EMPLOYMENT AGREEMENT

 

THIS AGREEMENT effective as of September 1, 2004 (the “Effective Date”) between
HEALTHTRAC, INC., a company incorporated pursuant to the laws of Canada, having
its principal place of business at 1300 Island Drive, Suite 105, Redwood City,
California 94065 (the “Company”) and EDWARD SHARPLESS, an individual (herein
called “Executive”).

 

 

RECITALS

 

A.            The Company desires to retain the services of the Executive as
Chief Executive and President of the Company.

 

B.                 The Company further desires to retain the services of the
Executive as President, Chief Executive Officer and Chairman of the Board of
Directors of the Company’s, wholly owned subsidiary Healthtrac Corporation, a
company incorporated pursuant to the laws of Nevada, having its principal place
of business at 1300 Island Drive, Suite 105, Redwood City, CA 94065

 

C.            Executive, in accordance with the terms and conditions stated
herein, is willing to be employed by the Company in the foregoing capacities.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties to this
Agreement (hereinafter collectively, “parties” and individually, a “party”)
agree as follows:

 

1.     DUTIES AND PERFORMANCE

1.1.          Duties and Authority. The Executive shall report directly to the
board of directors of the Company (the “Board”) and shall have all of the
authority and responsibilities customarily afforded the Chief Executive and
President of comparable companies, including, but not limited to: responsibility
for all day-to-day activities of the Company and its subsidiaries; supervision
of all other officers and employees of the Company and its subsidiaries;
determination of hiring and firing Company employees, and the right to chair any
and all committees formed for management purposes, with the corresponding rights
to delegate such responsibilities as Executive deems appropriate (the “Duties”).
Additionally, Executive shall be elected to the Board of the Company by the
Board, and the Board will nominate Executive for election to the Board at each
annual meeting of shareholders of the Company, so long as Executive is employed
by the Company.  Further, Executive shall be elected Chairman of the Board of
Directors of any subsidiaries of the Company for so long as Executive is
employed by the Company.  Executive shall be permitted to the extent such
activities do not substantially interfere with the performance by Executive of
his duties and responsibilities hereunder to (i) manage Executive’s personal,
financial and legal affairs and (ii) to serve on civic or charitable boards or
committees.

1.2.          Performance. The Executive shall devote enough of his business
time, energy, and skill to the affairs of the Company and its subsidiaries to
faithfully, diligently and competently perform the Duties to the best of his
ability.  Notwithstanding the foregoing, the Company agrees that so long as the
Executive properly discharges the Duties, the Executive shall not be precluded
from pursuing other business interests or holding positions in other companies
which are non-competing.  The parties acknowledge that Executive shall be
located in Redwood City, California or such other location in the City of San
Francisco or the County of San Mateo or Santa Clara, provided that such location
is the principal office of the Company  and is located within 30 miles of the
current principal office of the Company.

1.3.          (a)            Indemnification and Director’s and Officer’s
Insurance.  The Company covenants that its Articles of Incorporation and By-laws
currently provide, or will be amended promptly hereafter  to provide, the
maximum indemnification by the Company permissible under the Canadian Business
Corporation Act and the maximum indemnification by the Company’s subsidiaries
under the laws of each such subsidiary's applicable jurisdiction of
incorporation or organization.  Such indemnification shall indemnify the
Company’s and such subsidiaries' officers and directors, including Executive,
for acts done in the performance of their duties as officers and directors of
the Company.  The Company further covenants that, notwithstanding those
protections accorded in its Articles of Incorporation and By-laws, it will
indemnify, defend and hold Executive harmless for acts done in the performance
of his duties as an officer and director of the Company and/or of any of its
subsidiaries.

(b)           The Company covenants that it will carry Directors’ and Officers’
Liability Insurance providing such coverage in such amounts as the Board of
Directors of the Company may from time to time deem advisable, provided however
that such  insurance shall provide customary insurance against officer and
director liability in an amount of maximum coverage that shall not be less than
$1,000,000 at all times after January 1, 2005 or until such time as the Board of
Directors determines that it is in the best interest of the Company to obtain
such insurance.

