UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
August 28, 2014
Date of Report (Date of earliest event reported)
Simulations Plus, Inc.
(Exact name of registrant as specified in its charter)
| California | 001-32046 | 95-4595609 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
42505 10th Street West, Lancaster, California 93534-7059
(Address of principal executive offices, zip code)
661-723-7723
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry Into a Material Definitive Agreement.
As previously reported on that certain Current Report on Form 8-K filed by Simulations Plus, Inc., a California corporation (the “Company”), with the Securities and Exchange Commission (the “SEC”) on July 24, 2014 (the “Form 8-K”), on July 23, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cognigen Corporation, a New York corporation (“Cognigen”). In connection with the consummation of the transactions contemplated by the Merger Agreement, as further discussed in Item 2.01 below, as of September 2, 2014, Thaddeus H. Grasela, Jr., Ph.D., age 60, has been appointed President of the Company and its wholly-owned subsidiary Cognigen, and the Company and Cognigen have entered into an Employment Agreement with Dr. Grasela (the “Grasela Employment Agreement”) which has a three-year term. Pursuant to the Grasela Employment Agreement, Dr. Grasela will receive an annual base salary of $250,000, will be eligible to receive Company stock options under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Company’s Board of Directors, and will be eligible to receive an annual performance bonus in an amount not to exceed 10% of salary to be determined by the Compensation Committee of the Company’s Board of Directors. Dr. Grasela is not related to any director or executive officer of the Company. For the last 22 years, Dr. Grasela was the Chief Executive Officer and President of Cognigen, a consulting company with annual revenues of approximately $5,000,000 and 35 employees. Dr. Grasela positioned Cognigen as a leader in pharmacometric modeling and simulation. His duties at Cognigen included strategic planning, business development, scientific consulting and project team management, and he has overseen the development of a systematic approach to defining complex scientific process workflows. Dr. Grasela, as a former shareholder of Cognigen, is a party to the Merger Agreement and entered into transactions with the Company pursuant thereto as further discussed in Item 2.01 below, in which he had a material interest valued at approximately $4,500,000. A copy of the Grasela Employment Agreement is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Effective September 1, 2014, the Company entered into a new Employment Agreement with Walter S. Woltosz to serve as Chief Executive Officer of the Company (the “Woltosz Employment Agreement”). The Woltosz Employment Agreement has a one-year term. Under the terms of the Woltosz Employment Agreement, Mr. Woltosz is required to devote a minimum of 60% of his productive time to the position of Chief Executive Officer of the Company. He will receive annual compensation of $180,000, be eligible to receive up to 12,000 Company stock options under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Company’s Board of Directors, and shall be paid an annual performance bonus of up to 5% of the Company’s net income before taxes not to exceed $36,000. A copy of the Woltosz Employment Agreement is attached hereto as Exhibit 99.2 and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
As previously reported on the Form 8-K, on July 23, 2014, the Company entered into the Merger Agreement with Cognigen. On September 2, 2014, the Company consummated the acquisition of all outstanding equity interests of Cognigen pursuant to the terms of the Merger Agreement, with Cognigen merging with and into a newly-formed, wholly-owned subsidiary of the Company (“Acquisition Sub”), with Acquisition Sub surviving the merger and Cognigen became a wholly-owned subsidiary of the Company.
Under the terms of the Merger Agreement, the Company will pay the shareholders of Cognigen total consideration of $7,000,000, consisting of $2,800,000 of cash and $4,200,000 worth of newly-issued, unregistered shares of the Company’s common stock, a portion of which was paid on September 2, 2014 and a portion of which was held back by the Company to be paid, as follows:
On September 2, 2014, the Company paid the shareholders of Cognigen a total of $5,200,000, comprised of cash in the amount of $2,080,000 and the issuance of $3,120,000 worth of shares of the Company’s common stock (491,159 shares of the Company’s common stock valued at approximately $6.35 dollars per share based upon the volume-weighted average closing price (the “Average Price”) of the Company’s shares of common stock for the thirty (30)-consecutive-trading-day period ending two trading days prior to September 2, 2014). The Merger Agreement provides for a two-year market stand-off period in which the newly-issued shares may not be sold by the recipients thereof.
At the holdback release date, two years from the date of the Merger Agreement and subject to any offsets, the Company will pay $1,800,000 of holdback consideration, comprised of cash in the amount of $720,000 and the issuance of $1,080,000 worth of shares of the Company’s common stock (170,014 shares based on the original Average Price of approximately $6.35).
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| Item 3.02 | Unregistered Sales of Equity Securities. |
The information provided above in “Item 2.01 – Completion of Acquisition or Disposition of Assets” is incorporated by reference into this Item 3.02.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The disclosure set forth above under Item 1.01 “Entry Into a Material Definitive Agreement” is incorporated by reference into this Item 5.02.
Effective September 2, 2014, Virginia Woltosz resigned her position as a Director of the Company. She will continue to serve in her position as the Secretary and Treasurer of the Company.
Effective September 2, 2014, the board of directors has appointed Dr. Grasela as a director of the Company to replace the position formerly held by Virginia Woltosz. Dr. Grasela was chosen for his extensive knowledge of pharmaceutical sciences and his experience with Cognigen’s operations. He will hold this position until the next shareholder’s meeting.
| Item 7.01 | Regulation FD Disclosure |
On September 2, 2014, the Company issued a press release announcing that it has consummated the transactions contemplated by the Merger Agreement.
A copy of the press release is attached hereto as Exhibit 99.3 and incorporated by reference into this Item 7.01.
| Item 9.01 | Financial Statements and Exhibits |
(a) Financial Statements of Business Acquired.
As permitted by Item 9.01(a)(4) of Form 8-K, the financial statements required by Item 9.01(a) of Form 8-K will be filed by the Company by an amendment to this Current Report on Form 8-K not later than 71 days after the date upon which this Current Report on Form 8-K must be filed.
