UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported):
July 30,
2009
QuantRx
Biomedical Corporation
(Exact
name of Registrant as Specified in Charter)
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Nevada
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0-17119
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33-0202574
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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100 S. Main Street, Suite 300
Doylestown, Pennsylvania
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18901
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(267)
880-1595
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry into a Material
Definitive Agreement
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PRIA
Asset Purchase Agreement
On July 30, 2009, QuantRx Biomedical
Corporation, a Nevada corporation (“
QuantRx
” or the
“
Company
”),
entered into and closed an asset purchase agreement (the “
Asset Purchase
Agreement
”) with PRIA Diagnostics, LLC, a Delaware limited liability
company (“
PRIA
”), pursuant to
which PRIA agreed to sell to QuantRx certain of PRIA’s patents, trademarks,
other intellectual property assets and certain fixed assets. The
aggregate purchase price for such assets is equal to $725,000, comprised of cash
and shares of QuantRx’s common stock, par value $0.01 (the “
Common
Stock
”).
Under the
Asset Purchase Agreement, QuantRx is required to make additional contingent
payments, in the form of cash and Common Stock, upon the occurrence of certain
milestone events. Such cash milestone payments will be made by QN
Diagnostics, LLC (“
QN
Diagnostics
”), a newly formed Delaware limited liability company that was
formed as a joint venture between QuantRx and NuRx Pharmaceuticals, Inc., a
Nevada corporation (“
NuRx
”), which is
described in more detail below. In addition, QN
Diagnostics is required to pay royalties to PRIA on a quarterly basis upon the
commercialization of a product utilizing the acquired technologies
for five years from the
initial sales date of the first such product sold. QuantRx also
agreed under the Asset Purchase Agreement to offer to PRIA the first opportunity
to manufacture certain products utilizing the acquired technologies before
entering into any agreement or arrangement with a third party to manufacture
such products.
The
foregoing description of the Asset Purchase Agreement does not purport to be
complete and is qualified in their entirety by reference to the Asset Purchase
Agreement, which is filed as Exhibit 10.1 hereto.
QN
Diagnostics, LLC Limited Liability Company Agreement
On July
30, 2009, QuantRx also entered into a Contribution Agreement (the “
Contribution
Agreement
”) with NuRx. Pursuant to the Contribution Agreement,
QuantRx contributed certain intellectual property, including the assets
purchased from PRIA under the Asset Purchase Agreement, and other assets related
to its lateral flow strip technology and related lateral flow
strip readers into QN Diangnostics, a newly formed Delaware limited
liability company that was formed as a joint venture between NuRx and QuantRx
(the “
Joint
Venture
”).
QuantRx
and NuRx have also entered into a Limited Liability Company Agreement to govern
the Joint Venture, dated July 30, 2009 (the “
LLC
Agreement
”). Under the terms of the LLC Agreement, NuRx
contributed $5,000,000 in cash to the Joint Venture. Following the
respective contributions by NuRx and QuantRx to the Joint Venture, NuRx and
QuantRx will each own a 50% interest in the Joint Venture. The
purpose of the Joint Venture will be to research, develop and commercialize
products incorporating the lateral flow strip technology and related lateral
flow strip readers (the “
Lateral Flow
Products
”).
Under the
terms of the LLC Agreement, upon the consummation of the transactions
contemplated by the Contribution Agreement, the Joint Venture will make a
$2,000,000 cash distribution to QuantRx. In addition, subject to
certain exceptions, NuRx, at its sole election, will be entitled to a
distribution of up to $1,500,000 from the Joint Venture (the “
NuRx Distribution
”)
which must be repaid by NuRx within thirty days after the Joint Venture meets
certain milestone events.
The LLC
Agreement also provides for the management and governance of the Joint
Venture. Pursuant to the LLC Agreement, the Joint Venture will be
managed by a board of directors (the “
JV Board
”) initially
consisting of two QuantRx designees, two NuRx designees and an independent
designee mutually selected by QuantRx and NuRx. Subject to certain
exceptions, JV Board decisions will be made by majority vote, provided that NuRx
and QuantRx will have veto rights with respect to certain matters.
Pursuant
to the LLC Agreement, each member will also be required to make sustaining
capital contributions from time to time as the JV Board determines is
necessary. Sustaining capital contributions will be made by
QuantRx and NuRx on an equal basis, provided however that QuantRx solely will be
responsible for making a sustaining capital contribution with respect to the
first $700,000 determined to be required by the JV Board, and thereafter, NuRx
solely will be responsible for making a sustaining capital contribution to the
extent of any unpaid amount of the NuRx Distribution.
QuantRx
and the Joint Venture have also entered into a Development and Services
Agreement on July 30, 2009, pursuant to which the Joint Venture has agreed to
pay a monthly fee to QuantRx in exchange for QuantRx providing all services,
equipment and facilities related to the research, development, regulatory
approval and commercialization of the Lateral Flow Products. The
initial monthly fee to be paid to QuantRx will be $250,000, subject to
adjustment based on the mutual agreement of the Joint Venture and
QuantRx. If the Joint Venture fails to reach certain milestone
events, the Joint Venture will no longer be obligated to make the monthly
payments. All work product performed under the Development and
Services Agreement will be the sole property of the Joint Venture.
Each of
QuantRx and NuRx have also agreed not to compete with the Joint Venture with
respect to the research, development and commercialization of Lateral Flow
Products until (i) the earlier of the expiration of the LLC Agreement or (ii)
the date on which the Joint Venture ceases to carry on the research, development
and commercialization of Lateral Flow Products.
In
connection with the transactions described herein, NuRx received two warrants to
purchase 2,000,000 shares of QuantRx’s Common Stock, or an aggregate of
4,000,000 shares of QuantRx’s Common Stock. The warrants have a net
issuance feature and expire on July 30, 2014. The warrants have an
exercise price of $0.50 and $1.25, respectively.
The
foregoing descriptions of the Contribution Agreement, the Development and
Services Agreement and the LLC Agreement do not purport to be complete and are
qualified in their entirety by reference to the Contribution Agreement, which is
filed as Exhibit 2.1 hereto, the Development and Services Agreement, which is
filed as Exhibit 10.2 hereto, and the LLC Agreement, which is filed as Exhibit
10.3 hereto.
Warrant
In
consideration for NuRx’s entry into the joint venture and upfront funding
thereof, QuantRx issued to NuRx a warrant exercisable for 2,000,000 shares of
QuantRx’s Common Stock at a per share exercise price of $0.50 and a warrant
exercisable for 2,000,000 shares of QuantRx’s Common Stock at a per share
exercise price of $1.25. The warrants have a five-year term and
provide for cashless exercise and customary anti-dilution
protection.
The
foregoing description of the Warrants do not purport to be complete and are
qualified in their entirety by reference to the Warrants, which are filed as
Exhibits 10.6 and 10.7 hereto.
Exchange
Letters
In
connection with QuantRx’s obligation under the Contribution Agreement to deliver
its assets to QN Diagnostics free and clear of any encumbrances, QuantRx entered
into letter agreements (the “
Exchange Letters
”)
with all of its noteholders to cancel all of its outstanding notes, including
its 8% senior secured promissory bridge notes and its 10% senior secured
convertible promissory notes, and effect the full settlement of all of such
notes and the release of all security interests granted in QauntRx’s assets in
connection therewith. In connection with the noteholders’
cancellation of their notes and the release of the liens in favor of such
noteholders on QuantRx’s intellectual property being contributed to the joint
venture, such noteholders received either cash in an amount equal to the
outstanding principal and interest accrued thereunder, shares of QuantRx’s newly
created Series A-1 Convertible Preferred Stock, or a combination of
both. The Exchange Letters also provide for the cancellation of the
related loan documents and releases of any and all claims against QuantRx
relating to the notes.
Employment
Agreements
As part
of the transactions with NuRx, QuantRx entered into employment agreements with
Walter Witoshkin, Sasha Afanassiev and William Fleming to retain each of them as
Chief Executive Officer, Chief Financial Officer and Chief Science Officer (such
Chief Executive Officer, Chief Financial Officer and Chief Science
Officer, collectively being the “
Executives
”),
respectively. The term of each of the employment agreements is three
years from the date of the agreement, and each agreement is renewed
automatically for additional one year term , unless either party to the
employment agreement gives a no less than 90 day written notice to the other
party. QuantRx can terminate the Executives’ employment at any time
with or without “cause,” as defined in the employment
agreements. Executives can terminate the employment with or without
“good reason,” also as defined in the employment agreements, or if there is a
change of control. Each of the employment agreements contains a
change of control provision, where it provides that if there is a change of
control and within three months before or 12 months thereafter QuantRx
terminates the Executive for any reason other than Cause or the death or
disability of the Executive or the Executive terminates his employment for good
reason, the Executive is entitled to a lump sum cash payment equal to two times
the Executive’s then current base salary and the bonus amount. If
QuantRx terminates an Executive’s employment without cause or an Executive
terminates his employment for good reason or an Executive’s employment is
terminated because of a permanent disability or death, then QuantRx will pay 12
months salary as severance within 30 days of such termination. In
addition, during the term of the employment, if QuantRx sells all or
substantially all of the shares of its capital stock or its assets or performs a
material acquisition of the capital stock or assets of another entity, QuantRx
will pay a completion bonus to the Executives.
The
foregoing descriptions of the Employment Agreements with Walter Witoshkin, Sasha
Afanassiev, and William Fleming do not purport to be complete and are qualified
in their entirety by reference to the Employment Agreement with Walter
Witoshkin, which is filed as Exhibit 10.8 hereto, the Employment Agreement with
Sasha Afanassiev, which is filed as Exhibit 10.9 hereto, and the Employment
Agreement with William Fleming, which is filed as Exhibit 10.10
hereto.
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Item
1.02
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Termination of a
Material Definitive
Agreement
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The
applicable information contained in Item 1.01 of this Form 8-K is incorporated
by reference in response to this Item 1.02.
In
conjunction with the cancellation of all of QuantRx’s outstanding notes,
including its 8% senior secured promissory bridge notes and its 10% senior
secured convertible promissory notes, as described in Item 1.01 above, other
attendant principal agreements comprising the respective loans were terminated
effective July 30, 2009.
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Item
2.01.
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Completion of
Acquisition or Disposition of
Assets
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The
applicable information contained in Item 1.01 of this Form 8-K is
incorporated by reference in response to this Item 2.01.
Evan
Levine, a director of NuRx and the beneficial owner of approximately 4.6% of the
outstanding shares of common stock of NuRx, is also a former director of QuantRx
and the beneficial owner of approximately 7.4% of the outstanding shares of
common stock of QuantRx (such percentages determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934). The
nature of Mr. Levine’s relationships with both companies was fully disclosed to
the board of directors of QuantRx prior to entering into the transactions
described herein.
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Item
2.03.
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Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant
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As
described above, pursuant to the terms of the LLC Agreement, each member will be
required to make sustaining capital contributions from time to time as the JV
Board determines is necessary. Sustaining capital contributions will
be made by QuantRx and NuRx on an equal basis, provided however that
QuantRx solely will be responsible for making a sustaining capital contribution
with respect to the first $700,000 determined to be required by the JV Board,
and thereafter, NuRx solely will be responsible for making a sustaining capital
contribution to the extent of any unpaid amount of the NuRx
Distribution.
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Item
3.02.
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Unregistered Sales of
Equity Securities
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The
applicable information contained in Item 1.01 of this Form 8-K is
incorporated by reference in response to this Item 3.02.
On August
4, 2009, the Company issued 4,591,240 shares of Series A-1 convertible preferred
stock, par value $0.01 per share (“
Series A-1 Preferred
Stock
”) to the holders of the Company’s promissory notes in exchange for
the cancellation of the notes and the releases tendered in the Exchange Letters,
in reliance upon the exemption from registration in Section 4(2) of the
Securities Act of 1933 (the “
Securities
Act
”). A copy of the certificate of designations for the
Series A-1 Preferred Stock is filed as Exhibit 3.1 hereto and incorporated
herein by reference.
