Exhibit 99.1
AGREEMENT
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This Agreement (hereinafter "Agreement") is entered into by and among,
Xxxxxxx Xxxxxx, M.D. (hereinafter "Doctor Xxxxxx") and Lumisys, Inc.
(hereinafter "Lumisys") and XxxxXxxxxx.xxx, Inc., a subsidiary of Lumisys
(hereinafter "AuntMinnie")(Lumisys and AuntMinnie hereinafter collectively "the
Company"). The effective date of this Agreement shall be April 27, 2000.
RECITALS
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1. Doctor Xxxxxx is employed with Lumisys as its President and Chief
Executive Officer pursuant to a letter agreement effective November 1, 1999, a
copy of which is attached hereto as Exhibit A.
2. Doctor Xxxxxx and Lumisys wish to amicably discontinue the employment
of Doctor Xxxxxx in his role as President and Chief Executive Officer.
3. AuntMinnie wishes to continue to employ Doctor Xxxxxx as its Chief
Executive Officer, and Doctor Xxxxxx accepts such employment.
4. Lumisys wishes to accelerate the vesting of options for Doctor Xxxxxx
so that a total of 50,000 shares will be vested of the total 100,000 shares
subject to the performance-based option granted November 1, 1999 to Doctor
Xxxxxx.
5. Doctor Xxxxxx'x employment agreement, attached hereto as Exhibit A,
includes a one year severance to be paid upon his termination or significant
diminution of his responsibilities.
6. Lumisys agrees that Doctor Xxxxxx and Lumisys discontinuing the
employment of Doctor Xxxxxx as its President and Chief Executive Officer, and
AuntMinnie employing Doctor Xxxxxx as its Chief Executive Officer constitutes a
significant diminution of his responsibilities.
7. Doctor Xxxxxx agrees that the one year severance contained in his
employment agreement attached hereto as Exhibit A can only be triggered once,
and will only be paid once.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Doctor Xxxxxx and the Company agree as
follows:
I. THE OBLIGATIONS OF THE COMPANY
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A. EMPLOYMENT WITH AUNTMINNIE
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AuntMinnie agrees to continue the employment of Doctor Xxxxxx, and to pay
Doctor Xxxxxx full salary and benefits as set forth in the Employment Agreement
attached hereto as Exhibit A, which shall remain in full force and effect.
X. XXXXXXXXX PAYMENT
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If Doctor Xxxxxx is no longer employed by the Company for any reason
whatsoever, or if AuntMinnie is acquired or funded by another party other than
Lumisys, Lumisys shall immediately begin paying severance to Doctor Xxxxxx as
set forth in Section 3 of Exhibit A. Lumisys agrees that it shall not assert any
right of set-off or counterclaim that it may have against Doctor Xxxxxx in
connection with the severance payments to be made hereunder.
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C. INCENTIVE PAYMENT ON FIRST FIFTEEN MILLION DOLLARS OF SALE TRANSACTION
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The Company agrees that as an incentive, twenty percent (20%) in cash or in
kind (if stock is delivered as the currency for a sale) will be delivered to the
management team of AuntMinnie after any sale of AuntMinnie to a third party by
Lumisys where the value of the transaction is Fifteen Million Dollars
($15,000,000) or less. The amount from which the twenty percent (20%) is to be
calculated will be as follows:
[the value of the transaction] minus
[return of capital (which is cash expended only)] minus
[the investment banking fee].
D. INCENTIVE PAYMENT ON AMOUNTS EXCEEDING FIFTEEN MILLION DOLLARS OF SALE
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TRANSACTION
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If a sale transaction of AuntMinnie exceeds Fifteen Million Dollars
($15,000,000) in value, in addition to the twenty percent (20%) incentive set
forth above in Section I(D), twenty-five percent (25%) of the portion exceeding
Fifteen Million Dollars ($15,000,000), whether in cash or in kind, will be
delivered to the senior management of AuntMinnie, again within a reasonable
period of the closing of the transaction.
E. DEFINITIONS FOR INCENTIVE PAYMENTS
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For the purposes of the above incentives set forth in Section 1(D) and (E),
the return of capital shall mean the actual cash expended by the Company to the
date of the closing. For the purposes of the above incentives set forth in
Section 1(D) and (E), the investment banking fee will be two percent (2.0%) of
the transaction.