 

2.     COMPENSATION AND BENEFITS

2.1           Salary. Company shall pay Executive a minimum base salary in the
amount of $185,000 per annum from the date hereof. Such salary shall be
pro-rated for any partial year during the Term and shall be payable in equal
bi-weekly installments, less state and federal tax and other legally required or
authorized withholdings.  The Base Salary shall also be subject to increase (not
decrease) from time-to-time at the discretion of the Board, Compensation
Committee or Chairman of the Board, which shall review the Executive’s
performance at least annually.  If the Executive's Base Salary is increased by
the Company or by other provisions of this Agreement, such increased Base Salary
shall then constitute the Base Salary for all purposes of this Agreement.   As
used herein, "Base Salary" at any time shall mean Executive's annual base salary
then in effect, as it may have been so increased.

2.2               Incentive Compensation. During the Term, Executive shall be
eligible to receive from Company additional compensation in an amount up to 100%
of Base Salary, less state and federal tax and other legally required or
authorized withholdings. The additional compensation contemplated by this
Section 2.2 shall be payable to Executive and subject to review and adjustment
from time-to-time solely at the discretion of the Board or Compensation
Committee of the Board of Directors of the Company, and shall be based upon
Executive’s and Company’s performance. The Board or Compensation Committee shall
review Executive’s performance at least annually and may pay Executive incentive
compensation based upon such factors as the Board or Compensation Committee may
determine it its sole and absolute discretion.  

2.3               Benefits. The Company will provide, maintain and pay for:

(a)            medical and dental insurance for the Executive and his immediate
family and significant other and dependents as is provided by the Company to its
employees  and its senior executives, which insurance shall provide coverage
substantially equivalent to that provided under the Company's current medical
and dental insurance plan.  Executive shall be entitled to an annual executive
health screening at the cost of the Company;

 

(b)           such extended health and other benefits for the Executive and his
immediate family and significant other and dependents, including disability
insurance, as may be provided by Company from time to time to its employees and
its senior executives, subject to the eligibility of the Executive; and all
additional benefits and perquisites if and to the extent provided by the
Company, including without limitation, life insurance, participation in
profit-sharing and retirement plans, car allowances and company automobiles.

 

2.4               Restricted Stock.  Grant of Stock.

(a)            Executive Shares.  The Company hereby grants to the Executive
Seven Million (7,000,000) shares of the Company's Series III Class A Stock of
the Company (the "Executive Shares").  The Company represents and warrants to
the Executive that the rights, preferences and privileges of the Series III
Class A Stock are set forth in the series resolution attached hereto as Exhibit
A and that such resolution has been duly and lawfully approved by the Company
and its Board of Directors.  Note: Exhibit A will contain the following terms:
(a) the Executive Shares and Incentive Shares issued will have the same voting
rights as common stock of the Company on all matters that may come before the
shareholders for a vote; (b) the shares will be automatically converted into an
equal number of shares of then outstanding common shares immediately upon the
authorization of sufficient additional shares of common shares by the
shareholders; (c) the Company will use its best efforts to cause such increase
in the authorized shares to occur on or before June 30, 2005; (d)  if such
additional authorized shares are not approved by the shareholders on or before
June 30, 2005, the Series III Class A shares will begin to accrue a cumulative
cash dividend of 10% per annum; (e) in all other respects the Executive Shares
and Incentive Shares shall be identical to the common shares.

 

(b)           Executive Shares Vesting Schedule.  The Executive Shares shall
vest monthly, conditioned upon the Executive’s continued employment with the
Company as of each vesting date.

