Exhibit 10.12
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into as of this 9th day
of February, 2004, by and between OMNICORDER TECHNOLOGIES, INC., a Delaware
corporation with its principal place of business at 00-0 Xxxxxxxxxx Xxxxx, Xxxx
Xxxxxxxx, Xxx Xxxx 00000 (the "Company") and XXXXXX X. XXXXXXXX, an individual
residing at 00 Xxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive as Senior Vice
President of Operations & Planning and wishes to acquire and be assured of
Executive's continued services on the terms and conditions hereinafter set
forth;
WHEREAS, the Executive desires to be employed by the Company as Senior
Vice President of Operations & Planning and to perform and to serve the Company
on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions hereinafter set forth, the Company and the Executive
hereby agree as follows:
1. Employment. The Company hereby employs the Executive to serve as a
full-time executive of the Company, and the Executive hereby accepts such
employment with the Company, for the term set forth in Section 2 hereof. The
Executive's principal place of employment shall be at the Company's offices in
East Setauket, New York, or at such other location as shall be mutually
acceptable to the Executive and the Company (it being understood that an office
in Nassau County or Suffolk County shall be acceptable to the Executive). The
Executive hereby accepts such employment and agrees to undertake the duties and
responsibilities inherent in such position.
2. Term. Unless earlier terminated as provided in this Agreement, the term
of the Executive's employment under this Agreement shall be for a period
beginning on February 9, 2004 (the "Engagement Date"), and ending one year
thereafter (such period or, if the Executive's employment hereunder is earlier
terminated, such shorter period, being hereinafter called the "Employment
Term"). The Employment Term may be extended for additional periods by mutual
agreement of the parties in writing.
3. Duties; Authority; Director.
(a) Duties. During the Employment Term, the Executive shall be employed
as Senior Vice President of Operations & Planning, of the Company, shall
faithfully and competently perform such duties at such times and places and in
such manner as the President and CEO may from time to time reasonably direct.
Except as otherwise may be approved in advance by the President and CEO, and
except during vacation periods and reasonable periods of absence due to
sickness, personal injury, family leave as permitted by law, or other
disability, the Executive shall devote Executive's full time and attention
throughout the Employment Term to the services required of Executive hereunder.
The Executive shall render Executive's services exclusively to the Company
during the Employment Term and shall use Executive's best efforts, judgment and
energy to improve and advance the business and interests of the Company in a
manner consistent with the duties of Executive's position.
(b) Authority. The Executive shall have all the usual and necessary
authority, duties and responsibilities of a Senior Vice President, in the
operation of the Company's business, subject to the supervision and authority of
the President & CEO.
4. Salary and Other Compensation.
(a) Salary. In consideration for the services of the Executive rendered
to the Company hereunder, the Company shall pay the Executive a salary at an
annual rate of $140,000 during the Employment Term (the "Base Salary"), payable
in accordance with the Company's customary payroll practices, which in no event
shall be less frequently than on a monthly basis, subject to an annual upward
adjustment as the President & CEO, the Board or the compensation committee
thereof may deem appropriate, but which in no event shall be less than a five
percent (5%) cumulative annual increase at each anniversary date of the
Engagement Date. The Executive shall also be eligible for annual bonuses, as the
Board or the compensation committee thereof may deem appropriate. Upon
termination of this Agreement, except if the Company terminates this Agreement
without Cause (as defined in Section 6), and except if the Executive terminates
his employment for Good Reason (as defined in Section 7), payments made pursuant
to this Section 4(a) shall cease; provided, however, that the Executive shall in
all cases be entitled to payments for periods or partial periods that occurred
prior to the date of termination and for which the Executive has not yet been
paid. Any vacation time not used by Executive during any year of the Employment
Term shall be carried over to succeeding years; provided, however, Executive
will not take in excess of four continuous weeks of vacation utilizing such
carried over vacation time. Payment shall be made to Executive for any unused
vacation time upon the end of the Employment Term.
(b) Withholding, Etc. The payment of any amounts hereunder shall be
subject to income tax, social security and other applicable withholdings.