QuantRx
offered and sold the Series A-1 Convertible Preferred Stock and the Common Stock
warrants, and shares of Common Stock underlying such securities described in
Item 1.01 of this Form 8-K, in a private placement. Each of PRIA, NuRx and the
noteholders is an “accredited investor,” as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act. The private
placements were effected without registration under the Securities Act in
reliance upon the exemption provided by Rule 506 and/or Section 4(2)
thereunder. No form of general solicitation or general advertising
was made in connection with the offer or sale of these
securities. The filing of this report shall not constitute an offer
to sell, or a solicitation of an offer to buy, any of QuantRx’s
securities.
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Item
5.02
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Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers
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The
applicable information contained in Item 1.01 of this Form 8-K is
incorporated by reference in response to this Item 5.02.
As
described above, as part of the transactions with NuRx, QuantRx entered into
employment agreements with Walter Witoshkin, Sasha Afanassiev and William
Fleming to retain Mr. Witoshkin as President and Chief Executive Officer of the
Company, Mr. Afanassiev as Chief Financial Officer of the Company and Mr.
Fleming as a Chief Science Officer of the Company. Mr. Witoshkin will
receive an annual salary in the amount of $288,000, less statutory deductions
and applicable withholdings, and stock options under the Company’s 2007
Incentive Stock Plan to purchase no less than 250,000 shares of the Common Stock
at an exercise price equal to the closing price of the Common Stock on the date
of the grant, which will be exercisable for 5 years from the date thereof and
vested as of the date thereof. Mr. Afanassiev will receive an annual
salary in the amount of $180,000, less statutory deductions and applicable
withholdings, and stock options under the Company’s 2007 Incentive Stock Plan to
purchase no less than 125,000 shares of the Common Stock at an exercise price
equal to the closing price of the Common Stock on the date of the grant, which
will be exercisable for 5 years from the date thereof and vested as of the date
thereof. Mr. Fleming will receive an annual salary in the amount of
$168,000, less statutory deductions and applicable withholdings, and stock
options under the Company’s 2007 Incentive Stock Plan to purchase no less than
125,000 shares of the Common Stock at an exercise price equal to the closing
price of the Common Stock on the date of the grant, which will be exercisable
for 5 years from the date thereof and vest upon the successful achievement of
the milestones as defined in the LLC Agreement.
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Item
5.03
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Amendments to Articles
of Incorporation or Bylaws, Change in Fiscal
Year
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The
applicable information contained in Item 3.02 of this Form 8-K is incorporated
by reference in response to this Item 5.03.
Effective August 3, 2009, QuantRx filed
a Certificate of Designation of the Relative Rights and Preferences of the
Series A-1 Convertible Preferred Stock of the Company (the “
Certificate of
Designation
”) with the Secretary of State of the State of
Nevada. The Company’s Board of Directors approved the Certificate of
Designation and authorized its filing at a meeting held on July 24,
2009. A copy of the Certificate of Designation is attached to this
Current Report on Form 8-K as Exhibit 3.1 and is incorporated herein by
reference.
The Certificate of Designation provides
for the issuance of up to 10,000,000 shares of Series A-1 Convertible Preferred
Stock. The Series A-1 Preferred Stock shall rank prior to the Common
Stock for purposes of liquidation preference, and to all other classes and
series of equity securities of the Company that by their terms do not rank
senior to the Series A-1 preferred stock.
Holders
of the Series A-1 Preferred Stock shares shall be entitled to receive, when, as
and if declared by the Board of Directors, preferential dividends which shall
accrue at the rate of 8% per annum to be paid at the option of the Company,
either in cash or by the issuance of additional shares of Series A-1 Preferred
Stock.
The
Company may, at its option, redeem shares of the Series A-1 Preferred Stock, in
whole or in part, out of funds legally available therefor, by action of the
Board of Directors, at any time after the issuance of such Series A-1 Preferred
Stock, at a redemption price equal to the Face Amount plus all accrued and
unpaid dividends on such Series A-1 Preferred Stock.
At any time on or after the Issuance
Date, the Series A-1 Preferred Stock may be converted into a number of fully
paid and nonassessable shares of Common Stock at a conversion rate of two-to-one
(2:1); two shares of Common Stock for each one share of Series A-1 Preferred
Stock.
Except with respect to transactions
upon which the Series A-1 Preferred Stock shall be entitled to vote separately
as a class, the Series A-1 Preferred Stock shall have no voting
rights. The Common Stock into which the Series A-1 Preferred Stock is
convertible shall, upon issuance, have all of the same voting rights as other
issued and outstanding Common Stock of the Company.
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Item
9.01.
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Financial Statements
and Exhibits
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(d)
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Exhibits
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2.1
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Contribution
Agreement, dated July 30, 2009, by and among QuantRx, QN Diagnostics, LLC
and NuRx.*
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3.1
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Certificate
of Designation for Series A-1 Preferred Stock.
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10.1
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Asset
Purchase Agreement, dated July 30, 2009, by and between QuantRx and
PRIA.
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10.2
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Development
and Services Agreement, dated July 30, 2009, by and between QuantRx and QN
Diagnostics, LLC.*
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10.3
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LLC
Agreement, dated July 30, 2009, by and between QuantRx and
NuRx.
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10.4
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Warrant
to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30,
2009, issued by QuantRx in favor of NuRx.
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10.5
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Warrant
to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30,
2009, issued by QuantRx in favor of NuRx.
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10.6
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Employment
Agreement, dated July 30, 2009, by and between QuantRx and Walter
Witoshkin.
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10.7
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Employment
Agreement, dated July 30, 2009, by and between QuantRx and Sasha
Afanassiev.
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10.8
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Employment
Agreement, dated July 30, 2009, by and between QuantRx and William
Fleming.
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* Certain
exhibits and schedules are omitted but will be furnished to the Commission
supplementally upon request.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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QUANTRX
BIOMEDICAL CORPORATION
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Date: August
5, 2009
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By:
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/s/ Walter Witoshkin
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Walter
Witoshkin
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Chairman
and Chief Executive Officer
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EXHIBIT
INDEX
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Exhibit No.
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Description
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2.1
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Contribution
Agreement, dated July 30, 2009, by and among QuantRx, QN Diagnostics, LLC
and NuRx.
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3.1
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Certificate
of Designation for Series A-1 Preferred Stock.
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10.1
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Asset
Purchase Agreement, dated July 30, 2009, by and between QuantRx and
PRIA.
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10.2
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Development
and Services Agreement, dated July 30, 2009, by and between QuantRx and QN
Diagnostics, LLC.
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10.3
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LLC
Agreement, dated July 30, 2009, by and between QuantRx and
NuRx.
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10.4
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Warrant
to Purchase 2,00,000 Shares of Common Stock of QuantRx, dated July 30,
2009, issued by QuantRx in favor of NuRx.
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10.5
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Warrant
to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30,
2009, issued by QuantRx in favor of NuRx.
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10.6
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Employment
Agreement, dated July 30, 2009, by and between QuantRx and Walter
Witoshkin.
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10.7
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Employment
Agreement, dated July 30, 2009, by and between QuantRx and Sasha
Afanassiev.
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10.8
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Employment
Agreement, dated July 30, 2009, by and between QuantRx and William
Fleming.
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EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT
(this
“
Agreement
”),
dated as of _________ ___, 2009, by and between QuantRx Biomedical Corporation,
a Nevada corporation (the “
Company
”), and Walter
Witoshkin (the “
Executive
”).
WITNESSETH
:
WHEREAS,
the Company is
engaged in the research, development, acquisition and commercialization of
medical diagnostic products (the “
Business
”);
WHEREAS
, the Executive has
certain experiences relating to the Business; and
WHEREAS
, the Company desires
to retain the services of the Executive as Chief Executive Officer (“
CEO
”);
WHEREAS,
the Company and the
Executive desire to enter into this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the
Executive;
NOW, THEREFORE
, in
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1.
Nature of
Employment
.
(a)
The
Company hereby engages the Executive as a full-time employee to hold the office
of CEO for the Initial Term and any Renewal Term (as defined herein)
(collectively the “
Employment Period
”),
and the Executive accepts such employment, on the terms and conditions set forth
in this Agreement. Throughout the Employment Period, subject to the
direction of the Board of Directors of the Company (the “
Board
”), the
Executive shall perform and discharge well and faithfully the duties that may be
assigned to him from time-to-time by the Board in connection with the conduct of
the Business.
(b)
Throughout
the Employment Period, the Executive will: (i) devote his full
employment energies, interests, abilities and time to the performance of his
duties and shall not render to others any material service of any kind for
compensation, unless the Executive receives written consent of the Board; (ii)
not engage in any business activities that are directly or indirectly
competitive with any business conducted by the Company or any of its
subsidiaries or affiliates; (iii) observe and carry out such reasonable rules,
regulations, policies, directions and restrictions as may be established from
time-to-time by the Board, including but not limited to, the standard policies
and procedures of the Company as in effect from time-to-time and (iv) do such
traveling as may reasonably be required in connection with the performance of
such duties and responsibilities.
(c)
The
Executive acknowledges that Sections 5, 6 and 7 of this Agreement contain
non-competition and non-disclosure of proprietary information provisions, and
the Executive agrees to comply with these provisions. The Executive
understands that entering into and complying with these provisions is a
condition to the Executive’s continued employment with the Company and that
failure to comply with the terms and conditions of these provisions may result
in termination for “Cause” (as defined below) under this Agreement.
2.
Term and Termination of
Employment
.
(a)
Term
.
Subject to prior
termination in accordance with this Section 2, the term of this Agreement and
the Executive’s employment hereunder shall be for a term of three (3) years
commencing on the date of this Agreement (“
Initial Term
”); and
following such Initial Term, this Agreement shall thereafter automatically renew
for an additional term of one (1) year (“
Renewal Term
”),
unless either party gives written notice of termination to the other party not
less than ninety (90) days prior to the end of any term (in which event this
Agreement shall terminate effective as of the close of such Initial Term or
Renewal Term). Each twelve-month period beginning on the date hereof
or any anniversary thereof is referred to in this Agreement as a “
Year
”.
(b)
By
Company With Cause
.
(1) During
the Employment Period, the Company may terminate Executive’s employment at any
time for Cause.
(2) As
used herein, the term “Cause” shall mean and be limited to: (i) any
willful and material breach of this Agreement by the Executive; (ii) any willful
or gross neglect by the Executive of his duties and responsibilities hereunder;
(iii) any fraud, criminal misconduct, breach of fiduciary duty, dishonesty, or
gross and willful misconduct by the Executive in connection with the performance
of his duties and responsibilities hereunder; (iv) the Executive being legally
intoxicated or under the influence of illegal or illegally obtained drugs during
business hours or while on call, or being habitually drunk or addicted to drugs
(provided that this shall not restrict the Executive from taking
physician-prescribed medication in accordance with the applicable prescription);
(v) the commission by the Executive of any felony or crime of moral turpitude;
(vi) any action by the Executive which may materially impair or damage the
reputation of the Company; (vii) insubordinate disregard of any
lawful direction given to the Executive by the Board; or (viii) repeated failure
or refusal to comply with the Company’s policies and procedures.
(c)
By Company Without Cause or
by Executive with Good Reason
.
(1) During
the Employment Period, the Company may terminate Executive’s employment at any
time without Cause.
(2) The
Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “
Good Reason
” shall
mean, in the absence of written consent of the Executive:
(i) the
assignment to the Executive of any duties materially inconsistent with the
Executive’s duties and responsibilities, or any other material action by the
Company that is materially inconsistent with or materially reduces such duties
or responsibilities; or
(ii) notice
in writing to the Executive of his/her relocation, without the Executive’s
consent, to a place of business more than 50 miles from his/her location as of
the date hereof;
(iii) a
breach by the Company of any of its material agreements contained herein and the
continuation of such breach for fifteen (15) business days after notice thereof
is given to the Company; or
(iv) a
“
Change of
Control
” (as defined herein); Executive may terminate this Agreement for
Good Reason or if there is a “Change of Control.” A “Change of
Control” shall mean the occurrence of any of the following; (a) the sale,
transfer, conveyance or other disposition in one or a series of related
transactions, or all or substantially all of the assets of the Company to any
entity, person, or group; (b) any entity, person, or group that becomes,
directly or indirectly, the owner of more than forty percent (40%) of the voting
stock of the Company by way of merger, consolidation, or otherwise; (c) the
present directors of the Company cease for any reason to constitute the majority
of the Board. (d) If, during the Term, there should be a Change of Control (as
defined herein), and within 3 months before or 12 months thereafter either (i)
Executive’s employment is terminated by the Company for any reason
other than Cause or the death or disability of Executive or (ii) Executive
terminates his employment for Good Reason, then Company shall, on or before
Executive’s last day of full-time employment hereunder, pay to Executive, in
lieu of any other rights to cash compensation he may have under this Agreement
which have not accrued by such date, a lump sum cash payment equal to two times
(x) Executive’s then current Base Salary and (y) the Bonus Amount.
