EMPLOYMENT AGREEMENT
--------------------
AGREEMENT dated as of September 8, 2003, between VASOMEDICAL, INC.
("Company"), a Delaware corporation, having its principal place of business
located at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx, and
XXXXXX X. XXX ("Employee"), residing at 00 Xxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, the Company desires to employ the Employee and the Employee
desires to be employed by the Company subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and of the mutual
covenants hereinafter contained and for good and valuable consideration, the
parties hereto agree as follows:
1. Representation/Freedom to Contract. Employee represents and warrants
that he is free to enter into this Agreement and that he has not made, prior to
his employment, and will not thereafter make, any agreements which may be in
conflict with this Agreement in the latter, or post-employment context. Employee
agrees that he will not disclose to the Company or use for the Company's benefit
any trade secret or confidential information which is the property of any third
party and that there are no agreements or understandings which would prevent him
from being engaged by the Company pursuant to the terms of this Agreement.
2. Employment. The Company hereby employs the Employee as Chief Financial
Officer of the Company and the Employee hereby accepts employment upon the terms
and conditions hereinafter set forth.
3. Term. The term of this Agreement shall be two (2) years, commencing on
the date hereof ("Effective Date") and ending September 7, 2005, subject to
earlier termination as provided in this Agreement ("Term") and subject to
certain provisions hereof which survive the Term.
4. Compensation.
(a) For all services rendered under this Agreement:
(i) The Company shall pay the Employee a base salary at the rate of
$150,000 per annum payable in equal monthly installments. ("Base Salary").
(ii) The Company shall agree to grant to the Employee on the Effective
Date options to acquire 100,000 shares of the common stock of the Company
(the "Shares") at the closing price per share of the Company's common stock
on September 8, 2003, pursuant to the provisions of the Company's Stock
Option Plan ("the Plan") attached as Exhibit A, the terms of which are
incorporated herein. The options shall vest three years from the Effective
Date contingent on your continued employment.
(iii) The Employee shall be provided with the opportunity to earn up
to an additional 30% of his base salary annually under the Company's bonus
incentive program each year. The bonus will be awarded at the discretion of
the Board of Directors based upon the achievement of individual goals and
the Company's financial performance.
5. Duties. The Employee shall perform on a full time basis such duties of
an Employee nature as shall be customarily associated with an officer of the
Company subject to the direction of the Chief Executive Officer and the Board of
Directors. The Employee shall perform and discharge well and faithfully the
duties which may be assigned to him from time to time by the Company in
connection with the conduct of its business.
6. Extent of Services. So long as during the Term of this Agreement the
Company has not notified the Employee of his disability pursuant to Section
11(a) hereof, the Employee shall devote his full business time, attention and
best efforts to the business of the Company subject to reasonable absences for
vacation and illness and may 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. Notwithstanding the foregoing, Employee may join
professional associations that do not interfere with his attention and best
efforts on behalf of the Company.
7. Benefits/Expenses.
(a) During the term of his employment, the Employee shall be entitled to
participate in employee benefit plans or programs of the Company, if any, to the
extent that his position, tenure, salary, age, health and other qualifications
make him eligible to participate, subject to the rules and regulations
applicable thereto. Such additional benefits shall include paid vacation and,
subject to approval of the Board of Directors, qualified pension and profit
sharing plans. Medical and dental insurance will not be included.
(b) The Employee shall be entitled to timely reimbursement of all business
expenses reasonably incurred by him in the performance of his duties to the
Company subject to the business expense policy of the Company, subject to the
presenting of appropriate vouchers in accordance with the Company's policy.
8. Disclosure of Information.
(a) The Employee represents and warrants to the Company that no prior
employment or business agreements or arrangements preclude, or interfere with,
his ability to execute and perform his obligations under this Agreement.
(b) The Employee recognizes and acknowledges that the Company's
Confidential or Proprietary Data or Information as they have existed, will
exist, may continue to 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 Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company, in whole or in part,
directly or indirectly disclose, divulge or communicate such secrets,
information or processes to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever, except in the performance of his
duties hereunder, nor shall the Employee 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 provided that after the term of his
employment these restrictions shall not apply to such secrets, information and
processes which are then in the public domain (provided that the Employee was
not responsible, directly or indirectly, for such secrets, information or
process entering the public domain without the Company's consent). The Employee
agrees to hold as the Company's property, all memoranda, books, papers, letters,
formulas and other data, 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.
(c) The term "confidential or proprietary data or information": as used in
this Agreement shall mean information not generally available to the public,
including without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
(d) All written materials, records and documents made by the Employee or
coming into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
9. Inventions. The Employee 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 Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, or in whole or
in part, during or before the term hereof (but after the Effective Date) 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 Employee during the term hereof. The Employee 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 Employee shall execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may be
required of the Employee 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
Employee within one year following the termination of this Agreement shall be
deemed to fall within the provisions of this paragraph unless proved by the
Employee to have been first conceived and made following such termination. To
the extent that the Employee shall be required to expend time or incur expenses
fulfilling his obligations under this paragraph, post- termination of the
original term of this Agreement or any renewal term thereof, the Company agrees
to reasonably compensate Employee for such time and/or such expenses.