(b) Pro Forma Financial Information.
As permitted by Item 9.01(b)(2) of Form 8-K, the pro forma financial information required by Item 9.01(b) of Form 8-K will be filed by the Company by an amendment to this Current Report on Form 8-K not later than 71 days after the date upon which this Current Report on Form 8-K must be filed.
| (c) | Exhibits |
| 99.1 | Employment Agreement, dated September 2, 2014, by and between the Company and Thaddeus H. Grasela, Jr. |
| 99.2 | Employment Agreement with Walter S. Woltosz. |
| 99.3 | Press Release issued by the Company on September 2, 2014. |
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The information in this Current Report on Form 8-K furnished pursuant to Item 7.01 (the “Item 7.01 Information”) is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, and such information is not incorporated by reference into any registration statements or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of the general incorporation language contained in such filing, except as shall be expressly set forth by specific reference to this filing.
By providing the Item 7.01 Information, the Company makes no admission as to the materiality of the Item 7.01 Information. The Item 7.01 Information is intended to be considered in the context of the Company’s filings with the SEC and other public announcements that the Company makes, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the Item 7.01 Information, although it may do so from time to time as its management believes is appropriate. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K may contain forward-looking statements that are made pursuant to the safe harbor provisions of Section 21E of the Exchange Act. The forward-looking statements in this Current Report on Form 8-K are not historical facts, do not constitute guarantees of future performance, and are based on numerous assumptions which, while believed to be reasonable, may not prove to be accurate. Any forward-looking statements in this Current Report on Form 8-K do not constitute guarantees of future performance and involve a number of factors that could cause actual results to differ materially, including risks more fully described in the Company’s most recently filed Quarterly Report on Form 10-Q and Annual Report on Form 10-K. The Company assumes no obligation to update any forward-looking information contained in this Current Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SIMULATIONS PLUS, INC. | |
| (Registrant) | |
| Date: September 4, 2014 | By: /s/ John R. Kneisel |
| John R. Kneisel | |
| Chief Financial Officer |
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Exhibit 99.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is made as of this 2nd day of September, 2014 (the “Effective Date”), by and between Simulations Plus, Inc., a California corporation (the “Company”), its wholly-owned subsidiary Cognigen Acquisition, Inc., a Delaware corporation (“Cognigen”) (the Company and Cognigen are sometimes collectively referred to herein as the “Companies”), and Thaddeus H. Grasela, Jr., an individual (the “Employee”) with reference to the following facts:
A. The Company and Cognigen desire to secure the services of the Employee as President of each of the Companies.
B. The Employee agrees to perform such services for the Companies 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 Companies and the Employee as follows:
1. Representations and Warranties. Each of the Companies represents and warrants that it is empowered under its Articles or Certificate 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 that 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 that would divert his full attention from the duties assigned to him by the Companies by this Agreement; provided, that the foregoing limitations shall not be construed as prohibiting Employee from making personal investments or participating in business activities or community affairs in such form or manner as will not prevent Employee from performing his duties and responsibilities hereunder or cause Employee to violate the terms of Section 6 hereof.
2. Employment and Duties. The Companies hereby employ the Employee as President and the Employee hereby accepts such employment during the Term. For payroll purposes only, one or the other of the Companies shall be the statutory employer of Employee.
As President, the Employee shall have such duties, authority and responsibility as shall be consistent with the Employee’s position and such other duties as assigned by the CEO of the Company and/or the Board of Directors of the Company (the “Board of Directors”).
3. Term. Subject to the provisions of Section 5, the term of this Agreement shall commence on September 2, 2014 for a duration of three (3) years and end on September 1, 2017 (“Term”).
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4. Compensation. In full and complete consideration for the employment of Employee hereunder, each and all of the services to be rendered to the Companies 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 Companies a base salary of two hundred fifty thousand dollar ($250,000) per year, payable in equal, monthly installments. From each payment of Base Salary 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.
4.2 Stock Options. The Employee shall be eligible to receive a grant of stock options under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Board of Directors.
4.3 Performance Bonus. For each fiscal year during the Term, the Employee shall be eligible to receive a performance bonus in an amount not to exceed ten percent (10%) of the Employee’s salary, not to exceed $25,000 at the end of each year. The specific amount of the performance bonus shall be determined by the Compensation Committee of the Board of Directors, based on the financial performance and achievements of the Companies for the previous fiscal year.
4.4 Benefits. The Companies shall provide to the Employee at the sole cost to the Companies, and the Employee shall be entitled to receive from the Companies, 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 the Companies customarily provides at the time to their other management employees. The Employee's right to vacation and sick leave shall be determined in accordance with the policies of the Companies as may be in effect from time to time and as are approved by the Board of Directors. Employee shall have the right to reimbursement of customary, ordinary and necessary business expenses, including travel, incurred in connection with the rendering of services and performance of the functions required hereunder in accordance with the policies of the Companies as may be in effect from time to time and as are approved by the Companies' Boards of Directors. Such expenses are reimbursable only upon presentation by Employee of appropriate documentation pursuant to the policies adopted by the Companies' Boards of Directors.
5. Termination of Employment.
5.1 Expiration of the Term of Agreement. This Agreement shall be automatically terminated upon the expiration of the Term, or as sooner agreed to by both the Employee and the Company in writing in the event this Agreement is superseded by a new agreement. Upon such termination, the Companies shall have no further liability to the Employee for any payment, compensation or benefit whatsoever under this Agreement except with respect to (a) the Employee's salary and benefits through the effective date of the Employee's termination, and (b) such other compensation or benefits (if any) which, by the terms of the applicable plan or policy, is payable to the Employee after termination of employment.
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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 (a) the Employee's salary and benefits through the date of the Employee's death, and (b) such other compensation or benefits (if any) which, by the terms of the applicable plan or policy, is payable after the Employee's death.
