EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 3,
2003, between OmniComm Systems, Inc., a Delaware corporation, (the "Company"),
and Xxxxxxx X. Xxxxxxxxx, (the "Executive").
WITNESSETH:
WHEREAS, the Executive has experience in managing at a senior level the
sales and marketing function of a publicly traded company (or a division of such
a company) involved in or related to the clinical trials business;
WHEREAS, the parties acknowledge that the Executive's abilities and
services are unique and essential to the prospects of the Company; and,
WHEREAS, in light of the foregoing, the Company desires to employ the
Executive as its Senior Vice President of Marketing and Sales, and the Executive
desires to accept such employment.
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as Senior
Vice President of Marketing and Sales, and the Executive hereby accepts
employment upon the terms and conditions hereinafter set forth.
2. TERM AND TERMINATION. This Agreement shall commence on January
3, 2003, and shall terminate as of the earlier of:
(a) 3 years from the date hereof;
(b) the death or disability of the Executive. Disability
shall mean the Executive's inability, due to sickness or injury, to
perform effectively his duties hereunder for a period of at least 90
consecutive days. Executive agrees, in the event of a dispute under
this Subsection (b) relating to Executive's Disability, to submit to a
physical examination by a licensed physician jointly selected by the
Board and Executive;
(c) thirty (30) days after notice is given by the
Company to the Executive after a material breach hereof by the
Executive constituting "Cause" as defined in this Agreement; or,
(d) thirty (30) days after notice is given by the
Executive to the Company after a material breach hereof by the Company
constituting "Good Reason" as defined in this Agreement.
THE EXERCISE OF THE COMPANY'S OR THE EXECUTIVE'S RIGHT TO TERMINATE THIS
AGREEMENT PURSUANT TO CLAUSE (C) OR (D) HEREOF, AS THE CASE MAY BE, SHALL NOT
ABROGATE THE RIGHTS AND REMEDIES OF THE TERMINATING PARTY IN RESPECT OF THE
BREACH GIVING RISE TO SUCH TERMINATION.
3. SALARY. For all services rendered under this Agreement:
(a) During the term of his employment, the Company shall
pay the Executive an annual salary of $150,000.00, which shall be paid
in bi-weekly installments. Such salary shall be adjusted effective
January 1, 2004, and on January 1 of each subsequent year during the
term hereof, for increases in the cost of living, based on the
percentage increase in the CPI (All United States Wage Earners), as
published by the US Department of Labor, over the preceding calendar
year, and may be further increased, but not decreased, during the term
hereof, at the discretion of the Board of Directors. Executive's annual
salary shall be reviewed at least annually, and in addition to cost of
living increases, Executive shall be eligible to performance based
increases in his annual salary. The performance-based increases in
annual salary shall be based on mutually agreed upon sales and
marketing objectives for Executive, which objectives shall be
determined in good faith by Executive and the Board. The initial sales
and marketing objectives shall be determined within thirty (30) days of
the date of this Agreement for calendar year 2003, and for each
subsequent calendar year during the term, the objectives shall be
determined during the fourth quarter of the preceding calendar year.
(b) During the term of his employment, the Executive
shall be entitled to participate in all employee benefit plans or
programs of the Company, if any, offered to the employees of the
Company generally, and in all executive employee benefit plans and
programs of the Company, to the extent the Executive is eligible to
participate thereunder. Such plans and programs shall include, but not
be limited to, the following:
(i) major medical health and dental insurance
for the Executive, his spouse and children. Executive shall
remain initially under his existing COBRA plan health
coverage, and the Company shall reimburse Executive for up to
$800.00 per month (as a business expense reimbursement) while
Executive remains under such health plan coverage. The balance
of the COBRA cost ($432.14 per month) shall be paid for by
Executive. At expiration of COBRA coverage, Executive shall be
eligible to join the Company's benefit then in force on the
same terms and conditions as all other employees, or may
choose to take private health coverage with the Company
reimbursing Executive up to $800 per month;
(ii) three weeks paid vacation for the first year
of the term, and four weeks paid vacation for each subsequent
year of the term;
(iii) coverage under a group disability insurance
plan (to be provided within the first quarter of 2003);
(iv) participation in a 401k plan when
established by the Company ; and
(v) reimbursement of all ordinary and necessary
business expenses, subject to Executive providing reasonable
documentation and itemization of such expenses in accordance
with Company expense reimbursement policies.
(c) The Executive shall receive a stock grant of 100,000
shares of the Company's common stock, which grant shall be deemed fully
vested upon execution of this Agreement. Such stock grant shall be of
restricted stock, and Executive and the Company agree that the value of
such common stock grant is $0.20 (as of 1/3/03). The Company shall
"gross up" and reimburse Executive for any federal and state income
taxes (estimated to be $7,000.00 plus or minus 15%) incurred by him as
a result of such stock grant, so that Executive shall not bear any of
such tax cost. Such reimbursement shall be made within thirty (30) days
following the receipt by the Company of a statement of the amount of
such taxes and "gross up" payment from Executive's accountant,
accompanied by a copy of the Executive's 2003 federal income tax
return. Executive also shall be permitted to participate in the
Company's stock option plan. The number of shares subject to options,
type of options, and vesting of the options are set forth on Exhibit
"A," attached hereto as if fully set forth herein.
