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EXHIBIT 10.42
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of this 9th
day
of August, 2005, by and between Simulations
Plus, Inc., a California corporation
(the "Company") and Walter S. Woltosz, an
individual (the "Employee") with
reference to the following facts:
A. The Company desires to secure the
services of the Employee as President and
Chief Executive Officer.
B. The Employee agrees to perform such
services for the Company under the terms
and conditions set forth in this
Agreement.
In consideration of the mutual promises, covenants and conditions
set
forth herein and for other good and
valuable consideration, the receipt and
sufficiency of which is hereby
acknowledged, it is hereby agreed by and between
the Company and the Employee as
follows:
1. Representations and Warranties.
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The Company represents and warrants that it
is empowered under its Articles of
Incorporation and Bylaws to enter into this
Agreement. The Employee represents
and warrants that he is under no employment
contract, bond, confidentiality
agreement, or any other obligation which
would violate or be in conflict with
the terms and conditions of this Agreement
or encumber his performance of duties
assigned to him by the Company. The
Employee further represents and warrants
that he has not signed or committed to any
employment or consultant duties or
other obligations which would divert his
full attention from the duties assigned
to him by the Company by this
Agreement.
2. Employment and Duties.
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The Company employs the Employee as
President and Chief Executive Officer and
the Employee hereby accepts such employment
(the "Employment"). The Employee
agrees that he shall devote his full time,
ability, attention, energy, knowledge
and skill solely and exclusively to
performing all duties as President and Chief
Executive Officer of the Company as
assigned or delegated to him by the
directors and executive officers of the
Company.
3. Term.
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Subject to the provisions of Section 5, the
term of this Agreement shall extend
until August 31, 2007, commencing on the
date hereof.
4. Compensation.
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In full and complete consideration for the
Employment, each and all of the
services to be rendered to the Company by
the Employee, and each and all of the
representations, warranties, covenants,
agreements and promises undertaken by
the Employee pursuant to this Agreement,
the Employee shall be entitled to
receive compensation as follows:
4.1. BASE SALARY. The Employee shall
receive from the Company a base salary of
one hundred seventy-two thousand dollars
($172,000.00) per year, payable in
equal, monthly installments. From each said
salary payment the Company will
withhold and pay to the proper governmental
authorities any and all amounts
required by law to be withheld for federal
income tax, state income tax, federal
Social Security tax, state disability
insurance premiums, and any and all other
amounts required by law to be withheld from
the Employee's salary.
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4.2. SPECIAL INCENTIVE OPPORTUNITY. In
addition to, and not in lieu of, the base
salary provided for in Section 4.1 above,
Employee shall be entitled to receive
from Employer a bonus (the "Bonus") not to
exceed one hundred fifty thousand
dollars ($150,000.00), equal to 5% of the
Company's Net Annual Income before
taxes. For purposes of this Agreement, the
term "Net Annual Income" shall be and
mean the amount of Net Income reported by
the Company in its Form 10-K (the
"Form 10-K") as filed under the Securities
Act of 1934, as amended. Payment of
the Bonus, if any, shall be made to the
Employee within ten (10) days after the
Company files its Form 10-K.
4.3. GRANT OF OPTION. If the closing price
of the Company's Common Stock
averages in excess of two hundred percent
(200%) of the price per share of
Common Stock in the Company's initial
public offering for a period of twenty
(20) consecutive days during any fiscal
year, then Employee shall be granted an
option under the 1996 Stock Option Plan,
exercisable for five (5) years, to
purchase fifty (50) shares of Common Stock
for each one thousand dollars
($1,000) of net income before taxes that
the Company earns with respect to such
fiscal year (up to a maximum of sixty
thousand [60,000] options over the term of
this Agreement) at an exercise price 10%
over the market value per share as of
the date of grant.
4.4. BENEFITS. Employer shall provide to
Employee at the sole cost to Employer,
and Employee shall be entitled to receive
from Employer, such health insurance
and other benefits which are appropriate to
the office and position of Employee,
adequate to the performance of his duties
and not inconsistent with that which
Employer customarily provides at the time
to its other management employees.
