CONSULTING AGREEMENT
BETWEEN XXXXXXXX X. XXXX AND
HYPERTENSION DIAGNOSTICS, INC.
This Agreement is made and entered into effective 1st day of January, 1996,
by and between Xxxxxxxx X. Xxxx ("Consultant") and Hypertension Diagnostics,
Inc., a Minnesota corporation ("Company") on the terms and conditions set forth
below.
I. DUTIES OF CONSULTANT. Consultant will serve Company as President and Chief
Executive Officer on a part-time basis until the Company, acting through
its Board of Directors, appoints another President and Chief Executive
Officer. Consultant shall serve under the direction of the Board of
Directors of Company, and shall perform such duties as may be directed by
the Board of Directors.
II. COMPENSATION. In full consideration of the covenants contained herein,
Consultant's rendition of services under this Agreement, and subject to the
full performance by Consultant of his obligations hereunder, Company shall
provide and the Consultant shall accept the following:
A. SALARY. Consultant shall be paid at the rate of Four Thousand Dollars
($4,000) per month on a monthly basis (that is, once per month at the
end of the month) in accordance with the normal payroll procedures of
Company as established by the Board of Directors of Company.
B. STOCK OPTIONS. Company shall grant Consultant an option to acquire up
to 12,500 shares of the Company's $.01 par value common stock, as more
fully described in the document entitled "Non-Qualified Stock Option
Agreement between Xxxxxxxx X. Xxxx and Hypertension Diagnostics,
Inc.," attached hereto as Exhibit A (the "Option Agreement").
C. REIMBURSEMENT OF BUSINESS EXPENSES. Company shall, in accordance
with, and to the extent of, its policies in effect from time to time,
bear all ordinary and necessary business expenses incurred by the
Consultant in performing his duties as an employee of Company,
provided that Consultant accounts promptly for such expenses to
Company in the manner prescribed from time to time by Company.
D. NO WITHHOLDINGS. Due to Consultant's position as an independent
contractor, Company shall make no withholdings, deductions or payments
from sums payable to Consultant under this Agreement.
III. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Consultant shall keep
confidential and shall not disclose to anyone or use, either during or
after the term of this Agreement, any confidential information of Company,
except as is required by Consultant's duties, or as authorized in writing
by Company. "Confidential Information" means any
information or compilation of information which derives independent
economic value from not being generally known to and not being readily
ascertainable by proper means by other persons who can obtain economic
value from it disclosure or use. The term "Confidential Information"
shall not be deemed to include any information which is in or hereafter
enters the public domain through no wrongful act of Consultant.
Examples of Confidential Information not to be disclosed or used except
as permitted by Company, include but are not limited to:
A. Information concerning Company's operations, organizational structure,
methods, technology, procedures, finances, accounting, and legal
matters;
B. Information concerning Company's sales activities and strategies,
marketing activities and strategies, servicing activities and
strategies, and strategic business planning activities;
C. Information concerning Company's past, present, or potential customers
(hereafter referred to as "customers"), including the names, addresses
and telephone numbers of these customers; the identity of the
individuals responsible for buying products and services on behalf of
these customers; the needs and buying tendencies of these customers;
contract negotiations between Company and these customers; the
contents of contracts and agreements between Company and these
customers; financial information concerning these customers' business
operations; credit information regarding these customers; and
identity, quantity, and price of products or services purchased from
Company by these customers;
D. Vendor and supplier information including the names, addresses, and
telephone numbers of Company's vendors and suppliers; information
regarding Company's relationship with its vendors and suppliers;
contract negotiations between Company and its vendors and suppliers;
the contents of contracts and agreements between Company and its
vendors and suppliers; financial information concerning its vendors
and suppliers; and identity, quantity and prices of products purchased
by Company from its vendors and suppliers;
E. Information regarding Company's pricing of its products and services,
including price lists and pricing strategies;
F. Personnel records and data.
IV. BUSINESS RECORDS. Consultant shall not remove any records or documents
from the premises of Company or its clients in either original, duplicate,
or copied form, except as necessary in the ordinary course of conducting
business for Company. Consultant shall immediately deliver to Company,
upon termination of this Agreement with Company, any such records or
documents in Consultant's possession or control.