Notwithstanding the foregoing, Company shall not be obligated to make any
payments under this Section 2 unless Executive has executed and delivered to
Company a further agreement, to be prepared at the time of Executive’s
termination of employment, that shall provide (i) an unconditional release of
all claims, charges, complaints and grievances, whether known or unknown to
Executive, against Company or any of its affiliates, through date of Executive’s
termination of employment; (ii) an obligation to maintain the confidentiality of
such agreement; and (iii) an obligation to indemnify Company if Executive
breaches such agreement. (e) It is the intention of the parties that the
payments under this Section 2 shall not constitute “excess parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended. Accordingly, notwithstanding anything in this Section 2 to the
contrary, if any of the amounts otherwise payable under this Section would
constitute “excess parachute payments,” or if the independent accountants acting
as auditors for Company on the date of the Change in Control determine that such
payments may constitute “excess parachute payments,” then the amounts otherwise
payable under this Section 2 shall be reduced to the maximum amounts that may be
paid without any such payments constituting, or potentially constituting,
“excess parachute payments.” (f) Following any termination of Executive’s
employment under this Section 4.5 after a Change in Control, Executive shall be
entitled to continue to receive for the remainder of the then-current Term, but
not less than 12 months, medical benefits coverage for Executive and Executive’s
spouse and dependents (if any) at the Company’s expense if and to the extent
Company was paying for such benefits at the time of such termination. (g) Upon
making the payment described in this Section 2, Company shall have no further
obligation to Executive under this Agreement.
Notwithstanding
the foregoing, the Executive shall not be considered to have Good Reason to
terminate this Agreement unless and until he gives the Company written notice of
the circumstances constituting Good Reason with respect to subsections (i)-(ii)
and the Company fails to have cured such circumstances within fifteen (15)
business days of receipt of such notice.
(d)
By Executive Without Good
Reason
.
(1) At
any time during the Employment Period, Executive may resign employment by giving
thirty (30) days prior notice of termination to Company.
(2) In
the event Executive voluntarily terminates his employment without Good Reason at
any time during the Employment Period, Executive shall only be entitled to
unpaid Salary and Fringe Benefits, as defined in Section 3 hereof, through the
date of termination of employment.
(e)
Termination
of Employment by Reason of Death
.
If Executive
shall die during the Employment Period, this Agreement shall terminate
automatically as of the date of death, and Company shall pay to the Executive’s
estate
the amounts set forth under Section 2(g)
hereof, including those amounts under Section 3 hereof
which would
otherwise be payable to Executive up to the end of the month in which death
occurs, and, to the extent applicable, any insurance or insurance proceeds,
vested death benefits, compensation for accrued vacation or leave
time.
(f)
Termination
of Employment by Reason of Disability
.
As used herein,
the term “permanent disability” shall mean, and be limited to, any physical or
mental illness, disability or impairment that prevents or may reasonably be
expected to prevent the Executive from continuing for the performance of his
normal duties and responsibilities hereunder for a period in excess of six (6)
consecutive months. For purposes of determining whether a “permanent
disability” has occurred under this Agreement, the written determination thereof
by two (2) qualified practicing physicians selected and paid for by the Company
(and reasonably acceptable to the Executive) shall be conclusive.
(
g)
Severance
.
In the event the Company terminates Executive’s
employment without Cause, or Executive terminates his employment for Good
Reason, or Executive’s employment is ended because of a permanent disability or
death, then, subject to the execution of a general release of claims in favor of
the Company, Executive or Executive’s estate will receive
an amount equal
to twelve (12) months
Salary
as severance within
thirty (30) days of the date of such termination (or such later date as may be
necessary to avoid any adverse tax consequences under Section 409(A) of the
Internal Revenue Code) and any and all compensation and benefits under Section
3 hereof
, which would otherwise be payable
to Executive as of the effective date of termination.
(h)
Significant
Acquisition/Divestiture
.
If during the
Employment Period,
the Company sells, or
causes a sale of, (i) all or substantially all of the shares of its capital
stock or the capital stock of any of its affiliates, (ii) all or substantially
all of its assets or the assets of any of its affiliates or (iii) performs a
material acquisition of the capital stock or assets of any entity and such
acquisition is material the Company (the events specified in (i), (ii) and (iii)
being a “
Significant
Acquisition/Divestiture
”),
Executive or
Executive’s estate will receive
an amount equal to the greater of (A)(1)
the product of any per share consideration to be received by the stockholders,
whether as a dividend, distribution or otherwise, of the Company in connection
with such Significant Acquisition/Divestiture
multiplied by
(2) the
number of shares of the Company’s common stock held by Executive on a
filly-diluted, as converted basis (that is, assuming the exercise of all options
or warrants to purchase, or the conversion of all securities convertible into,
common stock of the Company, in each case then held by Executive) and (B) one
(1)
year’s
Salary,
as a completion bonus
within thirty (30) days of the date of the consummation of such acquisition or
sale (or such later date as may be necessary to avoid any adverse tax
consequences under Section 409(A) of the Internal Revenue
Code).
3.
Compensation and
Benefits
.
(a)
Salary.
Executive
shall receive an annual salary (“
Salary
”) in the
amount of $288,000, less statutory deductions and applicable withholdings, which
shall be payable in periodic installments in accordance with the standard
payroll practices of the Company in effect from time-to-time, and shall be
subject to required tax and payroll withholdings
. The Salary may be increased from
time-to-time as the Board, upon recommendation of the Board’s Compensation
Committee (the “
Compensation
Committee
”), determines
.
(b)
Bonus.
In
addition to the Salary, the Executive shall receive a calendar year end bonus
and/or other incentive compensation equal in value to not less than 25% and not
more than 100% of the Salary (such percentage within the 25% - 100% range to be
determined by the Board,
based upon the recommendation of the Compensation
Committee).
(c)
Fringe
Benefits
.
The Company shall
also make available to the Executive, throughout the period of his employment
hereunder, such benefits and perquisites as are generally provided by the
Company to its executives at the Executive’s level of responsibility;
provided
,
however
, that nothing
herein contained shall be deemed to require the Company to adopt or maintain any
particular plan or policy.
(d)
Expenses
.
The Company shall
reimburse the Executive, upon presentment by the Executive to the Company of
appropriate receipts, vouchers or other supporting documentation therefor, for
any reasonable out-of-pocket business expenses incurred by the Executive in
connection with the performance of his duties and responsibilities hereunder, in
accordance with the Company’s standard policies and procedures in effect from
time-to-time.
(e)
Equity
Compensation
.
As an incentive for Executive to make the agreements
contained in this Agreement,
upon execution of this
Agreement,
Executive shall receive
stock options
under the Company’s 2007 Incentive Stock Plan (the
“
Plan
Options
”), that do not qualify as incentive
stock options, to purchase not less than 250,000 shares of the Company
’s
common stock at an exercise price equal to the closing price of the Company’s
common stock on the date of the grant, which shall be exercisable for five
(5)
years from the date hereof. The
Plan Options shall be immediately vested as of the date hereof. The
Plan Options shall contain cashless exercise provisions permitting payment of
any portion of the exercise price by surrendering Plan Options and/or shares of
the Company’s common stock to the Company and shall be governed by the
provisions of a stock option agreement substantially in the same form as the
Company uses for non-qualified grants to its other senior executives with such
modifications as are appropriate to incorporate the terms of this section 3(e)
and to delete any provisions that are inconsistent with such
terms
.
4.
Vacation, Personal Days and
Sick Days
.
The
Executive will be entitled to holidays, personal days and sick days in
accordance with the Company’s standard policies and procedures in effect from
time-to-time. The Executive will also be entitled to four (4) weeks
of
paid
vacation.
5.
Nondisclosure of
Confidential and Proprietary Information
.
(a)
The
Executive acknowledges that during the term of the Employment Period, Executive
will have access to and possession of trade secret, confidential information,
and proprietary information (collectively, as defined more extensively below,
“
Confidential
Information
”) of the Company, its subsidiaries, and affiliates and their
respective customers. The Executive recognizes and acknowledges that
this Confidential Information is valuable, special, and unique to the Company’s
business, and that access to and knowledge thereof are essential to the
performance of the Executive’s duties to the Company. During the
Employment Period and thereafter, Executive will keep secret and will not use or
disclose to any person or entity other than the Company, in any fashion or for
any purpose whatsoever, any Confidential Information relating to the Company,
its subsidiaries, affiliates, or its customers, except at the request or the
Company.
(b)
The
term “
Confidential
Information
” means confidential data and confidential information
relating to the business of the Company, its subsidiaries, and affiliates and
their respective customers, that is or has been disclosed to Executive or of
which Executive became aware as a consequence of or through Executive’s
employment with the Company and that has value to the Company and is not
generally known to the competitors of the Company and includes but is not
limited to information written, in digital form, in graphic form, electronically
stored, orally transmitted or memorized concerning the Company’s business or
operations plans, strategies, portfolio, prospects or objectives, structure,
products, product development, technology, distribution, sales, services,
support and marketing plans, practices, and operations; research and
development, financial records and information, and customer
lists.
(c)
The
Executive further recognizes that the Company has received and in the future
will receive from third parties confidential or proprietary information (“
Third
Party Information
”)
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During
the Employment Period and thereafter, Executive will hold Third Party
Information in the strictest confidence and will not disclose to anyone (other
than Company personnel who need to know such information in connection with
their work for the Company) or use, except in connection with work for the
Company, Third Party Information unless expressly authorized by the Company in
writing.
(d)
The
Executive further agrees to store and maintain all Confidential Information in a
secure place. On the termination of the relationship, Executive
agrees to deliver all records, data, information, and other documents produced
or acquired during the Employment Period, and all copies thereof, to the
Company. Such material at all times will remain the exclusive
property of the Company, unless otherwise agreed to in writing by the
Company. Upon termination of the relationship, Executive agrees to
make no further use of any Confidential Information on his or her own behalf or
on behalf of any other person or entity other than the Company.
(e)
At
no time will Executive improperly use or disclose any confidential information
or trade secrets, if any, of any former employer or any other person to whom
Executive has an obligation of confidentiality, nor bring onto the premises of
the Company any unpublished documents or any property belonging to any former
employer or any other person to whom Executive has an obligation of
confidentiality unless consented to in writing by that former employer or
person.
6.
Assignment Of Inventions and
Intellectual Property
.
In
consideration of Executive’s employment, Executive acknowledges and agrees that
the Company shall have exclusive, unlimited ownership rights to all materials,
information and other items created, prepared, derived or developed in
connection with or arising from Executive’s employment relationship with the
Company, whether individually or jointly with others, whether original or
considered enhancements, improvement or modifications, whether or not completed,
and whether or not protectable as trade secrets, service or trademarks, or
through patent, copyright, mask work or any other intellectual, industrial or
other form of property protection or proprietary rights (“
Inventions
”). Executive
further agrees that all Inventions shall be deemed made in the course and scope
of Executive’s employment with the Company and shall belong exclusively to the
Company, with the Company having the sole right to obtain, hold and renew, in
its own name and for its own benefit, all registrations and other protections
that may be available by contract, license, law, equity and/or
regulation. To the extent that exclusive title or ownership rights do
not originally vest in the Company as contemplated, Executive hereby irrevocably
assigns, transfers and conveys (and agrees to assign, transfer and convey in the
future) to the Company all such rights. Executive agrees to give the
Company all assistance and execute all documents necessary to assist and enable
the Company to perfect, preserve, enforce, register and record its
rights.
7.
Agreement Not to
Compete
.