(d) The Company shall also pay the Executive a commission
on a quarterly basis, equal to 2% of the Company's Net Operating Income
("NOI"), determined and computed in accordance with the statement
attached hereto as Exhibit "B". Executive shall be paid the 2%
commission on NOI, as defined herein, within 30 days after the end of
each calendar quarter during the term of this Agreement. In the event
of any partial quarter, such commission shall be prorated to cover the
time during such quarter that Executive was employed by the Company.
(e) The Executive shall also be entitled to severance pay
equal to twelve (12) months' salary and benefits in the event (i)
termination by the Company for any reason other than for "Cause", or
(ii) Executive voluntarily terminates his employment with the Company
for "Good Reason". For purposes of this Agreement, "Cause" shall mean
any one of the following events: (i) commission of a felony or a crime
involving moral turpitude relating to services provided to the Company;
or (ii) termination by the Company for Executive's material breach of
any provision of this Agreement that is not cured or corrected within
twenty (20) days following written notice of such breach, which notice
shall contain a specific description of the breach and the action which
must be taken by Executive to cure or correct such breach. Failure of
the Company or the Executive to achieve or satisfy any milestone or
other performance goal or hurdle shall not be deemed a material breach
of this Agreement. For purposes of this Agreement, "Good Reason" shall
mean any one of the following events: (a) a reduction in Executive's
annual salary or other material benefits of his position; (b) a
material diminution of Executive's authority, status, duties or
position; or (c) a material breach by the Company of the terms and
conditions of this Agreement that is not cured or corrected within
twenty (20) days following written notice of such breach, which notice
shall contain a specific description of the breach and the action which
must be taken by the Company to cure or correct such breach.
(f) Options which have vested prior to the date of
termination shall remain exercisable in accordance with the terms of
their respective stock option agreements. Unvested options shall
terminate in accordance with the terms of the respective Stock Option
Agreements.
4. DUTIES. The Executive shall be employed as Senior Vice
President of Marketing and Sales of the Company and, subject to the lawful
direction of the Board of Directors and the Company's officers designated by the
Board of Directors, shall perform and discharge faithfully the duties which may
be assigned to him from time to time by the Company, consistent with his
position as Senior Vice President of Marketing and Sales, in connection with the
conduct of its business. If the Executive is elected or appointed a director of
the Company or any subsidiary thereof during the term of this Agreement, the
Executive will serve in such capacity without further compensation. Executive
will be based in Pennsylvania.
5. EXTENT OF SERVICES. Except as set forth below, the Executive
shall devote his entire business time, attention and energies to the business of
the Company and shall not during the term of this Agreement be engaged, whether
or not during normal business hours, in any other business or professional
activity, whether or not such activity is pursued for gain, profit, or other
pecuniary advantage. All fees earned performing consulting or contractor
activities deemed to fall within the parameters of the Company's lines of
business (EDC, Pharmaceutical development, etc.) shall be paid to the Company.
Notwithstanding the foregoing, the Executive shall be allowed to be an officer,
director or trustee of family businesses or trusts, to participate in charitable
and non-profit activities, to be a member of and participate in industry groups
and organizations, and to serve on the Board of Directors of other companies, so
long as such activities do not unreasonably interfere with the Executive
fulfilling his duties to the Company. In the case of service on the Board of
Directors of any for-profit enterprise or company, the Executive shall be
required to obtain the prior written approval of the Company's Board of
Directors. In addition, the Executive shall be allowed to provide consulting
services to other for-profit companies so long as he obtains the prior written
approval of the Company's Board of Directors, turns over to the Company the
entire amount of the compensation he receives as a result of providing such
services (if the services provided are related to the Company's business or
products), and provides such services no more than three (3) days per month.
6. DISCLOSURE OF INFORMATION. The Executive recognizes and
acknowledges that the Company's trade secrets and proprietary information and
processes, as they may exist from time to time, are valuable, special and unique
assets of the Company's business, 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 such secrets, information or processes to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
nor shall the Executive make use of any such property for his own purposes or
for the benefit of any person, firm, corporation or other 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 were known to Executive
prior to
his employment with the Company, or which are then in the public domain or known
in the industry, provided that the Executive was not responsible, directly or
indirectly, for such secrets, information or processes entering the public
domain or becoming known in the industry without the Company's consent. The
Executive agrees to hold all memoranda, books, papers, letters, formulas and
other data belonging to the Company, and all copies thereof and therefrom, in
any way relating to the Company's business and affairs, whether made by him or
otherwise coming into his possession, and on termination of his employment, or
on demand of the Company, at any time, to deliver the same to the Company. The
preceding sentence shall not apply to the Executive's personal employment
records and documents. 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 information disclosed was in the
public domain or known in the industry, was already known by the Executive prior
to his employment with the Company, or was developed independently by the
Executive.