5.3 By Disability. Employee’s employment may be terminated due to his disability upon receiving notice from Companies that Companies have determined that Employee is unable to perform the essential duties hereunder, with or without reasonable accommodation, by reason of any physical or mental illness or medical condition that has caused Employee to be absent from work for a continuous one hundred twenty (120)-day period, or that has caused Employee to be absent from work for more than one hundred eighty (180) days during any twelve (12)- month period. The Companies' 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.
5.4 For Cause. The Companies reserve the right to terminate this Agreement immediately, at any time, if, in the reasonable opinion of the Companies' Boards of Directors: the Employee fails or refuses to faithfully and diligently perform the usual and customary duties of his employment which failure or refusal is not cured within thirty (30) days after written notice thereof is given to Employee; 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 Companies' Boards of Directors; or acts in any way that has a direct, substantial and adverse effect on the Companies' reputation. The Companies' 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 Companies reserve 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, so long as he signs a release of all claims against Companies on a release form provided by Companies to him at that time. Other than payment of the amount as described in this paragraph, the Companies shall have no further obligation to pay the Employee any other compensation or benefits whatsoever. The Employee hereby agrees that the Companies may dismiss him under this Section 5.5 without regard (i) to any general or specific policies (whether written or oral) of the Companies 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 Companies.
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5.6 Mutual Consent. This Agreement shall be terminated upon mutual written consent of the Companies and the Employee. The Companies’ total liability to the Employee in the event of termination of the Employee's employment under this Section 5.6 shall be limited to the payment of
(a) The Employee's salary and benefits through the effective date of termination; and
(b) such other compensation or benefits (if any) which, by the terms of the applicable plan or policy, is payable to the Employee after termination of employment, except as otherwise agreed by the parties in writing.
5.7 Termination of Offices and Board. Upon termination of employment for any reason whatsoever, the Employee shall be deemed to have resigned from all offices, including the Boards of Directors then held with the Companies.
6. Restrictions on Use or Disclosure of Confidential Matters, Proprietary Information and Trade Secrets.
6.1 During the Term, the Employee may be dealing with trade secrets of the Companies, including without limitation, customer lists, client contacts, financial information, inventions and processes, all of a confidential nature that are the Companies' property and are used in the course of the Companies' 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 Companies. 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 employment by the Companies, are the exclusive property of the Companies. During the Term and at any time thereafter, the Employee shall not publish, communicate, divulge, disclose or use any of such information which has been reasonably designated by the Companies as proprietary or confidential or which from the surrounding circumstances the Employee knows, or has good reason to know, or should reasonably know, ought to be treated by the Employee as proprietary or confidential without the prior written consent of the Companies, which consent may not be unreasonably withheld by the Companies.
6.2 In the course of his employment for the Companies, Employee will develop a personal relationship with the Companies' customers and knowledge of those customers’ affairs and requirements, which may constitute the Companies' only contact with such customers. The Employee consequently agrees that it is reasonable and necessary for the protection of the goodwill and business of the Companies that the Employee make the covenants contained herein. Accordingly, the Employee agrees that while he is in the Companies' employ, he will not directly or indirectly:
(a) attempt in any manner, to solicit from any customer (except on behalf of the Companies) business of the type performed by the Companies or to persuade any customer of the Companies to cease to do business or reduce the amount of business which any such customer has customarily done or contemplates doing with the Companies, whether or not the relationship with the Companies and such customer was originally established in whole or in part through the Employee's efforts; or
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(b) engage in any business as, or own an interest in, directly or indirectly, any individual proprietorship, partnership, corporation, joint venture, trust or any other form of business entity if such business form or entity is engaged in the business in which the Companies are engaged;
(c) render any services of the type rendered by the Companies to or for any customer of the Companies;
(d) employ or attempt to employ or assist anyone else to employ any person who is then or at any time during the preceding year in the Companies' employ.
6.3 For a one (1) year period after the termination of this Agreement for any reason, Employee shall not, directly or indirectly, ask or encourage any employee(s) of the Companies to leave their employment with Companies or solicit any employee(s) of the Companies for employment elsewhere. The Employee further agrees that he shall make any subsequent employer aware of this non-solicitation obligation.
6.4 This entire Section 6 shall survive termination of this Agreement.
7. The Companies' Property.
7.1 Any patents, inventions, discoveries, applications or processes, software and computer programs devised, planned, applied, created, discovered or invented by the Employee in the course of his employment by the Companies and which pertain to any aspect of the business of the Companies, or their respective subsidiaries, affiliates or customers, shall be the sole and exclusive property of the Companies, and the Employee shall make prompt report thereof to the Companies and promptly execute any and all documents reasonably requested to assure the Companies the full and complete ownership thereof.
7.2 All records, files, lists, drawings, documents, equipment and similar items relating to the Companies' business which the Employee shall prepare or receive from the Companies in the course of his employment by the Companies shall remain the Companies' sole and exclusive property. Upon termination of this Agreement the Employee shall return promptly to the Companies all property of the Companies in his possession and the Employee represents and warrants that he will not copy, or cause to be copied, printed, summarized or compiled, any software, documents or other materials originating with and/or belonging to the Companies, including, without limitation, documents or other materials created by the Employee for, or on behalf of, the Companies. The Employee further represents and warrants that he will not retain in his possession any such software, documents or other materials in machine or human readable form.
7.3 This Section 7 shall survive termination of this Agreement.
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8. Outside Activities. During the Term, the Employee shall not, directly or indirectly, either as an officer, director, employee, representative, principal, partner, shareholder, employee, agent or in any other capacity, engage or assist any third party in engaging in any business competitive with the business of the Companies, without the prior written consent of the Companies, which consent may be withheld by the Companies in their sole and absolute discretion. Following his employment with the Companies, the Employee shall not engage in unfair competition with the Companies, aid others in any unfair competition with the Companies, in any way breach the confidence that the Companies have placed in the Employee or misappropriate any proprietary information of the Companies.
