to this
Agreement may be terminated by the Executive or PHARMA-BIO or the Company on not
less than 30 days' written notice in the event of Executive's Disability. The
term "Disability" shall mean any illness, disability or incapacity of the
Executive which prevents his from substantially performing his regular duties
for a period of two consecutive months or three months, even though not
consecutive, in any twelve month period.
(c) The Company may terminate this Agreement and Executive's
employment pursuant to this Agreement immediately for Cause, in which event no
further compensation shall be payable to Executive subsequent to the date of
such termination. The date of termination shall be the date of the notice from
PHARMA-BIO or the Company stating that Executive's employment is terminated for
Cause. The term "Cause" shall mean:
(i) repeated failure of Executive to perform material
instructions from the Board, or, from the officer to whom Executive reports,
provided that such instructions are reasonable and consistent with Executive's
duties as set forth in Section 1 of this Agreement, or any other failure or
refusal by Executive to perform his duties required by said Section; provided,
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however, that Executive shall have received notice from the Board specifying the
nature of such failure in reasonable detail and Executive shall have failed to
cure the failure within five business days after receipt of such notice.
(ii) a breach of Sections 6, 7 or 8 of this Agreement;
(iii) a breach of trust whereby Executive obtains personal
gain or benefit at the expense of or to the detriment of PHARMA-BIO or the
Company or any of its affiliates;
(iv) any fraudulent or dishonest conduct by Executive or any
other conduct by Executive which damages PHARMA-BIO, the Company or any of its
affiliates or their property, business or reputation.
(v) a conviction of, or guilty plea or plea of nolo
contendere by, of Executive of (x) any felony or (y) any other crime involving
fraud, theft, embezzlement or use or possession of illegal substances; or
(vi) the admission by Executive of any matters set forth in
Section 5(c)(v) of this Agreement.
(d) Executive's resignation prior to the expiration of the Term
shall be treated in the same manner as a termination for Cause.
(e) In the event that the Company and PHARMA-BIO terminate this
Agreement and Executive's employment other than for reasons set forth in
Sections 5(a), 5(b) or 5(c):
(i) The Company shall pay to Executive within 30 days after
the date of his termination an amount equal to Salary for the corresponding
working period, if any, of the Term;
(ii) The restrictions set forth in Section 7(a) of this
Agreement shall terminate immediately.
6. Trade Secrets and Proprietary Information
(a) Executive recognizes and acknowledges that the Company,
through the expenditure of considerable time and money, has developed and will
continue to develop in the future information concerning customers, clients,
marketing, products, services, business, research and development activities and
operational methods of the Company and its customers or clients, contracts,
financial or other data, technical data or any other confidential or proprietary
information possessed, owned or used by the Company, the disclosure of which
could or does have a material adverse effect on the Company, its businesses, any
business in which it proposes to engage, its operations, financial condition or
prospects and that the same are confidential and proprietary and considered
"confidential information" of the Company for the purposes of this Agreement. In
consideration of his employment during the Term, Executive agrees that he will
not, during or after the Term, without the consent of the Board make any
disclosure of confidential information to any person, partnership, corporation
or entity either during or after the Term, except that nothing in this Agreement
shall be construed to prohibit Executive from using or disclosing (a) if such
disclosure is necessary in the normal course of the Company's business in
accordance with policies or instructions or authorization from the Board, (b)
Executive can demonstrate that such information shall have (i) become public
knowledge other than by or as a result of disclosure by a person not having a
right to make such disclosure, (ii) been developed by Executive independent of
any of the Company's confidential or proprietary information or (iii) been
disclosed to Executive by a person not subject to a confidentiality agreement
with or other obligation of confidentiality to the Company.