(a)
The
Executive agrees with the Company that the services that the Executive will
render during the Employment Period are unique, special and of extraordinary
character, that the Company will be substantially dependent upon such services
to develop and market its products and to earn a profit, and that the
application of the Executive’s knowledge and services to any competitive
business would be substantially detrimental to the
Company. Accordingly, in consideration for employment by the Company
and compensation and other benefits pursuant to this Agreement, and any
compensation the Executive may receive after his employment is terminated, the
Executive will not compete or interfere with the Company or any affiliate of the
Company (or any of their successors or assigns), directly or indirectly during
the Employment Period or for the twelve (12) month period following termination
of Executive’s employment (the “
Restricted
Period
”).
The term
“compete” as used herein means to engage in, assist, or have any interest in,
including without limitation as a principal, consultant, employee, owner,
shareholder, director, officer, partner, member, advisor, agent, or financier,
any entity that is, or that is about to become engaged in, any activity that is
in competition with, or competes with the Company. The phrase
includes, but is not limited to, managing, producing, soliciting or selling
services, programs or products that provide similar functions to any of the
Company’s services, programs or products to any current customer of the
Company.
However, Executive shall not
be prohibited from owning up to two percent (2%) of the equity of a publicly
traded company.
(b)
Furthermore,
during the Restricted Period, Executive shall not, directly or indirectly, with
respect to the Company (including any subsidiaries or affiliates of the
Company), or any successors or assigns:
(1)
Solicit
any employees of the Company’s;
(2)
Directly
or indirectly influence any of the Company’s employees to terminate their
employment with the Company or accept employment with any of the Company’s
competitors; or
(3)
Interfere
with any of the Company’s business relationships, including without limitation
those with customers, suppliers, consultants, attorneys, or other agents,
whether or not evidenced by written or oral agreements.
(c)
The
Executive agrees that any breach of this Section 7 shall cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Executive agrees that (i) the Executive shall not be entitled to any
further payments due under the terms of this Agreement, and (ii) any stock
option granted but not exercised shall be void and have no further force or
effect. Furthermore, in addition to any other remedies that may
be available, the Company shall have the right to seek specific performance and
injunctive relief as set forth in Section 9, without the need to post a bond or
other security.
(d)
The
Executive further acknowledges that the covenants contained in this Section 7
are a material part of this Agreement and if this Agreement is terminated for
any reason, the Executive will be able to earn a livelihood without violating
these provisions.
8.
Return of Company
Property
.
When the
Executive leaves the employ of the Company, the Executive will deliver to the
Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, recordings, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, computer materials, equipment, other documents or property, together
with all copies thereof (in whatever medium recorded), belonging to the Company,
its successors or assigns. The Executive further agrees that any
property situated on the Company’s premises and owned by the Company, including
computer disks and other digital, analog or hard copy storage media, filing
cabinets or other work areas, is subject to inspection by Company personnel at
any time with or without notice.
9.
Legal and Equitable
Remedies
.
Because
the Executive’s services are personal and unique and because the Executive may
have access to and become acquainted with the Confidential Information of the
Company, and because the parties agree that irrepressible harm would result in
the event of a breach of Sections 5, 6, 7 and 8 by the Executive, the Company
may not have an adequate remedy at law, the Company will have the right to
enforce Sections 5, 6, 7 and 8 and any of their provisions by injunction,
restraining order, specific performance or other injunction relief, without
bond, and without prejudice to any other rights and remedies that the Company
may have for a breach of this Agreement. The Company’s remedies under
this Section 9 are not exclusive and shall not prejudice or prohibit any other
rights or remedies under this Agreement or otherwise.
10.
No
Conflicting Obligations
.
The
Executive represents that Executive’s compliance with the terms of this
Agreement and Executive’s performance as an executive of the Company does not
and shall not breach any agreement to keep in confidence information acquired by
the Executive in confidence or in trust prior to employment by the
Company. The Executive has not entered into, and agrees not to enter
into, any agreement, either written or oral, in conflict
herewith.
11.
Notification of New
Employer
.
In the
event that the Executive leaves the employ of the Company, the Executive hereby
agrees to notify the Executive’s new employer of those obligations that are
continuing under this Agreement after termination.
12.
Notices
.
Any
notice of communication permitted or required by this Agreement shall be in
writing and delivered personally or via overnight courier or certified mail,
return receipt requested:
If to the
Company:
100 S.
Main Street
Doylestown,
Pennsylvania 18901
Attention: Board
of Directors
If to the
Executive:
Walter
Witoshkin
New
Hope, PA 18938
(a)
No
waiver by the Company of any breach of this Agreement will be a waiver of any
preceding or subsequent breach. No waiver by the Company of any right under this
Agreement will be construed as a waiver of any other right. The Company will not
be required to give notice to enforce strict adherence to all terms of this
Agreement.
(b)
Neither
this Agreement, nor any of the Executive’s rights, powers, duties, or
obligations hereunder, may be assigned by the Executive. This
Agreement shall be binding upon and inure to the benefit of Executive and
Executive’s heirs and legal representatives and the Company and its
successors. Successors of the Company shall include, without
limitation, any company or companies acquiring, directly or indirectly, all or
substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and successor shall thereafter be
deemed “the Company” for the purpose hereof.
(c)
The
captions and Section headings used in this Agreement are for convenience of
reference only, and will not affect the construction or interpretation of this
Agreement or any of the provisions hereof.
(d)
The
validity and construction of this Agreement or any of its provisions will be
governed by and constructed in accordance with the laws of the State of New York
without regard to its conflicts of law. Each of the parties hereto
submits to the exclusive jurisdiction of the United States District Court for
the Southern District of New York, or if such court lacks subject matter
jurisdiction, to the jurisdiction of the Supreme Court of the State of New York,
County of New York. Each of the parties hereto specifically waives
any objection that it may otherwise have to the jurisdiction or venue of any
such Courts or that such Courts are an inconvenient forum and acknowledges that
service of process may be made by mailing a copy thereof in accordance with the
provisions of Section 12. However, any dispute arising under, out of,
in connection with, or in relation to: the Executive’s employment with the
Company; the termination of that employment; this Agreement, or the making,
validity, interpretation or breach thereof, will be determined and settled by
arbitration before a single arbitrator at the offices of the American
Arbitration Association (“
AAA
”) pursuant to the
employment dispute rules then in effect of the AAA.
The parties agree to avail themselves of any expedited
procedures available under the commercial arbitration rules of the AAA and to
use their best efforts to cause the arbitrator to render his decision within 90
days of the date of the Arbitration Notice or as soon thereafter as is
practicable. The parties consent to the jurisdiction of the Supreme
Court of the State of New York, County of New York (Commercial Division) and of
the United States District Court for the Southern District of New York for all
purposes in connection with said arbitration and further consent that any
process or notice of motion or other application to the Court or any judge
thereof and any paper in connection with such arbitration may be served in or
out of the State of New York by certified or registered mail or personal service
or in such other manner as may be permissible under the rules of the applicable
Court or arbitration tribunal, provided a reasonable time for appearance is
allowed. Any provisional remedy which, but for this Agreement to
arbitrate disputes, would be available at law, shall be available to the parties
hereto pending arbitration. The costs of the arbitration, including
the reasonable legal fees and disbursements of counsel to the prevailing party
in the arbitration shall be paid by the losing party, except that the arbitrator
in his discretion shall have the right to allocate the costs of the arbitration,
including the legal fees and disbursements of the parties, in such manner as the
arbitrator shall deem fair and reasonable
.
(e)
This
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
(f)
This Agreement may be executed in counterparts, each of which
will be deemed to be an original hereof, but all of which together will
constitute one and the same instrument.
(g)
This
Agreement constitutes the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.
(h)
This
Agreement is intended for the sole and exclusive benefit of the parties hereto
and their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns, and no other person or entity will have any
right to rely on this Agreement or to claim or derive any benefit herefrom
absent the express written consent of the party to be charged with such reliance
or benefit.
(i)
If
any provision of this Agreement is held invalid or unenforceable, either in its
entirety or by virtue of its scope or application to given circumstances, such
provision will thereupon be deemed modified only to the extent necessary to
render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require; and this Agreement will be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.
(j)
The
provisions of this Agreement will survive the termination of the E
xecutive
’s employment and the assignment of this
Agreement by the Company to any successor in interest or other
assignee.
(g)
The
Executive
has read this Agreement
carefully and fully understands its terms.
IN
WITNESS THEREOF, the parties have executed and delivered, or caused to be
executed and delivered, this Agreement on the date first written
above.
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QUANTRX
BIOMEDICAL CORPORATION
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By:
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Name:
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Title:
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Walter
Witoshkin
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EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT
(this
“
Agreement
”),
dated as of _________, 2009, by and between QuantRx Biomedical Corporation, a
Nevada corporation (the “
Company
”), and Sasha
Afanassiev (the “
Executive
”).
WITNESSETH
:
WHEREAS,
the Company is
engaged in the research, development, acquisition and commercialization of
medical diagnostic products (the “
Business
”);
WHEREAS
, the Executive has
certain experiences relating to the Business; and
WHEREAS
, the Company desires
to retain the services of the Executive as Chief Financial Officer (“
CFO
”);
WHEREAS,
the Company and the
Executive desire to enter into this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the
Executive;
NOW, THEREFORE
, in
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1.
Nature of
Employment
.
(a)
The
Company hereby engages the Executive as a full-time employee to hold the office
of CFO for the Initial Term and any Renewal Term (as defined herein)
(collectively the “
Employment Period
”),
and the Executive accepts such employment, on the terms and conditions set forth
in this Agreement. Throughout the Employment Period, subject to the
direction of the Board of Directors of the Company (the “
Board
”), the
Executive shall perform and discharge well and faithfully the duties that may be
assigned to him from time-to-time by the Board in connection with the conduct of
the Business.
(b)
Throughout
the Employment Period, the Executive will: (i) devote his full
employment energies, interests, abilities and time to the performance of his
duties and shall not render to others any material service of any kind for
compensation, unless the Executive receives written consent of the Board; (ii)
not engage in any business activities that are directly or indirectly
competitive with any business conducted by the Company or any of its
subsidiaries or affiliates; (iii) observe and carry out such reasonable rules,
regulations, policies, directions and restrictions as may be established from
time-to-time by the Board, including but not limited to, the standard policies
and procedures of the Company as in effect from time-to-time and (iv) do such
traveling as may reasonably be required in connection with the performance of
such duties and responsibilities.
(c)
The
Executive acknowledges that Sections 5, 6 and 7 of this Agreement contain
non-competition and non-disclosure of proprietary information provisions, and
the Executive agrees to comply with these provisions. The Executive
understands that entering into and complying with these provisions is a
condition to the Executive’s continued employment with the Company and that
failure to comply with the terms and conditions of these provisions may result
in termination for “Cause” (as defined below) under this Agreement.
2.
Term and Termination of
Employment
.
(a)
Term
.
Subject to prior
termination in accordance with this Section 2, the term of this Agreement and
the Executive’s employment hereunder shall be for a term of three (3) years
commencing on the date of this Agreement (“
Initial Term
”); and
following such Initial Term, this Agreement shall thereafter automatically renew
for an additional term of one (1) year (“
Renewal Term
”),
unless either party gives written notice of termination to the other party not
less than ninety (90) days prior to the end of any term (in which event this
Agreement shall terminate effective as of the close of such Initial Term or
Renewal Term). Each twelve-month period beginning on the date hereof
or any anniversary thereof is referred to in this Agreement as a “
Year
”.
(b)
By
Company With Cause
.
(1) During
the Employment Period, the Company may terminate Executive’s employment at any
time for Cause.
(2) As
used herein, the term “Cause” shall mean and be limited to: (i) any
willful and material breach of this Agreement by the Executive; (ii) any willful
or gross neglect by the Executive of his duties and responsibilities hereunder;
(iii) any fraud, criminal misconduct, breach of fiduciary duty, dishonesty, or
gross and willful misconduct by the Executive in connection with the performance
of his duties and responsibilities hereunder; (iv) the Executive being legally
intoxicated or under the influence of illegal or illegally obtained drugs during
business hours or while on call, or being habitually drunk or addicted to drugs
(provided that this shall not restrict the Executive from taking
physician-prescribed medication in accordance with the applicable prescription);
(v) the commission by the Executive of any felony or crime of moral turpitude;
(vi) any action by the Executive which may materially impair or damage the
reputation of the Company; (vii) insubordinate disregard of any
lawful direction given to the Executive by the Board; or (viii) repeated failure
or refusal to comply with the Company’s policies and procedures.