9. Reports. The Employee, when directed, shall provide written reports to the Companies with respect to the services provided hereunder.
10. Strict Loyalty. The Employee hereby covenants and agrees to avoid all circumstances and actions that reasonably would place the Employee in a position of divided loyalty with respect to his obligations under this Agreement.
11. Assignment. This Agreement may not be assigned to another party by the Employee without the prior written consent of the Companies, which consent may be withheld by the Companies, in their sole and absolute discretion.
12. Arbitration. In the event of any dispute between the Companies and the Employee concerning any aspect of the employment relationship, including any disputes relating to its termination, all such disputes shall be resolved by binding arbitration before a single neutral arbitrator pursuant to the following terms. This provision shall supersede any prior arbitration agreement, policy or understanding between the parties. The parties intend to revoke any prior arbitration agreement.
12.1 Claims Covered by the Agreement. The Employee and the Companies mutually consent to the resolution by final and binding arbitration of all claims or controversies (“claims”) that the Companies may have against the Employee or that the Employee may have against the Companies or against their officers, directors, partners, employees, agents, pension or benefit plans, administrators, or fiduciaries, franchisors, or any parent, subsidiary or affiliated companies or corporation (collectively referred to for purposes of this Section 12 as “Companies’ Parties”), relating to, resulting from, or in any way arising out of Employee’s employment relationship with Companies and/or the termination of Employee’s employment relationship with Companies, to the extent permitted by law. The claims covered by this Agreement include, but are not limited to, claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); tort claims; claims for discrimination and harassment (including, but not limited to, race, sex, religion, national origin, age, marital status or medical condition, disability, or sexual orientation); claims for benefits (except where an employee benefit or pension plan specifies claims procedures different from the ones described in this Section 12); claims for breach of any duties or obligations; and claims for violation of any public policy, federal, state or other governmental law, statute, regulation or ordinance, except claims excluded in the following section.
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12.2 Claims Not Covered by the Agreement. Claims the Employee may have for workers’ compensation (excluding discrimination claims under workers’ compensation statutes) or unemployment compensation benefits are not covered by this Arbitration section. Claims the Companies’ Parties may have for injunctive relief pursuant to Section 15.11 of this Agreement are not covered by this Arbitration section.
12.3 Required Notice of Claims and Statute of Limitations. Arbitration may be initiated by the Employee by serving or mailing a written notice to the Chairman of the Board of each of the Companies. Arbitration may be initiated by the Companies’ Parties by serving or mailing a written notice to the Employee at his last known address. The notice shall identify and describe the nature of all claims asserted and the facts upon which such claims are based. The written notice shall be served or mailed within the applicable statute of limitations period set forth by federal or state law.
12.4 Arbitration Procedures.
(a) After demand for arbitration has been made by serving written notice under the terms of Section 12.3 of this Agreement, the party demanding arbitration shall file a demand for arbitration with the office of Judicial Arbitration and Mediation Services (“JAMS”) located in Los Angeles, California. The arbitrator shall be selected from the JAMS panel and the arbitration shall be conducted pursuant to JAMS policies and procedures. All rules governing the arbitration shall be the rules as set forth by JAMS. If the dispute is employment-related, the dispute shall be governed by JAMS’ then-current version of the national rules for the resolution of employment disputes. JAMS’ then-applicable rules governing the arbitration may be obtained from JAMS’ website which currently is www.jamsadr.com.
(b) The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of California, or federal law, or both, as applicable to the claim(s) asserted. The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable.
(c) Either party may file a motion for summary judgment with the arbitrator. The arbitrator is entitled to resolve some or all of the asserted claims through such a motion. The standards to be applied by the arbitrator in ruling on a motion for summary judgment shall be the applicable laws as specified in Section 12.4(b) of this Agreement.
(d) Discovery shall be allowed and conducted pursuant to the then-applicable arbitration rules of JAMS, provided that the parties shall be entitled to discovery sufficient to adequately arbitrate their claims and defenses. The arbitrator is authorized to rule on discovery motions brought under the applicable discovery rules.
12.5 Arbitration Decision. The arbitrator’s decision will be final and binding. The arbitrator shall issue a written arbitration decision revealing the essential findings and conclusions upon which the decision and/or award is based. A party’s right to appeal the decision is limited to grounds provided under applicable federal or California law.
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12.6 Place of Arbitration. The arbitration will be at a mutually convenient location in Los Angeles, California. If the parties cannot agree upon a location, then the arbitration will be held at a JAMS’ office in Los Angeles.
12.7 Representation, Fees and Costs. Each party may be represented by an attorney or other representative selected by the party. Each party shall be responsible for its own attorneys’ or representative’s fees. However, if any party prevails on a statutory claim that affords the prevailing party’s attorneys’ fees, or if there is a written agreement providing for fees, the arbitrator may award reasonable fees to the prevailing party. The Companies shall be responsible for the arbitrator’s fees and costs to the extent they exceed any fee or cost that the Employee would be required to bear if the action were brought in court.
12.8 Waiver Of Jury Trial/Exclusive Remedy. The Employee and the Companies knowingly and voluntarily waive any constitutional right to have any dispute between them decided by a court of law and/or by a jury in court.
