EMPLOYMENT AGREEMENT
EXHIBIT
10.73
THIS
EMPLOYMENT AGREEMENT
is dated
as of January 18, 2007, between Imaging
Diagnostic Systems, Inc.,
a
Florida corporation (the “Company”), and
Xxxxxxx X. Xxxxxx (the
“Executive”).
WITNESSETH:
WHEREAS,
the
Company is engaged in the business of developing laser-based medical optical
imaging devices; and
WHEREAS,
the
Company has the intent to market and sell its products and services to clients
and potential clients throughout the world; and
WHEREAS,
the
Company wishes to continue to employ the Executive as its Chief Executive
Officer, charged with all the responsibilities and duties as set forth in the
Company’s bylaws for both the CEO and President; and
WHEREAS,
the
Company wishes for the Executive to continue to serve as a member of its Board
of Directors; and
WHEREAS,
in the
course of the Executive’s employment, the Executive will continue to have access
to and acquire knowledge of valuable trade secrets, confidential information
and
other proprietary information belonging and relating to the Company and its
business, and which the Company has a legitimate interest in protecting; and
WHEREAS,
the
Company and Executive are willing to continue the employment, subject to the
terms and conditions contained in this Employment Agreement (the
“Agreement”);
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants set forth in this
Agreement, and intending to be legally bound, the Company and the Executive
agree as follows:
1. EMPLOYMENT.
The
Company hereby continues the employment of the Executive and the Executive
hereby accepts employment upon the terms and condition hereinafter set forth.
For so long as the Executive is employed hereunder, the Company shall nominate
the Executive for reelection to its Board of Directors at each annual meeting
of
shareholders and the Executive shall serve as a Director if
elected.
2. TERM
& TERMINATION.
(a) Term.
The
Company hereby continues the employment of the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on
January
18, 2007, and ending three years from that date (the “Term”). All Company
obligations under this Agreement shall cease upon expiration of the Term, except
for those stock options which have been vested.
(b) Termination
without Cause.
The
Company may terminate the Executive’s employment without cause. Such termination
will become effective upon the date specified in the termination notice,
provided that such date is at least 60 days from the date of such notice. In
the
event of such termination without cause:
(i) The
Company will continue to pay the Executive his salary pursuant to Section 3(a)
for 24 months or through the expiration of the Term, whichever is
longer.
(ii) The
Company will continue to maintain through the expiration of the Term, for the
benefit of the Executive, the employee benefit programs referred to in Section
3(b) as in effect on the date of termination.
(iii) On
the
effective date of termination, all options that were scheduled to vest will
vest
and will remain exercisable for a period of 10 years from the date of this
Agreement.
(iv) The
compensation payments and other consideration to which the Executive is entitled
on termination without cause shall not be diminished or otherwise affected
by
any employment thereafter obtained or income thereafter earned by Executive
nor
will the Company maintain that it is entitled to mitigation of amounts owed
under this section for any reason.
(c) Termination
for Cause.
The
Company may terminate the Executive’s employment at any time for cause by giving
written notice of termination setting forth such cause. Such termination shall
become effective upon the giving of such notice, except that, where the basis
for cause is capable of cure within 30 days, termination based upon cause shall
not become effective unless Executive shall fail to complete such cure within
30
days of receipt of written notice of the existence of such cause. Upon such
termination the Executive shall have no right to compensation, commission,
bonus, benefits or reimbursement pursuant to this Agreement, for any period
subsequent to the effective date of termination. Further, upon termination
for
cause, all of the Executive’s unvested stock options shall terminate. For
purposes of this section, “cause” shall mean: (1) the Executive is convicted of
a felony; (2) the Executive, in carrying out his duties hereunder, commits
gross
negligence or willful misconduct resulting, in either case, in material harm
to
the Company; (3) the Executive misappropriates Company funds or otherwise
defrauds the Company; (4) the Executive materially breaches any provision of
this Agreement; or (5) the Executive materially fails to perform his duties
under section 4 resulting in material harm to the Company.
