Exhibit 10.1
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PARADIGM MEDICAL INDUSTRIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 5th day of January, 2006 (the "Effective Date"), by and between PARADIGM
MEDICAL INDUSTRIES, INC., a Delaware corporation (the "Company") and XXXXXXX
X.X. XXXXXXXX (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to employee Employee, and Employee desires
to become employed by the Company;
NOW THEREFORE, In consideration of Employee's employment by the
Company, and the mutual promises and covenants contained in, and the mutual
benefits to be derived from this Agreement, and to set forth and establish the
terms and conditions upon which Employee shall be employed by the Company, the
parties hereto agree as follows:
1. Employment
The Company hereby employs Employee and Employee hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
(a) Employee shall be employed in the position of President and
Chief Executive Officer of the Company and shall supervise, control and
be responsible for all aspects of the business operations of the
Company and its subsidiaries, including direct supervision of the day-
to-day operations of all departments of the Company and its
subsidiaries. Employee shall also perform such related services and
duties for the Company as may be assigned or delegated to him from time
to time by the Board of Directors.
(b) Throughout his employment hereunder, Employee shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and
implement all management policies and decisions of the Board of
Directors. Notwithstanding the requirements of the preceding sentence,
Employee shall be permitted to perform work relating to Chinese
regulatory matters pursuant to a potential consulting agreement with
Escalon Medical Corp.
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3. Compensation and Benefits.
As the entire consideration for the services to be performed and the
obligations incurred by Employee hereunder, and subject to the terms and
conditions hereof, during the Term of this Agreement Employee shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement,
the Company shall pay Employee an annual salary ("Annual Salary") of
$125,000. Such Annual Salary, which shall be pro-rated for any partial
employment period, will be payable in equal bi-monthly installments or
at such other intervals as may be established for the Company's
customary pay schedule. The Annual Salary is subject to such
incremental increases as the Board of Directors may determine from time
to time in its sole discretion. The first review of the Annual Salary
by the Board of Directors shall be as of June 30, 2006.
(b) Bonus. As further compensation to Employee, and as further
consideration for his entering into this Agreement and the services to
be rendered by Employee hereunder, the Company may pay Employee
following the end of fiscal year 2006 (December 31, 2006), a bonus in
the form of cash and additional stock options to purchase shares of the
Company's common stock pursuant to the Company's 1995 Stock Option
Plan. The Company's Board of Directors, in its sole discretion, shall
determine the amount of any bonuses and the terms and conditions under
which Employee shall receive the bonuses. Such bonus shall be provided
to Employee upon the satisfaction by the Company of the performance
objectives that shall be determined by the Company's Board of
Directors. Employee shall have the right to prepare and submit a
proposed bonus plan to the Board of Directors for its review and
consideration. Without limiting the generality of the foregoing, the
performance objectives shall include an increase in the sales and net
income of the Company over the previous year's sales and net income.
Employee shall also have the right to direct any portion of the bonus
to be paid into a deferred compensation fund.