V. DUTIES. Consultant shall devote his best efforts to Company and to
fulfilling the duties of his position which shall include such duties as
may from time to time be assigned him by the
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Board of Directors of the Company; provided that such duties are
reasonably consistent with Consultant's education and experience, and not
in conflict with his other business and employment commitments.
VI. TERMINATION OF AGREEMENT.
A. DURATION OF AGREEMENT. Unless properly terminated as provided herein,
this Agreement shall continue in effect for a term of one (1) year,
that is, until December 31, 1996.
B. TERMINATION BY CONSULTANT. Provided that Consultant shall have served
in such capacity for a minimum of six (6) months (including the period
of the notice of termination), Consultant may give written notice of
termination of this Agreement for any reason thirty (30) days prior to
the proposed date of termination, at which time this Agreement shall
terminate.
C. TERMINATION BY COMPANY. Company may give written notice of
termination of this Agreement only for Reasonable Cause thirty (30)
days prior to the proposed date of termination, at which time this
Agreement shall terminate. No waiver by Company of any breach of this
Agreement shall be deemed a waiver of any prior or subsequent breach.
For purposes of this Agreement, "Reasonable Cause" shall mean:
1. Dishonesty, fraud, misrepresentation, diversion of corporate
opportunity, using insider information for personal gain, theft
or embezzlement of Company assets, or material intentional
violations of law;
2. Willful or reckless misconduct by Consultant in the performance
of the duties, functions, obligations or responsibilities
delegated to Consultant; or
3. The hiring of a President and Chief Executive Officer of the
Company; provided that if the Company terminates this Agreement
pursuant to this subsection 3 before Consultant has served for a
minimum of six (6) months, then Consultant shall be entitled to
the compensation and stock options specified hereunder as if this
Agreement had remained in effect for six (6) months.
D. EFFECT OF DISABILITY OR DEATH. This Agreement shall terminate
immediately upon the disability (that is, the physical or mental
condition of Consultant that prohibits Consultant from discharging his
duties) or death of Consultant. Subject to Section 4 of the Option
Agreement, upon the date of disability or death of Consultant, any and
all obligations of Company or its successors and assigns hereunder
shall be terminated, relieved and discharged; PROVIDED HOWEVER,
Consultant or Consultant's estate shall be paid in the aggregate, a
minimum of $24,000 hereunder for the minimum of a six (6) month period
described in Section VI C4 hereof, unless this Agreement is terminated
prior to six (6) months pursuant to Section VI C1, 2 or 3 hereof.
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X. XXXXXXXXXXX XXXX XXXXXXXXXXX. Following notice of termination of this
Agreement, Consultant shall fully cooperate with Company in all
matters relating to the winding up of Consultant's pending work on
behalf of Company and the orderly transfer of such pending work to
such other employees as may be designated by Company.
VII. NON-TRANSFERABILITY. This Agreement may not be assigned or transferred by
Company, and shall not be assigned by Consultant to any other person or
entity.
VIII. BINDING AGREEMENT. This Agreement shall be binding upon and inure to
the benefit of the legal representatives, executors, administrators,
successors and assigns of each of the parties to this Agreement.
IX. GOVERNING LAW.
A. The laws of Minnesota shall govern the validity, interpretation and
performance of the respective duties and obligations of this
Agreement.
B. Consultant consents to venue and jurisdiction in the District Court of
Hennepin County, State of Minnesota, and in the United States District
Court for the District of Minnesota, and to service of process under
Minnesota law, in any action commenced by Company to enforce this
Agreement.
X. SEVERABILITY. If any provision of this Agreement is adjudged void, invalid
or unenforceable under law, the remainder of this Agreement shall continue
and remain in full force and effect.
XI. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and may not be amended,
changed, modified, terminated, or waived other than by written instrument
signed by both parties.
XII. SUPREMACY. This Agreement supersedes all prior oral or written agreements
and understandings between Consultant and Company concerning the subject
matter hereof.