 

Vesting Date

Shares Vesting on the Vesting Date

Total Vested Shares Immediately After the Vesting Date

October 1, 2004

291,667

291,667

November 1, 2004

291,667

583,334

December 1, 2004

291,666

875,000

January  1, 2005

291,667

1,166,667

February 1, 2005

291,667

1,458,334

March 1, 2005

291,666

1,750,000

April 1, 2005

291,667

2,041,667

May 1, 2005

291,667

2,333,334

June 1, 2005

291,666

2,625,000

July 1, 2005

291,667

2,916,667

August 1, 2005

291,667

3,208,334

September 1, 2005

291,666

3,500,000

October 1, 2005

291,667

3,791,667

November 1, 2005

291,667

4,083,334

December 1, 2005

291,666

4,375,000

January  1, 2006

291,667

4,666,667

February 1, 2006

291,667

4,958,334

March 1, 2006

291,666

5,250,000

April 1, 2006

291,667

5,541,667

May 1, 2006

291,667

5,833,334

June 1, 2006

291,666

6,125,000

July 1, 2006

291,667

6,416,667

August 1, 2006

291,667

6,708,334

September 1, 2006

291,666

7,000,000

 

 

 

 

 

Notwithstanding the foregoing, the interest of the Executive in the Executive
Shares shall vest on an accelerated basis as follows:

 

(i)            Upon the Executive’s termination of employment due to death or a
“Disability Termination” (as defined below), those Executive Shares that would
otherwise vest during the following twelve (12) months shall immediately vest.  

 

(ii)           Upon the Executive’s termination of employment due to involuntary
termination by the Company other than for “Cause” (as defined below) or
voluntary termination by the Executive for “Good Reason” (as defined below),
100% of the then unvested Executive Shares shall immediately vest; and

 

(iii)          upon a “Change of Control” (as defined below), 100% of the then
unvested Executive Shares shall immediately vest.

 

(c)            Incentive Shares.  The Company hereby grants to the Executive an
additional Sixteen Million (16,000,000) shares of the Company's Series III Class
A Stock of the Company (the "Incentive Shares").  The Incentive Shares shall
vest upon the achievement by the Company of objectives established by the Board
of Directors and agreed to by the Executive, which agreement shall set forth
such objectives and the portion of the Incentive Shares that shall vest upon the
achievement of each objective.  Such vesting shall be further conditioned upon
the Executive’s continued employment with the Company as of the date on which
such objective is achieved.  Upon any termination of employment of the Executive
by the Company for "Cause" or by the Executive without "Good Reason" or upon the
expiration of the Term hereof, any of the unvested Incentive Shares that have
not theretofore vested shall be forfeited.  Notwithstanding the foregoing, the
interest of the Executive in the Incentive Shares shall vest on an accelerated
basis as follows, regardless of whether or not the objectives specified for
vesting have theretofore been achieved:

 

(i)            Upon the Executive’s termination of employment due to death or a
“Disability Termination” (as defined below), 100% of the then unvested Incentive
Shares shall immediately vest.  

 

(ii)           Upon the Executive’s termination of employment due to involuntary
termination by the Company other than for “Cause” (as defined below) or
voluntary termination by the Executive for “Good Reason” (as defined below),
100% of the then unvested Incentive Shares shall immediately vest; and

 

(iii)          upon a “Change of Control” (as defined below), 100% of the then
unvested Incentive Shares shall immediately vest.

 

 

(d)           Restrictions. Any Executive Shares or Incentive Shares granted
hereunder may not be sold, pledged or otherwise transferred until the number of
Executive Shares or Incentive Shares sought to be sold becomes vested  in
accordance with Section 2.4(b) or 2.4(c) above.  The period of time between the
date hereof and the date the Executive Shares or Incentive Shares become vested
is referred to herein as the “Restriction Period.”

 

(e)            Legend. All certificates representing any Executive Shares or
Incentive Shares of the Company subject to the provisions of this Agreement
shall have endorsed thereon the following legend:

 

“The shares represented by this certificate are subject to an agreement between
the Corporation and the registered holder, a copy of which is on file at the
principal office of this Corporation.”

 

(f)   Executive Stockholder Rights.   During the Restriction Period, the
Executive shall have all the rights of a stockholder with respect to the
Executive Shares and the Incentive Shares except for the right to transfer the
Executive Shares or Incentive Shares, as set forth in Section
2.4(d).  Accordingly, the Executive shall have the right to vote the Executive
Shares and the Incentive Shares and to receive any cash or stock dividends paid
to or made with respect to the Executive Shares.