7. INVENTIONS. 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,
or 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 on behalf of the Company 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 by the Executive within six (6) months following the termination of
this Agreement which is related to methods, apparatus, designs, products,
processes or devices sold, leased, used or under construction or development by
the Company or any subsidiary shall be deemed to fall within the provisions of
this paragraph unless proved by the Executive to have been first conceived and
made following such termination.
8. COVENANT NOT TO COMPETE.
(a) During the term hereof,, the Executive shall not compete,
directly or indirectly, with the Company, interfere with, disrupt or
attempt to disrupt the relationship, contractual or otherwise, between
the Company and any customer, client, supplier, consultant, or employee
of the Company, including, without limitation, being an employee or
investor in, or officer, director, or consultant to, any person or
entity which is engaged in a "Competitive Activity" as defined below. A
"Competitive Activity" shall mean performing services whether as an
employee, officer, consultant, director, partner, or sole proprietor
for any person or entity engaged in the business then engaged in by the
Company, which services involve the development and marketing of a
web-based system to collect, manage, and compile clinical trial and
research data.
(b) It is the desire and intent of the parties that the
provisions of this Section shall be enforced to the fullest extent
permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any
particular portion of this Section shall be adjudicated to be invalid
or unenforceable, this Section shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable,
such deletion to apply only with respect to the operation of this
Section in the particular jurisdiction in which such adjudication is
made.
(c) Nothing in this Section shall reduce or abrogate the
Executive's obligations during the term of this Agreement under
Sections 4 and 5 hereof. If for any reason the Company shall default
under this Agreement and fail to pay Executive the severance payment
and benefits that he is entitled to receive hereunder, the provisions
of this Section 8 shall become null and void.
9. REMEDIES. If there is a breach or threatened breach of the
provisions of Section 6, 7 or 8 of this Agreement, the Company shall be entitled
to an injunction restraining the Executive from such breach. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
for such breach or threatened breach.
10. ASSIGNMENT. This Agreement may not be assigned by any party
hereto; provided that the Company may assign this Agreement: (a) to an affiliate
so long as such affiliate assumes the Company's obligations hereunder; provided
that no such assignment shall discharge the Company of its obligations herein,
or (b) in connection with a merger or consolidation involving the Company or a
sale of more than 50% of the Company's securities or assets, to the surviving
corporation or purchaser as the case may be, so long as such assignee assumes
the Company's obligations thereunder.
11. NOTICES. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by registered mail to
the Executive at his residence at:
Xxxxxxx X. Xxxxxxxxx
0000 Xxxx Xxxxxxxxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
and to the Company at:
OmniComm Systems, Inc.
0000 Xxxxx Xxxx, Xxxxx 000X
Xx. Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
12. WAIVER OF BREACH. A waiver by the Company or the Executive of
a breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other party.
13. ENTIRE AGREEMENT. This instrument contains the entire
agreement of the parties. It may be changed only by an agreement in writing
signed by a party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
14. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Florida ("State"). All questions with respect to
the construction hereof and the rights and liabilities of the parties hereto
shall be governed by the laws of such State. Any action or proceeding arising
out of or relating hereto shall be brought in such State.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first hereinabove written.
OMNICOMM SYSTEMS, INC.
By: /s/ Cornelis Wit
----------------------------------
Chief Executive Officer
EXECUTIVE
/S/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
EXHIBIT A
INCENTIVE AND NON-QUALIFIED STOCK OPTION
Total Number of Shares Subject to Options: 150,000
Vesting Schedule: 3 years
AMOUNT PRICE VESTING DATE
Year 1 2004 50,000 $.25 January 2, 2004
Year 2 2005 50,000 $.25 January 2, 2005
Year 3 2006 50,000 $.25 January 2, 2006
OTHER RIGHTS:
1. "Piggyback" rights in equal proportion to other employees.
2. Acceleration of all unvested options in the event of change in control,
defined as a sale of more than 50% of the Company's securities or assets to a
third party other than shares sold to Noesis Capital or its affiliates in the
Series C Preferred Private Placement.
3. Options will be granted as Incentive Stock Options (ISO's) to the
extent possible under Sec. 422 of the Internal Revenue Code of 1986.
4. Length of options: ISO 5 years; NonQ 7 years
NOTES:
1. ISO: Incentive stock option pursuant to Sec. 422 of the Internal
Revenue Code of 1986. ISO option price shall be the fair market value at the
date of grant x 100%
2. NONQ: Non-qualified stock option.