XIII. INDEPENDENT CONTRACTOR. The parties acknowledge that Consultant is
acting as an independent contractor, and it is not the intention of
the parties that Consultant be deemed to be an employee of the
Company. Company acknowledges that Consultant is otherwise employed
and that he will fulfill the interim role of President and Chief
Executive Officer on a part-time basis only, without a requirement to
perform such services at particular times, and that he will do so in a
manner that is consistent with his current employment and other
business commitments.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year below written:
CONSULTANT HYPERTENSION DIAGNOSTICS, INC.
/s/ Xxxxxxxx X. Xxxx By /s/ Xxxxxxx X. Xxxxxxx
----------------------------- ----------------------------------
Xxxxxxxx X. Xxxx Its President/CEO
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Dated: December 7, 1995 Dated: December 7, 1995
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NON-QUALIFIED STOCK OPTION AGREEMENT
BETWEEN XXXXXXXX X. XXXX AND
HYPERTENSION DIAGNOSTICS, INC.
THIS AGREEMENT is made and entered into as of January 1, 1996, between
Hypertension Diagnostics, Inc., a Minnesota corporation ("Company"), and
Xxxxxxxx X. Xxxx ("Optionee") on the terms and conditions set forth below.
WHEREAS, the Board of Directors of the Company has decided to permit
Non-Qualified Stock Options to be granted to certain individuals providing
valuable services to the Company and any subsidiary corporations of the Company
to purchase voting common stock of the Company; and
WHEREAS, the Company desires the Optionee to secure stock ownership in the
Company in order to increase effectiveness and personal interest in the Company;
NOW THEREFORE, in consideration of the promises and of the covenants and
agreements set forth below, it is mutually agreed as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee an option to
purchase from the Company all or any part of an aggregate amount of
12,500 shares of the voting common stock of the Company, par value
$.01 per share ("Option Shares"), at an option price of $2.00 per
share. The date of this Agreement is the date of the grant.
2. EXERCISE PERIOD. The Option shall become exercisable with respect to
the Option Shares in monthly installments. The following table sets
forth the initial dates of exercisability of each installment and the
number of Option Shares as to which this Option shall become
exercisable on such dates, provided the Option Shares described below
available for exercise shall become so exercisable only if the
"Consulting Agreement Between Xxxxxxxx X. Xxxx and Hypertension
Diagnostics, Inc." ("Consulting Agreement"), of which this Agreement
is an Exhibit, has not been terminated by Optionee or Company prior to
the respective initial date of exercisability set forth below:
INITIAL DATE NUMBER OF OPTION SHARES
OF EXERCISABILITY AVAILABLE FOR EXERCISE
January 31, 1996 1,250
February 29, 1996 1,250
March 31, 1996 1,250
April 30, 1996 1,250
May 31, 1996 1,250
June 30, 1996 1,250
July 31, 1996 1,250
August 31, 1996 1,250
September 30, 1996 1,250
October 31, 1996 1,250
EXHIBIT A
The foregoing rights to exercise this Option shall be cumulative with
respect to the Option Shares becoming exercisable on each such date
but in no event shall this Option be exercisable after, and this
Option shall become void and expire as to all unexercised Option
Shares, at 5:00 p.m. (Minneapolis, Minnesota time) on December 31,
2006.
3. EXERCISE OF OPTION. This option may be exercised only by written
notice of intent to the Company at its xxxxxx xx Xxxx Xxxxx Xxxxx,
Xxxxx Xx. Xxxx, XX 00000-0000. Such notice shall state the number of
shares in respect of which the option is being exercised and shall be
accompanied by payment for such shares in cash, certified or cashier's
check or by personal check, if acceptable to the Board of Directors of
Company. The exercise of the Option shall be deemed effective upon
receipt of such notice and payment. As soon as practicable after the
effective exercise of the Option, the Company shall record on the
stock transfer books of the Company the ownership of the shares
purchased in the name of the Optionee, and the Company shall deliver
to the Optionee one or more duly issued stock certificates evidencing
such ownership.
4. EXERCISE UPON DEATH. Notwithstanding Section 2 hereof, if Optionee
shall die, this option may be exercised with respect to all Option
Shares available for exercise by Optionee at the date of Optionee's
death by the person or persons to whom Optionee's rights under this
option pass by will or applicable law, or if no such person has such
right, by his executors or administrators.