 

(g)           Taxes.  The Executive shall be liable for any and all taxes,
including withholding taxes, arising out of the grant of the Executive Shares or
the Incentive Shares or the vesting of Executive Shares or the Incentive Shares
hereunder. The Executive may elect to satisfy such withholding tax obligation by
having the Company retain Executive Shares or Incentive Shares having a fair
market value equal to the Company’s minimum withholding obligation.  

 

(h)           Registration of Stock.  To ensure that any common stock issued to
the Executive by the Company pursuant to this Section 2.4 is registered in
accordance with the Securities Act of 1933 (the “Securities Act”), the Company
will, immediately after the conversion of the Executive Shares and the Incentive
Shares into common stock, register such shares of Common Stock with the United
States Securities and Exchange Commission (the “SEC”). Upon the issuance to
Executive of the common stock, the Company will file a registration statement on
Form S-3 or other appropriate form with the SEC to effect registration of resale
by Executive of the common stock issued to Executive. The Company will use its
reasonable best efforts to have the registration of the Executive’s common stock
declared “Effective” as soon as possible thereafter.

 

 

(i)            Miscellaneous.  The Company shall not be required (i) to transfer
on its books any Executive Shares or the Incentive Shares of the Company which
shall have been sold or transferred in violation of any of the provisions set
forth in this Agreement, or (ii) to treat as owner of such shares or to accord
the right to vote as such owner or to pay dividends to any transferee to whom
such shares shall have been so transferred.

 

3.     VACATION

3.1               Entitlement to Vacation. The Executive will be entitled to
five (5) weeks of vacation per year, granted to the Executive on January 1.  The
Executive will use his best efforts to ensure that use of vacation is arranged
with the Company in advance such that it does not unduly affect the operations
of the Company.  Accrued but unused vacation hours will be governed by the
Company’s Officer Benefits Policy.  

 

4.     REIMBURSEMENT OF EXPENSES

4.1               Reimbursement of Expenses. The Executive will be reimbursed
for all reasonable out-of-pocket expenses incurred by the Executive in or about
the execution of the Duties contained herein, including without limitation, all
reasonable travel and promotional expenses payable or incurred by the Executive
in connection with the Duties under thus Agreement. All payments and
reimbursements will be made within ten (10) days of submission by the Executive
of vouchers, bills or receipts for such expenses.

5.     CONFIDENTIAL INFORMATION

5.1               Confidential Information. The Executive shall execute and
deliver to the Company concurrently herewith the form of Non-Disclosure
Agreement that the Company requires its employees generally to sign.

6.     TERM

6.1           Term. The Term of Executive’s employment by Company under this
Agreement shall commence on and as of September 1, 2004 for a two-year term
ending August 31, 2006, and continue thereafter for successive one-year terms
(the initial two-year term and each one-year term thereafter, collectively the
“Term”), unless either the Company or Executive gives notice to the other at
least six (6) months in advance of the expiration of the current Term that it
wishes to terminate this Agreement, in which event this Agreement shall
terminate as of the end of such Term, unless earlier terminated as hereinafter
provided.

7.     TERMINATION

7.1           Death. The Executive’s employment shall terminate automatically
upon the Executive’s death (“Death”).

7.2           Disability. The Company may terminate the Executive’s employment,
after having established the Executive’s “Disability” (as defined below), by
giving to the Executive notice of its intention to terminate Executive’s
employment with the Company.  This Agreement will terminate on the 90th day
subsequent to the date upon which the notice is delivered to the Executive (the
“Disability Effective Date”).  If within such 90-day period the Executive fails
to return to full-time performance of his duties, this Agreement will terminate.
For purposes of this Agreement, “Disability” means a disability that, after the
expiation of more than 26 weeks after its commencement, is determined to be
total and permanent by a physician selected by the Company or the insurers
providing disability insurance to the Company.   Notwithstanding the foregoing,
in no event will the Disability Effective Date be deemed to have occurred
hereunder unless it shall have been determined under the disability insurance
plan of the Company  that Executive is totally and permanently disabled.