13. The Companies' Bylaws, Directions, Policies, Practices, Rules, Regulations and Procedures. The Employee agrees to become and remain thoroughly familiar with each and all of the Companies' bylaws, directions, policies, practices, rules, regulations and procedures that relate to the employment and/or to any of Employee's duties and/or responsibilities as an employee of the Companies and to abide fully and by each and all of such bylaws, directions, policies, practices, rules, regulations and procedures. During the Term, the Employee shall be fully bound by and employed pursuant to each and all of the Companies' bylaws, directions, policies, practices, rules, regulations and procedures as now in effect or as may be implemented, modified or otherwise put into effect by the Companies during the term of employment, regardless of whether such bylaws, directions, policies, practices, rules, regulations and procedures are oral or are set forth in any manual, handbook or other document, and it is solely the responsibility of Employee to become and remain fully aware of and familiar with each and all such directions, policies, practices, rules, regulations and/or procedures. In the event of any conflict between any provision of this Agreement and any provision of the Companies' directions, policies, practices, rules, regulations and/or procedures, the provisions of this Agreement govern for any and all purposes whatsoever.
14. Indemnification. The Companies shall indemnify and hold the Employee harmless from any and all claims, demands, judgments, liens, subrogation or costs incurred by the Employee with respect to any shareholder derivative action or other claims or suits against the Companies and/or their respective Boards of Directors by individuals, firms or entities not a party to this Agreement to the maximum extent permitted under California law.
15. General.
15.1 Further Documents. Each party shall execute and deliver all further instruments, documents and papers, and shall perform any and all acts necessary reasonably requested by the other party, to give full force and effect to all of the terms and provisions of this Agreement.
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15.2 Successors and Assigns. Except where expressly provided to the contrary, this Agreement, and all provisions hereof, shall inure to the benefit of and be binding upon the parties hereto, their successors in interest, assigns, administrators, executors, heirs and devises.
15.3 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If any provision of this Agreement, as applied to any party or to any circumstance, shall be found by a court or arbitrator to be invalid or unenforceable under applicable law, such provision will be ineffective only to the extent of such invalidity or unenforceability, without invalidating or rendering unenforceable the remainder of such provision and any such invalidity or unenforceability shall in no way affect any other provision of this Agreement, the application of any provision in any other circumstance or the validity or enforceability of this Agreement.
15.4 Notices. All notices or demands shall be in writing and shall be served personally, telegraphically or by express or certified mail. Service shall be deemed conclusively made at the time of service if personally served, 24 hours after deposit thereof in the United States mail properly addressed and postage prepaid, return receipt requested, if served by express Mail, and five days after deposit thereof in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail. Any notice or demand to the Companies shall be given to:
Simulations Plus, Inc.
42505 10th Street West
Lancaster, CA 93534-7059
Attention: Compensation Committee
and any notice or demand to the Employee shall be given to:
Mr. Thaddeus H. Grasela, Jr.
1780 Wehrle Drive, Suite 110
Buffalo, NY 14221-7000
Any party may, by virtue of a written notice in compliance with this Section, alter or change the address or the identity of the person to whom any notice, or copy thereof, is to be sent.
15.5 Waiver. A waiver by any party of any of the terms and conditions of this Agreement in any one instance shall not be deemed or construed to be a waiver of the term or condition for the future, or of any subsequent breach thereof or of any other term or condition thereof. Any party may waive any term, provision or condition included for the benefit of that party. Any and all waivers shall be in writing.
15.6 Construction. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and fully to be performed therein without regard to its principles of choice of law or conflicts of law. In all matters of interpretation, whenever necessary to give effect to any provision of this Agreement, each gender shall include the others, the singular shall include the plural, the plural shall include the singular and the terms “and” and “or” may be used interchangeably as the context so requires or implies. The title of the sections of this Agreement are for convenience only and shall not in any way affect the interpretation of any provision or condition of this Agreement. All remedies, rights, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of any party.
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15.7 Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter contained herein and supersedes all prior and collateral agreements, understandings, statements and negotiation of the parties. Each party acknowledges that no representations, inducements or promises, oral or written, with reference to the subject matter hereof have been made other than as expressly set forth herein. This Agreement cannot be changed, rescinded or terminated orally.
15.8 Third Party Rights. The parties hereto do not intend to confer any rights or remedies upon any person other than the parties hereto and those referred to in Section 15.2 hereof so long as any such assignment by Employee was approved by the Company as provided in Section 11 hereof.
15.9 Attorneys' Fees. In the event of any litigation between the parties respecting or arising out of this Agreement, the prevailing party shall be entitled to recover reasonable legal fees and costs, whether or not the litigation proceeds to final judgment or determination.
15.10 Place of Litigation. Any litigation between the parties shall occur in the County of Los Angeles, California.
15.11 Injunctive Relief. Since a breach of the provisions of Sections 6, 7, and 8 of this Agreement cannot adequately be compensated by monetary damages, the Company shall be entitled, in addition to any other right and remedy set forth in this Agreement or available to it at law, in equity or otherwise, to seek and obtain from any court of competent jurisdiction immediate temporary, preliminary and permanent injunctive relief restraining such breach or threatened breach, without the posting of any bond or other security therefor, against the Employee and against each and every other person, firm company, joint venture, and/or other entity concerned with and/or acting in concert with the Employee. Any such requirement of bond or other security is hereby expressly waived by the Employee, and the Employee expressly acknowledges that in the absence of such waiver, a bond or other security may be required by the court. The Employee hereby consents to the issuance of such injunction and expressly and knowingly waives any claim or defense that any adequate remedy at law might exist for any such breach or threatened breach. The Employee agrees that the provisions of Sections 6, 7, and 8 of this Agreement are necessary and reasonable to protect the Companies in the conduct of the business of the Companies.
15.12 Counterparts. This Agreement may be executed in counterparts which, taken together, shall constitute the whole of the agreement between the parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS THEREOF, the parties have executed this Agreement as of the day and year first above written.
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Company:
SIMULATIONS PLUS, INC.
By: /s/
Walter S. Woltosz |
Employee:
/s/Thaddeus H. Grasela, Jr. Thaddeus H. Grasela, Jr.
|
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COGNIGEN ACQUISITION, INC. By: /s/
Walter S. Woltosz
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[Signature Page to Employment Agreement]
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Exhibit 99.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is made as of this 28th day of August, 2014, 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 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.