(c)
By Company Without Cause or
by Executive with Good Reason
.
(1) During
the Employment Period, the Company may terminate Executive’s employment at any
time without Cause.
(2) The
Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “
Good Reason
” shall
mean, in the absence of written consent of the Executive:
(i)
the assignment to the Executive of any duties materially inconsistent with the
Executive’s duties and responsibilities, or any other material action by the
Company that is materially inconsistent with or materially reduces such duties
or responsibilities; or
(ii) notice
in writing to the Executive of his/her relocation, without the Executive’s
consent, to a place of business more than 50 miles from his/her location as of
the date hereof;
(iii) a
breach by the Company of any of its material agreements contained herein and the
continuation of such breach for fifteen (15) business days after notice thereof
is given to the Company; or
(iv) a
“
Change of
Control
” (as defined herein); Executive may terminate this Agreement for
Good Reason or if there is a “Change of Control.” A “Change of
Control” shall mean the occurrence of any of the following; (a) the sale,
transfer, conveyance or other disposition in one or a series of related
transactions, or all or substantially all of the assets of the Company to any
entity, person, or group; (b) any entity, person, or group that becomes,
directly or indirectly, the owner of more than forty percent (40%) of the voting
stock of the Company by way of merger, consolidation, or otherwise; (c) the
present directors of the Company cease for any reason to constitute the majority
of the Board. (d) If, during the Term, there should be a Change of Control (as
defined herein), and within 3 months before or 12 months thereafter either (i)
Executive’s employment is terminated by the Company for any reason
other than Cause or the death or disability of Executive or (ii) Executive
terminates his employment for Good Reason, then Company shall, on or before
Executive’s last day of full-time employment hereunder, pay to Executive, in
lieu of any other rights to cash compensation he may have under this Agreement
which have not accrued by such date, a lump sum cash payment equal to two times
(x) Executive’s then current Base Salary and (y) the Bonus Amount.
Notwithstanding the foregoing, Company shall not be obligated to make any
payments under this Section 2 unless Executive has executed and delivered to
Company a further agreement, to be prepared at the time of Executive’s
termination of employment, that shall provide (i) an unconditional release of
all claims, charges, complaints and grievances, whether known or unknown to
Executive, against Company or any of its affiliates, through date of Executive’s
termination of employment; (ii) an obligation to maintain the confidentiality of
such agreement; and (iii) an obligation to indemnify Company if Executive
breaches such agreement. (e) It is the intention of the parties that the
payments under this Section 2 shall not constitute “excess parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended. Accordingly, notwithstanding anything in this Section 2 to the
contrary, if any of the amounts otherwise payable under this Section would
constitute “excess parachute payments,” or if the independent accountants acting
as auditors for Company on the date of the Change in Control determine that such
payments may constitute “excess parachute payments,” then the amounts otherwise
payable under this Section 2 shall be reduced to the maximum amounts that may be
paid without any such payments constituting, or potentially constituting,
“excess parachute payments.” (f) Following any termination of Executive’s
employment under this Section 4.5 after a Change in Control, Executive shall be
entitled to continue to receive for the remainder of the then-current Term, but
not less than 12 months, medical benefits coverage for Executive and Executive’s
spouse and dependents (if any) at the Company’s expense if and to the extent
Company was paying for such benefits at the time of such termination. (g) Upon
making the payment described in this Section 2, Company shall have no further
obligation to Executive under this Agreement.
Notwithstanding
the foregoing, the Executive shall not be considered to have Good Reason to
terminate this Agreement unless and until he gives the Company written notice of
the circumstances constituting Good Reason with respect to subsections (i)-(ii)
and the Company fails to have cured such circumstances within fifteen (15)
business days of receipt of such notice.
(d)
By Executive Without Good
Reason
.
(1) At
any time during the Employment Period, Executive may resign employment by giving
thirty (30) days prior notice of termination to Company.
(2) In
the event Executive voluntarily terminates his employment without Good Reason at
any time during the Employment Period, Executive shall only be entitled to
unpaid Salary and Fringe Benefits, as defined in Section 3 hereof, through the
date of termination of employment.
(e)
Termination
of Employment by Reason of Death
.
If Executive
shall die during the Employment Period, this Agreement shall terminate
automatically as of the date of death, and Company shall pay to the Executive’s
estate
the amounts set forth under Section 2(g)
hereof, including those amounts under Section 3 hereof
which would
otherwise be payable to Executive up to the end of the month in which death
occurs, and, to the extent applicable, any insurance or insurance proceeds,
vested death benefits, compensation for accrued vacation or leave
time.
(f)
Termination
of Employment by Reason of Disability
.
As used herein,
the term “permanent disability” shall mean, and be limited to, any physical or
mental illness, disability or impairment that prevents or may reasonably be
expected to prevent the Executive from continuing for the performance of his
normal duties and responsibilities hereunder for a period in excess of six (6)
consecutive months. For purposes of determining whether a “permanent
disability” has occurred under this Agreement, the written determination thereof
by two (2) qualified practicing physicians selected and paid for by the Company
(and reasonably acceptable to the Executive) shall be conclusive.
(
g)
Severance
.
In the event the Company terminates Executive’s
employment without Cause, or Executive terminates his employment for Good
Reason, or Executive’s employment is ended because of a permanent disability or
death, then, subject to the execution of a general release of claims in favor of
the Company, Executive or Executive’s estate will receive
an amount equal
to twelve (12) months
Salary
as severance within
thirty (30) days of the date of such termination (or such later date as may be
necessary to avoid any adverse tax consequences under Section 409(A) of the
Internal Revenue Code) and any and all compensation and benefits under Section
3 hereof
, which would otherwise be payable
to Executive as of the effective date of termination.
(h)
Significant
Acquisition/Divestiture
.
If during the
Employment Period,
the Company sells, or
causes a sale of, (i) all or substantially all of the shares of its capital
stock or the capital stock of any of its affiliates, (ii) all or substantially
all of its assets or the assets of any of its affiliates or (iii) performs a
material acquisition of the capital stock or assets of any entity and such
acquisition is material the Company (the events specified in (i), (ii) and (iii)
being a “
Significant
Acquisition/Divestiture
”),
Executive or
Executive’s estate will receive
an amount equal to the greater of (A)(1)
the product of any per share consideration to be received by the stockholders,
whether as a dividend, distribution or otherwise, of the Company in connection
with such Significant Acquisition/Divestiture
multiplied by
(2) the
number of shares of the Company’s common stock held by Executive on a
filly-diluted, as converted basis (that is, assuming the exercise of all options
or warrants to purchase, or the conversion of all securities convertible into,
common stock of the Company, in each case then held by Executive) and (B) one
(1)
year’s
Salary,
as a completion bonus
within thirty (30) days of the date of the consummation of such acquisition or
sale (or such later date as may be necessary to avoid any adverse tax
consequences under Section 409(A) of the Internal Revenue Code).
3.
Compensation and
Benefits
.
(a)
Salary.
Executive
shall receive an annual salary (“
Salary
”) in the
amount of $180,000, less statutory deductions and applicable withholdings, which
shall be payable in periodic installments in accordance with the standard
payroll practices of the Company in effect from time-to-time, and shall be
subject to required tax and payroll withholdings
. The Salary may be increased from
time-to-time as the Board, upon recommendation of the Board’s Compensation
Committee (the “
Compensation
Committee
”), determines
.
(b)
Bonus.
In
addition to the Salary, the Executive shall receive a calendar year end bonus
and/or other incentive compensation equal in value to not less than 25% and not
more than 100% of the Salary (such percentage within the 25% - 100% range to be
determined by the Board,
based upon the recommendation of the Compensation
Committee).
(c)
Fringe
Benefits
.
The Company shall
also make available to the Executive, throughout the period of his employment
hereunder, such benefits and perquisites as are generally provided by the
Company to its executives at the Executive’s level of responsibility;
provided
,
however
, that nothing
herein contained shall be deemed to require the Company to adopt or maintain any
particular plan or policy.
(d)
Expenses
.
The Company shall
reimburse the Executive, upon presentment by the Executive to the Company of
appropriate receipts, vouchers or other supporting documentation therefor, for
any reasonable out-of-pocket business expenses incurred by the Executive in
connection with the performance of his duties and responsibilities hereunder, in
accordance with the Company’s standard policies and procedures in effect from
time-to-time.
(e)
Equity
Compensation
.
As an incentive for Executive to make the agreements
contained in this Agreement,
upon execution of this
Agreement,
Executive shall receive
stock options
under the Company’s 2007 Incentive Stock Plan (the
“
Plan
Options
”), that do not qualify as incentive
stock options, to purchase not less than 125,000 shares of the Company
’s
common stock at an exercise price equal to the closing price of the Company’s
common stock on the date of the grant, which shall be exercisable for five
(5)
years from the date hereof. The
Plan Options shall be immediately vested as of the date hereof. The
Plan Options shall contain cashless exercise provisions permitting payment of
any portion of the exercise price by surrendering Plan Options and/or shares of
the Company’s common stock to the Company and shall be governed by the
provisions of a stock option agreement substantially in the same form as the
Company uses for non-qualified grants to its other senior executives with such
modifications as are appropriate to incorporate the terms of this section 3(e)
and to delete any provisions that are inconsistent with such
terms
.
4.
Vacation, Personal Days and
Sick Days
.
The
Executive will be entitled to holidays, personal days and sick days in
accordance with the Company’s standard policies and procedures in effect from
time-to-time. The Executive will also be entitled to four (4) weeks
of
paid
vacation.
5.
Nondisclosure of
Confidential and Proprietary Information
.
(a)
The
Executive acknowledges that during the term of the Employment Period, Executive
will have access to and possession of trade secret, confidential information,
and proprietary information (collectively, as defined more extensively below,
“
Confidential
Information
”) of the Company, its subsidiaries, and affiliates and their
respective customers. The Executive recognizes and acknowledges that
this Confidential Information is valuable, special, and unique to the Company’s
business, and that access to and knowledge thereof are essential to the
performance of the Executive’s duties to the Company. During the
Employment Period and thereafter, Executive will keep secret and will not use or
disclose to any person or entity other than the Company, in any fashion or for
any purpose whatsoever, any Confidential Information relating to the Company,
its subsidiaries, affiliates, or its customers, except at the request or the
Company.
(b)
The
term “
Confidential
Information
” means confidential data and confidential information
relating to the business of the Company, its subsidiaries, and affiliates and
their respective customers, that is or has been disclosed to Executive or of
which Executive became aware as a consequence of or through Executive’s
employment with the Company and that has value to the Company and is not
generally known to the competitors of the Company and includes but is not
limited to information written, in digital form, in graphic form, electronically
stored, orally transmitted or memorized concerning the Company’s business or
operations plans, strategies, portfolio, prospects or objectives, structure,
products, product development, technology, distribution, sales, services,
support and marketing plans, practices, and operations; research and
development, financial records and information, and customer lists.
(c)
The
Executive further recognizes that the Company has received and in the future
will receive from third parties confidential or proprietary information (“
Third
Party Information
”)
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During
the Employment Period and thereafter, Executive will hold Third Party
Information in the strictest confidence and will not disclose to anyone (other
than Company personnel who need to know such information in connection with
their work for the Company) or use, except in connection with work for the
Company, Third Party Information unless expressly authorized by the Company in
writing.
(d)
The
Executive further agrees to store and maintain all Confidential Information in a
secure place. On the termination of the relationship, Executive
agrees to deliver all records, data, information, and other documents produced
or acquired during the Employment Period, and all copies thereof, to the
Company. Such material at all times will remain the exclusive
property of the Company, unless otherwise agreed to in writing by the
Company. Upon termination of the relationship, Executive agrees to
make no further use of any Confidential Information on his or her own behalf or
on behalf of any other person or entity other than the Company.