7.3           Cause. The Company may terminate the Executive’s employment for
Cause . For purposes of this Agreement, “Cause” means: (i) any act of fraud,
theft or personal dishonesty by the Executive in connection with the Executive’s
responsibilities hereunder and intended to result in substantial personal
enrichment of the Executive, (ii) conviction of or plea of nolo contendere to a
felony (or a misdemeanor involving moral turpitude) in connection with
Executive’s responsibilities hereunder, and (iii) a material violation by the
Executive of any of the Executive’s fiduciary obligations hereunder, provided
that the Company gives Executive written notice of such violation and such
violation remains uncured for thirty (30) days after such notice is received by
Executive.

7.4           Resignation. At any time after the effective date of the
Agreement, the Executive may terminate his employment by electing resignation
(“Voluntary Resignation”).

7.5               Change of Control. In the event of a Change of Control, this
Agreement shall at the sole discretion of the Executive be terminated. For
proposes of this Agreement, “Change of Control” shall be deemed to have occurred
if  a third person, including a “group” as defined in Article 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of shares of the
Company having 25% or more of the total number of votes that may be cast for the
election of directors, whether as the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination (a “Transaction”)
or otherwise.

7.6               Good Reason. The term “Good Reason” shall mean (i) a material
breach by the Company of its obligations to the Executive under this Agreement;
(ii) a material reduction by the Company in the compensation or bonus
opportunity of the Executive as in effect immediately prior to such reduction;
(iii) a reduction in the scope of authority of Executive, (iv) the removal of
Executive from any significant decision-making process in which Executive had
been involved during the previous six (6) month period, (v) the direction of
other employees, consultants or other agents of the Company to disregard
directives or ignore requests of the Executive regarding matters for which such
other employees, consultants or other agents of the Company typically would have
responded to Executive’s directives or requests during the previous six (6)
month period, or (vi) requiring Executive to relocate a location greater than
thirty (30) miles from the principal business location of the Company or that is
not in the City of San Francisco or the County of San Mateo or Santa Clara.;
provided, however, no such termination for Good Reason shall be effective unless
(i) Executive shall have given the Company  30 days prior notice of and
opportunity to cure any action by Company that Executive believes justifies
Executive’s termination under this Section 7.6; and (ii) Company shall not have
cured such non-compliant action during such notice period.

7.7               Notice of Termination. Any termination by the Company shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 9. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date of this Agreement which date shall be in accordance with
specific termination provision in this Agreement relied upon.

7.8               Date of Termination. Notwithstanding any contrary provision
contained in this Agreement, (i) if the Executive is terminating this Agreement
in order to elect Voluntary Resignation, the Date of Termination shall not be
the date of receipt of such Notice of Termination but shall be a date specified
therein, which date shall be neither less than 60 days nor greater than 90 days
after giving such Notice of Termination; (ii) if the Executive’s employment is
terminating due to Disability the Date of Termination shall be the Disability
Effective Date; (iii) if the Executive’s employment terminates due to the
Executive’s death, the Date of Termination shall be the date of death; and (iv)
if the Executive’s employment is terminated Without Cause, the Date of
Termination shall not be the date of receipt of such Notice of Termination but
shall be a date specified therein, which date shall be not less than 30 days
after giving such Notice of Termination.

8..    RIGHTS AND OBLIGATIONS UPON TERMINATION

8.1               Rights and Obligations. Upon termination of this Agreement,
the Executive will deliver up to the Company all documents, papers, plans,
materials and other property of or relating to the affairs of the Company, which
may then be in its or the Executive’s possession or under his control and
Company will immediately pay all severance benefits, if applicable.  In
addition, upon  the termination of Executive's employment, the provisions set
forth in Section 2.4(b) with respect to the Executive Shares and Section 2.4(c)
with respect to the Incentive Shares shall apply in addition to the provisions
set forth in this Article 8.

8.2               Death. If the Executive’s employment is terminated by reason
of the Executive’s death, except as described in the next sentence, this
Agreement shall terminate without further obligations to the Executive’s legal
representatives under this Agreement other than those obligations accrued
hereunder at the date of Executive’s death.  Anything in this Agreement to the
contrary notwithstanding, the Executive’s significant other and dependents shall
be entitled to continue to receive the benefits under Section 2.3 through the
remaining Term of this Agreement as if Executive had not died and the
obligations set forth in Section 2.4.