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 that 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 that would divert his attention from the duties assigned to him by the Company by this Agreement at a minimum level of 60% of full-time employment.
2. Employment and Duties.
The Company employs the Employee as Chief Executive Officer and the Employee hereby accepts such employment (the “Employment”). The Employee agrees that he shall devote a minimum of 60% of his productive time, ability, attention, energy, knowledge, and skill solely and exclusively to performing all duties as Chief Executive Officer of the Company as assigned or delegated to him by the directors and executive officers of the Company.
3. Term.
Subject to the provisions of Section 5, the term of this Agreement shall extend until August 31, 2015, commencing on September 1, 2014.
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4. Compensation.
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 eighty thousand dollars ($180,000.00) 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.
4.2. Grant of Option. The Employee shall be granted an option under the 2007 Stock Option Plan, exercisable for five (5) years, to purchase six (6) shares of Common Stock for each one thousand dollars ($1,000) of net income before taxes that the Company earns at the end of each fiscal year (up to a maximum of twelve thousand [12,000] options over the term of this Agreement) at an exercise price 10% over the market value per share as of the date of grant. The maximum number of options under this grant shall be adjusted accordingly for any stock split or reverse split after the date of this agreement. Option grants under this agreement shall be issued within ten days after the filing of the annual report (10-K) for the fiscal year for which the option is granted.
4.3 Performance Bonus. The Employee shall be paid a Performance Bonus in an amount equal to five percent (5%) of the Company’s net income before taxes of the previous fiscal year, not to exceed $36,000.
4.4. Benefits. Employer shall provide to Employee at the cost to Employer of 60% of actual costs, 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 paid time off (“PTO”) 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.
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, or as sooner agreed by both Employee and Company in the event this Agreement is superseded by a new agreement. Upon such termination, the Company shall have no further liability to the Employee for any payment, compensation or benefit whatsoever under this Agreement.
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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.
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. Termination of employment shall have no effect on the Employee’s position(s) on the Company’s board of directors. The board of directors and shareholders will determine the Employee’s eligibility to continue to serve as a member of the board.
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6. Restrictions on Use or Disclosure of Confidential Matters, Proprietary Information and Trade Secrets.
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 publish, communicate, divulge, disclose or use any of such information which has been reasonably designated by the Company as proprietary or confidential or which from the surrounding circumstances the Employee knows, or has good reason to know, or should reasonably know, ought to be treated by the Employee as proprietary or confidential without the prior written consent of the Company, which consent may not be unreasonably withheld by the Company.
6.2. In the course of his employment for the Company, Employee will develop a personal relationship with the Company’s customers and knowledge of those customers’ affairs and requirements which may constitute the Company’s only contact with such customers. Employee consequently agrees that it is reasonable and necessary for the protection of the goodwill and business of the Company that Employee make the covenants contained herein. Accordingly, Employee agrees that while he is in the Company’s employ and for a one (1) year period after the termination of such employment for any reason whatsoever, he will not directly or indirectly:
(a) attempt in any manner to solicit from any customer (except on behalf of the Company) business of the type performed by the Company or to persuade any customer of the Company to cease to do business or reduce the amount of business which any such customer has customarily done or contemplates doing with the Company, whether or not the relationship with the Company and such customer was originally established in whole or in part through Employee’s efforts; or
(b) engage in any business as, or own an interest in, directly or indirectly, any individual proprietorship, partnership, corporation, joint venture, trust, or any other form of business entity if such business form or entity is engaged in the business in which the Company is engaged;
(c) render any services of the type rendered by the Company to or for any customer of the Company;
(d) employ or attempt to employ or assist anyone else to employ any person who is then or at any time during the preceding year in the Company’s employ.
This entire Section 6 shall survive termination of this Agreement.
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7. Company Property.
7.1. Any patents, inventions, discoveries, applications or processes, software and computer programs devised, planned, applied, created, discovered or invented by the Employee in the course of the engagement under this Agreement and which pertain to any aspect of the business of the Company, or its subsidiaries, affiliates or customers, shall be the sole and exclusive property of the Company, and the Employee shall make prompt report thereof to the Company and promptly execute any and all documents reasonably requested to assure the Company the full and complete ownership thereof.
7.2. All records, files, lists, drawings, documents, equipment and similar items relating to the Company’s business which the Employee shall prepare or receive from the Company shall remain the Company’s sole and exclusive property. Upon termination of this Agreement the Employee shall return promptly to the Company all property of the Company in his possession and the Employee represents and warrants that he will not copy, or cause to be copied, printed, summarized or compiled, any software, documents or other materials originating with and/or belonging to the Company, including, without limitation, documents or other materials created by the Employee for, or on behalf of, the Company. The Employee further represents and warrants that he will not retain in his possession any such software, documents or other materials in machine or human readable form.
7.3. This Section 7 shall survive termination of this Agreement.
8. Outside Activities. During the term of this Agreement, the Employee shall devote sixty percent (60%) of his productive time, ability, and attention to the business of the Company. During the term of this Agreement, the Employee shall not, directly or indirectly, either as an officer, director, employee, representative, principal, partner, shareholder, employee, agent or in any other capacity, engage or assist any third party in engaging in any business competitive with the business of the Company, without the prior written consent of the Company, which consent may be withheld by the Company in its sole and absolute discretion. Following his employment with the Company, the Employee shall not engage in unfair competition with the Company, aid others in any unfair competition with the Company, in any way breach the confidence that the Company has placed in the Employee, or misappropriate any proprietary information of the Company.
9. Reports. The Employee, when directed, shall provide written reports to the Company with respect to the services provided hereunder.
10. Strict Loyalty. The Employee hereby covenants and agrees to avoid all circumstances and actions that reasonably would place the Employee in a position of divided loyalty with respect to his obligations under this Agreement.