(c) Stock Options. As additional consideration under this Agreement,
the Company has granted to the Executive as of the Engagement Date incentive
stock options ("Stock Options") to purchase up to 120,000 shares of common stock
at an exercise price equal to $4.40 per share, representing the fair market
value of OmniCorder's common stock on the date of this agreement. The Stock
Options shall be exercisable in a four year vesting period at 25% per year, and
shall be exercisable over a five-year period from the date of grant. The Company
undertakes to use its best efforts to register the shares of OmniCorder's common
stock
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into which the Stock Options are exercisable by the filing of a registration
statement on Form S-8, or such other method as is most appropriate in the
circumstances, to enable the Executive to sell such shares, subject to
applicable securities laws.
5. Benefits. During the Employment Term, the Executive shall be entitled
to:
(a) Participate in all executive fringe benefits, pension, savings,
life insurance, disability, stock option, profit sharing, medical, health or
other welfare benefit plans that may be provided by the Company for its key
executives in accordance with the provisions of any such plans, as the same may
be in effect on and after the Engagement Date;
(b) 20 annual paid vacation days in each year of employment; such
vacation to be taken at a time mutually convenient to Company and the Executive;
(c) 5 days paid sick leave and/or personal days in each year of
employment;
(d) 10 days of paid holidays during each calendar year;
(e) Reimbursement for executive education programs;
(f) Reimbursement for all reasonable and necessary out-of-pocket
business expenses, properly receipted or otherwise documented, incurred by the
Executive in the performance of Executive's duties hereunder in accordance with
the Company's policies applicable on and after the Engagement Date; and
6. Termination by the Company.
(a) The Executive's employment hereunder shall be terminated:
(i) upon death of the Executive; or
(ii) upon the Executive's inability to perform Executive's duties
on account of disability or incapacity for a period of ninety (90) or more
consecutive days occurring within any period of twelve (12) consecutive months,
such termination to take effect on 30 days prior written notice from the Company
to the Executive. A determination of disability shall be made by a physician
satisfactory to both the Executive and the Company; provided that if the
Executive and the Company do not agree on a physician, they shall each select a
physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties; or
(iii) at any time, for Cause (as hereinafter defined), such
termination to take effect immediately upon written notice from the Company to
the Executive, except in case of subparagraph 6(a)(iv)(3) or (4) below, in which
case termination shall only take effect after Executive has been given written
notice of specifications and a reasonable opportunity to cure any matter
referred to therein and same shall not be cured within such time; or
(iv) upon expiration of the Employment Term.
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The following actions, failures or events shall constitute "Cause" for
termination within the meaning of clause (iii) above: (1) conviction of a
felony, (2) acts of dishonesty or moral turpitude constituting fraud or
embezzlement or otherwise materially adversely affecting the business or
properties of the Company, (3) failure by the Executive to obey the reasonable
and lawful orders of the Board of Directors of the Company or (4) repeated
negligence by the Executive in the performance of, or willful disregard by the
Executive, of Executive's obligations hereunder. If the Executive contests, in
good faith, whether termination for "Cause" is proper, said dispute shall be
immediately referred to arbitration in Suffolk County, New York, in accordance
with the provisions of Section 18 hereof. Pending the resolution of such
dispute, the Company shall continue to pay Executive his salary and benefits.
Whether Executive must return any of said amounts if it is ultimately determined
that termination for "Cause" was proper shall be decided by the Arbitrator.
(b) Notwithstanding anything to the contrary expressed or implied
herein, except as required by applicable law, and except if the Company
terminates Executive's employment without Cause or the Executive terminates his
employment for Good Reason, the Company shall not be obligated to make any
payments to the Executive or on Executive's behalf of whatever kind or nature by
reason of the Executive's cessation of employment, other than (i) such amounts,
if any, of Executive's salary and bonus as shall have accrued and remained
unpaid as of the date of said cessation, including Back Salary, and (ii) such
other amounts which may be then otherwise payable to the Executive from the
Company's benefits plans or reimbursement policies, if any (the sum of these
amounts shall hereinafter be referred to as the "Accrued Obligations").
7. Termination by Executive for Good Reason. The Executive may terminate
his employment with the Company for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, in the absence of the written consent of the
Executive, a reasonable determination by the Executive that any of the following
has occurred:
(a) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive's position (including titles and
reporting requirements, authority, duties or responsibilities as
contemplated by Section 3 hereof), or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated and insubstantial
action not taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive; or
(b) any failure by the Company to comply with any of the provisions of
this Agreement applicable to it, other than any isolated and insubstantial
failure not occurring in bad faith and which is remedied promptly after
notice thereof from the Executive.