Employee's right to vacation and sick leave
shall be determined in accordance
with the policies of the Company as may be
in effect from time to time and as
are approved by the Company's Board of
Directors. Employee shall have the right
to reimbursement of customary, ordinary and
necessary business expenses incurred
in connection with the rendering of
services and performance of the functions
required hereunder in accordance with the
policies of the Company as may be in
effect from time to time and as are
approved by the Company's Board of
Directors. Such expenses are reimbursable
only upon presentation by Employee of
appropriate documentation pursuant to the
policies adopted by the Company's
Board of Directors.
5. Termination of Employment.
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5.1. EXPIRATION OF THE TERM OF AGREEMENT.
This Agreement shall be automatically
terminated upon the expiration of the term
of the agreement as described in
paragraph 3 of this Agreement. Upon such
termination, the Company shall have no
further liability to the Employee for any
payment, compensation or benefit
whatsoever.
5.2. BY DEATH. This Agreement shall be
terminated upon the death of the
Employee. The Company's total liability in
such event shall be limited to
payment of the Employee's salary and
benefits through the date of the Employee's
death.
5.3. BY DISABILITY. If, in the sole opinion
of the Company's Board of Directors,
the Employee shall be prevented from
properly performing his or her duties
hereunder by reason of any physical or
mental incapacity for a period of more
than 90 days in the aggregate in any twelve
month period, then, to the extent
permitted by law, his or her employment
with the Company shall terminate. The
Company's total liability in such event
shall be limited to payment of the
Employee's salary and benefits through the
effective date of termination upon
disability.
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5.4. FOR CAUSE. The Company reserves the
right to terminate this Agreement
immediately, at any time, if, in the
reasonable opinion of the Company's Board
of Directors: the Employee breaches or
neglects the duties which he or she is
required to perform under the terms of this
Agreement; commits any material act
of dishonesty, fraud, misrepresentation, or
other act of moral turpitude; is
guilty of gross carelessness or misconduct;
fails to obey the lawful direction
of the Company's Board of Directors; or
acts in any way that has a direct,
substantial and adverse effect on the
Company's reputation. The Company's total
liability to the Employee in the event of
termination of the Employee's
employment under this paragraph shall be
limited to the payment of the
Employee's salary and benefits through the
effective date of termination.
5.5. WITHOUT CAUSE. The Company reserves
the right to terminate this Agreement
without cause for any reason whatsoever
upon thirty (30) days' written notice to
the Employee. Upon termination under this
subsection, the Employee shall receive
payment of an amount equal to twelve (12)
months of the Employee's base salary
or the Employee's base salary for the
remaining term of this Agreement,
whichever is greater. Other than payment of
the amount as described in this
paragraph, the Company shall have no
further obligation to pay the Employee any
other compensation or benefits whatsoever.
The Employee hereby agrees that the
Company may dismiss him or her under this
paragraph 5.5 without regard (i) to
any general or specific policies (whether
written or oral) of the Company
relating to the employment or termination
of its employees, or (ii) to any
statements made to the Employee, whether
made orally or contained in any
document, pertaining to the Employee's
relationship with the Company.
5.6. MUTUAL CONSENT. This Agreement shall
be terminated upon mutual written
consent of the Company and the Employee.
The Company's total liability to the
Employee in the event of termination of the
Employee's employment under this
paragraph shall be limited to the payment
of the Employee's compensation through
the effective date of termination.
5.7. TERMINATION OF OBLIGATIONS. Upon
termination of employment for any reason
whatsoever, the Employee shall be deemed to
have resigned from all offices and
directorships then held with the
Company.
6. Restrictions on Use or Disclosure of
Confidential Matters, Proprietary
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Information and Trade Secrets.
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6.1. During the term of this Agreement, the
Employee may be dealing with trade
secrets of the Company, including without
limitation, customer lists, client
contacts, financial information, inventions
and processes, all of a confidential
nature that are the Company's property and
are used in the course of the
Company's business. The Employee will not
disclose to anyone, directly or
indirectly, any of such trade secrets or
use them other than as necessary in the
course of his duties with the Company. All
documents that the Employee prepares,
or confidential information that might be
given to him or that Employee himself
might create in the course of his
consultation with the Company, are the
exclusive property of the Company. During
the term of this Agreement and at any
time thereafter, the Employee shall not
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