(e)
At
no time will Executive improperly use or disclose any confidential information
or trade secrets, if any, of any former employer or any other person to whom
Executive has an obligation of confidentiality, nor bring onto the premises of
the Company any unpublished documents or any property belonging to any former
employer or any other person to whom Executive has an obligation of
confidentiality unless consented to in writing by that former employer or
person.
6.
Assignment Of Inventions and
Intellectual Property
.
In
consideration of Executive’s employment, Executive acknowledges and agrees that
the Company shall have exclusive, unlimited ownership rights to all materials,
information and other items created, prepared, derived or developed in
connection with or arising from Executive’s employment relationship with the
Company, whether individually or jointly with others, whether original or
considered enhancements, improvement or modifications, whether or not completed,
and whether or not protectable as trade secrets, service or trademarks, or
through patent, copyright, mask work or any other intellectual, industrial or
other form of property protection or proprietary rights (“
Inventions
”). Executive
further agrees that all Inventions shall be deemed made in the course and scope
of Executive’s employment with the Company and shall belong exclusively to the
Company, with the Company having the sole right to obtain, hold and renew, in
its own name and for its own benefit, all registrations and other protections
that may be available by contract, license, law, equity and/or
regulation. To the extent that exclusive title or ownership rights do
not originally vest in the Company as contemplated, Executive hereby irrevocably
assigns, transfers and conveys (and agrees to assign, transfer and convey in the
future) to the Company all such rights. Executive agrees to give the
Company all assistance and execute all documents necessary to assist and enable
the Company to perfect, preserve, enforce, register and record its
rights.
7.
Agreement Not to
Compete
.
(a)
The
Executive agrees with the Company that the services that the Executive will
render during the Employment Period are unique, special and of extraordinary
character, that the Company will be substantially dependent upon such services
to develop and market its products and to earn a profit, and that the
application of the Executive’s knowledge and services to any competitive
business would be substantially detrimental to the
Company. Accordingly, in consideration for employment by the Company
and compensation and other benefits pursuant to this Agreement, and any
compensation the Executive may receive after his employment is terminated, the
Executive will not compete or interfere with the Company or any affiliate of the
Company (or any of their successors or assigns), directly or indirectly during
the Employment Period or for the twelve (12) month period following termination
of Executive’s employment (the “
Restricted
Period
”).
The term
“compete” as used herein means to engage in, assist, or have any interest in,
including without limitation as a principal, consultant, employee, owner,
shareholder, director, officer, partner, member, advisor, agent, or financier,
any entity that is, or that is about to become engaged in, any activity that is
in competition with, or competes with the Company. The phrase
includes, but is not limited to, managing, producing, soliciting or selling
services, programs or products that provide similar functions to any of the
Company’s services, programs or products to any current customer of the
Company.
However, Executive shall not
be prohibited from owning up to two percent (2%) of the equity of a publicly
traded company.
(b)
Furthermore,
during the Restricted Period, Executive shall not, directly or indirectly, with
respect to the Company (including any subsidiaries or affiliates of the
Company), or any successors or assigns:
(1)
Solicit
any employees of the Company’s;
(2)
Directly
or indirectly influence any of the Company’s employees to terminate their
employment with the Company or accept employment with any of the Company’s
competitors; or
(3)
Interfere
with any of the Company’s business relationships, including without limitation
those with customers, suppliers, consultants, attorneys, or other agents,
whether or not evidenced by written or oral agreements.
(c)
The
Executive agrees that any breach of this Section 7 shall cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Executive agrees that (i) the Executive shall not be entitled to any
further payments due under the terms of this Agreement, and (ii) any stock
option granted but not exercised shall be void and have no further force or
effect. Furthermore, in addition to any other remedies that may
be available, the Company shall have the right to seek specific performance and
injunctive relief as set forth in Section 9, without the need to post a bond or
other security.
(d)
The
Executive further acknowledges that the covenants contained in this Section 7
are a material part of this Agreement and if this Agreement is terminated for
any reason, the Executive will be able to earn a livelihood without violating
these provisions.
8.
Return of Company
Property
.
When the
Executive leaves the employ of the Company, the Executive will deliver to the
Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, recordings, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, computer materials, equipment, other documents or property, together
with all copies thereof (in whatever medium recorded), belonging to the Company,
its successors or assigns. The Executive further agrees that any
property situated on the Company’s premises and owned by the Company, including
computer disks and other digital, analog or hard copy storage media, filing
cabinets or other work areas, is subject to inspection by Company personnel at
any time with or without notice.
9.
Legal and Equitable
Remedies
.
Because
the Executive’s services are personal and unique and because the Executive may
have access to and become acquainted with the Confidential Information of the
Company, and because the parties agree that irrepressible harm would result in
the event of a breach of Sections 5, 6, 7 and 8 by the Executive, the Company
may not have an adequate remedy at law, the Company will have the right to
enforce Sections 5, 6, 7 and 8 and any of their provisions by injunction,
restraining order, specific performance or other injunction relief, without
bond, and without prejudice to any other rights and remedies that the Company
may have for a breach of this Agreement. The Company’s remedies under
this Section 9 are not exclusive and shall not prejudice or prohibit any other
rights or remedies under this Agreement or otherwise.
10.
No Conflicting
Obligations
.
The
Executive represents that Executive’s compliance with the terms of this
Agreement and Executive’s performance as an executive of the Company does not
and shall not breach any agreement to keep in confidence information acquired by
the Executive in confidence or in trust prior to employment by the
Company. The Executive has not entered into, and agrees not to enter
into, any agreement, either written or oral, in conflict herewith.
11.
Notification of New
Employer
.
In the
event that the Executive leaves the employ of the Company, the Executive hereby
agrees to notify the Executive’s new employer of those obligations that are
continuing under this Agreement after termination.
12.
Notices
.
Any
notice of communication permitted or required by this Agreement shall be in
writing and delivered personally or via overnight courier or certified mail,
return receipt requested:
|
If
to the Company:
|
|
100
S. Main Street
|
|
|
|
Suite
300
|
|
|
|
Doylestown,
Pennsylvania 18901
|
|
|
|
Attention: Board
of Directors
|
|
|
|
|
|
If
to the Executive:
|
|
Sasha
Afanassiev
|
|
|
|
14
Oxford Court
|
|
|
|
Langhorne,
PA 19047
|
(a)
No
waiver by the Company of any breach of this Agreement will be a waiver of any
preceding or subsequent breach. No waiver by the Company of any right under this
Agreement will be construed as a waiver of any other right. The Company will not
be required to give notice to enforce strict adherence to all terms of this
Agreement.
(b)
Neither
this Agreement, nor any of the Executive’s rights, powers, duties, or
obligations hereunder, may be assigned by the Executive. This
Agreement shall be binding upon and inure to the benefit of Executive and
Executive’s heirs and legal representatives and the Company and its
successors. Successors of the Company shall include, without
limitation, any company or companies acquiring, directly or indirectly, all or
substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and successor shall thereafter be
deemed “the Company” for the purpose hereof.
(c)
The
captions and Section headings used in this Agreement are for convenience of
reference only, and will not affect the construction or interpretation of this
Agreement or any of the provisions hereof.
(d)
The
validity and construction of this Agreement or any of its provisions will be
governed by and constructed in accordance with the laws of the State of New York
without regard to its conflicts of law. Each of the parties hereto
submits to the exclusive jurisdiction of the United States District Court for
the Southern District of New York, or if such court lacks subject matter
jurisdiction, to the jurisdiction of the Supreme Court of the State of New York,
County of New York. Each of the parties hereto specifically waives
any objection that it may otherwise have to the jurisdiction or venue of any
such Courts or that such Courts are an inconvenient forum and acknowledges that
service of process may be made by mailing a copy thereof in accordance with the
provisions of Section 12. However, any dispute arising under, out of,
in connection with, or in relation to: the Executive’s employment with the
Company; the termination of that employment; this Agreement, or the making,
validity, interpretation or breach thereof, will be determined and settled by
arbitration before a single arbitrator at the offices of the American
Arbitration Association (“
AAA
”) pursuant to the
employment dispute rules then in effect of the AAA.
The parties agree to avail themselves of any expedited
procedures available under the commercial arbitration rules of the AAA and to
use their best efforts to cause the arbitrator to render his decision within 90
days of the date of the Arbitration Notice or as soon thereafter as is
practicable. The parties consent to the jurisdiction of the Supreme
Court of the State of New York, County of New York (Commercial Division) and of
the United States District Court for the Southern District of New York for all
purposes in connection with said arbitration and further consent that any
process or notice of motion or other application to the Court or any judge
thereof and any paper in connection with such arbitration may be served in or
out of the State of New York by certified or registered mail or personal service
or in such other manner as may be permissible under the rules of the applicable
Court or arbitration tribunal, provided a reasonable time for appearance is
allowed. Any provisional remedy which, but for this Agreement to
arbitrate disputes, would be available at law, shall be available to the parties
hereto pending arbitration. The costs of the arbitration, including
the reasonable legal fees and disbursements of counsel to the prevailing party
in the arbitration shall be paid by the losing party, except that the arbitrator
in his discretion shall have the right to allocate the costs of the arbitration,
including the legal fees and disbursements of the parties, in such manner as the
arbitrator shall deem fair and reasonable
.
(e)
This
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
(f)
This
Agreement may be executed in counterparts, each of which will be deemed to be an
original hereof, but all of which together will constitute one and the same
instrument.
(g)
This
Agreement constitutes the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.
(h)
This
Agreement is intended for the sole and exclusive benefit of the parties hereto
and their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns, and no other person or entity will have any
right to rely on this Agreement or to claim or derive any benefit herefrom
absent the express written consent of the party to be charged with such reliance
or benefit.
(i)
If
any provision of this Agreement is held invalid or unenforceable, either in its
entirety or by virtue of its scope or application to given circumstances, such
provision will thereupon be deemed modified only to the extent necessary to
render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require; and this Agreement will be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.
(j)
The
provisions of this Agreement will survive the termination of the E
xecutive
’s employment and the assignment of this
Agreement by the Company to any successor in interest or other
assignee.
(g)
The
Executive
has read this Agreement
carefully and fully understands its terms.
IN
WITNESS THEREOF, the parties have executed and delivered, or caused to be
executed and delivered, this Agreement on the date first written
above.
EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT
(this
“
Agreement
”),
dated as of _________ ___, 2009, by and between QuantRx Biomedical Corporation,
a Nevada corporation (the “
Company
”), and
William Fleming (the “
Executive
”).
WITNESSETH
:
WHEREAS,
the Company is
engaged in the research, development, acquisition and commercialization of
medical diagnostic products (the “
Business
”);
WHEREAS
, the Executive has
certain experiences relating to the Business; and
WHEREAS
, the Company desires
to retain the services of the Executive as Chief Science Officer (“
CSO
”);
WHEREAS,
the Company and the
Executive desire to enter into this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the
Executive;
NOW, THEREFORE
, in
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1.
Nature of
Employment
.
(a)
The
Company hereby engages the Executive as a full-time employee to hold the office
of CSO for the Initial Term and any Renewal Term (as defined herein)
(collectively the “
Employment Period
”),
and the Executive accepts such employment, on the terms and conditions set forth
in this Agreement. Throughout the Employment Period, subject to the
direction of the Board of Directors of the Company (the “
Board
”), the
Executive shall perform and discharge well and faithfully the duties that may be
assigned to him from time-to-time by the Board in connection with the conduct of
the Business.
(b)
Throughout
the Employment Period, the Executive will: (i) devote his full
employment energies, interests, abilities and time to the performance of his
duties and shall not render to others any material service of any kind for
compensation, unless the Executive receives written consent of the Board; (ii)
not engage in any business activities that are directly or indirectly
competitive with any business conducted by the Company or any of its
subsidiaries or affiliates; (iii) observe and carry out such reasonable rules,
regulations, policies, directions and restrictions as may be established from
time-to-time by the Board, including but not limited to, the standard policies
and procedures of the Company as in effect from time-to-time and (iv) do such
traveling as may reasonably be required in connection with the performance of
such duties and responsibilities.