8. Obligations of the Company upon Early Termination. In the event the
Company terminates the Executive's employment during the Employment Term without
Cause, or the Executive terminates his employment for Good Reason, then the
Company shall pay or provide to the Executive the following:
(a) all Accrued Obligations;
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(b) all Back Salary;
(c) the Executive's Base Salary under this Agreement for the duration
of one month, except if terminated prior to sixty days of employment, then
a two week's severance package will be applicable and
(d) benefits to the Executive and/or the Executive's family and
dependents for one month and then eligibility under the COBRA plan.
9. Rights and Obligations Upon Change in Control.
(a) In the event of a "Change in Control," as defined below, of the
Company during the Employment Term, the Executive may terminate his
employment with the Company by giving 30 days' notice thereof within six
months after the occurrence of such Change in Control. If the Executive
terminates his employment in accordance with this Section 9, or is
terminated without Cause within six months after a Change in Control, the
Company shall pay the Executive an amount equal to: (i) all Accrued
Obligations; (ii) all Back Salary; and (iii) all Base Salary under this
Agreement for the duration of the Employment Term. Such payment shall be
made in a lump sum payable on the date of termination. The Company shall
also continue for such period to permit the Executive to receive or
participate at the Company's expense in all fringe benefits available to
him pursuant to Section 5 for the duration of the Employment Term;
provided, however, in no event shall the amount paid to the Executive
pursuant to this Section 9 exceed the maximum payment permitted by Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") or then
applicable law, and to the extent any "excess parachute payment," as that
phrase is defined in Section 280G(b) of the Code or then applicable law,
would result from the provisions of this Section 9, then the amount the
Executive would otherwise receive shall be reduced so that no "excess
parachute payment" is made by the Company or received by the Executive.
(b) A "Change in Control" of the Company shall be deemed to have
occurred as of the first day that any one or more of the following
conditions shall have occurred:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
other than the Executive or its Affiliates, becomes the "beneficial
owner" (as defined in Rule 13-d under the Act), directly or indirectly,
of securities representing more than fifty percent (50%) of the total
voting power represented by the Company's then outstanding voting
securities;
(ii) A change in the composition of the Board, as a result of
which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (a) are directors
of the Company as of the date hereof, or (b) are elected, or nominated
for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or
nomination; or
(iii) The Company merges or consolidates with any other
corporation after which a majority of the shares of the resulting
entity are not held by the
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stockholders of the Company prior to the merger, or the Company adopts,
and the stockholders approve, if necessary, a plan of complete
liquidation of the Company, or the Company sells or disposes of
substantially all of its assets.
10. Confidential Information. The Executive hereby covenants, agrees and
acknowledges as follows:
(a) The Company is engaged in a continuous program of research, design,
development, production, marketing and servicing with respect to its
business. (b) The Executive's employment hereunder creates a relationship
of confidence and trust between the Executive and the Company with respect
to certain information pertaining to the business of the Company and its
Affiliates (as hereinafter defined) or pertaining to the business of any
client or customer of the Company or its Affiliates which may be made known
to the Executive by the Company or any of its Affiliates or by any client
or customer of the Company or any of its Affiliates or learned by the
Executive during the period of Executive's employment by the Company.
(c) The Company possesses and will continue to possess information that
has been created, discovered or developed by, or otherwise become known to
it (including, without limitation, information created, discovered or
developed by, or made known to, the Executive during the period of
Executive's employment or arising out of Executive's employment) or in
which property rights have been or may be assigned or otherwise conveyed to
the Company, which information has commercial value in the business in
which the Company is engaged and is treated by the Company as confidential.
(d) Any and all inventions, products, discoveries, improvements,
processes, manufacturing, marketing and services methods or techniques,
formulae, designs, styles, specifications, data bases, computer programs
(whether in source code or object code), know-how, strategies and data,
whether or not patentable or registrable under copyright or similar
statutes, made, developed or created by the Executive (whether at the
request or suggestion of the Company, any of its Affiliates, or otherwise,
whether alone or in conjunction with others, and whether during regular
hours of work or otherwise) during the period of Executive's employment by
the Company which directly pertain to the business, products, or processes
of the Company or any of its Affiliates (collectively hereinafter referred
to as "Developments"), will be promptly and fully disclosed by the
Executive to an appropriate executive officer of the Company (other than
the Executive) without any additional compensation therefore, including,
without limitation, all papers, drawings, models, data, documents and other
material pertaining to or in any way relating to any Developments made,
developed or created by Executive as aforesaid. For the purposes of this
Agreement, the term "Affiliate" or "Affiliates" shall mean any person,
corporation or other entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
For the purposes of this definition, "control" when used with respect to
any person, corporation or other entity means the power to direct the
management and policies of such person or entity, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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(e) The Executive will keep confidential and will hold for the
Company's sole benefit any Development which is to be the exclusive
property of the Company under this Section 10 for which no patent,
copyright, trademark or other right or protection is issued.