5. CHANGE IN CONTROL.
a. DEFINITION. For purposes of this Agreement, the term "Change in
Control" shall mean any transaction or occurrence of events in
which (i) Company merges or consolidates with any other
corporation and is not the surviving corporation after such
merger or consolidation; (ii) Company transfers all or
substantially all of its business and assets to any other person,
individual, corporation, partnership, group, or association; or
(iii) more than 50% of Company's outstanding voting shares are
purchased by any other person, individual, corporation,
partnership, group or association.
b. ACCELERATION. If any events constituting a Change in Control of
the Company shall occur, Optionee shall be entitled to receive
option rights covering shares of the surviving or acquiring
entity in the same proportion, at an equivalent price, and
subject to the same conditions as this Option; provided, however,
that Optionee may, at his sole discretion, accelerate the right
to exercise this Option thirty (30) days prior to the anticipated
effective date of any of the foregoing transactions.
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6. DILUTION OR OTHER ADJUSTMENTS. If there shall be any change in the
shares of voting common stock of the Company through merger,
consolidation, reorganization, recapitalization, dividend in the form
of stock (of whatever amount), stock split or other change in the
corporate structure, appropriate adjustments in the outstanding
options shall be made by the Company. In the event of any such
changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject and the price per share subject to
outstanding and future options in order to prevent dilution or
enlargement of option rights.
7. NO RIGHT TO CONTINUED COMPENSATION. Nothing contained in this
Agreement shall obligate the Company or any subsidiary corporation of
the Company to continue to accept and pay for the services of Optionee
as a consultant, employee or independent contractor for any particular
period or interfere with the right of the Company or any such
subsidiary to terminate any contract or employment relationship with
Optionee.
8. NO SHAREHOLDER RIGHTS. Optionee shall have no rights as a stockholder
with respect to any shares of common stock subject to this option
prior to the date of issuance of a certificate or certificates for
such shares.
9. INVESTMENT REPRESENTATION. Notice of the exercise of this option
shall include a representation that any of the Option Shares purchased
shall be acquired as an investment and not with a view to, or for sale
in connection with, any public distribution.
10. COMPLIANCE WITH LAW AND REGULATIONS. The Optionee acknowledges that
this option may not be exercised until the Company has taken all
actions then required to comply with all applicable federal and state
laws, rules and regulations and any exchange on which the stock may
then be listed. The certificates representing the shares purchased
upon the exercise of this option shall bear a legend in substantially
the following form:
These shares have not been registered either under any applicable
federal law and rules and resale will not be permitted under state law
unless the shares are first registered under the Minnesota Securities
Law. Further, no sale, offer to sell, or transfer of these shares
shall be made unless a registration statement under the federal
Securities Act of 1933, as amended, with respect to such shares is
then in effect or an exemption from the registration requirements of
such Act is then in fact applicable to such shares.
11. NON-TRANSFERABILITY. Subject to Section 4 hereof, this option shall
not be transferable other than by will or by laws of descent and
distribution. During the lifetime of the Optionee, this option shall
be exercisable only by such Optionee.
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12. DISPUTE OR DISAGREEMENT. As a condition of the granting of this
option, the Optionee agrees that any dispute or disagreement which may
arise under or as a result of or pursuant to this Agreement shall be
determined by the Board of Directors in its sole discretion, and that
any interpretation by the Board of Directors of the terms of this
Agreement shall be final, binding and conclusive.
13. OTHER ASSISTANCE. Upon the exercise of this option the Optionee or
other person exercising the option must execute any document or make
any representation or give any commitment which the Board of
Directors, in its discretion, deems necessary or advisable by reason
of the securities laws of the United States or any state, and execute
any document for the purpose of restricting the transfer of stock to
third parties, or pay any sum of money in respect of taxes or
undertake to pay or have paid any such sum which the Board of
Directors, in its discretion, deems necessary by reason of the Code or
any rule or regulation thereunder, or by reason of the tax laws of any
state or any contracts or agreements in effect at such time.
