Exhibit 10.5
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made as on
the 1st day of July 2008.
FIRST AMERICAN
SCIENTIFIC CORP
WHEREAS, the Corporation desires to employ the
Executive as its Chief Financial Officer effective July 1, 2008,
and
WHEREAS, the Executive is willing to accept
such employment by the Corporation,
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
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For the purposes of this Agreement the
following terms shall have the following meanings:
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1.1.1
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“Termination For Cause" shall mean
termination by the Corporation of the Executive's employment by the
Corporation by reason of the Executive's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to
the Corporation, or by reason of the Executive's willful material
breach of this Agreement, which has resulted in material injury to
the Corporation.
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1.1.2
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“Termination Other Than For Cause"
shall mean termination by the Corporation of the Executive's
employment by the Corporation (other than in a Termination for
Cause) and shall include constructive termination of the
Executive's employment by reason of material breach of this
Agreement by the Corporation, such constructive termination to be
effective upon notice from the Executive to the Corporation of such
constructive termination.
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1.1.3
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"Voluntary Termination" shall mean
termination by the Executive of the Executive's employment other
than (i) constructive termination as described herein, (ii)
"Termination upon a Change in Control," and (iii) termination by
reason of the Executive's death or disability as described
herein.
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1.1.5
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"Change in Control" shall mean (i) the
time that the Corporation first determines that any person and all
other persons who constitute a group (within the meaning of
§ 13(d)(3) of the Securities Exchange Act of 1934
("Exchange Act")) have acquired direct or indirect beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of twenty percent (20%) or more of the Corporation's outstanding
securities, unless a majority of the "Continuing Directors"
approves the acquisition not later than ten (10) business days
after the Corporation makes that determination, or (ii) the first
day on which a majority of the members of the Corporation's board
of directors are not "Continuing Directors."
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1.1.6
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"Continuing Directors" shall mean,
as of any date of determination, any member of the Corporation's
board of directors of the Corporation who (i) was a member of that
board of directors on January 31, 2001, (ii) has been a member of
that board of directors since inception of the Company, or (iii)
was nominated for election or elected to the Corporation's board of
directors with the affirmative vote of the greater of a majority of
the Continuing Directors who were members of the Corporation's
board of directors at the time of such nomination or election.
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During the term of this Agreement, the
Executive agrees to be employed by and to serve the Corporation as
its CEO and the Corporation agrees to employ and retain the
Executive in such capacity for the duration of the term
herein. In such capacity, the Executive shall render
such managerial, administrative and other services as are
customarily associated with or incident to such position and shall
perform such other duties and responsibilities for the Corporation
as the Corporation may reasonably require, consistent with such
position. The Executive shall devote a substantial
portion of his business time, energy, and skill to the affairs of
the Corporation as the Executive shall report to the Corporation's
board of directors.
The Executive shall report directly to the
Board of Directors and the Corporation shall not appoint any
individual to whom the Executive shall report, or who shall have
the right to supervise the Executive, provided, however, that the
Corporation's board of directors may appoint one or more members of
the board of directors to coordinate the reporting from the
Executive to the board of directors. In the event that
the Corporation changes the Executive's title, working conditions
or specifies duties so that the Executive's powers and duties are
diminished or reduced, or include powers, duties or working
conditions which are not generally consistent with the title of
CEO, or if the Corporation changes the reporting relationship so
that the Executive reports to another officer or employee, other
than the Corporation's board of directors as a whole, then at any
time thereafter, at the Executive's option and upon thirty days
notice, and provided that such changes shall not have been
rescinded or corrected to the reasonable satisfaction of the
Executive within said thirty day period, the Executive shall have
the right to terminate the employment relationship, and in such
event, the employment shall be deemed to have been constructively
terminated by the Corporation without cause.
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The term of employment of the Executive by the
Corporation shall be for a period of seven years beginning with
Effective Date July 1, 2008 ("Initial Term"), unless terminated
earlier pursuant to this Agreement. At any time prior to
the expiration of the Initial Term, the Corporation and the
Executive may by mutual written agreement extend the Executive's
employment under the terms of this Agreement for such additional
periods as they may agree.