(f) The Executive also agrees that the Executive will not without the
prior approval of the Board (i) use for Executive's benefit or disclose at
any time during Executive's employment by the Company, or thereafter,
except to the extent required by the performance by Executive of
Executive's duties as an executive of the Company, any information known
to, obtained or developed by Executive while in the employ of the Company
with respect to any Developments or with respect to any customers, clients,
suppliers, products, services, prices, executives, financial affairs, or
methods of design, distribution, marketing, service, procurement or
manufacture of the Company or any of its Affiliates, or any confidential
matter, except information which at the time is generally known to the
public other than as a result of disclosure by Executive not permitted
hereunder, or (ii) take with Executive upon leaving the employ of the
Company any document or paper relating to any of the foregoing or any
physical property of the Company or any of its Affiliates.
(g) The Executive acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this Section 10 would be
inadequate and, therefore, agrees that the Company and its Affiliates shall
be entitled to injunctive relief in addition to any other available rights
and remedies in case of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting
the Company or any of its Affiliates from pursuing any other rights and
remedies available for any such breach or threatened breach.
(h) The Executive agrees that upon termination of Executive's
employment by the Company for any reason, the Executive shall forthwith
return to the Company all documents and other property in Executive's
possession or under the Executive's control belonging to the Company or any
of its Affiliates.
(i) The Executive represents and warrants that he has terminated
employment with one or more prior employers and that his employment by the
Company and the use by the Company of any skills and knowledge that he may
have, are not in violation of the terms of any contract that he is a party
to or any other applicable provision of the law.
(j) The Executive represents and warrants that his performance of all
the terms of this Agreement and his duties as an employee of the Company
does now and will not knowingly breach any agreement to keep in confidence
confidential information acquired by him in confidence or in trust prior to
his employment with the Company. The Executive further represents and
warrants that he has not entered into and he will not enter into any
agreement either written or oral in conflict herewith.
(k) Notwithstanding the foregoing, the following will not constitute
confidential information for purposes of this Agreement: (i) information
which is or becomes publicly available other than as a result of disclosure
by the Executive; or (ii) information designated by the Company as no
longer confidential.
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(l) The Executive represents and warrants that he has not brought and
will not bring with him to the Company or use in the performance of his
responsibilities at the Company (a) any materials, documents or
confidential information of a former employer which are not generally
available to the public, unless he has obtained written authorization from
the former employer for their possession and use, or (b) any confidential
information which he knows or should have known has been acquired by
improper means, or otherwise misappropriated from another person.
(m) Without limiting the generality of Section 12 hereof, the Executive
hereby expressly agrees that the foregoing provisions of this Section 10
shall be binding upon the Executive's heirs, successors and legal
representatives.