8.3               Cause. If the Executive’s employment shall be terminated for
Cause, the Company shall pay the Executive his Base Salary and any other accrued
obligations through the Date of Termination. Thereafter, Company shall have no
further obligations to the Executive under this Agreement, except for the
stockholder and conversion  rights pursuant to Section 2.4.

8.4               Voluntary Resignation. Except as set forth in paragraph 5
above, if Executive voluntarily resigns for other than Good Reason, neither the
Company nor Executive shall have any further obligations to each other. If the
Executive elects Voluntary Resignation., the Company shall pay the Executive his
Base Salary and any other accrued obligations through the Date of Termination.

8.5               Without Cause And Good Reason. If the Company terminates
Executive’s employment without Cause, or if Executive terminates his employment
with Good Reason, Company shall provide Executive with the following termination
benefits: (i) 30 days prior written notice of Company’s intention to terminate
this Agreement without Cause; (ii) a lump sum payment equal to two (2)  years of
both Executive’s Base Salary  and the maximum Incentive Compensation then
payable to Executive under the Company's Incentive Compensation plan then
applicable to Executive; (iii) a lump sum payment equal to any portion of any
Incentive Compensation accrued for Executive on Company’s books through the Date
of Termination with respect to any prior year; and (iv) continued coverage under
Company’s standard and executive benefit plans as prescribed in Section 2.3 for
two (2) years in accordance with the terms of the applicable plans; provided, if
the terms of the applicable plan do not permit continued coverage, then Company
shall pay to Executive the value of the applicable benefits in lump sum upon
termination of employment.

8.6               Change of Control.  If the Executive’s employment shall be
terminated within six (6) months prior to a Change of Control of the Company or
within twelve (12) months after  a Change in Control of the Company, whether by
Executive or by the Company or any successor in interest, then this Agreement
shall be deemed to have been terminated without Cause and the Executive shall be
provided with the termination benefits provided in Paragraph 8.5 above. In the
event that such termination occurs in the six (6) month period prior to a Change
of Control, Executive shall be entitled to receive on the date of termination
the compensation and benefits set forth herein as if such Change of Control had
not occurred and subsequently, upon the consummation of the Change of Control,
the Company shall pay any additional amount owing as a result of such Change of
Control under this Section 8.6.

8.7               Full Settlement. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.

8.8               Attorneys' Fees.  The Company shall reimburse Executive for
the fees and disbursements of his counsel and his tax advisors in connection
with the preparation and negotiation of this Agreement.

9.     NOTICES AND REQUESTS

9.1               Notices and Requests. All notices and requests in connection
with this Agreement will be deemed given as of the day they are received either
by messenger, delivery service, or mailed by registered or certified mail with
postage prepaid and return receipt requested and addressed as follows:

(a)            if to the Company:

 

Healthtrac, Inc.

1300 Island Drive, Suite 105

Redwood City, CA 94065

 

(b)           If to the Executive at the address specified in the personnel
files of the Company or to such other address as the party to receive notice or
request so designates by written notice to the other.

 

10.   INDEPENDENT PARTIES

10.1            Independent Parties. This Agreement is intended solely as an
employment services agreement and no partnership, agency, joint venture,
distributorship or other form of agreement is intended.

11.   AGREEMENT VOLUNTARY AND EQUITABLE

11.1         Agreement Voluntary. Each of the parties acknowledges and declares
that such party has obtained all such professional advice (including legal
advice) as such party deems appropriate before executing this Agreement and that
such party is relying wholly on its own judgment and knowledge and has not been
influenced to any extent whatsoever by any representations or statements made by
or on behalf of the other party regarding any matters dealt with herein or
incidental thereto save as set out herein.

11.2            Agreement Equitable. The parties further acknowledge and declare
that they each have carefully considered and understand the provisions contained
herein, including, but without limiting the generality of the foregoing, the
Executive’s rights upon termination and agree that the said provisions are
mutually fair and equitable, and that they executed this Agreement voluntarily
and of their own free will.

