EXHIBIT NO. 10.19
EMPLOYMENT AGREEMENT dated as of January 1, 1998 between ▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Executive") and MILESTONE SCIENTIFIC INC. (The "Company").
WHEREAS, the Company presently employs the Executive as its President and
Chief Executive Officer; and
WHEREAS, the Company desires to continue to retain the Executive and the
Executive desires to continue to work for the Company; and
WHEREAS, the Company and the Executive desire to provide for the terms and
conditions of the future employment of the Executive by the Company.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the parties hereto agree as follows:
1. Term of Agreement. Subject to the terms and conditions hereof, the
Company employs the Executive and the Executive accepts such employment for the
five year period commencing January 1, 1998 and ending December 31, 2002, unless
extended or terminated as provided in Sections 2 and 7, respectively (the
"Employment Term").
2. Renewal. The Employment Term shall be extended for successive one-year
periods unless prior to December 1 of any year, either party notifies the other
that he or it chooses not to extend the Employment Term. By way of example, if
neither party makes an election prior to December 1, 1998 then the Employment
Term shall automatically be extended by one additional year to December 31,
2003.
3. Duties and Responsibilities. During the Employment Term, the Executive
shall serve as the Chief Executive Officer of the Company and as the holder of
such other senior executive positions consistent therewith as the Board may
determine. He shall report to, and be subject to, the direction of the Company's
Board of Directors with such duties and responsibilities as are commensurate
with his title and position. The Executive shall work on a full time basis and
shall devote his time, energy and attention to the business of the Company.
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4. Compensation.
(a) Base Salary. In payment for the services to be rendered by the
Executive hereunder, the Executive shall be paid at the annual base salary rate
of $350,000, less withholding required by law and other deductions agreed upon
by the Executive, commencing on the date of this agreement. Such compensation
shall be payable bi-monthly, or on such more frequent schedule as the Company
may elect. Commencing January 1, 2001 and as of January 1 of each year
thereafter during the Employment Term, annual base pay for the ensuing year
shall be increased, proportionately, to reflect the increase in the Consumer
Price Index, all items for New York City for the preceding November from that
same Index for November 1997.
(b) Stock Options.
(i) During January 1998 and each of the next four Januarys during
the Employment Term the Company shall grant to the Executive
an option to purchase 50,000 shares of Common Stock of the
Company. The option exercise price per share shall be the fair
market value of one share on the date of grant. The option
term shall be not less than five nor more than ten years, as
determined by the Compensation Committee of the Board of
Directors, and such option shall be exercisable only during
the last 30 days of its term, except that the option shall
become earlier exercisable if the Company achieves the minimum
income or other financial goal specified by the Compensation
Committee for the payment of a cash bonus under paragraph (c),
below, for that year.
(ii) As soon as practicable after the preparation of financial
statements for each fiscal year during the first five years of
the Employment Term, but in no event later than April 15 of
any year commencing April 15, 1999 and ending April 15 2003
(not withstanding any earlier expiration of the Employment
Term), the Company shall grant to the Executive options to
purchase up to an additional 50,000 shares of Common Stock
depending on the extent to which, if any, the Company achieves
the net income or other performance target in excess of the
minimum target specified by the Compensation Committee, for
the payment of any annual cash bonus award. The number of
option shares shall be prorated over the differential between
the minimum target required for payment of any bonus and the
target entitling the Executive to a maximum cash bonus. With
respect to 1998 the performance target specified for the
achievement of a minimal annual bonus is net income of
$2,500,000 (as defined below) and the net income required for
payment of the maximum bonus is $4,500,000. Since the
Compensation Committee has determined to award such options
with respect to 1998 in 10,000 share increments, then for each
$400,000 of net income in excess of $2,500,000 the Executive
will receive options for 10,000 shares. For example, if income
of $3,300,000 is earned, the Executive would receive options
for 20,000 shares. The options awarded under this paragraph
shall be exercisable at a price per share equal to the fair
market value of one share on the date of grant and shall have
a term of not less than five nor more than ten years, all as
determined by the Compensation Committee.