11. Assignment. This Agreement may not be assigned to another party by the Employee without the prior written consent of the Company, which consent may be withheld by the Company, in its sole and absolute discretion.
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12. Arbitration. Except as otherwise provided herein in Section 15.11, any controversy between the Company and Employee in connection with this Agreement, including, without limitation, any dispute or claim arising from the voluntary or involuntary termination hereof, shall be settled by final and binding arbitration in Los Angeles, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment of such award may be entered in a court of competent jurisdiction. Employee and the Company shall each pay the fees of his or its own attorneys, the expenses of his or its witnesses and all other fees and expenses connected with presenting his or its case at arbitration. All other costs of the arbitration, including, without limitation, the costs of any record or transcript of the arbitration proceedings, administrative fees, the fee for the arbitrator and all other fees and costs shall be borne equally by the Company and Employee.
13. Company Bylaws, Directions, Policies, Practices, Rules, Regulations and Procedures. Employee agrees to become and remain thoroughly familiar with each and all of the Company’s bylaws, directions, policies, practices, rules, regulations and procedures that relate to the employment and/or to any of Employee’s duties and/or responsibilities as an employee of the Company and to abide fully and by each and all of such bylaws, directions, policies, practices, rules, regulations and procedures. During the term of employment, Employee shall be fully bound by and employed pursuant to each and all of the Company’s bylaws, directions, policies, practices, rules, regulations and procedures as now in effect or as may be implemented, modified or otherwise put into effect by the Company during the term of employment, regardless of whether such bylaws, directions, policies, practices, rules, regulations and procedures are oral or are set forth in any manual, handbook or other document, and it is solely the responsibility of Employee to become and remain fully aware of and familiar with each and all such directions, policies, practices, rules, regulations and/or procedures. In the event of any conflict between any provision of this Agreement and any provision of the Company’s directions, policies, practices, rules, regulations and/or procedures, the provisions of this Agreement govern for any and all purposes whatsoever.
14. Indemnification. The Company shall indemnify and hold Employee harmless from any and all claims, demands, judgments, liens, subrogation or costs incurred by Employee with respect to any shareholder derivative action or other claims or suits against the Company and/or its Board of Directors by individuals, firms or entities not a party to this Agreement to the maximum extent permitted under California law.
15. General.
15.1. Further Documents. Each party shall execute and deliver all further instruments, documents and papers, and shall perform any and all acts necessary reasonably requested by the other party, to give full force and effect to all of the terms and provisions of this Agreement.
15.2. Successors and Assigns. Except where expressly provided to the contrary, this Agreement, and all provisions hereof, shall inure to the benefit of and be binding upon the parties hereto, their successors in interest, assigns, administrators, executors, heirs and devises.
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15.3. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If any provision of this Agreement, as applied to any party or to any circumstance, shall be found by a court or arbitrator to be invalid or unenforceable under applicable law, such provision will be ineffective only to the extent of such invalidity or unenforceability, without invalidating or rendering unenforceable the remainder Of such provision and any such invalidity or unenforceability shall in no way affect any other provision of this Agreement, the application of any provision in any other circumstance or the validity or enforceability of this Agreement.
15.4. Notices. All notices or demands shall be in writing and shall be served personally, telegraphically or by express or certified mail. Service shall be deemed conclusively made at the time of service if personally served, at the time that the telegraphic agency confirms to the sender deliver thereof to the addressee if served telegraphically, 24 hours after deposit thereof in the United States mail properly addressed and postage prepaid, return receipt requested, if served by express Mail, and five days after deposit thereof in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail. Any notice or demand to the Company shall be given to:
Simulations Plus, Inc.
42505 10th Street West
Lancaster, CA 93534-7059
(661) 723-7723 Telephone
(661) 723-5524 Facsimile
Attention: Compensation Committee
and any notice or demand to the Employee shall be given to:
Mr. Walter S. Woltosz
42505 10th Street West
Lancaster, CA 93534-7059
(661) 723-7723 Telephone
(661) 723-5524 Facsimile
Any party may, by virtue of a written notice in compliance with this paragraph, alter or change the address or the identity of the person to whom any notice, or copy thereof, is to be sent.
15.5. Waiver. A waiver by any party of any of the terms and conditions of this Agreement in any one instance shall not be deemed or construed to be a waiver of the term or condition for the future, or of any subsequent breach thereof or of any other term or condition thereof. Any party may waive any term, provision or condition included for the benefit of that party. Any and all waivers shall be in writing.
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15.6. Construction. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and fully to be performed therein without regard to its principles of choice of law or conflicts of law. In all matters of interpretation, whenever necessary to give effect to any provision of this Agreement, each gender shall include the others, the singular shall include the plural, the plural shall include the singular and the terms “and” and “or” may be used interchangeably as the context so requires or implies. The title of the sections of this Agreement are for convenience only and shall not in any way affect the interpretation of any provision or condition of this Agreement. All remedies, rights, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of any party.
15.7. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter contained herein and supersedes all prior and collateral agreements, understandings, statements and negotiation of the parties. Each party acknowledges that no representations, inducements or promises, oral or written, with reference to the subject matter hereof have been made other than as expressly set forth herein. This Agreement cannot be changed, rescinded or terminated orally.
15.8. Third Party Rights. The parties hereto do not intend to confer any rights or remedies upon any person other than the parties hereto and those referred to in Section 15.2 hereof so long as any such assignment by Employee was approved by the Company as provided in Section 11 hereof.
15.9. Attorneys’ Fees. In the event of any litigation between the parties respecting or arising out of this Agreement, the prevailing party shall be entitled to recover reasonable legal fees and costs, whether or not the litigation proceeds to final judgment or determination.