(d) Death
or Disability.
Upon
the death or disability of the Executive, the Executive shall be entitled to
and
the Company will pay the Executive’s salary from the date of death or from the
date of disability for six months or through the end of the Term, whichever
is
2
longer.
(For purposes of this Section, “disability” shall mean that for a period of six
months in any 12-month period the Executive is incapable of substantially
fulfilling his duties because of physical, mental or emotional incapacity
arising from injury, sickness or disease.) Should the Executive be rendered
disabled, the Company will continue to maintain for the benefit of the Executive
the employee benefit programs referred to in Section 3(b) that were in effect
on
the date of the disability.
(e) Special
Termination.
In the
event that (i) the Executive, with or without a change in title or formal
corporate action, shall no longer exercise all of his customary duties and
responsibilities and shall no longer possess substantially all the authority
customary for a CEO in a publicly-traded company; (ii) the Company materially
breaches this Agreement or the performance of its duties and obligations
hereunder; or (iii) any entity or person not now an executive officer of the
Company becomes either individually or as part of a group the beneficial owner
of 20% or more of the Company’s common stock, the Executive, by written notice
to the Company, may elect to deem the Executive’s employment hereunder to have
been terminated by the Company without cause under Section 2(b) hereof, in
which
event the Executive shall be entitled to the compensation provided for in
Section 2(b).
(f) Voluntary
Termination.
The
Executive, on 30 days prior written notice to the Company, may terminate his
employment voluntarily. Upon such termination, the Company will pay the
Executive’s compensation through the date of such termination. After such date,
the Executive shall no longer be entitled to receive any compensation,
reimbursement or benefits, and all unvested stock options shall terminate upon
termination of the Executive’s employment.
(g) Continuing
Effect. Notwithstanding
any termination of this Agreement at the end of the Term or otherwise, the
provisions of Sections 6 - 11 shall remain in full force and effect and the
provisions of these Sections shall be binding upon the legal representatives,
heirs, successors and assigns of the Executive.
3. COMPENSATION.
(a) The
Company will pay the Executive an annual base salary of $260,000 per annum
in
equal semi-monthly installments. The salary will be reviewed annually, but
at a
minimum will increase (but not decrease) by the increase in the Consumer Price
Index-All Urban Wage Earnings (or similar index) from year-to-year.
(b) During
the term of his employment, the Executive shall be entitled to participate
in
employee benefits plans or programs of the Company, if any, to the extent the
Executive is eligible to participate thereunder, including the Comprehensive
Group Insurance Program maintained by the Company, paid by the Company for
the
Executive and his spouse.
(c) The
Company will reimburse or advance funds to the Executive for all reasonable
travel, entertainment and miscellaneous expenses incurred in connection with
the
performance of duties under this Agreement, provided that the Executive properly
accounts for such expenses to the Company in accordance with the Company’s
practices.
3
(d) The
Company shall provide the Executive with a $500 per month car allowance and
a
cellular phone and major credit card for use on Company business.
(e) The
Executive shall receive an option to purchase up to an aggregate of 3,000,000
shares of the Company’s common stock at an exercise price of $.09 per share (the
closing price on the date hereof). The option shall vest as
follows:
|
(i)
|
Options
to purchase up to 500,000 shares may be exercised after 6 months
(July 18,
2007) of continuous employment.
|
|
|
(ii)
|
Options
to purchase up to 500,000 shares may be exercised after 12 months
(January18, 2008) of continuous employment.
|
|
|
(iii)
|
Options
to purchase up to 500,000 shares may be exercised after 18 months
(July
18, 2008) of continuous employment.
|
|
|
(iv)
|
Options
to purchase up to 500,000 shares may be exercised after 24 months
(January
18, 2009) of continuous employment.
|
|
|
(v)
|
Options
to purchase up to 500,000 shares may be exercised after 30 months
(July
18, 2009) of continuous employment.