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(c) Cash Bonus. For each of the first five calendar years of the
Employment Term, the Executive shall receive the opportunity to earn a cash
bonus of up to $200,000 depending upon the achievement by the Company of
achievable income or other performance targets specified by the Compensation
Committee for such calendar year. The performance targets shall be specified by
the Committee not later than 30 days after the completion of financial
statements for the preceding year, but in no event later than April 30 of any
year. The performance target determined by the Compensation Committee for 1998
is minimum net income of at least $2,500,000 and the net income level at which
the maximum performance bonus will be payable is $4,500,000. For net income
levels between $2,500,000 and $4,500,000, the performance bonus shall be
prorated, i.e. for each $1,000 of income in excess of $2,500,000, in each case
before giving effect to the bonus, earned by the Company the Executive shall
receive $100.
(d) General. For purposes of this Section 4, net income shall mean net
income shown on an internal financial statement prepared by the Company's Chief
Financial Officer; adjusted to eliminate the effect, if any, of any estimated
bonus to the Company's Chief Executive Officer under this Agreement with respect
to such year, provided however, that if net income shown on the audited
financial statements for such calendar year, adjusted to eliminate the effect of
any bonus paid under this Agreement with respect to such year would result in
the calculation of a different bonus, the bonus paid shall be appropriately
adjusted.
5. Expenses. During the Employment Term, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and procedures established from time to time by the
Board of Directors of the Company) in performing services hereunder, provided
that such expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
6. Other Benefits. The Executive shall be entitled to the following
additional benefits:
(a) Four weeks of paid vacation during each year of the term.
(b) Paid holidays in accordance with the Company's usual holiday schedule
plus eight additional paid holiday, or personal days, to be taken at such time
as the Executive determines.
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(c) Such major medical, family health and dental coverage benefits and
long-term disability group plan coverage generally available to the Company's
officers. To the extent the Executive qualifies, the Executive may participate
in, or benefit under, any employee benefit plan, arrangement or perquisite made
available by the Company to its key executives.
(d) The Company shall reimburse the Executive for such ordinary and
necessary business related expenses as shall be incurred by the Executive in the
course of the performance of his duties under this Agreement.
7. Termination. The Executive's employment hereunder may be terminated
under the following circumstances:
(a) The Company shall have the right to terminate the employment of
the Executive under this Agreement for disability in the event the Executive
suffers an injury, or physical or mental illness or incapacity of such character
as to substantially disable him from performing his duties hereunder for a
period of more than one hundred eighty (180) consecutive days upon the Company
giving at last thirty (30) days written notice of termination; provided,
however, that if the Executive is eligible to receive disability payments
pursuant to a disability insurance policy or policies paid for by the Company,
the Executive shall assign such benefits to the Company for all periods as to
which he is receiving payment under this Agreement.
(b) This Agreement shall terminate upon the death of Executive.
(c) The Company may terminate this Agreement at any time because of (i)
Executive's material breach of any term of this Agreement or (ii) the willful
engaging by the Executive in misconduct which is materially injurious to the
Company, monetarily or otherwise; provided, in each case, however, that the
Company shall not terminate this Agreement pursuant to this Section 7(c) unless
the Company shall first have delivered to the Executive a notice which
specifically identifies such breach or misconduct, specifies reasonable
corrective action and the Executive shall not have cured the breach or corrected
the misconduct within fifteen (15) days after receipt of such notice.
(d) The Executive may terminate his employment for "Good Reason" on five
days written notice if:
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(i) he is assigned, without his express written consent, any
duties inconsistent with his positions, duties,
responsibilities, authority and status with the Company as of
the date hereof, or a change in his reporting responsibilities
or titles as in effect as of the date hereof, except in
connection with the termination of his employment by him
without Good Reason; or
(ii) his compensation is reduced or
(iii) Any purchaser or purchasers of substantially all of the
business or assets of the Company do not agree, at or prior to
the closing of any such transaction, by agreement in form and
substance satisfactory to the Executive to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform if no sale was
consummated.
