PARADIGM MEDICAL INDUSTRIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
13th day of December, 2000, by and between Paradigm Medical Industries, Inc., a
Delaware corporation (the "Company") and Xxxx X. Xxxxxx (the "Employee"),
effective as of September 20, 2000 (the "Effective Date").
WITNESSETH:
WHEREAS, the Company desires to employ Employee, and Employee desires to
become employed by 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:
I. 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 on a part-time basis in the
position of Vice President of Finance and Chief Financial Officer and,
subject to direction from the Chairman and Chief Executive Officer of
the Company, shall supervise, control and be responsible for all
aspects of the financial and accounting activities of the Company and
its subsidiaries, including but not limited to meeting with investment
bankers, securities analysts, commercial bankers and shareholders,
preparing financial statements and other financial documents for
filing with the Securities and Exchange Commission (the "Commission"),
assisting in the preparation of reports to be filed with the
Commission, including Form 10-K, Form 10-Q and Form 8-K reports,
assisting in the preparation of budgets, cash flow statements, income
statements and balance sheets, and facilitating agreements and other
documents in the financial area with the Company's legal counsel.
Employee shall also perform such services and duties for the Company
as may be assigned or delegated to him from time to time by the
Chairman and Chief Executive Officer or the Board of Directors.
Employee shall be a member of the Company's Executive Committee and
shall report directly to the Company's Chairman and Chief Executive
Officer.
(b) Throughout his employment hereunder, Employee shall devote
his energy and skill on a part-time basis to perform the duties of his
employment, 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.
(c) The principal location at which Employee's services are to be
performed shall be at 00 Xxxxxx Xxxx, Xxxxxxxxxx Xxxxx, Xxx Xxxx. As
required by the needs of the Company's business, Employee also shall
perform services in the Company's headquarters office in Salt Lake
City, Utah, in the Company's office in San Diego, California, and in
other places the Company conducts business when deemed appropriate and
necessary by the Chairman and Chief Executive Officer or the Board of
Directors.
(d) Employee may engage in other activities an invest his
personal assets in other business or ventures to the extent that such
other activities, business, or ventures do not materially interfere
with the performance of his duties under this Agreement and do not
violate the provisions of paragraph 6, paragraph 7 or other provisions
of this Agreement.
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
$60,000. Such Annual Salary will be payable in equal bi-weekly
installments or at such other intervals as may be established for the
Company's customary pay schedule and shall be pro-rated for any
partial pay period. The Annual Salary is subject to such adjustments
as the Board of Directors may determine from time to time in its sole
discretion.
(b) Continuation of Retirement Benefits. Any compensation or
other benefits to which Employee is entitled to receive from the
Company as retirement benefits, as approved by the Board of Directors
on May 6, 1999, including the payments of $25,000, $25,000 and $12,500
to be made on January 1, 2001, 2002 and 2003, respectively, shall
remain in effect upon execution of this Agreement.
(c) Incentive Stock Option Plan. Employee shall be entitled to
participate in the Company's Company's 1995 Stock Incentive Plan. As
of the Effective Date of this Agreement, the Company shall cause to be
issued to Employee stock options to purchase 60,000 shares of the
Company's common stock pursuant to the terms and conditions of the
plan at an exercise price of $5.00 per share, vesting monthly in equal
amounts over a period of six (6) months and with an exercise period of
five (5) years from the date of grant of such options. However, if the
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Agreement is terminated by the Company prior to six (6) months from
the Effective Date, all such stock options shall become vested as of
such termination date.
(d) Additional Benefits. Employee shall also be entitled to
reinstatement and to participate in the employee 401(k) plan made
available by the Company to its employees during the Term of this
Agreement. Such participation in the 401(k) plan shall be in
accordance with the terms established from time to time by the Company
for individual participation in any such plan.
(e) Deductions. The Company shall have th right to deduct and
withhold from the compensation due to Employee hereunder, including
Employee's Annual Salary, such taxes and other amounts as may be
customary or required by law.
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. The Company shall
reimburse Employee for Employee's annual membership fees for the Columbia Club
of New York. The annual membership fees as of the Effective Date were $460.
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
or extension 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 December
31, 2000. For purposes of this Agreement, the word "Term" shall mean
the initial Term and any extensions thereof made in accordance with
subparagraph (b) of this paragraph 5.
(b) Extension of Term. The Term of this Agreement shall be
automatically extended by one (1) month unless either party elects not
to do so. If either party elects not to extend the Term of this
Agreement, that party must notify the other party, in writing, not
less than twenty (20) days prior to the last day of the Term of the
Agreement then in effect. If either party fails to give such written
notice at least twenty (20) days prior to the expiration of the Term
then in effect, the Term automatically extends for an additional
month.
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(c) Termination on Death and for Cause. This Agreement, and
Employee's employment hereunder, shall terminate upon Employee's death
and is otherwise 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
negligent or dishonest or unethical activity; or (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. A determination of whether
Employee's actions justify termination for cause and the date such
termination is effective shall be made by the Board of Directors in
its sole discretion.