|
|
|
(vi)
|
Options
to purchase up to 500,000 shares may be exercised after 36 months
(January
18, 2010) of continuous employment.
|
During
the Term of this Agreement, the Company shall register from time to time
pursuant to a registration statement(s) on Form S-8 that number of shares
of
common stock as shall be sufficient to cover Executive’s option granted
hereunder. In the event that the Company experiences a Change of Control
(as
defined in the Executive’s stock option agreement of even date) then all options
will vest immediately. Also, in the event the Executive’s employment is
terminated without cause, all options will vest immediately. In the event
the
Executive’s employment is terminated with cause, only that portion of the option
exercisable at the time of such termination of employment may thereafter
be
exercised, and then only for three months after said termination or until
the
expiration of the option, whichever is sooner.
(f) The
Executive will be entitled to nine paid holidays and six weeks of vacation
for
each 12-month period without loss of compensation or other benefits to which
he
is entitled under this Agreement, to be taken at such times as the Executive
may
select and the affairs of the Company may permit.
4. DUTIES.
(a) General
Duties.
The
Executive shall be employed as the Chief Executive Officer, with duties and
responsibilities that are customary for such position, subject to the direction
of the Board of Directors and as directed by the Company’s by-laws for both the
CEO and President. The Executive will use the standard of care befitting of
such
an executive in performing duties and in discharging responsibilities pursuant
to this Agreement, which duties and responsibilities shall be discharged
competently, carefully, and faithfully.
4
(b) Corporate
Code of Conduct.
The
Executive agrees to adhere to the Company’s Corporate Code of
Conduct.
(c) Extent
of Services.
The
Executive will devote all of his time, attention and energies during normal
business hours (exclusive of periods of sickness and disability and of such
normal holiday and vacation periods as have been established by the Company)
to
the affairs of the Company. The Executive will not enter the employ of, or
serve
as a consultant to, or in any way perform any services with or without
compensation to any person, business or organization without the prior consent
of the board of directors of the Company; provided, that the Executive shall
be
permitted to devote a limited amount of time, without compensation, to
charitable or similar organizations.
5. PLACE
OF PERFORMANCE.
The
Executive hereby acknowledges that the Company’s existing and potential clients
are located throughout the world and that the Company is actively engaged in
marketing and selling its products and services to such clients throughout
the
world.
6. NON-DISCLOSURE
OF CONFIDENTIAL INFORMATION.
The
Executive acknowledges that, during his employment, he will learn and will
have
access to confidential information regarding the Company and its affiliates,
including without limitation (i) proprietary or secret plans, designs,
processes, programs, documents, software, agreements or material relating to
the
business, products, services or activities of the Company and its affiliates
and
(ii) market reports, customer investigations, clinical data, scientific or
engineering research, customer lists and/or similar information that is
proprietary information of the Company or its affiliates (collectively,
“Confidential Business and Technical Information”). The Executive recognizes and
acknowledges that the Confidential Business and Technical Information, as it
may
exist from time to time, represents valuable, special and unique assets of
the
Company access to and knowledge of which are essential to the performance of
the
Executive’s duties hereunder.
The
Executive will not, during or after the term of his employment by the Company,
in whole or in part, disclose any such Confidential Business and Technical
Information to any person, firm, corporation, association or entity for any
reason or purpose whatsoever, nor shall the Executive make use of any such
Confidential Business and Technical Information for his own purposes or for
the
benefit of any person, firm, corporation or entity except the Company under
any
circumstances during or after the term of his employment, provided that after
the term of his employment these restrictions shall not apply to such secrets,
information and processes which are then in the public domain provided that
the
Executive was not responsible, directly or indirectly, for such secrets,
information or processes entering the public domain without the Company’s
consent.