(b) In the event that any confidential information is required to
be produced by Executive pursuant to legal process, Executive shall give the
Company notice of such legal process within a reasonable time, but not later
than ten business days prior to the date such disclosure is to be made, unless
Executive has received less notice, in which event Executive shall immediately
notify the Company. The Company shall have the right to object to any such
disclosure, and if the Company objects (at the Company's cost and expense) in a
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timely manner so that Executive is not subject to penalties for failure to make
such disclosure, Executive shall not make any disclosure until there has been a
court determination on the Company's objections. If disclosure is required by a
court order, final beyond right of review, or if the Company does not object to
the disclosure, Executive shall make disclosure only to the extent that
disclosure is required by the court order, and Executive will exercise
reasonable efforts at the Company's expense, to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information.
(c) Executive shall, upon expiration or termination of the Term,
or earlier at the request of the Company, turn over to the Company or destroy
all documents, papers, computer disks or other material in Executive's
possession or under Executive's control which may contain or be derived from
confidential information. To the extent that any confidential information is on
Executive's hard drive or other storage media, he shall, upon the request of the
Company, cause either such information to be erased from his computer disks and
all other storage media or otherwise take reasonable steps to maintain the
confidential nature of the material.
(d) Executive further realizes that any trading in PHARMA-BIO's
common stock or other securities or aiding or assisting others in trading in
PHARMA-BIO's common stock or other securities, including disclosing any
non-public information concerning PHARMA-BIO or the Company to a person who uses
such information in trading in PHARMA-BIO's common stock or other securities,
constitutes a violation of federal and state securities laws. Executive will not
engage in any transactions involving PHARMA-BIO's common stock or other
securities while in the possession of material non-public information.
(e) For the purposes of Sections 6, 7, 8 and 9 of this Agreement,
the term "Company" shall include PHARMA-BIO and Plaza Consulting Group, their
subsidiaries and affiliates.
7. Covenant Not To Solicit or Compete
(a) During the period from the date of this Agreement until one
(1) year following the date on which Executive's employment is terminated,
Executive will not, directly or indirectly:
(i) persuade or attempt to persuade any person or entity
which is or was a customer, client or supplier of the Company to cease doing
business with the Company, or to reduce the amount of business it does with the
Company (the terms "customer" and "client" as used in this Section 7 to include
any potential customer or client to whom the Company submitted bids or
proposals, or with whom the Company conducted negotiations, during the term of
Executive's employment hereunder or during the two (2) years preceding the
termination of his employment);
(ii) persuade or attempt to persuade any employee of the
Company, or any individual who was an employee of the Company during the one (1)
year period prior to the lawful and proper termination of this Agreement, to
leave the Company's employment, or to become employed by any person or entity
other than the Company; or
(iii) engage in any business in the United States whether as
an officer, director, consultant, partner, guarantor, principal, agent,
employee, advisor or in any manner, which directly competes with the business of
the Company as it is engaged in at the time of the termination of this
Agreement, unless, at the time of such termination or thereafter during the
period that the Executive is bound by the provisions of this Section 7, the
Company ceases to be engaged in such activity, provided, however, that nothing
in this Section 7 shall be construed to prohibit the Executive from owning an
interest of not more than five (5%) percent of any public Company engaged in
such activities.
(b) Executive will not, during or after the Term, make any
disparaging statements concerning the Company, its business, officers, directors
and employees that could injure, impair, damage or otherwise affect the
relationship between the Company, on the one hand, and any of the Company's
employees, suppliers, customers, clients or any other person with which the
Company has or may conduct business or otherwise have a business relationship of
any kind and description. The Company will not make any disparaging statements
concerning Executive; provided, however, that this sentence shall not be
construed to prohibit the Company from giving factual information concerning
Executive in response to inquiries that the Company believes are bona fide.
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(c) The Executive acknowledges that the restrictive covenants (the
"Restrictive Covenants") contained in Sections 6 and 7 of this Agreement are a
condition of his employment are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part of any of the Restrictive Covenants, is
invalid or unenforceable, the remainder of the Restrictive Covenants and parts
thereof shall not thereby be affected and shall remain in full force and effect,
without regard to the invalid portion. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable because
of the geographic or temporal scope of such provision, such court shall have the
power to reduce the geographic or temporal scope of such provision, as the case
may be, and, in its reduced form, such provision shall then be enforceable.