8. Nondisclosure; Noncompetition.
(a) The Executive agrees not to use or disclose, either while in the
Company's employ or at any time thereafter, except with the prior written
consent of the Board of Directors, any trade secrets, proprietary information,
or other information that the Company considers confidential relating to
processes, suppliers (including but not limited to a list or lists of
suppliers), customers (including but not limited to a list or lists of
customers), compositions, improvements, inventions, operations, processing,
marketing, distributing, selling, cost and pricing data, or master files
utilized by the Company, not presently generally known to the public, and which
is, obtained or acquired by the Executive while in the employ of the Company.
(b) During the Employment Term and for a period of two years thereafter,
the Executive shall not, directly or indirectly; (i) in any manner, engage in
any business which competes with any business conducted by the Company
(including any subsidiary) and will not directly or indirectly own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be employed by or connected in any manner with any corporation,
firm or business that is so engaged (provided, however, that nothing herein
shall
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prohibit the Executive from owning not more than three percent (3%) of the
outstanding stock of any publicly held corporation), (ii) persuade or attempt to
persuade any employee of the Company to leave the employ of the Company or to
become employed by any other entity, or (iii) persuade or attempt to persuade
any current client or former client with leaving, or to reduce the amount of
business it does or intends or anticipates doing with the Company.
(c) During his employment with the Company, and for two years thereafter,
the Executive shall not take any action which might divert from the Company any
opportunity learned about by him during his employment with the Company
(including without limitation during the Employment Term) which would be within
the scope of any of the businesses then engaged in or planned to be engaged in
by the Company.
(d) In the event that this Agreement shall be terminated, then
notwithstanding such termination, the obligations of Executive pursuant to this
Section 8 of this Agreement shall survive such termination.
9. Successors; Binding Agreement.
(a) The Company shall require any purchaser or purchasers of the Company
or any purchaser or purchasers of substantially all of the business or assets of
the Company, by agreement in form and substance satisfactory to the Executive,
to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such purchase had
taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business or assets which executes
and delivers the agreement provided for in this Section 9(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there be no such designee, to the Executive's estate.
10. Amendment; Waiver. No provisions of this Agreement may be modified,
supplemented, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of
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any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express of implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
11. Applicable Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
Jersey without regard to its conflict of laws principles.
12. Severability of Covenants. In the event that any provision of this
Agreement, including any sentence, clause or part hereof, shall be deemed
contrary to law or invalid or unenforceable in any respect by a court of
competent jurisdiction, the remaining provisions shall not be affected, but
shall remain in full force and effect and any invalid and enforceable provisions
shall be deemed, without further action on the part of the undersigned,
modified, amended and limited solely to the extent necessary to render the same
valid and enforceable.
13. Remedies.
(a) In the event of a breach or threatened breach of any of the
Executive's covenants under Section 8, the Executive acknowledges that the
Company will not have an adequate remedy at law. Accordingly, in the event of
any such breach or threatened breach, the Company will be entitled to such
equitable and injunctive relief as may be available to restrain the Executive
from the violation of the provisions thereof.
(b) Nothing herein shall be construed as prohibiting the Company, on the
one hand, and the Executive, on the other hand, from pursuing any remedies
available at law or in equity for any breach or threatened breach of the
provisions of this Agreement by the other party, including the recovery of
damages.
(c) If the Executive terminates his employment for a Good Reason (as
defined above in Section 7(d)) then the Executive will suffer damages which will
be difficult to calculate. Consequently, the Executive shall be entitled by way
of liquidated damages, and not as a penalty, to receive a lump sum payment in an
amount equal to the amount of the compensation payments that,
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but for his termination of employment, would have been payable to the Executive
under Section 4(a) for the remainder of the Employment Term. Such payment shall
be made by the Company to the Executive within fifteen (15) days following his
termination of employment. The Executive shall not be required to mitigate the
amount of any payment received pursuant to this paragraph nor shall the amount
payable under this paragraphbe reduced by any compensation earned by the
Executive after the date of his termination of employment.
14. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the other party shall be in writing and shall be
deemed to have been duly given when delivered personally or five (5) days after
dispatch by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made:
If to the Company
addressed to: Milestone Scientific Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Livingston Corporate Park
Livingston, New Jersey 07039
with a copy to: Morse, Zelnick, Rose & Lander, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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If to the Executive
addressed to: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as the one party shall specify to the other party in
writing.
15. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.
MILESTONE SCIENTIFIC INC.
by: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Operating Officer
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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