12.   BINDING EFFECT AND ASSIGNMENT

12.1            Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of any successor of the Company by reorganization,
merger or consolidation, or any assignee of all or substantially all of the
Company’s business and properties. The Company assign their rights and
obligations under this Agreement to any of its Affiliates only with the express
written consent of the Executive. The obligations and duties of Executive under
this Agreement are personal and not assignable, except that the rights of
Executive specified under Sections 2 and 7 shall pass upon the Executive’s death
to Executive’s executor or administrator.

12.2            Inurement. The rights, benefits and privileges contained herein,
including without limitation the benefits of Sections 2 and 7 hereof, will inure
to the benefit of and be binding upon the respective parties hereto, their
heirs, executors, administrators and successors and permitted assigns.

13.   ENTIRE AGREEMENT

13.1         Entire Agreement. This Agreement represents the entire Agreement
between the parties and supersedes any and all prior agreements and
understandings, whether written or oral, between the parties.

13.2            Previous Agreements Cancelled. Save and except for the express
provisions of this Agreement, any and all previous agreements, written or oral,
between the parties hereto or on their behalf relating to the services of the
Executive for the Company are hereby terminated and cancelled and each of the
parties hereby releases and further discharges the other of and from all tanner
of actions, causes of action, claims and demands whatsoever under or in respect
of any such Agreement.

14.   WAIVER

14.1         Waiver. No consent or waiver, express or implied, by either panty
to or of any breach or default by the other party in the performance by the
other of its obligations herein will be deemed or construed to be a consent or
waiver to or of any breach or default of the same or any other obligation of
such party. Failure on the part of any panty to complain of any act or failure
to act, or to declare either panty in default irrespective of how long such
failure continues, will not constitute a waiver by such panty of its rights
herein or of the right to then or subsequently declare a default.

15.   SEVERABILITY

15.1            Severability. If any provision contained herein is determined to
be void or enforceable in whole or in pail, it is to that extent deemed omitted.
The remaining provisions will not be affected in any way.

16.   AMENDMENT

16.1            Amendment. This Agreement will not be amended or otherwise
modified except by a written notice of even date herewith or subsequent hereto
signed by both parties.

17.   HEADINGS

17.1            Headings. The headings of the sections and subsections herein
are for convenience only and will not control or affect the meaning or
construction of any provisions of this Agreement.

18.   GOVERNING LAW AND ARBITRATION

18.1            Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California. In the event of any
controversy or claim by either party hereunder, the prevailing party in any
final and legally binding adjudication (as to which all periods for the filing
of any appeal have expired) with respect to such controversy or claim shall be
entitled to reimbursement from the losing party for reasonable attorney’s fees
and costs and for all other reasonable expenses of such adjudication.

18.2            Arbitration. Any dispute arising out of this Agreement shall be
determined by arbitration in San Mateo County, California, under the rules of
the American Arbitration Association then in effect and judgment upon any award
pursuant to such arbitration may be enforced in any court having jurisdiction
thereof, provided each of the parties to this Agreement will appoint one person
as an arbitrator to hear and determine the dispute, and if they are unable to
agree, then the two arbitrators so chosen will select a third impartial
arbitrator whose decision will be final and conclusive upon the parties to this
Agreement. The expenses of the arbitration proceedings concluded pursuant to
this paragraph will be borne by the parties in such proportions as the
arbitrators decide.

 

 

19.   DRAFTING AMBIGUITIES.

19.1            Each party to this Agreement and its legal counsel have reviewed
and revised this Agreement.  The rule of construction that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of the Agreement or of any amendments or exhibits to this
Agreement.

20.   EXECUTION

20.1            Execution in Several Counterparts. This Agreement may be
executed by facsimile and in several counterparts, each of which will be deemed
to be an original and all of which will together constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.

 

 

 

HEALTHTRAC, INC., on behalf of the Board of Directors

 

By:  /s/Robert
Baker                                                                                            Date:  10/26/04

      Robert Baker, Director

 

    

By:  /s/ Pierre
Prefontaine                                                                                    Date:  10/26/04

      Pierre Prefontaine, Director

 

 

 

EDWARD SHARPLESS

 

/s/ Edward
Sharpless                                                                                          Date:  10/26/04

Executive