In
the
event an action is instituted and prior knowledge is an issue, it shall be
the
obligation of the Executive to prove by clear and convincing evidence that
the
Confidential Business and Technical Information disclosed was in the public
domain, was already known by the recipient, or was developed independently
by
the recipient. The Executive agrees to hold as
5
the
Company’s property all memoranda, books, papers, letters, formulas and other
data, and all copies thereof and therefrom, in any way containing Confidential
Business and Technical Information or otherwise relating to the Company’s
business and affairs, whether made by him or otherwise coming into his
possession, and upon termination of his employment, or on demand of the Company,
at any time, to deliver the same to the Company.
7. NON-COMPETITION
AGREEMENT.
(a) The
Executive acknowledges and agrees that, pursuant to Florida Statutes Section
542.335, based on having access to and acquiring knowledge of highly sensitive
and valuable trade secrets, and confidential or proprietary information
belonging or relating to the Company, the Executive would be in a position
to
cause serious and irreparable harm to the Company in the event that, following
the termination of his employment hereunder, the Executive were to compete
with
or be involved in an enterprise which competes with the Company, engages in
the
same business as the Company, or performs research and development in the field
of medical optical imaging.
(b) Until
termination of his employment and for a period of 24 months commencing on the
date of termination, the Executive, directly or indirectly, in association
with
or as a stockholder, director, officer, consultant, executive, partner, joint
venturer, member or otherwise of or through any person, firm, corporation,
partnership, association or entity, covenants that the Executive will not
compete with the Company or any of its affiliates in the design, manufacture,
construction, offer, sale or marketing of products or services that are
competitive with the products or services offered by the Company during such
period, within the United States or anywhere in the world. The Executive
covenants and agrees that during his employment and for a period of 24 months
immediately following the termination of such employment, the Executive will
not, either individually or in partnership or jointly or in conjunction with
any
person, firm, business, corporation, partnership, joint venture, entity,
syndicate or association, as an executive, principal, agent, officer, director,
consultant, advisor, distributor, dealer, contractor, trustee, lender,
shareholder or in any manner or capacity whatsoever, directly or indirectly,
be
employed by, render services to, carry on or be engaged in, or be concerned
with
or be interested in or advise, lend money to, guarantee the debts or obligations
of, or in any manner participate in the management, operation or control of
any
business which is directly competitive with the business of the Company, engages
in the same business as the Company or performs research and development in
the
medical optical imaging field with any entity located anywhere in the
world.
(c) For
the
purposes of this paragraph a business shall be deemed to be in “direct
competition” or “directly competitive” with the Company if such business is
engaged in developing, manufacturing, marketing, selling, or distributing
medical optical imaging devices.
8. NON-SOLICITATION.
The
Executive covenants and agrees that while he is employed by the Company and
for
a period of 24 months immediately following the termination of such employment,
he will not, directly or indirectly, in any manner whatsoever, on his own
behalf, or on behalf of any person, firm, business, corporation, partnership,
joint venture, entity,
6
syndicate
or association solicit, induce or cause, or attempt to induce or cause, any
person who is then an employee of or consultant to the Company to cease
providing services to the Company.
9. REASONABLENESS
OF CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION OBLIGATION AND
COVENANTS.
(a) The
Executive hereby acknowledges and confirms that the obligations and covenants
set out in the above paragraphs are reasonable and necessary to protect the
legitimate interests of the Company. Without limiting the generality of the
foregoing, the Executive hereby acknowledges and confirms that given, among
other things, the nature and international scope of the Company’s operations and
of the employment duties to be performed by the Executive hereunder, the
geographic scope and duration of the restrictions set forth above are reasonable
and necessary to protect the legitimate interests of the Company.
(b) The
Executive further acknowledges and agrees that these obligations and covenants
will not preclude him from becoming gainfully employed following their
termination of his employment in his profession.
