exv10w4






Exhibit 10.4









February 4, 2002




Barry Hanover 

2597 Sherwood Drive

Salt Lake City, UT 84108




RE: Offer of Employment




Dear Barry;




TechniScan, Inc. (TSI) is pleased to offer you the position of Chief Operations Officer.
The purpose of this letter is to outline the terms under which this offer is tendered and
provide a brief overview of the position responsibilities. The letter is intended to be an
agreement that provides the framework under which we will engage you. As we discussed, the
position description is not intended to be all encompassing because the position will
evolve rapidly as we grow (hopefully with equal rapidity). Further, I understand that you
will be developing a description of duties you are most attracted to — and that job
description is what we will work from. To assist you in this process I have attached a
draft job description for this position. Please feel free to make changes that you would
like to make to describe the position responsibilities as you see them.



Job Description




The position offered is Chief Operations Officer. In this position you would have
responsibility for all aspects of producing TSI’s Breast Cancer Scanner now in development.
The attached job description includes the following key responsibilities:


Strategic development of the SafeScanTM system (the “Product”) for market:





	 	•	 	Co-develop and implement the Company Business Plan
	 
	 	•	 	Co-develop and implement the annual budget
	 
	 	•	 	Aid in capital development
	 
	 	•	 	Develop human resources policies and procedures
	 
	 	•	 	Develop and implement Product end-user objectives
	 
	 	•	 	Develop and implement Product regulatory strategy
	 
	 	•	 	Develop and manage the Clinical Advisory Board
	 
	 	•	 	Develop the marketing strategy





Northgate
Business Center • 350 West 800 North, Suite 305 • Salt Lake City, Utah 84103

Voice: 801.521.0444, 521.0888 • Fax: 801.521.0666

www.techniscanmedical.com • www.techniscan.net • E-mail: admin@techniscan.net




 









 





Barry Hanover

Offer Letter

Page 2 of 5




This is intended to be the “beginning list” of job responsibilities that, with your input and
direction, will grow over a very short period of time as the product develops.



Salary




The salary offered for this position is $12,500/month. As we discussed you would start on February
11, 2002 and migrate toward full time as your personal schedule can accommodate it. Of course, we
envision this as a full time position and encourage you to work toward a balance that allows your
full time participation as soon as practical. The company will depend on you top provide an
accounting of your time until you reach full time. Until then, your salary will be prorated to
that percentage of full time you actually work.



As you know, we are currently raising capital. Currently, there is not sufficient capital to pay
full salaries for most employees, and most senior managers have agreed to accrue salaries into an
account payable or convertible to stock at the close of next round of financing. I anticipate that
this will be complete by the end of Q-2 2002 or sooner.



At the time the round closes, you will be paid the total accrued less applicable taxes. The
company will issue an earnings statement showing the accrued salary and taxes bi-monthly on the
5th and 20th of each month instead of a paycheck. If required a draw against
salary is available and I would be happy to discuss your needs for compensation at any time.



Equity Participation




The company will reward key employees through opportunities for equity participation. As a key
executive you are eligible to participate in various company equity issues including Preferred
Stock for cash or deferred salary at each financing round, Stock Options.



Preferred Stock Equity




All employees will have an opportunity to participate in each funding round of equity issue for
the company. The purpose of this is to allow employees to continue to invest alongside new
investors as the company grows without having to meet minimum investment amounts or investor
qualifications. This program is voluntary and employees are not
required to participate.



Stock Options




The Company has adopted a Comprehensive Management Incentive Plan (“Stock Option Plan” herein) and
has authorized the issuance of up to 5,000,000 shares of Common Stock under the Plan. The actually
number of shares set aside for the option pool will be approximately 20% of the total outstanding
stock at each round. Stock Options are granted as Non Qualified Options and Incentive Stock
Options. The primary difference is



 









 





Barry Hanover

Offer Letter

Page 3 of 5




that Non Qualified Options do not have a vesting period while Incentive Stock Options vest over
four (4) years as described below.



First Option Grant: Forty five (45) days after you start, the Company shall grant to you a
first round of Non Qualified Stock for 200,000 shares of stock at a strike price to be determined
by the Board.



Second Stock Option Grant: Within thirty days (30) after the closure of the Series B
Round, the Board of Directors shall authorize a second round of Incentive Stock Options (ISO) and
shall grant you an ISO for a minimum of 300,000 shares (or more at the discretion of the Board of
Directors and the recommendation of the CEO).



Vesting of Non Qualified Stock Options




Non Qualified Stock Options do not vest. They are exercisable upon grant.