(c) Incentive Stock Option Plan. Employe shall be entitled to
participate in the Company's Company's 1995 Stock Incentive Plan to the
extent of Employee's eligibility under such plan. Upon execution of
this Agreement, the Company shall cause to be issued to Employee stock
options for 4,500,000 shares of the Company's common stock pursuant to
the terms and conditions of said plan. The options shall be exercisable
at $.01 per share and vest in twelve (12) equal monthly installments of
375,000 shares, beginning on February 5, 2006, until such shares are
vested. The vesting of the shares is contingent upon the continued
employment of Employee with the Company. In the event of a change of
control of the Company, then all outstanding stock options would have
been vested at the end of the Term had Employee remained employed by
the Company to the end of the Term, subject to any restrictions that
may apply under the law, shall be immediately vested. A change of
control shall be deemed to have occurred if (A) a tender offer shall be
made and consummated for the ownership of more than 25% of the
outstanding shares of common stock of the Company, (B) the Company
shall be merged or consolidated with another corporation and, as a
result of such merger or consolidation, less than 25% of the
outstanding shares of common stock of the surviving or resulting
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corporation shall be owned in the aggregate by the former shareholders
of the Company, as the same shall have existed immediately prior to
such merger or consolidation, (C) the Company shall sell all or
substantially all of its assets to another corporation that is not a
wholly-owned subsidiary or affiliate, (D) as a result of, or in
connection with, any contested election for the Board of Directors of
the Company, or any tender or exchange offer, merger or business
combination or sale of assets, or any combination of the foregoing (a
"Transaction"), the persons who were directors of the Company before
the Transaction shall cease to constitute a majority of the Board of
Directors of the Company, or any successor thereto, or (E) a person,
within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in
effect on the date hereof) of the Securities Exchange Act of 1934
("Exchange Act") other than any officer or director of the Company,
shall acquire more than 20% of the outstanding shares of common stock
of the Company (whether directly, indirectly, beneficially, or of
record).
(d) Additional Benefits. Employee shall also be entitled to
participate, to the extent of Employee's eligibility, in any employee
benefit plans made available by the Company to its employees during the
Term of this Agreement, including, without limitation, such profit
sharing plans, 401K and cafeteria plans, and health, life,
hospitalization, dental, disability or other insurance plans as may be
in effect from time to time. Such participation shall be in accordance
with the terms established from time to time by the Company for
individual participation in any such plans.
(e) Life Insurance. The Company shall provide Employee with a life
insurance policy in an amount equal to twice his Annual Salary.
(f) Vacation, Sick Leave, and Holidays. Employee shall be entitled
to three weeks of vacation, and also sick leave and holidays at full
pay in accordance with the Company's policies established and in effect
from time to time.
(g) Deductions. The Company shall have the right to deduct and
withhold from the compensation due to Employee hereunder, including
Employee's Annual Salary and Compensation Bonus, if any, such taxes and
other amounts as may be customary or required by law.
4. Business Expenses.
The Company shall promptly reimburse Employee for all reasonable
out-of-pocket business expenses incurred in performing Employee's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Employee promptly furnishes
to the Company adequate records and other documentary evidence required by all
federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such business expense as a deduction
on the federal and state income tax returns of the Company.
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5. Term and Termination.
(a) Term. The Term of this Agreement shall commence on the
Effective Date of this Agreement, and subject to earlier termination as
provided below, and except for the provisions of this Agreement which,
by their terms, continue in force beyond the termination hereof, the
Term of this Agreement shall end on the first anniversary of the
Effective Date of this Agreement (January 5, 2007).
(b) Termination for Cause. This Agreement, and Employee's
employment hereunder, is immediately terminable for cause (as defined
below) upon written notice from the Company to Employee. As used in
this Agreement, "cause" shall include: (i) habitual neglect of or
deliberate or intentional refusal to perform any of Employee's duties
or obligations under this Agreement or to follow Company policies or
procedures; (ii) fraudulent or criminal activities; (iii) any grossly
negligent or dishonest or unethical activity; (iv) breach of fiduciary
duty, deliberate breach of Company rules resulting in loss or damage to
the Company, or unauthorized disclosure of Company trade secrets or
confidential information; or (v) if Employee fails to fulfill the
performance goals and objectives, which shall be mutually determined by
Employee and the Board of Directors.
(c) Involuntary Termination for Other than Cause. The Company may
terminate Employee's employment hereunder during the Term of employment
other than for Cause by giving Employee at least ten (10) days written
notice. In such event, the Company shall pay to Employee all salary and
bonuses accrued up to and including the date of termination, all unused
vacation and all unreimbursed expenses which are reimbursable pursuant
to paragraph 4 incurred prior to such termination. In addition, all
outstanding stock options allocated to Employee, which would have been
vested at the end of the Term had Employee remained employed by the
Company to the end of the Term, shall be immediately vested, subject to
any restrictions that may apply under the law including restrictions
applicable to any options granted under the Company's 1995 Incentive
Stock Option Plan.
