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Effective May 15, 2006 the Company and Bryan P. Healey, CPA entered into an employment agreement (Healey Agreement) pursuant to which Mr. Healey serves as the Company’s Chief Financial Officer for an initial two-year term at an annual salary of $140,000 (Healey Base Salary), which may be increased but not decreased at the discretion of the Board of Directors. Unless the Company gives 30 days written notice to Mr. Healey prior to May 15, 2007, the two year term of the Healey Agreement shall be automatically extended for one day for each day elapsed after May 15, 2007, it being the intention to convert the term of the Healey Agreement to a contract with a two year ‘evergreen’ term, commencing on May 15, 2007.
Mr. Healey may terminate his employment under the Healey Agreement at any time for good reason (defined below) within 36 months after the date of a Change in Control (defined below). Upon his termination, Mr. Healey shall be paid the Healey Base Salary payable under the Healey Agreement through the expiration date of the Healey Agreement.
Change in Control is deemed to have occurred if (i) any individual or entity, other than individuals beneficially owning, directly or indirectly, common stock of the Company representing 50.1% or more of the Company’s stock outstanding as of May 15, 2006, is or becomes the beneficial owner, directly or indirectly, of 50.1% or more of the Company’s outstanding stock or (ii) individuals constituting the Board of Directors on May 15, 2006 (Incumbent Board), including any person subsequently elected to the Board whose election or nomination for election was approved by a vote of at least a majority of the Directors comprising the Incumbent Board, cease to constitute at least a majority of the Board. Good reason means a determination made solely by Mr. Healey, in good faith, that as a result of a Change in Control he may be adversely affected (i) in carrying out his duties and powers in the fashion he previously enjoyed or (ii) in his future prospects with the Company.
Mr. Healey may also terminate his employment if the Company fails to make the payments specified in the Healey Agreement, or if the Company fails to make such payments for a period of five days after Mr. Healey has given notice of such failure.
The Company may terminate Mr. Healey’s employment under the Healey Agreement for cause which is defined as (i) Mr. Healey’s continued failure to substantially perform his duties under the Healey Agreement (other than by reason of his incapacity due to physical or mental illness) which is not cured within specified time frames or (ii) Mr. Healey’s conviction of any criminal act of fraud. The Company may not terminate Mr. Healey’s employment except by a vote of not less than 75% of the entire Board of Directors at a meeting at which Mr. Healey is given the opportunity to be heard.
In the event of Mr. Healey’s death during the term of the Agreement, his beneficiary shall be paid a death benefit equal to his then current annual salary in equal monthly installments for the remainder of the term of the Healey Agreement. Should Mr. Healey become disabled during the term of the Healey Agreement, Mr. Healey shall be paid such benefits to which he is entitled under the terms of such long-term insurance as the Company has provided him or 80% of his salary for the remainder of the two year term of the Healey Agreement, whichever is greater, in accordance with his regular payment schedule. | 