Vesting of Incentive Stock Options: The Incentive Stock Options will vest and become
exercisable in accordance with the following schedule, subject to the terms of the Company’s Stock
Option Plan: twenty five percent (25%) of the Options shall vest on the first anniversary of the
date of this AGREEMENT and the remaining seventy-five percent (75%) of the Options shall vest in
equal monthly installments for thirty-six (36) months thereafter, provided you are then still
employed, and has been continuously employed, on a full- or substantially 

full-time basis by the
Company at such times.



Effect of Change in Control Upon Vesting: If you are still employed by the Company and
there occurs a Change in Control made the subject of a binding written agreement executed and
delivered on or after January 1, 2002, then upon the closing date of the event constituting a
Change in Control, one hundred percent (100%) of the your then-unvested Options shall accelerate
and immediately become vested. Remaining unvested Options, if any, shall continue to vest on the
terms and under the conditions specified herein. For purposes of this letter agreement, a “Change
in Control” shall mean:




	 	•	 	The sale, transfer or other disposition of all or substantially all of the assets of
the Company; or
	 
	 	•	 	Any merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company’s outstanding
securities are transferred to a person or persons different from those holding
beneficial ownership of 50% or more of the outstanding voting stock of the
Company immediately prior to such transaction.
	 
	 	•	 	For purposes of this letter agreement, the occurrence of an underwritten public
offering by the Company shall not be deemed an occurrence of a Change
in Control.





 









 





Barry Hanover

Offer Letter

Page 4 of 5




General Terms Pertaining to Options: Subject to the foregoing provisions, the Options
shall be granted under and shall be governed by the terms of the Company’s Stock Option Plan (as
it may be amended from time to time in the future) and shall be subject to a written option
agreement issued to you. All Plan provisions not contradicted by the terms of this letter
agreement (including, but not limited to, provisions regarding timing and manner of, and deadlines
for, exercise, and provisions concerning market stand-off) shall apply to the Options to be
granted. If you have questions about any option please request further written detail from David
Robinson (CEO) or Gerald Snow (Corporate Counsel).



Taxes




As a part of this agreement you acknowledge that the grant of equity benefits may result in
taxable income. As a condition of employment, you acknowledge that you are solely responsible for
payment of any tax liability relating to or arising from such Preferred and/or Common Stock. You
are encouraged to obtain a professional opinion regarding your potential tax liabilities under
this agreement. Do not rely on any statements made by the Company’s representatives with respect
to the tax and other economic considerations relating to this investment.



In regard to such considerations, you should rely on the advice of, or consult with, your own
personal tax, investment, legal or other advisors. You acknowledge that an election under Section 83(b) of the Internal Revenue Code may be made within 30 days of the date of this Agreement, and
with respect thereto Executive has consulted with, or shall consult with, his or her personal tax,
investment, legal or other advisors.



Benefits




As an early stage start up the company contemplates a generous benefits package that will allow us
to attract and retain employees from national employment markets. As a person who is joining
during the time that these benefits are being determined you will be given the maximum benefit at
the time each is instituted. The following descriptions are intended to provide general guidance
about the contemplated benefit policies of the company — not all benefits are in place.



Medical and Dental




The company currently provides medical insurance through IHC. A copy of the current plan is
available upon your request. Whether you choose this option or not the company currently provides a
maximum medical/dental benefit of $300/month. If you elect to maintain your coverage through COBRA
or self insurance the company will pay you this amount directly each month.



Holidays




The company recognizes 8 holidays:




	 	•	 	Memorial Day





 









 





Barry Hanover

Offer Letter

Page 5 of 5





	 	•	 	Independence Day
	 
	 	•	 	State Holiday 24 July
	 
	 	•	 	Labor Day
	 
	 	•	 	Thanksgiving and the day after
	 
	 	•	 	Christmas Day, and
	 
	 	•	 	New Years Day





Sick Leave Policy & Vacation




The company currently allows up to fifteen (15) working days per twelve (12) months for either sick
or vacation time. Flex time will accrue up to a maximum of thirty (30) working days, at which time
it shall cease accruing until the total amount accrued is reduced below the thirty (30) day
maximum.



401K Plan




The company does have a retirement program that allows you to place up to 10% of your salary in a
qualified 401K plan. At this time the company does not provide matching funds, however, it does
expect to do so in the future.



Barry, I
am excited to have the opportunity to work with a professional of your caliber. I have no
doubt your contribution to our team of technology professionals will allow us to reach our goals. I
look forward to completing the “dry” work of agreement and move on to the challenging and
stimulating work of building a company known for its line of superior imaging products.



	 	 	 	 	 
	 	Sincerely,








David Robinson

President and Chief Executive Officer

TechniScan, Inc.