AGREEMENT
AGREEMENT dated as of the ____ day of August 1997, by and between Xxxxxx
Xxxxxx, residing at 00000 Xxxxxx Xxxx Xxxx, Xxxx X-00, Xxxxx Xxxxx Xxxxx,
Xxxxxxx 00000 ("Dubbin") and Oak Tree Medical Systems, Inc., having a principal
place of business at 000-00 Xxxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000
(the "Company").
WITNESSETH:
WHEREAS, Dubbin serves as an officer of the Company; and
WHEREAS, Oak Tree and Dubbin are parties to a Stock Option Agreement
dated as of December 3, 1996 (the "Option Agreement"), pursuant to which Dubbin
has been granted options (the "Options") to purchase three hundred seventy five
thousand (375,000) shares of the Company's common stock (the "Option Shares");
and
WHEREAS, the parties desire that Dubbin resign as an officer of the
Company and become a consultant to the Company, and that the Option Agreement be
amended, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. Resignation as Officer. Dubbin hereby resigns as an officer of the
Company effective upon execution of this Agreement.
2. Amendments to Option Agreement. The Option Agreement, a copy of which
is annexed hereto as Exhibit A, is hereby amended as follows:
(a) The last sentence of Section 2.1 is hereby deleted in its
entirety and replaced by the following: "The number and kind of shares issuable
upon exercise of the Options and the Exercise Price shall be adjusted upon the
occurrence of the events and in the manner provided on Exhibit B to this
Agreement".
(b) Section 2.2 of the Option Agreement is hereby deleted in its
entirety and replaced by the following: "The Options shall vest and become
exercisable immediately upon execution of this Agreement.".
(c) Section 2.3 of the Option Agreement is hereby deleted in its
entirety and replaced by the following: "To the extent not therefore exercised,
the Options shall terminate and expire at 5:00 p.m., New York time, ten years
from the date hereof.".
(d) Article 5 of the Option Agreement is hereby amended to the
extent of providing that the Company's address for notices shall be 000-00
Xxxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
(e) Section 6.6 of the Option Agreement is hereby amended by
permitting arbitration thereunder to be brought before the American Arbitration
Association of New York, New York or Miami, Florida. Whether such arbitration
shall be maintained in New York or Florida shall be the choice of the party
instituting the arbitration proceeding.
3. Appointment of Consultant. Oak Tree hereby engages Dubbin or his
designee ("Consultant") and Consultant hereby agrees to render services to the
Company as a management consultant, strategic planner and advisor.
(a) During the term of this Agreement Consultant shall provide
advice to, undertake for and consult with the Company concerning management,
strategic planning, communicating and negotiating with security holders,
corporate organization and structure, identification of business opportunities
and other general corporate and business matters in connection with the
operation of the business of the Company.
(b) In the event Dubbin designates an entity to serve as
Consultant hereunder, such entity shall accept the terms of the consulting
provisions set forth in this Section 3, in writing, and such writing shall
covenant and agree that the consulting services to be provided by Consultant
shall be rendered by Dubbin.
(c) As consideration for its consulting services hereunder, the
Company agrees to compensate Consultant as described in Section 4.
(d) The term of Consultant's consulting services under this
Agreement shall commence on the date hereof and shall continue for a period of
twenty four (24) months. Except as otherwise specifically provided in this
Agreement, no termination of Consultant's consulting services hereunder shall
affect the Company's other obligations under this Agreement, including without
limitation, the Company's obligations under Sections 2, 5 and 7.
(e) Consultant's services under this Section 3 shall terminate
upon the occurrence of any of the following events: (i) the death of Dubbin:
(ii) the disability of Dubbin, which, for purposes hereof shall mean
Consultant's inability, due to the physical or mental impairment of Dubbin, to
perform the consulting services required hereunder for a period of thirty (30)
consecutive days during any consecutive ninety (90) day period; or (iii)
Consultant's failure to perform the consulting duties required hereunder other
than as described in subparagraph (ii) of this paragraph (e). In the event of
the termination of Consultant's services under this Section 3(e), the Company's
obligations under Sections 3 and 4 shall terminate, other than to pay Consultant
all amounts due to it up to the date of termination.
(f) Consultant and the Company hereby acknowledge that Consultant
is an independent contractor. Consultant shall not hold itself out as, nor shall
it take any action from
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which others might infer, that it is a partner of, agent of or a joint venturer
of the Company. Consultant shall have no authority to bind the Company to any
third party.
4. Compensation to Consultant. As consideration for Consultant's
consulting services, the Company shall compensate Consultant as follows:
(a) The Company shall pay Consultant a fee in the amount of
twelve thousand five hundred dollars ($12,500.00) per month. Such fee shall be
payable on or before the first day of each month, commencing in the month
following the month in which this Agreement is executed, and shall continue for
twenty three (23) consecutive monthly payments thereafter.
(b) Consultant shall be reimbursed by the Company for such
reasonable out-of-pocket expenses as Consultant may incur in performing its
services under this Agreement.