8. Inventions and Discoveries - Executive agrees promptly to disclose
in writing to the Company any invention, design, system, process, development or
other discovery or intellectual property (collectively, "inventions and
discoveries") conceived, created or made by his during the Term, whether created
or developed by himself or with others, whether during or after working hours,
in any business in which the Company is then engaged or which otherwise relates
to any product or service dealt in by the Company and such inventions and
discoveries shall be the Company's sole property, regardless of whether such
inventions and discoveries are otherwise treated as work performed for hire and
regardless of whether such inventions and discoveries are or can be patented,
registered or copyrighted. Upon the Company's request, Executive shall execute
and assign to the Company all applications for copyrights, trademarks and
letters patent of the United States and such foreign countries as the Company
may designate, and Executive shall execute and deliver to the Company such other
instruments as the Company deems necessary to vest in the Company the sole
ownership of all rights, title and interest in and to such inventions and
discoveries, as well as all copyrights and/or patents. Executive shall also give
the Company all assistance it may reasonably require, including the giving of
testimony in any suit, action, investigation or other proceeding in connection
with the foregoing.
9. Injunctive Relief - Executive agrees that his violation or
threatened violation of any of the provisions of Sections 6, 7 or 8 of this
Agreement shall cause immediate and irreparable harm to the Company. In the
event of any breach or threatened breach of any of said provisions, Executive
consents to the entry of preliminary and permanent injunctions by a court of
competent jurisdiction prohibiting Executive from any violation or threatened
violation of such provisions and compelling Executive to comply with such
provisions. This Section 9 shall not affect or limit, and the injunctive relief
provided in this Section 9 shall be in addition to, any other remedies available
to the Company at law or in equity or in arbitration for any such violation by
Executive. In the event an injunction is issued against any such violation by
Executive, the period referred to in Section 7 of this Agreement shall continue
until the later of the expiration of the period set forth therein or one (1)
month from the date a final judgment enforcing such provisions is entered and
the time for appeal has lapsed. Subject to Section 7(c) of this Agreement, the
provisions of Sections 6, 7, 8 and 9 of this Agreement shall survive any
termination of this Agreement and Executive's employment.
10. Indemnification Pharma-Bio or the Company shall provide Executive
with payment of legal fees and indemnification to the maximum extent permitted
by the Company's certificate of incorporation, by-laws and applicable law.
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11. Representations by the Parties
(a) Executive represents, warrants, covenants and agrees that he
has a right to enter into this Agreement, that he is not a party to any
agreement or understanding, oral or written, which would prohibit performance of
his obligations under this Agreement, and that he will not use in the
performance of his obligations hereunder any proprietary information of any
other party which he is legally prohibited from using.
(b) The Company represents warrants and agrees that it has full
power and authority to execute and deliver this Agreement and perform its
obligations hereunder.
12. Miscellaneous
(a) Any notice, consent or communication required under the
provisions of this Agreement shall be given in writing and sent or delivered by
hand, overnight courier or messenger service, against a signed receipt or
acknowledgment of receipt, or by registered or certified mail, return receipt
requested, or telecopy or similar means of communication if receipt is
acknowledged or if transmission is confirmed by mail as provided in this Section
12(b), to the parties at their respective addresses set forth at the beginning
of this Agreement or by telecopy to PHARMA-BIO at the Company fax at (787)
796-5168, or to Executive at available numbers, with notice to PHARMA-BIO to the
attention of the individual who executed this Agreement on its behalf. Any party
may, by like notice, change the person, address or fax number to which notice is
to be sent.
(b) This Agreement shall in all respects be construed and
interpreted in accordance with, and the rights of the parties shall be governed
by, the laws of the Commonwealth of Puerto Rico applicable to contracts executed
and to be performed wholly within such State, without regard to principles of
conflicts of laws except that the provisions of Section 10, as it relates to
PHARMA-BIO, shall be governed by the Delaware General Corporation law.