(c)
The
Executive acknowledges that Sections 5, 6 and 7 of this Agreement contain
non-competition and non-disclosure of proprietary information provisions, and
the Executive agrees to comply with these provisions. The Executive
understands that entering into and complying with these provisions is a
condition to the Executive’s continued employment with the Company and that
failure to comply with the terms and conditions of these provisions may result
in termination for “Cause” (as defined below) under this Agreement.
2.
Term
and Termination of Employment
.
(a)
Term
.
Subject to prior
termination in accordance with this Section 2, the term of this Agreement and
the Executive’s employment hereunder shall be for a term of three (3) years
commencing on the date of this Agreement (“
Initial Term
”); and
following such Initial Term, this Agreement shall thereafter automatically renew
for an additional term of one (1) year (“
Renewal Term
”),
unless either party gives written notice of termination to the other party not
less than ninety (90) days prior to the end of any term (in which event this
Agreement shall terminate effective as of the close of such Initial Term or
Renewal Term). Each twelve-month period beginning on the date hereof
or any anniversary thereof is referred to in this Agreement as a “
Year
”.
(b)
By
Company With Cause
.
(1) During
the Employment Period, the Company may terminate Executive’s employment at any
time for Cause.
(2) As
used herein, the term “Cause” shall mean and be limited to: (i) any
willful and material breach of this Agreement by the Executive; (ii) any willful
or gross neglect by the Executive of his duties and responsibilities hereunder;
(iii) any fraud, criminal misconduct, breach of fiduciary duty, dishonesty, or
gross and willful misconduct by the Executive in connection with the performance
of his duties and responsibilities hereunder; (iv) the Executive being legally
intoxicated or under the influence of illegal or illegally obtained drugs during
business hours or while on call, or being habitually drunk or addicted to drugs
(provided that this shall not restrict the Executive from taking
physician-prescribed medication in accordance with the applicable prescription);
(v) the commission by the Executive of any felony or crime of moral turpitude;
(vi) any action by the Executive which may materially impair or damage the
reputation of the Company; (vii) insubordinate disregard of any
lawful direction given to the Executive by the Board; or (viii) repeated failure
or refusal to comply with the Company’s policies and procedures.
(c)
By Company Without Cause or
by Executive with Good Reason
.
(1) During
the Employment Period, the Company may terminate Executive’s employment at any
time without Cause.
(2) The
Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “
Good Reason
” shall
mean, in the absence of written consent of the Executive:
(i) the
assignment to the Executive of any duties materially inconsistent with the
Executive’s duties and responsibilities, or any other material action by the
Company that is materially inconsistent with or materially reduces such duties
or responsibilities; or
(ii) notice
in writing to the Executive of his/her relocation, without the Executive’s
consent, to a place of business more than 50 miles from his/her location as of
the date hereof;
(iii) a
breach by the Company of any of its material agreements contained herein and the
continuation of such breach for fifteen (15) business days after notice thereof
is given to the Company; or
(iv) a
“
Change of
Control
” (as defined herein); Executive may terminate this Agreement for
Good Reason or if there is a “Change of Control.” A “Change of
Control” shall mean the occurrence of any of the following; (a) the sale,
transfer, conveyance or other disposition in one or a series of related
transactions, or all or substantially all of the assets of the Company to any
entity, person, or group; (b) any entity, person, or group that becomes,
directly or indirectly, the owner of more than forty percent (40%) of the voting
stock of the Company by way of merger, consolidation, or otherwise; (c) the
present directors of the Company cease for any reason to constitute the majority
of the Board. (d) If, during the Term, there should be a Change of Control (as
defined herein), and within 3 months before or 12 months thereafter either (i)
Executive’s employment is terminated by the Company for any reason
other than Cause or the death or disability of Executive or (ii) Executive
terminates his employment for Good Reason, then Company shall, on or before
Executive’s last day of full-time employment hereunder, pay to Executive, in
lieu of any other rights to cash compensation he may have under this Agreement
which have not accrued by such date, a lump sum cash payment equal to two times
(x) Executive’s then current Base Salary and (y) the Bonus Amount.
Notwithstanding the foregoing, Company shall not be obligated to make any
payments under this Section 2 unless Executive has executed and delivered to
Company a further agreement, to be prepared at the time of Executive’s
termination of employment, that shall provide (i) an unconditional release of
all claims, charges, complaints and grievances, whether known or unknown to
Executive, against Company or any of its affiliates, through date of Executive’s
termination of employment; (ii) an obligation to maintain the confidentiality of
such agreement; and (iii) an obligation to indemnify Company if Executive
breaches such agreement. (e) It is the intention of the parties that the
payments under this Section 2 shall not constitute “excess parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended. Accordingly, notwithstanding anything in this Section 2 to the
contrary, if any of the amounts otherwise payable under this Section would
constitute “excess parachute payments,” or if the independent accountants acting
as auditors for Company on the date of the Change in Control determine that such
payments may constitute “excess parachute payments,” then the amounts otherwise
payable under this Section 2 shall be reduced to the maximum amounts that may be
paid without any such payments constituting, or potentially constituting,
“excess parachute payments.” (f) Following any termination of Executive’s
employment under this Section 4.5 after a Change in Control, Executive shall be
entitled to continue to receive for the remainder of the then-current Term, but
not less than 12 months, medical benefits coverage for Executive and Executive’s
spouse and dependents (if any) at the Company’s expense if and to the extent
Company was paying for such benefits at the time of such termination. (g) Upon
making the payment described in this Section 2, Company shall have no further
obligation to Executive under this Agreement.
Notwithstanding
the foregoing, the Executive shall not be considered to have Good Reason to
terminate this Agreement unless and until he gives the Company written notice of
the circumstances constituting Good Reason with respect to subsections (i)-(ii)
and the Company fails to have cured such circumstances within fifteen (15)
business days of receipt of such notice.
(d)
By Executive Without Good
Reason
.
(1) At
any time during the Employment Period, Executive may resign employment by giving
thirty (30) days prior notice of termination to Company.
(2) In
the event Executive voluntarily terminates his employment without Good Reason at
any time during the Employment Period, Executive shall only be entitled to
unpaid Salary and Fringe Benefits, as defined in Section 3 hereof, through the
date of termination of employment.
(e)
Termination
of Employment by Reason of Death
.
If Executive
shall die during the Employment Period, this Agreement shall terminate
automatically as of the date of death, and Company shall pay to the Executive’s
estate
the amounts set forth under Section 2(g)
hereof, including those amounts under Section 3 hereof
which would
otherwise be payable to Executive up to the end of the month in which death
occurs, and, to the extent applicable, any insurance or insurance proceeds,
vested death benefits, compensation for accrued vacation or leave
time.
(f)
Termination
of Employment by Reason of Disability
.
As used herein,
the term “permanent disability” shall mean, and be limited to, any physical or
mental illness, disability or impairment that prevents or may reasonably be
expected to prevent the Executive from continuing for the performance of his
normal duties and responsibilities hereunder for a period in excess of six (6)
consecutive months. For purposes of determining whether a “permanent
disability” has occurred under this Agreement, the written determination thereof
by two (2) qualified practicing physicians selected and paid for by the Company
(and reasonably acceptable to the Executive) shall be conclusive.
(
g)
Severance
.
In the event the Company terminates Executive’s
employment without Cause, or Executive terminates his employment for Good
Reason, or Executive’s employment is ended because of a permanent disability or
death, then, subject to the execution of a general release of claims in favor of
the Company, Executive or Executive’s estate will receive
an amount equal
to twelve (12) months
Salary
as severance within
thirty (30) days of the date of such termination (or such later date as may be
necessary to avoid any adverse tax consequences under Section 409(A) of the
Internal Revenue Code) and any and all compensation and benefits under Section
3 hereof
, which would otherwise be payable
to Executive as of the effective date of termination.
(h)
Significant
Acquisition/Divestiture
.
If during the
Employment Period,
the Company sells, or
causes a sale of, (i) all or substantially all of the shares of its capital
stock or the capital stock of any of its affiliates, (ii) all or substantially
all of its assets or the assets of any of its affiliates or (iii) performs a
material acquisition of the capital stock or assets of any entity and such
acquisition is material the Company (the events specified in (i), (ii) and (iii)
being a “
Significant
Acquisition/Divestiture
”),
Executive or
Executive’s estate will receive
an amount equal to the greater of (A)(1)
the product of any per share consideration to be received by the stockholders,
whether as a dividend, distribution or otherwise, of the Company in connection
with such Significant Acquisition/Divestiture
multiplied by
(2) the
number of shares of the Company’s common stock held by Executive on a
filly-diluted, as converted basis (that is, assuming the exercise of all options
or warrants to purchase, or the conversion of all securities convertible into,
common stock of the Company, in each case then held by Executive) and (B) one
(1)
year’s
Salary,
as a completion bonus
within thirty (30) days of the date of the consummation of such acquisition or
sale (or such later date as may be necessary to avoid any adverse tax
consequences under Section 409(A) of the Internal Revenue Code).
3.
Compensation and
Benefits
.
(a)
Salary.
Executive
shall receive an annual salary (“
Salary
”) in the
amount of $168,000, less statutory deductions and applicable withholdings, which
shall be payable in periodic installments in accordance with the standard
payroll practices of the Company in effect from time-to-time, and shall be
subject to required tax and payroll withholdings
. The Salary may be increased from
time-to-time as the Board, upon recommendation of the Board’s Compensation
Committee (the “
Compensation
Committee
”), determines
.
(b)
Bonus.
In
addition to the Salary, the Executive shall receive a calendar year end bonus
and/or other incentive compensation equal in value to not less than 25% and not
more than 100% of the Salary (such percentage within the 25% - 100% range to be
determined by the Board,
based upon the recommendation of the Compensation
Committee). In addition to the foregoing, the Executive shall receive a $25,000
cash Milestone Bonus for the successful achievement of the First Milestone as
defined in the QN Diagnostics LLC Operating Agreement.
(c)
Fringe
Benefits
.
The Company shall
also make available to the Executive, throughout the period of his employment
hereunder, such benefits and perquisites as are generally provided by the
Company to its executives at the Executive’s level of responsibility;
provided
,
however
, that nothing
herein contained shall be deemed to require the Company to adopt or maintain any
particular plan or policy.
(d)
Expenses
.
The Company shall
reimburse the Executive, upon presentment by the Executive to the Company of
appropriate receipts, vouchers or other supporting documentation therefor, for
any reasonable out-of-pocket business expenses incurred by the Executive in
connection with the performance of his duties and responsibilities hereunder, in
accordance with the Company’s standard policies and procedures in effect from
time-to-time.
(e)
Equity
Compensation
.
As an incentive for Executive to make the agreements
contained in this Agreement,
upon execution of this
Agreement,
Executive shall receive
stock options
under the Company’s 2007 Incentive Stock Plan (the
“
Plan
Options
”), that do not qualify as incentive
stock options, to purchase not less than 125,000 shares of the Company
’s
common stock at an exercise price equal to the closing price of the Company’s
common stock on the date of the grant, which shall be exercisable for five
(5)
years from the date hereof. The
Plan Options shall vest with respect to 62,500 options on the successful
achievement of the First Milestone as defined in the QN Diagnostics LLC
Operating Agreement and shall vest with respect to the remaining 62,500 options
on the successful achievement of the Second Milestone as defined in the QN
Diagnostics LLC Operating Agreement. The Plan Options shall contain
cashless exercise provisions permitting payment of any portion of the exercise
price by surrendering Plan Options and/or shares of the Company’s common stock
to the Company and shall be governed by the provisions of a stock option
agreement substantially in the same form as the Company uses for non-qualified
grants to its other senior executives with such modifications as are appropriate
to incorporate the terms of this section 3(e) and to delete any provisions that
are inconsistent with such terms
.
4.
Vacation, Personal Days and
Sick Days
.
The
Executive will be entitled to holidays, personal days and sick days in
accordance with the Company’s standard policies and procedures in effect from
time-to-time. The Executive will also be entitled to four (4) weeks
of
paid
vacation.
5.
Nondisclosure of
Confidential and Proprietary Information
.