15.10. Place of Litigation. Any litigation between the parties shall occur in the County of Los Angeles, California.
15.11. Injunctive Relief. Since a breach of the provisions of Sections 6, 7, 8 and 10 of this Agreement cannot adequately be compensated by monetary damages, the Company shall be entitled, in addition to any other right and remedy set forth in this Agreement or available to it at law, in equity or otherwise, to seek and obtain from any court of competent jurisdiction immediate temporary, preliminary and permanent injunctive relief restraining such breach or threatened breach, without the posting of any bond or other security therefor, against the Employee and against each and every other person, firm company, joint venture, and/or other entity concerned with and/or acting in concert with the Employee. Any such requirement of bond or other security is hereby expressly waived by the Employee, and the Employee expressly acknowledges that in the absence of such waiver, a bond or other security may be required by the court. The Employee hereby consents to the issuance of such injunction and expressly and knowingly waives any claim or defense that any adequate remedy at law might exist for any such breach or threatened breach. The Employee agrees that the provisions of Sections 6, 7, 8 and 10 of this Agreement are necessary and reasonable to protect the Company in the conduct of the business of the Company.
15.12. Counterparts. This Agreement may be executed in counterparts which, taken together, shall constitute the whole of the agreement between the parties.
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IN WITNESS THEREOF, the parties have executed this Agreement as of the day and year first above written.
“Company”
SIMULATIONS PLUS, INC.,
a California corporation
| By: | /s/ John Kneisel | ||
| Title: | Chief Financial Officer | ||
| Date: | August 28, 2014 |
“Employee” WALTER S. WOLTOSZ
| By: | /s/ Walter S. Woltosz | |
| Walter S. Woltosz | ||
| Date: | August 28, 2014 |
Compensation Committee:
| By: | /s/ David Z. D’Argenio | |
| Dr. David Z. D’Argenio | ||
| Date: | August 28, 2014 |
| By: | /s/ David L. Ralph | |
| Dr. David L. Ralph | ||
| Date: | August 28, 2014 |
| By: | /s/ Wayne H. Rosenberger | |
| Wayne H. Rosenberger | ||
| Date: | August 28, 2014 |
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Exhibit 99.3
Simulations Plus
Integrating Science and Software
For Further Information:
Simulations Plus, Inc.
42505 10th Street West
Lancaster, CA 93534-7059
CONTACT:
| Simulations Plus Investor Relations | Hayden IR |
| Ms. Renee Bouche | Mr. Cameron Donahue |
| 661-723-7723 | 651-653-1854 |
| renee@simulations-plus.com | cameron@haydenir.com |
For Immediate Release:
September 2, 2014
Simulations Plus Closes Acquisition of Cognigen Corporation
LANCASTER, CA, September 2, 2014 – Simulations Plus, Inc. (NASDAQ: SLP), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today announced that the Agreement and Plan of Merger (the “Agreement”) with Cognigen Corporation of Buffalo, New York, announced on July 23, 2014, has been closed as of today and the two companies are now merged.
Pursuant to the Agreement, upon closing, Cognigen has become a wholly-owned subsidiary of Simulations Plus and will continue to operate under the Cognigen name. As a result of this accretive acquisition, the total number of Simulations Plus employees is increasing from 30 to 65, and it is expected to add approximately $5 million to the revenues of the combined company in the coming fiscal year.
Walt Woltosz, chairman and chief executive officer of Simulations Plus, Inc. said, “This is an exciting step forward for both Simulations Plus and Cognigen. Dr. Thaddeus (“Ted”) Grasela, the former President of Cognigen, has been appointed President of the combined companies and will join the board of directors to replace Virginia Woltosz, who is retiring from her position on the board. I will remain as Chairman and CEO. At my request, my new contract reduces my time to 60% of my productive time. I look forward to working with Ted and the management teams of both companies, especially devoting my time to products, services, and business development.”
Dr. Grasela added, “I am pleased to be appointed President of the combined companies and I look forward to working with Walt and the board of directors to ensure the continued success of our company. I am excited about the opportunities this merger affords for the future of clinical pharmacology. The recent push by regulatory agencies to use physiologically based pharmacokinetics (PBPK), a strength of Simulations Plus, in clinical pharmacology, a strength of Cognigen, makes the timing of this merger ideal.”
The Agreement
The Agreement called for the merger of Cognigen with and into a wholly-owned subsidiary of Simulations Plus with the subsidiary continuing as the surviving corporation.
Under the terms of the Agreement, Simulations Plus will pay the shareholders of Cognigen total consideration of $7,000,000, comprised of $2,800,000 of cash and $4,200,000 worth of newly-issued, unregistered shares of common stock of Simulations Plus. The Agreement provides that $1,800,000 of the total consideration will be held back for two years to satisfy any indemnifiable claims that may arise pursuant to the terms of the Agreement.
Excel Partners, an investment bank with offices in New York and Los Angeles, acted as exclusive financial advisor to Simulations Plus in connection with this transaction.
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About Simulations Plus, Inc.
Simulations Plus, Inc., is a premier developer of groundbreaking drug discovery and development simulation and modeling software that is licensed to and used in the conduct of drug research by major pharmaceutical, biotechnology, agrochemical, and food industry companies worldwide. Simulations Plus is headquartered in Southern California and trades on the NASDAQ Capital Market under the symbol “SLP.” For more information, visit our Web site at www.simulations-plus.com.
About Cognigen Corporation
Cognigen Corporation was founded in 1993 in Buffalo, New York and has grown to become one of the leading providers of clinical trial data analysis. The services of the company are well-recognized as providing analysis and reports that are tailored to the expectations of regulatory agencies so that reports are submitted in a manner that minimizes follow-up questions from regulators, saving sponsors considerable time and money in getting new pharmaceutical products to market. More information is available on the company’s Web site at www.cognigencorp.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 – With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, our ability to properly manage the new combined company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports as filed with the U.S. Securities and Exchange Commission.
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