10. INVENTIONS.
(a) The
Executive hereby sells, transfers and assigns to the Company or to any person
or
entity designated by the Company, all of the entire right, title and interest
of
the Executive in and to all inventions, ideas, disclosures and improvements,
whether patented or unpatented, and copyrightable material, made or conceived
by
the Executive, solely or jointly, in whole or in part, during the term hereof
which (i) relate to methods, apparatus, designs, products, processes or devices
sold, leased, used or under construction or development by the Company or any
subsidiary, or (ii) otherwise relate to or pertain to the business, functions
or
operations of the Company or any subsidiary, or (iii) arise wholly or partly
from the efforts of the Executive during the term hereof. The Executive shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and, whether during the term
hereof or thereafter, the Executive shall execute and deliver to the Company
such formal transfers and assignments and such other papers and documents as
may
be required of the Executive at the Company’s expense to permit the Company or
any person or entity designated by the Company to file and prosecute the patent
applications and, as to copyrightable material, to obtain copyright thereon.
Any
invention made by the Executive within one year following the termination of
employment shall be deemed to fall within the provisions of this Section unless
proven by the Executive to have been first conceived and made following such
termination.
(b) No
Payment.
The
Executive acknowledges and agrees that no separate or additional payment or
compensation will be required to be made to him in consideration of his
undertakings in this Section.
7
11. EQUITABLE
RELIEF.
(a) The
Company and the Executive recognize that the services to be rendered under
this
Agreement by the Executive are special, unique and of extraordinary character,
and that in the event of the breach by the Executive of the terms and conditions
of this Agreement or if the Executive, without the prior consent of the Board
of
Directors of the Company, shall leave his employment for any reason and take
any
action in violation of Section 6, Section 7 or Section 8, the Company will
be
entitled to institute and prosecute proceedings in any court of competent
jurisdiction referred to in Section 11(b) below, to enjoin the Executive from
breaching the provisions of Section 6, Section 7, or Section 8. In such action,
the Company will not be required to plead or prove irreparable harm or lack
of
an adequate remedy at law. Nothing contained in this Section 11 shall be
construed to prevent the Company from seeking such other remedy as the Company
may elect in any arbitration proceeding based on any breach of this Agreement
by
the Executive.
(b) Any
proceeding or action for equitable relief must be commenced in state court
in
Broward County, Florida. The Executive and the Company irrevocably and
unconditionally submit to the jurisdiction of such court and agree to take
any
and all future action necessary to submit to the jurisdiction of such court.
The
Executive and the Company irrevocably waive any objection that they now have
or
hereafter may have to the laying of venue of any suit, action or proceeding
brought in such court for equitable relief and further irrevocably waive any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum.
12. ASSIGNMENT. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company,
provided that any such successor or assign shall acquire all or substantially
all of the assets and business of the Company. The Executive's obligations
hereunder may not be assigned or alienated and any attempt to do so by the
Executive will be void.
13. SEVERABILITY.
(a) The
Executive expressly agrees that the character, duration and geographical scope
of the provisions set forth in this Agreement are reasonable in light of the
circumstances, as they exist on the date hereof. Should a decision, however,
be
made at a later date by a court of competent jurisdiction that the character,
duration or geographical scope of such provisions is unreasonable, then it
is
the intention and the agreement of the Executive and the Company that this
Agreement shall be construed by the court in such a manner as to impose only
those restrictions on the Executive's conduct that are reasonable in the light
of the circumstances and as are necessary to assure to the Company the benefits
of this Agreement. If, in any judicial proceeding, a court shall refuse to
enforce all of the separate covenants deemed included herein because taken
together they are more extensive than necessary to assure to the Company the
intended benefits of this Agreement, it is expressly understood and agreed
by
the parties hereto that the provisions of this Agreement that, if eliminated,
would permit the
8
remaining
separate provisions to be enforced in such proceeding shall be deemed
eliminated, for the purposes of such proceeding, from this
Agreement.
(b) If
any
provision of this Agreement otherwise is deemed to be invalid or unenforceable
or is prohibited by the laws of the state or jurisdiction where it is to be
performed, this Agreement shall be considered divisible as to such provision
and
such provision shall be inoperative in such state or jurisdiction and shall
not
be part of the consideration moving from either of the parties to the other.