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As payment for the services to be rendered by
the Executive as provided in Section 1 and subject to the terms and
conditions of Section 2, the Corporation agrees to pay to the
Executive a "Base Salary" for the twelve (12) calendar months
beginning the Effective Date at the rate as follows:
a) $150,000
USD per annum for July 1, 2008 to June 30, 2010
b) $180,000
USD per annum for July 1, 2010 to June 30, 2012
c) $210,000
USD per annum for July 1, 2012 to June 30, 2015
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Additional Compensation and
Bonuses
The Executive may be paid additional
compensation by way of bonuses, additional stock options or
otherwise as determined from time to time by management and
approved by a majority of the Board of Directors.
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As incentive to the executive to commit to
full time employment with the Company, and in consideration of the
lost opportunity in so doing, the Company grants the Executive
14,000,000 options to purchase the Company’s stock at $ 0.02
USD, said options to be exercisable at the rate of 2,000,000 at
beginning of each employment year or in the case of early
termination for any reason whatsoever, all remaining options will
be granted on the date of that termination. Any unexercised options
will expire ten years after the date of grant.
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During the term of this Agreement, the
Executive shall be entitled to the following fringe benefits:
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The Executive shall be eligible to participate
in such of the Corporation's benefits and deferred compensation
plans as are now generally available or later made generally
available to executive officers of the Corporation, including,
without limitation, the Corporation's Stock Option Plan, profit
sharing plans, annual physical examinations, dental and medical
plans, personal catastrophe and disability insurance, financial
planning, retirement plans and supplementary executive retirement
plans, if any. For purposes of establishing the length
of service under any benefit plans or programs of the Corporation,
the Executive's employment with the Corporation will be deemed to
have commenced on the Effective Date.
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4.4.2
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The Executive shall be entitled to six (6)
weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial
years.
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4.4.3
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For the term of this Agreement and any
extensions thereof, the Corporation shall at its expense procure
and keep in effect a Preferred Plan of medical insurance through a
Medical Services plan of the Executive’s choice.
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For the term of this Agreement and any
extensions thereof, the Corporation shall at its expense procure
and keep in effect term life insurance on the life of the Executive
payable to the in the aggregate amount of $1,000,000 with the
Corporation being the beneficiary thereof. Further, the
cost of such insurance will be paid by the Corporation.
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Directors’ Liability
Insurance
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For the term of this Agreement and any
extensions thereof, and so long as the Executive is a Director of
the Corporation, the Corporation shall at its sole
expense, maintain and keep in effect Directors’
liability insurance on behalf of the Executive. In event that the
Corporation does not, or is unable to provide such insurance
coverage, then the Corporation will indemnify the Executive against
any claims or liabilities that may arise, other than for fraud, as
a result of the Executive’s service as a
Director.
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For the term of this Agreement and any
extensions thereof the Corporation will reimburse the Executive for
mileage accumulated upon his motor vehicle while being used for
corporate matters.
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Reimbursement for Expenses
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During the term of this Agreement, the
Corporation shall reimburse the Executive for reasonable and
properly documented out-of-pocket business and/or entertainment
expenses incurred by the Executive in connection with her duties
under this Agreement.
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Section 5
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Outside Activities of
Executive
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The Corporation acknowledges that the
Executive has commitments and business activities not related to
the Corporation. There shall be no restriction on the
Executive's ability to fulfill such commitments or engage in such
business activities, provided that during the term of the
Executive's employment under this Agreement, the Executive devotes
at lease 80% of his time to corporate matters.
Nothing in this Agreement shall preclude the Executive from
devoting time during reasonable periods required for investing
personal assets and/or those of family members in such form or
manner that will not violate this Agreement and these activities
will be permitted so long as they do not materially adversely
affect the performance of the Executive's duties and obligations to
the Corporation.
The Corporation's obligation to pay the
Executive the compensation and to make the arrangements provided
herein shall be unconditional, and the Executive shall have no
obligation whatsoever to mitigate damages hereunder. If
litigation after a Change in Control shall be brought to enforce or
interpret any provision contained herein, the Corporation, to the
extent permitted by applicable law and the Corporations' articles
of incorporation and bylaws, hereby indemnifies and will pay the
Executive for the Executive's reasonable attorneys' fees and
disbursements incurred in such litigation.
All compensation and benefits to the Executive
hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable
law.
If the event that the Company is unable to pay
any amounts due to the Executive on the date that it is specified
due herein, or to pay any other amounts due the Executive as a
result of his employment at any time with the Corporation, the
Executive may el
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