10. Restrictive Covenant. During the Term of this Agreement and for a
period of two (2) years after the date of such termination for any reason,
Employee shall not without the prior written consent of the Company:
(a) Non-Competition. Act as an individual proprietor, partner, stockholder,
officer, principal, agent, employee, supervisor, manager, consultant, guarantor,
creditor, lender, co-endorser or in any other capacity whatsoever, own,
participate in the ownership of, manage, operate, exercise any control over,
render services to, or engage in any of the foregoing for any business, firm,
corporation, limited liability company, its successors or assigns, partnership
or other entity which operates a business similar to or competitive with any of
the counterpulsation therapy products or services developed by the Company which
are conducted in any of the geographic areas, including the continental United
States, in which the Company's business is conducted. Notwithstanding the
foregoing, Employee may hold not more than one percent (1%) of the outstanding
securities of any class of any publicly-traded securities of a company that is
engaged in activities referenced in Section 10(a) hereof.
(b) Non-Solicitation. Solicit any business from any current customers or
clients of the Company, its successors or assigns, or from any prospective
customers or clients of Company, its successors or assigns from whom the
Company's employees or agents have engaged in, actual business within the two
(2) year period immediately preceding the termination date of the Executive's
employment for the purpose of selling products or services competitive with
those offered or sold or provided by the Company.
(c) Solicitation of Employees. In any manner, whether directly or
indirectly, seek to persuade any director, officer, or other employee of
Company, its successors or assigns to discontinue their employment or
relationship with Company, its successors or assigns, nor will such Employee
solicit entice, or induce any such person for such purpose.
(d) Severability. The parties hereto intend that the covenants contained in
this Section 10, which pertain only to geographic areas where the Company is
engaged in business, shall be deemed a series of separate covenants for each
applicable area of the relevant country, state, county and city. If, in any
judicial proceeding, a court shall refuse to enforce all the separate covenants
deemed included in this Section 10 because, taken together, they cover too
extensive a geographic area, the parties intend that those of such covenants
(taken in order of the cities, counties, states and countries therein which are
least populous) which if eliminated would permit the remaining separate
covenants to be enforced in such proceeding shall, for the purpose of such
proceeding, be deemed eliminated from the provisions of this Section 10.
(e) Nothing in this Section 10 shall reduce or abrogate the Employee's
obligations during the term of this Agreement under Sections 5 and 6 hereof.
(f) The provisions of this section shall not apply only in the event
Employee's employment is terminated without cause as finally determined by a
court of competent jurisdiction, which determination is not subject to appeal or
the posting of a bond.
11. Termination.
(a) Disability. The Company shall have the right in the event of the
permanent disability of the Employee, to terminate this Agreement upon five (5)
days prior written notice. Upon termination, the Company shall pay the Employee
all compensation earned under Section 4 through the date of termination. For the
purposes of this subparagraph "permanent disability" shall mean the physical or
mental incapacity of the Employee for any consecutive ninety (90) day period or
any aggregate period of a one hundred and eighty (180) day period in any twelve
(12) month period of such a nature that the Employee shall be unable to perform
his duties as contemplated hereby. Such determination shall be made by the
mutual agreement of the parties hereto, or in the event such agreement cannot be
reached, by the following procedure:
(i) If the Company maintains a disability insurance policy with respect to
the Employee, the definition set forth in such policy shall control,
provided the issuing insurance company agrees to commence disability
payments as a result of such permanent disability.
(ii) If the Company does not maintain a disability income policy with
respect to the Employee:
(A) Each party shall select an independent physician who shall
examine the subject Employee. The mutual agreement of the two
examining physicians shall control, and their decision shall be
binding.
(B) If the two physicians cannot agree, they (the physicians) shall
select a third physician to examine the subject Employee. The
majority opinion of such three physicians shall control, and
their decision shall be binding.
(b) Death. This Agreement shall terminate automatically upon the death of
the Employee. In such event, the Company shall pay the estate of the Employee,
within thirty (30) days after the date of death, all compensation earned under
Section 4 through the date of termination.
(c) For Cause. In addition to its rights under Section 11(a) above, the
Company shall have the right, at its sole option, to terminate this Agreement
"for Cause", as hereinafter defined, at any time, without any further payment to
the Employee other than compensation earned under Section 4(a)(i) prior to the
date of termination, by notice to the Employee, as provided herein, specifying
the reason for such termination. For purposes of this Section 11(c), "cause"
shall mean (i) the Employee's conviction of a felony, (ii) the Employee's
willful misconduct or gross negligence materially detrimental to the Company in
the performance of his duties, or (iii) the breach by the Employee of a material
term of this Agreement which continues for thirty (30) days after written notice
thereof is given to the Employee (constituting an opportunity to cure),
specifying the nature and the details of the breach.