The
remaining provisions of this Agreement shall be valid and binding and of like
effect as though such provision were not included.
14. NOTICES
AND ADDRESSES. All
notices, offers, acceptance and any other acts under this Agreement (except
payment) shall be in writing, and shall be sufficiently given if delivered
to
the addressee in person, by Federal Express or similar receipted delivery,
by
facsimile delivery or, if mailed, postage prepaid, by certified mail, return
receipt requested, as follows:
|
To
the Company:
|
Imaging
Diagnostic Systems, Inc.
|
|
0000
X.X. 00xx
Xxxxx
|
|
|
Xxxxxxxxxx,
Xxxxxxx 00000
|
|
|
To
the Executive:
|
Xxxxxxx
Xxxxxx
|
|
0000
X.X. 00xx
Xxxxx
|
|
|
Xxxxxxxxxx,
Xxxxxxx 00000
|
or
to
such other address as either of them, by notice to the other may designate
from
time to time. The transmission confirmation receipt from the sender's facsimile
machine shall be conclusive evidence of successful facsimile delivery. Time
shall be counted to, or from, as the case may be, the delivery in person or
by
mailing.
15. COUNTERPART. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the same
instrument. The execution of this Agreement may be by actual or facsimile
signature.
16. ARBITRATION. Except
for any controversy or claim seeking equitable relief as provided in Section
11
of this Agreement, any controversy or claim arising out of or relating to this
Agreement, or to the interpretation, breach or enforcement thereof or any other
dispute between the parties, shall be submitted to one arbitrator and settled
by
arbitration in Fort Lauderdale, Florida, in accordance with the commercial
arbitration rules of the American Arbitration Association in effect at such
time. Any award made by such arbitrator shall be final, binding and conclusive
on all parties hereto for all purposes, and judgment may be entered thereon
in
any court having jurisdiction thereof.
17. ATTORNEYS
FEES.
In the
event that there is any controversy or claim arising out of or relating to
this
Agreement, or to the interpretation, breach or enforcement thereof, and any
action or proceeding is commenced to enforce the provisions of this Agreement,
whether through litigation or arbitration, the prevailing party shall be
entitled to recover from the non-prevailing party his/its reasonable attorney’s
fees, costs and expenses incurred at all levels.
18. GOVERNING
LAW. This
Agreement and any dispute, disagreement, or issues of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided therein or performance shall be governed
or
interpreted according to the internal laws of the State of Florida without
regard to choice of law considerations.
19. ENTIRE
AGREEMENT.
This
Agreement constitutes the entire Agreement between the parties and supersedes
all prior oral and written agreements between the parties with respect to the
employment of the Executive; provided, however, that all pre-existing option
agreements between the Company and the Executive shall remain in full force
and
effect. Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing signed by
the
party or parties against whom enforcement or the change, waiver, discharge
or
termination is sought.
20. ADDITIONAL
DOCUMENTS.
The
parties hereto shall execute and deliver such additional instruments as may
be
reasonably required in order to carry out the purpose and intent of this
Agreement and to fulfill the obligations of the parties hereunder.
21. SECTION
AND PARAGRAPH HEADINGS.
The
section and paragraph headings in this Agreement are for reference purposes
only
and shall not affect the meaning or interpretation of this
Agreement.
22. WAIVER
OF BREACH.
A waiver
by the Company or the Executive of a breach of any provision of the Agreement
by
the other party shall not operate or be construed as a waiver of any subsequent
breach by the other party.
[Remainder
of page intentionally left blank]
9
IN
WITNESS WHEREOF,
the
Company and the Executive have executed this Agreement as of the 18th day of
January, 2007.
|
IMAGING
DIAGNOSTIC SYSTEMS, INC.
By:
/s/ Xxx Xxxxxx
Xxx
Xxxxxx, Co-Chairman of the Board
|
EXECUTIVE
By:
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx
X. Xxxxxx, Chief Executive Officer
|
10