(c) Except for actions, suits, or proceedings taken pursuant to or
under Section 6, 7, 8 or 9 of this Agreement, any dispute concerning this
Agreement or the rights of the parties hereunder shall be submitted to binding
arbitration in San Juan, Puerto Rico before a single arbitrator jointly selected
by the parties under the rules of the American Arbitration Association. If the
parties shall be unable to agree upon an arbitrator, then each party shall
designate one arbitrator and the two arbitrators shall select a third
arbitrator. The award of the arbitrator shall be final, binding and conclusive
on all parties, and judgment on such award may be entered in any court having
jurisdiction. The arbitrator shall have the power, in his or his discretion, to
award counsel fees and costs to the prevailing party. The arbitrator shall have
no power to modify or amend any specific provision of this Agreement except as
expressly provided in Section 12(f) of this Agreement.
(d) Notwithstanding the provisions of Section 12(c) of this
Agreement, with respect to any claim for injunctive relief or other equitable
remedy pursuant to Section 9 of this Agreement or any claim to enforce an
arbitration award or to compel arbitration, the parties hereby (i) consents to
the exclusive jurisdiction of the United States District Court for the District
of Puerto Rico and the Puerto Rico courts located in San Juan, Puerto Rico, (ii)
agree that any process in any action commenced in such court under this
Agreement may be served upon it or his personally, either (x) by certified or
registered mail, return receipt requested, or by Federal Express or other
courier service which obtains evidence of delivery, with the same full force and
effect as if personally served upon such party in San Juan, Puerto Rico, or (y)
by any other method of service permitted by law, and (iii) waives any claim that
the jurisdiction of any such court is not a convenient forum for any such action
and any defense of lack of in personam jurisdiction with respect thereof. If an
action may be commenced pursuant to this Section 12(d), the complaint may,
notwithstanding Section 12(c) of this Agreement, include other claims against
the other party, even if such claims would otherwise be subject to arbitration
pursuant to said Section 12(c).
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(e) If any term, covenant or condition of this Agreement or the
application thereof to any party or circumstance shall, to any extent, be
determined to be invalid or unenforceable, the remainder of this Agreement, or
the application of such term, covenant or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Agreement shall be
valid and be enforced to the fullest extent permitted by law, and any court or
arbitrator having jurisdiction may reduce the scope of any provision of this
Agreement, including the geographic and temporal restrictions set forth in
Section 7 of this Agreement, so that it complies with applicable law.
(f) This Agreement constitute the entire agreement of the Company
and Executive as to the subject matter hereof, superseding all prior or
contemporaneous written or oral understandings or agreements, including any and
all previous employment agreements or understandings, all of which are hereby
terminated, with respect to the subject matter covered in this Agreement. This
Agreement may not be modified or amended, nor may any right be waived, except by
a writing which expressly refers to this Agreement, states that it is intended
to be a modification, amendment or waiver and is signed by both parties in the
case of a modification or amendment or by the party granting the waiver. No
course of conduct or dealing between the parties and no custom or trade usage
shall be relied upon to vary the terms of this Agreement. The failure of a party
to insist upon strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.
(g) No party shall have the right to assign or transfer any of its
or his rights here under except that PHARMA-BIO's and the Company's rights and
obligations may be assigned in connection with a merger of consolidation of
PHARMA-BIO or the Company or a sale by PHARMA-BIO or the Company of all or
substantially all of its business and assets.
(h) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors, executors,
administrators and permitted assigns.
(i) The headings in this Agreement are for convenience of
reference only and shall not affect in any way the construction or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PHARMA-BIO SERV, INC.
By: /s/ Elizabeth Plaza
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Name: Elizabeth Plaza
Title: President & CEO
EXECUTIVE: /s/ Manual Morera
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Manuel Morera
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