(a)
The
Executive acknowledges that during the term of the Employment Period, Executive
will have access to and possession of trade secret, confidential information,
and proprietary information (collectively, as defined more extensively below,
“
Confidential
Information
”) of the Company, its subsidiaries, and affiliates and their
respective customers. The Executive recognizes and acknowledges that
this Confidential Information is valuable, special, and unique to the Company’s
business, and that access to and knowledge thereof are essential to the
performance of the Executive’s duties to the Company. During the
Employment Period and thereafter, Executive will keep secret and will not use or
disclose to any person or entity other than the Company, in any fashion or for
any purpose whatsoever, any Confidential Information relating to the Company,
its subsidiaries, affiliates, or its customers, except at the request or the
Company.
(b)
The
term “
Confidential
Information
” means confidential data and confidential information
relating to the business of the Company, its subsidiaries, and affiliates and
their respective customers, that is or has been disclosed to Executive or of
which Executive became aware as a consequence of or through Executive’s
employment with the Company and that has value to the Company and is not
generally known to the competitors of the Company and includes but is not
limited to information written, in digital form, in graphic form, electronically
stored, orally transmitted or memorized concerning the Company’s business or
operations plans, strategies, portfolio, prospects or objectives, structure,
products, product development, technology, distribution, sales, services,
support and marketing plans, practices, and operations; research and
development, financial records and information, and customer lists.
(c)
The
Executive further recognizes that the Company has received and in the future
will receive from third parties confidential or proprietary information (“
Third
Party Information
”)
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During
the Employment Period and thereafter, Executive will hold Third Party
Information in the strictest confidence and will not disclose to anyone (other
than Company personnel who need to know such information in connection with
their work for the Company) or use, except in connection with work for the
Company, Third Party Information unless expressly authorized by the Company in
writing.
(d)
The
Executive further agrees to store and maintain all Confidential Information in a
secure place. On the termination of the relationship, Executive
agrees to deliver all records, data, information, and other documents produced
or acquired during the Employment Period, and all copies thereof, to the
Company. Such material at all times will remain the exclusive
property of the Company, unless otherwise agreed to in writing by the
Company. Upon termination of the relationship, Executive agrees to
make no further use of any Confidential Information on his or her own behalf or
on behalf of any other person or entity other than the Company.
(e)
At
no time will Executive improperly use or disclose any confidential information
or trade secrets, if any, of any former employer or any other person to whom
Executive has an obligation of confidentiality, nor bring onto the premises of
the Company any unpublished documents or any property belonging to any former
employer or any other person to whom Executive has an obligation of
confidentiality unless consented to in writing by that former employer or
person.
6.
Assignment Of Inventions and
Intellectual Property
.
In
consideration of Executive’s employment, Executive acknowledges and agrees that
the Company shall have exclusive, unlimited ownership rights to all materials,
information and other items created, prepared, derived or developed in
connection with or arising from Executive’s employment relationship with the
Company, whether individually or jointly with others, whether original or
considered enhancements, improvement or modifications, whether or not completed,
and whether or not protectable as trade secrets, service or trademarks, or
through patent, copyright, mask work or any other intellectual, industrial or
other form of property protection or proprietary rights (“
Inventions
”). Executive
further agrees that all Inventions shall be deemed made in the course and scope
of Executive’s employment with the Company and shall belong exclusively to the
Company, with the Company having the sole right to obtain, hold and renew, in
its own name and for its own benefit, all registrations and other protections
that may be available by contract, license, law, equity and/or
regulation. To the extent that exclusive title or ownership rights do
not originally vest in the Company as contemplated, Executive hereby irrevocably
assigns, transfers and conveys (and agrees to assign, transfer and convey in the
future) to the Company all such rights. Executive agrees to give the
Company all assistance and execute all documents necessary to assist and enable
the Company to perfect, preserve, enforce, register and record its
rights.
7.
Agreement Not to
Compete
.
(a)
The
Executive agrees with the Company that the services that the Executive will
render during the Employment Period are unique, special and of extraordinary
character, that the Company will be substantially dependent upon such services
to develop and market its products and to earn a profit, and that the
application of the Executive’s knowledge and services to any competitive
business would be substantially detrimental to the
Company. Accordingly, in consideration for employment by the Company
and compensation and other benefits pursuant to this Agreement, and any
compensation the Executive may receive after his employment is terminated, the
Executive will not compete or interfere with the Company or any affiliate of the
Company (or any of their successors or assigns), directly or indirectly during
the Employment Period or for the twelve (12) month period following termination
of Executive’s employment (the “
Restricted
Period
”).
The term
“compete” as used herein means to engage in, assist, or have any interest in,
including without limitation as a principal, consultant, employee, owner,
shareholder, director, officer, partner, member, advisor, agent, or financier,
any entity that is, or that is about to become engaged in, any activity that is
in competition with, or competes with the Company. The phrase
includes, but is not limited to, managing, producing, soliciting or selling
services, programs or products that provide similar functions to any of the
Company’s services, programs or products to any current customer of the
Company.
However, Executive shall not
be prohibited from owning up to two percent (2%) of the equity of a publicly
traded company.
(b)
Furthermore,
during the Restricted Period, Executive shall not, directly or indirectly, with
respect to the Company (including any subsidiaries or affiliates of the
Company), or any successors or assigns:
(1)
Solicit
any employees of the Company’s;
(2)
Directly
or indirectly influence any of the Company’s employees to terminate their
employment with the Company or accept employment with any of the Company’s
competitors; or
(3)
Interfere
with any of the Company’s business relationships, including without limitation
those with customers, suppliers, consultants, attorneys, or other agents,
whether or not evidenced by written or oral agreements.
(c)
The
Executive agrees that any breach of this Section 7 shall cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Executive agrees that (i) the Executive shall not be entitled to any
further payments due under the terms of this Agreement, and (ii) any stock
option granted but not exercised shall be void and have no further force or
effect. Furthermore, in addition to any other remedies that may
be available, the Company shall have the right to seek specific performance and
injunctive relief as set forth in Section 9, without the need to post a bond or
other security.
(d)
The
Executive further acknowledges that the covenants contained in this Section 7
are a material part of this Agreement and if this Agreement is terminated for
any reason, the Executive will be able to earn a livelihood without violating
these provisions.
8.
Return of Company
Property
.
When the
Executive leaves the employ of the Company, the Executive will deliver to the
Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, recordings, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, computer materials, equipment, other documents or property, together
with all copies thereof (in whatever medium recorded), belonging to the Company,
its successors or assigns. The Executive further agrees that any
property situated on the Company’s premises and owned by the Company, including
computer disks and other digital, analog or hard copy storage media, filing
cabinets or other work areas, is subject to inspection by Company personnel at
any time with or without notice.
9.
Legal and Equitable
Remedies
.
Because
the Executive’s services are personal and unique and because the Executive may
have access to and become acquainted with the Confidential Information of the
Company, and because the parties agree that irrepressible harm would result in
the event of a breach of Sections 5, 6, 7 and 8 by the Executive, the Company
may not have an adequate remedy at law, the Company will have the right to
enforce Sections 5, 6, 7 and 8 and any of their provisions by injunction,
restraining order, specific performance or other injunction relief, without
bond, and without prejudice to any other rights and remedies that the Company
may have for a breach of this Agreement. The Company’s remedies under
this Section 9 are not exclusive and shall not prejudice or prohibit any other
rights or remedies under this Agreement or otherwise.
10.
No Conflicting
Obligations
.
The
Executive represents that Executive’s compliance with the terms of this
Agreement and Executive’s performance as an executive of the Company does not
and shall not breach any agreement to keep in confidence information acquired by
the Executive in confidence or in trust prior to employment by the
Company. The Executive has not entered into, and agrees not to enter
into, any agreement, either written or oral, in conflict
herewith.
11.
Notification of New
Employer
.
In the
event that the Executive leaves the employ of the Company, the Executive hereby
agrees to notify the Executive’s new employer of those obligations that are
continuing under this Agreement after termination.
12.
Notices
.
Any
notice of communication permitted or required by this Agreement shall be in
writing and delivered personally or via overnight courier or certified mail,
return receipt requested:
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If to the Company:
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100 S. Main Street
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Doylestown, Pennsylvania 18901
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Attention: Board of
Directors
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If to the Executive:
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William Fleming
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(a)
No
waiver by the Company of any breach of this Agreement will be a waiver of any
preceding or subsequent breach. No waiver by the Company of any right under this
Agreement will be construed as a waiver of any other right. The Company will not
be required to give notice to enforce strict adherence to all terms of this
Agreement.
(b)
Neither
this Agreement, nor any of the Executive’s rights, powers, duties, or
obligations hereunder, may be assigned by the Executive. This
Agreement shall be binding upon and inure to the benefit of Executive and
Executive’s heirs and legal representatives and the Company and its
successors. Successors of the Company shall include, without
limitation, any company or companies acquiring, directly or indirectly, all or
substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and successor shall thereafter be
deemed “the Company” for the purpose hereof.
(c)
The
captions and Section headings used in this Agreement are for convenience of
reference only, and will not affect the construction or interpretation of this
Agreement or any of the provisions hereof.
(d)
The
validity and construction of this Agreement or any of its provisions will be
governed by and constructed in accordance with the laws of the State of New York
without regard to its conflicts of law. Each of the parties hereto
submits to the exclusive jurisdiction of the United States District Court for
the Southern District of New York, or if such court lacks subject matter
jurisdiction, to the jurisdiction of the Supreme Court of the State of New York,
County of New York. Each of the parties hereto specifically waives
any objection that it may otherwise have to the jurisdiction or venue of any
such Courts or that such Courts are an inconvenient forum and acknowledges that
service of process may be made by mailing a copy thereof in accordance with the
provisions of Section 12. However, any dispute arising under, out of,
in connection with, or in relation to: the Executive’s employment with the
Company; the termination of that employment; this Agreement, or the making,
validity, interpretation or breach thereof, will be determined and settled by
arbitration before a single arbitrator at the offices of the American
Arbitration Association (“
AAA
”) pursuant to the
employment dispute rules then in effect of the AAA.
The parties agree to avail themselves of any expedited
procedures available under the commercial arbitration rules of the AAA and to
use their best efforts to cause the arbitrator to render his decision within 90
days of the date of the Arbitration Notice or as soon thereafter as is
practicable. The parties consent to the jurisdiction of the Supreme
Court of the State of New York, County of New York (Commercial Division) and of
the United States District Court for the Southern District of New York for all
purposes in connection with said arbitration and further consent that any
process or notice of motion or other application to the Court or any judge
thereof and any paper in connection with such arbitration may be served in or
out of the State of New York by certified or registered mail or personal service
or in such other manner as may be permissible under the rules of the applicable
Court or arbitration tribunal, provided a reasonable time for appearance is
allowed. Any provisional remedy which, but for this Agreement to
arbitrate disputes, would be available at law, shall be available to the parties
hereto pending arbitration. The costs of the arbitration, including
the reasonable legal fees and disbursements of counsel to the prevailing party
in the arbitration shall be paid by the losing party, except that the arbitrator
in his discretion shall have the right to allocate the costs of the arbitration,
including the legal fees and disbursements of the parties, in such manner as the
arbitrator shall deem fair and reasonable
.
(e)
This
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
(f)
This
Agreement may be executed in counterparts, each of which will be deemed to be an
original hereof, but all of which together will constitute one and the same
instrument.
(g)
This
Agreement constitutes the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.
(h)
This
Agreement is intended for the sole and exclusive benefit of the parties hereto
and their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns, and no other person or entity will have any
right to rely on this Agreement or to claim or derive any benefit herefrom
absent the express written consent of the party to be charged with such reliance
or benefit.
(i)
If
any provision of this Agreement is held invalid or unenforceable, either in its
entirety or by virtue of its scope or application to given circumstances, such
provision will thereupon be deemed modified only to the extent necessary to
render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require; and this Agreement will be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.
(j)
The
provisions of this Agreement will survive the termination of the E
xecutive
’s employment and the assignment of this
Agreement by the Company to any successor in interest or other
assignee.
(g)
The
Executive
has read this Agreement
carefully and fully understands its terms.
IN
WITNESS THEREOF, the parties have executed and delivered, or caused to be
executed and delivered, this Agreement on the date first written
above.
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QUANTRX
BIOMEDICAL CORPORATION
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By:
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Name:
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Title:
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William
Fleming
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