(c) The Company shall issue to Consultant an aggregate of one
hundred and twenty-five thousand (125,000) unregistered shares of the Company's
Common Stock (the "Shares"), as follows: (i) a certificate for twenty-five
thousand (25,000) of the Shares, registered in the name of Consultant, shall be
delivered to Consultant simultaneous with the execution of this Agreement; and
(ii) twenty (20) certificates registered in the name of Consultant, each
evidencing five thousand (5,000) of the Shares, shall be delivered to Atlas,
Xxxxxxxx, Trop & Borkson, P.A. (the "Escrowee"), simultaneous herewith, to be
held by the Escrowee in accordance with the terms of the Form of Escrow
Agreement attached hereto as Exhibit C.
(d) Promptly following the execution of this Agreement, but in no
event later than thirty (30) days following the date hereof, the Company shall
prepare and file a registration statement on Form S-8 (or successor or other
applicable form) under the Securities Act of 1933, as amended (the "Act"). The
Company shall use its best efforts to cause such registration statement to
become effective. Such registration statement shall cover the Shares and, upon
the effective date thereof and subject to the other terms and conditions hereof,
shall entitle Consultant to publicly sell the Shares.
(e) Notwithstanding the foregoing:
(i) Dubbin may not sell any of the Shares being held in
the escrow described in paragraph (c) of this Section 4, or any
interest therein, prior to the release of such Shares from
escrow;
(ii) Dubbin may not exercise the right to vote any of the
Shares being held in the escrow described in paragraph (c) of
this Section 4, prior to the release of such Shares from escrow;
and
(iii) the Company shall neither accrue nor pay dividends
on any of the Shares being held in the escrow described in
paragraph (c) of this Section 4, prior to the release of such
Shares from escrow.
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(f) In the event that the Company terminates Consultant's
consulting services hereunder other than for "Cause" (as defined in Section 1.2
of the Option Agreement), or Consultant terminates its consulting services
hereunder for "Good Reason" (as defined in Section 1.5 of the Option Agreement),
then (i) all of the Shares then remaining in the escrow described above shall
immediately be delivered to Consultant free and clear of the restrictions set
forth in the Escrow Agreement, and (ii) all unpaid compensation under paragraphs
(a) and (b) of this Section 4 due through the end of the term of Consultant's
consulting services hereunder (as if such termination had not occurred) shall
become immediately due and payable.
5. Covenant of the Company. The Company hereby covenants and agrees
that, for a period of two years following the date hereof, it will not effect a
"reverse split" of its outstanding Common Stock without the prior written
consent of Dubbin.
6. Confidentiality. Dubbin will not disclose to any other person, firm
or corporation, nor use for its own benefit, during or after the term of this
Agreement, any trade secrets or other information designated as confidential by
the Company which is or has been acquired by Dubbin in the course of its
performing services to the Company. (A trade secret is information not generally
known to the trade which gives the Company an advantage over its competitors.
Trade secrets can include, by way of example, products or services under
development, production methods and processes, sources of supply, customer
lists, marketing plans and information concerning the filing of pendency of
patent applications). Any management advice rendered by Dubbin pursuant to this
Agreement may not be disclosed publicly in any manner without the prior written
approval of the Company. The provision shall be binding upon Consultant to the
extent that Dubbin designates an entity to perform consulting duties under
Section 3 hereof. The provisions of this Section 6 shall survive the termination
and expiration of this Agreement.
7. Indemnification. The Company agrees to indemnify and hold Dubbin
harmless from and against all losses, claims, damages, liabilities, costs or
expenses (including reasonable attorneys' fees (collectively the "Liabilities")
joint and several, arising out of this Agreement, whether or not Dubbin is a
party to such dispute. This indemnity shall not apply, however, and Dubbin shall
indemnify and hold the Company, its affiliates, control persons, officers,
employees and agents harmless from and against all liabilities attributable to
the negligence or willful misconduct of Dubbin in the performance of his
services hereunder which gave rise to the losses, claim, damage, liability, cost
or expense sought to be recovered hereunder.
8. Corporate Authorization. The Company hereby represents and warrants
that this Agreement has been duly authorized by the Company's Board of Directors
and constitutes the valid and binding obligation of the Company, enforceable
against it in accordance with its terms.
9. Assignment; Successors. Except as specifically set forth herein,
Dubbin's rights and duties under this Agreement may not be assigned without the
Company's consent, and any attempted assignment shall be void. Subject to the
foregoing, this Agreement shall be binding on the parties and their respective
successors or assigns.
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10. Severability. In the event that any term, provision or condition of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of this Agreement shall remain in full force and
effect and shall not be affected, impaired or invalidated thereby.
11. Miscellaneous. This Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and supersedes and cancels
any prior communications, understandings and agreements between the parties.
This Agreement cannot be modified or changed, nor can any of its provisions be
waived, except by written agreement signed by all parties. This Agreement shall
be governed by the laws of the State of Florida. In the event of any dispute as
to the terms of this Agreement, the prevailing party in any litigation shall be
entitled to reasonable attorneys' fees.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
OAK TREE MEDICAL SYSTEMS, INC.
By: /s/ XXXX XXXXXXXX
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Xxxx Xxxxxxxx, Chief Operating Officer
/s/ XXXXXX XXXXXX
--------------------------------------
Xxxxxx Xxxxxx
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