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F. DIVISION OF INCENTIVE PAYMENTS
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The division of this incentive payments set forth in Section 1(D) and (E),
shall be as follows: sixty percent (60%) of the success fee to Doctor Xxxxxx,
and forty percent (40%) to the rest of the senior management team. The division
of the incentive may be changed by Doctor Xxxxxx at his sole discretion.
G. INCENTIVE FOR FINANCING TRANSACTION
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The Company agrees that as an incentive, in the event of a financing/spin-
off agreed to by the Board of Lumisys with a pre-dilution value of less than
Fifteen Million Dollars ($15,000,000), twenty percent (20%) of the common stock
in AuntMinnie held by Lumisys following the dilution will be distributed to
Doctor Xxxxxx and eighty percent (80%) will be retained by Lumisys. In the event
of a financing/spin-off agreed to by the Board of Lumisys with a pre-dilution
value of Fifteen Million Dollars ($15,000,000) or more, twenty-five percent
(25%) of the common stock in AuntMinnie held by Lumisys following the dilution
will be distributed to Doctor Xxxxxx and seventy-five percent (75%) will be
retained by Lumisys. The division of the AuntMinnie stock distributed to
employees will be determined by Doctor Xxxxxx.
II. THE OBLIGATIONS OF DOCTOR XXXXXX
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A. CONTINUED WORK
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Doctor Xxxxxx shall continue to work for AuntMinnie and shall make his best
efforts to sell and promote AuntMinnie and agrees that the employment
relationship with AuntMinnie is "at will." Doctor Xxxxxx agrees that the one
year severance contained in
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his employment agreement attached hereto as Exhibit A can only be triggered
once, and will only be paid once.
D. FUNDING OF AUNTMINNIE
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Doctor Xxxxxx agrees that the progress of AuntMinnie and possible sale or
financing transactions will be reviewed by the Board of Lumisys on a quarterly
basis. Upon review, the Board of Lumisys may discontinue funding the development
of AuntMinnie for any reason, at its sole discretion.
III. MISCELLANEOUS PROVISIONS
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A. Dispute Resolution.
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1) Arbitration. Any disputes or differences arising from this
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Agreement or from subsequent agreements regarding the performance
of this Agreement shall be resolved in accordance with this
Section III(A). The parties shall first attempt to settle any
such disputes or differences amicably. An attempt to arrive at a
settlement shall be deemed to have failed as soon as one party so
notifies the other party in writing. If an attempt at amicable
settlement has failed, all such disputes and differences shall be
conclusively and finally settled by binding arbitration in San
Diego, California, according to the Commercial Arbitration Rules
("CAR") of the American Arbitration Association by one arbitrator
appointed in accordance with the CAR. Unless prohibited or
restricted by law, each party agrees to provide to the
arbitrators and to the other party such documents or other
evidence as may reasonably be requested by the other party and as
is relevant to the issues being arbitrated. Such request shall be
subject to a strict confidentiality agreement and shall not
affect time-limits provided for in the CAR and/or in this
Agreement. The arbitration award and the determinations and
decisions of the arbitrator shall be substantiated in writing.
The arbitration tribunal shall decide on the matter of costs of
the arbitration and which of the parties shall bear the costs or
in what proportions the costs shall be borne by the parties. The
award of the arbitrator shall be final and binding, and
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no appeal shall lie therefrom. Judgment on the award or any final
or interim order by the arbitrator may be entered, registered or
filed for enforcement purposes in any court having jurisdiction
thereof.
2) Governing Law. The Agreement shall be construed in accordance
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with and governed by the laws of the State of California, without
giving effect to the conflicts of law principles thereof. The
State and Federal courts situated in San Diego, California shall
have exclusive jurisdiction to resolve any non-arbitrable
disputes with respect to the Agreement, with each party
irrevocably consenting to the jurisdiction thereof for any
actions, suits or proceedings arising out of or relating to the
Agreement.
B. Severability.
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Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by, or invalid under, applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining of such provision or the remaining
provisions of the Agreement.
C. No Third Party Beneficiaries/No Agency Agreement.
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This Agreement is intended to confer rights and benefits only on the
parties to this Agreement, and is not intended to confer any right or
benefit upon any other person or entity. No person or entity other
than the parties to this Agreement shall have any legally enforceable
right under this Agreement. All rights of action for any breach of
this Agreement are hereby reserved only to the parties hereto.
D. Further Assurances.
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The parties each agree to cooperate and to execute additional
documents and instruments and to perform additional acts as the other
party may reasonably request, which may be necessary or appropriate to
effectuate, consummate, or perform any of the terms, provisions or
conditions of this Agreement.