14. BINDING AGREEMENT. This Agreement shall be binding upon and inure to
the benefit of the legal representatives, executors, administrators,
successors and assigns of each of the parties to this Agreement.
15. GOVERNING LAW.
A. The laws of Minnesota shall govern the validity, interpretation
and performance of the respective duties and obligations of this
Agreement.
B. Optionee consents to venue and jurisdiction in the District Court
of Hennepin County, State of Minnesota, and in the United States
District Court for the District of Minnesota, and to service of
process under Minnesota law, in any action commenced by Company
to enforce this Agreement.
16. SEVERABILITY. If any provision of this Agreement is adjudged void,
invalid or unenforceable under law, the remainder of this Agreement
shall continue and remain in full force and effect.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and may not be
amended, changed, modified, terminated, or waived other than by
written instrument signed by both parties.
18. SUPREMACY. This Agreement supersedes all prior oral or written
agreements and understandings between Optionee and Company concerning
the subject matter hereof, including any implied or express
representations regarding Optionee's ownership of any interest in
Company or its property, and any prior oral or written agreements
conveying stock option rights to Optionee.
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19. REGISTRATION RIGHTS. If, at any time prior to December 31, 2006, the
Company shall propose to file any Registration Statement (other than
any registration on Form S-4, or any other similarly inappropriate
form or Registration Statement with respect to any initial public
offering in which there are no selling shareholders) under the
Securities Act of 1933, as amended, covering a public offering of the
Company's Common Stock, it will notify Optionee at least forty-five
(45) days prior to each such filing and will include in the
Registration Statement (to the extent permitted by applicable
regulation) the Common Stock purchased by Optionee or purchasable by
Optionee upon the exercise of the Option to the extent requested by
Optionee. Notwithstanding the foregoing, the number of shares of the
holder of this Option proposed to be registered thereby shall be
reduced pro rata with any other selling shareholder (other than the
Company) upon the request of the managing underwriter of such
offering. If the Registration Statement or Offering Statement filed
pursuant to such forty-five (45) day notice has not become effective
within six months following the date such notice is given to Optionee,
the Company must again notify Optionee in the manner provided above.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year below written:
OPTIONEE HYPERTENSION DIAGNOSTICS, INC.
----------------------------- By____________________________
Xxxxxxxx X. Xxxx Its___________________________
Dated:_______________________ Dated:________________________
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NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTIONS
Hypertension Diagnostics, Inc.
Five Xxxxx Xxxxx
Xxxxx Xx. Xxxx, XX 00000-0000
Gentlemen:
The undersigned is the holder of a non-qualified stock option (the
"Option") to purchase shares of voting common stock ("Stock") of Hypertension
Diagnostics, Inc. (the "Company"), pursuant to the Non-Qualified Stock Option
Agreement between Xxxxxxxx X. Xxxx and Hypertension Diagnostics, Inc. dated
January 1, 1996. The undersigned hereby irrevocably elects to exercise the
Option to purchase ___________ shares of Stock ("Option Shares"). Enclosed
herewith is payment for the Option Shares as required under the Agreement. The
undersigned requests that the certificate representing the Option Shares be
issued in the name of the undersigned and delivered to the address set forth
below.
In connection with the issuance of the Option Shares to the undersigned,
the undersigned hereby certifies and represents to the Company that the
undersigned is acquiring such shares for the purpose of investment and not with
a view toward distribution. The undersigned understands that these securities
have not been registered either under any applicable federal law and rules or
applicable state law and rules and that resale will not be permitted under state
law unless the securities are first registered or the sale is a transaction
exempt from registration under the applicable state securities law.
The undersigned further understands that no sale, offer to sell, or
transfer of the Option Shares shall be made unless a registration statement
under the federal Securities Act of 1933, as amended (the "Act"), with respect
to the Option Shares is then in effect or an exemption from the registration
requirements of the Act is then in fact applicable to the Option Shares. The
undersigned understands that a legend reciting this investment restriction shall
be placed on any stock certificate that may be issued to the undersigned.
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Xxxxxxxx X. Xxxx (Optionee)
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Address
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Social Security No.
Dated:---------------------------
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