(d) Effect of Termination. In the event Employee's employment is
terminated hereunder, all obligations of the Company and all
obligations of Employee shall cease, except as otherwise provided
herein. Upon such termination, Employee shall be entitled to receive
only the compensation, benefits, and reimbursement earned or accrued by
Employee under the terms of this Agreement prior to the date of
termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation,
benefits, or reimbursement from such date, unless otherwise mutually
agreed in writing by the parties.
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6. Confidential Information Agreement.
Employee agrees that Employee will keep confidential and will not,
during or after this Agreement, disclose, divulge, furnish or make accessible to
any person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment or any confidential or secret aspect of the business of the
Company (collectively, the "Confidential Information") without the prior written
consent of the Company. Upon the termination of this Agreement for any reason,
and at any time prior thereto upon request by the Company, Employee shall return
to the Company all written records of any Confidential Information, together
with any and all copies of such records, in Employee's possession. Any
Confidential Information which Employee may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Employee
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
7. Assignment.
This Agreement is for the unique personal services of Employee and is
not assignable or delegable in whole or in part by Employee without the consent
of the Board of Directors of the Company. This Agreement may be assigned or
delegated in whole or in part by the Company and, in such case, the terms of
this Agreement shall inure to the benefit of, be assumed by, and be binding upon
the entity to which this Agreement is assigned.
8. Inventions
(a) Disclosure of Inventions. Employee hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques,
know-how, or data relating to the Defined Business (hereinafter
referred to collectively as "Inventions") while he is employed by the
Company, he will promptly disclose such Inventions to the Company or to
any person designated by it. Notwithstanding the fact that Employee may
determine that the Company has no right to such Invention, he shall
nevertheless promptly disclose any such Invention to the Company or to
any person designated by it upon reasonable request.
(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to ophthalmic instrumentation shall be the sole and
exclusive property of the Company, and the Company shall have the right
to use and to apply for patents, copyrights, or other statutory or
common law protection for such Inventions in any country. Employee
hereby assigns to the Company any rights which he may acquire in such
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Inventions. Furthermore, Employee agrees to assist the Company in every
proper way at the Company's expense to obtain patents, copyrights, and
other statutory common law protections for such Inventions in any
country and to enforce such rights from time to time. Specifically,
Employee agrees to execute all documents as the Company may desire for
use in applying for and in obtaining or enforcing such patents,
copyrights, and other statutory or common law protections together with
any assignments thereof to the Company or to any person designated by
the Company. In the event the Company is unable for any reason
whatsoever to secure Employee's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, Employee
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to
act in his stead to execute such documents and to do such other lawful
and necessary acts to further the issuance and protection of such
patents, copyrights, or other statutory or common law protection, such
documents or such acts to have the same legal force and effect as if
such documents were executed by or such acts were done by Employee.
9. Waiver or Modification.
Any waiver, modification or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and such document is signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision hereof or any subsequent breach of the same provision
hereof.
10. Severability.
If any provision of this Agreement is found to be unenforceable by a
court of competent jurisdiction, the remaining provisions shall nevertheless
remain in full force and effect.
11. Notices.
Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Employee at: Xxxxxxx X.X. Xxxxxxxx
0000 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
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To the Company at: Paradigm Medical Industries, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Mackey Price Xxxxxxxx & Xxxxxx
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective 24 hours after the dispatch
thereof. A notice delivered by mail or by private courier shall be effective on
the 3rd day after the day of mailing.
12. Attorney's Fees.
In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
13. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Utah applicable to contracts entered into and to be
performed entirely within such State.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first set forth above.
EMPLOYEE:
/s/ Xxxxxxx X.X. Xxxxxxxx
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Xxxxxxx X.X. Xxxxxxxx
THE COMPANY:
PARADIGM MEDICAL INDUSTRIES, INC.
By:/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman of the Board
January 5, 2006
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