11. Non-Competition.
(a) During the period during which Executive is employed hereunder and,
at the Company's option and subject to the Company continuing to pay the
Executive all salary and benefits paid to him in the year preceding his
termination, during the one-year period following such termination (the
"Non-Competition Period"):
(i) the Executive will not make any statement or perform any act
intended to advance an interest of any existing or prospective
competitor of the Company or any of its Affiliates in any way that will
or may injure an interest of the Company or any of its Affiliates in
its relationship and dealings with existing or potential customers or
clients, or solicit or encourage any other executive of the Company or
any of its Affiliates to do any act that is disloyal to the Company or
any of its Affiliates or inconsistent with the interest of the Company
or any of its Affiliate's interests or in violation of any provision of
this Agreement;
(ii) the Executive will not solicit, divert or take away, or
attempt to divert or to take away, the business or patronage of any of
the clients, customers, dealers, distributors, representatives or
accounts, or prospective clients, customers, dealers, distributors,
representatives or accounts, of the Company or its Affiliates which
were contacted, solicited or served by employees of the Company while
the Executive was employed by the Company;
(iii) the Executive will not directly or indirectly (as a
director, stockholder, officer, Executive, manager, consultant,
independent contractor, advisor or otherwise) engage in competition
with, or own any interest in, perform any services for, participate in
or be connected with (i) any business or organization which engages in
competition with the Company or any of its Affiliates in the United
States or any other geographical area where any business is presently
carried on by the Company or any of its Affiliates, or (ii) any
business or organization which engages in competition with the Company
or any of its Affiliates in any geographical area where any business
shall be hereafter, during the period of the Executive's employment by
the Company, carried on by the Company or any of its Affiliates, if
such business is being carried on by the Company or any of its
Affiliates in such geographical area during the Non-Competition Period;
and
(iv) the Executive will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ
or solicit for employment, any employee of the Company or any of its
Affiliates;
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provided, however, that there shall be no Non-Competition Period following the
termination of the Executive without Cause, or following the termination by the
Executive of his employment for Good Reason; and provided, further, that the
provisions of this Section 11(a) shall not be deemed to prohibit the Executive's
ownership of not more than five percent (5%) of the total shares of all classes
of stock outstanding of any publicly-held company.
(b) (i) The Executive further agrees that the limitations set forth in this
Section 11 (including, without limitation, any time or territorial limitations)
are reasonable and properly required for the adequate protection of the
businesses of the Company and its Affiliates. It is understood and agreed that
the covenants made by the Executive in this Section 11 (and in Section 10
hereof) shall survive the expiration or termination of this Agreement.
(ii) The Executive acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 11 would
be inadequate and, therefore, agrees that the Company and any of its Affiliates
shall be entitled to injunctive relief in addition to any other available rights
and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its Affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
12. Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive, Executive's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section 12 shall preclude the Executive from
designating a beneficiary to receive any benefit payable hereunder upon
Executive's death or incapacity.
13. Binding Effect. Without limiting or diminishing the effect of Section
12 hereof, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors, legal representatives and
assigns; except under no circumstances will the provisions of Section 11 be
binding upon the Executive's heirs, successors, legal representatives or
assigns.
14. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Executive,
at Executive's home address set forth on the signature hereto, or to such other
address or addresses as either party shall have designated in writing to the
other party hereto.
15. Severability. The Executive agrees that in the event that any court of
competent jurisdiction shall finally hold that any provision of Section 10 or 11
hereof is void or constitutes an unreasonable restriction against the Executive,
such provision shall not be rendered void but shall apply to such extent as such
court may judicially determine constitutes a reasonable restriction under the
circumstances. If any part of this Agreement other than Section 10 or 11 is held
by a court of competent jurisdiction to be invalid, illegible or incapable of
being enforced in whole or in part by reason of any rule of law or public
policy, such part shall be deemed to be severed from the remainder of this
Agreement for the purpose only of the particular legal proceedings in question
and
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all other covenants and provisions of this Agreement shall in every other
respect continue in full force and effect and no covenant or provision shall be
deemed dependent upon any other covenant or provision.
16. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
17. Entire Agreement; Modifications. This Agreement constitutes the entire
and final expression of the agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, oral and written, between the
parties hereto with respect to the subject matter hereof. This Agreement may be
modified or amended only by an instrument in writing signed by both parties
hereto.
18. Governing Law and Arbitration of Disputes. This Agreement shall be
construed and enforced in accordance with the internal laws of the State of New
York without regard to the conflicts of law principles thereof. Any dispute
arising hereunder shall be settled by arbitration in Suffolk County, New York,
in accordance with the rules then obtaining of the American Arbitration
Association ("AAA"). One Arbitrator will be chosen by the parties who shall be
an attorney experienced in labor and employment law. If the parties cannot agree
on the identity of the Arbitrator, he will be appointed by the head of the AAA
in Suffolk County, New York.
19. Prior Employment Agreement in Force. The parties hereto agree that the
previous Employment Agreement entered into as of (none), by and between the
parties hereto shall remain in full force and effect until this Agreement
becomes effective.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have duly executed
and delivered this Agreement as of the day and year first above written.
OMNICORDER TECHNOLOGIES, INC.
By:
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Name: Xxxx X. Xxxxx
Title: President & CEO
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XXXXXX X. XXXXXXXX