E. Drafting.
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The parties represent and acknowledge that they both have participated
in the preparation and drafting of this Agreement and have each given
their approval to all of the language contained in this Agreement, and
it is expressly agreed and acknowledged that if either party later
claims that
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there is an ambiguity in the language of this Agreement, there shall
be no presumption that such ambiguity be construed for or against
either party hereto. Doctor Xxxxxx agrees that the Law Offices of Xxxx
X. Xxxx has acted as counsel to the Company only and that he has had
his own separate counsel review and approve of this Agreement.
F. Entire Agreement.
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This Agreement is an integrated agreement, containing the entire
undertaking between the parties regarding the matters addressed
herein, and, except as set forth in this Agreement, no
representations, warranties, or promises have been made or relied upon
by the parties to this Agreement. This agreement shall prevail over
prior communications between the parties or their representatives
concerning the matters contained herein.
G. Corporate Authorizations.
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The parties represent, acknowledge and warrant that they have taken
all necessary corporate and legal action required to duly approve the
making and performance of this Agreement and that no further action is
necessary after execution to make this Agreement binding and legally
enforceable. Further the parties warrant that each representative
signing this Agreement has the authority and power to execute this
Agreement.
H. No Violation of Any By-Laws or Agreement.
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The parties represent and warrant that the making and performance of
this Agreement will not violate any of their respective articles of
incorporation or by-laws or any contract or agreement.
I. No Agreement Until Signed and Delivered.
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The parties do not intend to be legally bound until execution and
delivery of this Agreement. Execution and delivery of this Agreement
by both parties hereto is a condition precedent to any obligations
herein.
J. Successors and Assigns.
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The parties agree that all terms of this Agreement shall be binding
upon them, their respective legal representatives, predecessors,
successors and assigns.
K. Attorneys Fees.
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In any action or litigation to enforce any of the provisions or rights
under this Agreement, the non-prevailing party to such litigation or
action shall pay the prevailing party all of its costs, expenses and
reasonable attorneys' fees incurred therein, including without
limitation costs, expenses and attorneys' fees in any appeals, and
such costs, expenses and attorneys' fees shall be included in part of
any judgment entered in any such action or proceeding.
L. Non-Waiver.
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No delay in exercising, and no failure to exercise, any right under
this Agreement shall impair such right or be construed to be a waiver
of any breach of or default under this Agreement. Any single or
partial exercise of any such right shall not preclude any other or
further exercise of any other right under this Agreement.
M. Notice.
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If any notice is given or required hereunder, it shall be addressed in
written as follows:
If to Xxxxxx:
Xxxxxxx Xxxxxx, M.D.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Tel: 000-000-0000 Fax: 000-000-0000
If to Lumisys:
Xxxx X. Xxxxxx, Ph.D
Chairman of Board
Lumisys, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000 Fax: (000) 000-0000
If to AuntMinnie:
Xxxx X. Xxxxxx, Ph.D
Chairman of Board
XxxxXxxxxx.xxx, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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Tel: (000) 000-0000 Fax: (000) 000-0000
Notices shall be effective from delivery, if delivered, or upon
receipt, if mailed. All mailed notices shall be sent via facsimile and
first class mail, proper postage prepaid.
N. Duplicate Originals.
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This Agreement may be executed in two counterparts, any or all of
which may contain the signature of only one of the parties, and all of
which together shall be considered a single original document.
O. Amendments in Writing.
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No Amendments or variations of the terms of this Agreement shall be
valid unless made in writing and executed by the parties hereto and
this provision cannot be orally waived.
IN WITNESS WHEREOF, the parties hereto represent and warrant that they have
read this Agreement, fully understand its terms and the consequences thereof,
and that the parties to this Agreement execute this Agreement in their
respective capacities as described below:
Lumisys, Inc. Notary Public
By: /s/ Xxxx XxxXxxxxx Xxxxxxx X. Xxxxx 4/27/00
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Chief Financial Officer
XxxxXxxxxx.xxx, Inc. Notary Public
By: /s/ Xxxx XxxXxxxxx Xxxxxxx X. Xxxxx 4/27/00
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Vice-President
Xxxxxxx Xxxxxx, M.D. Notary Public
By: /s/ Xxxxxxx X. Xxxxx 4/27/00
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Xxxxxxx Xxxxxx, M.D., individually
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