(d) Without Cause. The Employee may be terminated at any time without
cause. If the Employee is terminated by the Company without Cause he shall be
entitled to receive as his sole compensation, a termination payment, in an
amount equal to six (6) months' Base Salary payable in equal monthly
installments. You shall have a duty to mitigate these payments through seeking
employment elsewhere. In the event you are employed by a third party, any
amounts earned shall be deducted from these payments.
12. Remedies. If there is a breach or threatened breach of the provisions
of Sections 8, 9 or 10 of this Agreement, the Company shall be entitled to an
injunction restraining the Employee from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
13. Insurance. The Company may, at its election and for its benefit, insure
the Employee through key man insurance up to $1,000,000 or otherwise, against
accidental loss or death and the Employee shall submit to such physical
examination and supply such information as may be required in connection
therewith; provided, however, the Employee makes no representation regarding his
insurability at commercially reasonable rates or otherwise.
14. Location of Performance. The Employee's services will be performed in
the Westbury, New York area unless the Company relocates its principal facility
or its research and development facility to another area, in which event his
services will be performed, at the Company's option, in the area of relocation
as long as the new location is not more than 65 miles from the Employees present
home residence. The parties acknowledge, however, that the Employee may be
required to travel extensively in connection with the performance of his duties
hereunder.
15. Change of Control. In the event (a) the Company has been consolidated
or merged into or with any other corporation or all or substantially all of the
assets of the Company have been sold to another corporation, with or without the
consent of Employee, in his sole discretion; or (b) the Company undergoes a
Change of Control, as hereinafter defined below ; then
Employee is entitled to the following settlement benefits, which he shall
also have the right to exercise in lieu of his compensation under paragraph
11(d) hereof, in the event his employment is terminated without cause within
three months prior to the change of control event:
(i) a lump-sum payment of twelve (12) months of the Base Salary; and
(ii) any and all stock options held by Employee shall become
immediately vested and exercisable; if
(A) Employee voluntarily and unilaterally resigns his position
with the Company within ninetysi (90) days of an event described in
Section 15(a) or (b) hereof, or
(B) Employee is given notice of termination directly as a result
of such Change in Control within twelve (12) months of an event
described in Section 15(a) or (b) hereof.
A "Change of Control" of the Company, or in any person directly or
indirectly controlling the Company, shall mean:
(i) a change of control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"); or
(ii) if during the Term of Employment the individuals who at the
beginning of such period constitute the Board (the "Incumbent Board")
cease for any reason other than death, disability or retirement to
constitute at least a majority thereof, provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding for
this purpose any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board.
16. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any successors. In addition, this Agreement shall be binding upon and inure to
the benefit of the Employee and his heirs, executors, legal representatives and
assigns; provided, however, that the obligations of Employee hereunder may not
be delegated without the prior written approval of the Board of Directors of the
Company.
17. Successor Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform as if no such succession
had taken place.
18. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and shall be deemed given when
delivered personally or three days after being sent by first-class registered or
certified mail, return receipt requested, to the party for which intended at its
or his address set forth at the beginning of this Agreement (which, in the case
of the Company, shall be sent "Attention: Chairman of the Board") or to such
other address as either party may hereafter specify by similar notice to the
other.
19. Waiver of Breach. A waiver by the Company or the Employee 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.
20. Entire Agreement. This Agreement supersedes all prior agreements
between the parties, written and oral, and cannot be amended or modified except
by a writing signed by both parties. It may be executed in one or more
counterpart copies, each of which shall be deemed an original, but all of which
shall constitute the same instrument.
21. Choice of Law/Forum. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law. Any disputes arising out of this Agreement shall be
adjudicated in the Federal or State court presiding in the County of Nassau,
State of New York.
22. Captions/Exhibits. Captions used in this Agreement are for convenience
of reference only and shall not be deemed a part of this Agreement nor used in
the construction of its meaning. Exhibits attached to this Agreement shall be
deemed as fully a part of this Agreement as if set forth in full herein.
23. Severability. If any provision of this Agreement shall be deemed
invalid or unenforceable as written it shall be construed, to the greatest
extent possible, in a manner which shall render it valid and enforceable and any
limitations on the scope or duration of any such provision necessary to make it
valid and enforceable shall be deemed to be part thereof; no invalidity or
unenforceability shall affect any other portion of this Agreement unless the
provision deemed to be so invalid or unenforceable is a material element of this
Agreement, taken as a whole.
24. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person or entity in order
to enter into and perform his obligations under this Agreement.
With respect to the covenants contained in Sections 8, 9 and 10 of this
Agreement, Employee agrees that any remedy at law for any breach or threatened
or attempted breach of such covenants may be inadequate and that the Company
shall be entitled to specific performance or any other mode of injunctive and/or
other equitable relief to enforce its rights hereunder or any other relief a
court might award without the necessity of showing any actual damage or
irreparable harm or the posting of any bond or furnishing of other security.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first hereinabove written.
VASOMEDICAL, INC.
By: /s/ Xxxxxxx X. Xxxx
Chief Executive Officer and President
/s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx, Employee