(d) Termination for Disability. The Company's Board of Directors
may terminate this Agreement, upon written notice to Employee, for the
"disability" (as defined below) of Employee at the expiration of a
consecutive four (4) week period of disability if the Board of
Directors determines in its sole discretion that Employee's disability
will prevent Employee from substantially performing Employee's duties
hereunder. As used in this Agreement, "disability" shall be defined as
(i) Employee's inability, by reason of physical or mental illness or
other cause, to perform substantially Employee's duties hereunder; or
(ii), in the discretion of the Board of Directors, as it is defined in
any disability insurance policy in effect at the Company during the
time in question. Employee shall receive full compensation, benefits,
and reimbursement of expenses pursuant to the terms of this Agreement
from the date disability begins until the date Employee receives
notice of termination under this paragraph.
(e) Mutual Voluntary Termination. In the event the parties
mutually agree in writing to terminate this Agreement, Employee
agrees, at the Company's request, to continue providing services for a
requested period of time up to, but not more than, thirty (30) days
after such voluntary termination (the "Transition Period") to
facilitate transition. Employee shall be an independent contractor and
not an employee during the Transition Period and shall be available to
assist in the transition during such period. During the Transition
Period, Employee shall receive compensation equal to 100 percent of
the Salary at the time of the voluntary termination. Payment of such
compensation shall be made at least monthly. It is understood and
agreed that Employee, during the Transition Period, may be seeking
other opportunities and will not be devoting 100 percent of his time
to the affairs of the Company. The Company may elect to terminate the
independent contractor relationship with Employee prior to the end of
the Termination Period once Employee accepts a full time position with
another company.
(f) Effect of Termination. In the event Employee's employment is
terminated hereunder, all obligations of the Company and all
obligations of Employee shall cease. Upon such termination, Employee
or Employee's representative or estate 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
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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.
6. Covenant Not to Compete
(a) Covenant. Employee hereby covenants and agrees that during
the Term of this Agreement and for a period of six (6) months
thereafter, he will not, except as a director, officer, employee or
consultant of the Company, or any subsidiary or affiliate of the
Company, directly or indirectly own, manage, operate, join, control,
or participate in the ownership, management, operation or control of,
or be connected with (as director, officer, employee, consultant,
agent, independent contractor of otherwise) in any other manner with
any business engaged in the Defined Business (as described below)
which is the same or substantially similar in nature to the business
engaged in by the Company in the State of Utah, and each of the other
states in the United States, and each foreign country, in which the
Company may engage (whether directly or indirectly through
subsidiaries, affiliates, franchisees, licensees, representatives,
agents or otherwise) during the term of this Agreement and Employee's
employment with the Company.
(b) Definition of Defined Business. As used herein, the term
"Defined Business" shall mean the business of ophthalmic
instrumentation and engaging in any business currently engaged in by
the Company or contemplated by the Company.
(c) Non-Solicitation Agreement. Employee shall not, directly or
indirectly, employ, 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 subsidiary or affiliate), during the
Term of this Agreement and Employee's employment with the Company and
for a term of one (1) year thereafter; provided however, that this
paragraph shall not preclude Employee from giving an employment
reference at the request of any employee of the Company or at the
request of a prospective employer of such employee.
(d) Conflicting Employment. Employee shal not, during the Term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to
the business in which the Company is now involved or becomes involved
during the Term of his employment, nor will Employee engage in any
other activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Service of Employee. Employee
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the
personal services Employee is to perform as an employee of the Company
and that irreparable injury would befall the Company or its
subsidiaries or affiliates should Employee serve a competitor of, or
compete, with the Company or any of its subsidiaries or affiliates.
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(f) Injunctive and Equitable Relief. Employee covenants and
agrees that the Company's remedy at law for any breach or violation of
the provisions of this Paragraph 6 are inadequate and that, in the
event of any such breach or violation, the Company shall be entitled
to injunctive relief in addition to any other remedy, at law or in
equity, to which it may be entitled.
(g) Acknowledgement of Reasonableness of Restrictions. Employee
specifically acknowledges and agrees that the six-month
post-employment limitation upon his activities as specified above,
together with the geographical limitations set forth above, are
reasonable limitations as to time and place upon Employee's
post-employment activities and that the restrictions are necessary to
preserve, promote and protect the business, accounts and good-will of
the Company and impose no greater restraint than is reasonably
necessary to secure such protection.
(h) Limitation on Scope or Duration. In the event that any
provision of this Paragraph 6 shall be held invalid or unenforceable
by a court of competent jurisdiction by reason of the geographic or
business scope or the duration thereof, such invalidity or
unenforceability shall attach only to the scope or duration of such
provision and shall not affect or render invalid or unenforceable any
other provision of this Paragraph 6 and, to the fullest extent
permitted by law, this Paragraph shall be construed as if the
geographic or business scope or the duration of such provision had
been more narrowly drafted so as not to be invalid or unenforceable
but rather to provide the broadest protection to the Company permitted
by law.
7. 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.
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8. 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.
9. 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 he Company any rights which he may acquire in such
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.
10. 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
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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.
11. 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.
12. 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: 00 Xxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxx Xxxx 00000
(or the last residence address given by
Employee to the Company)
To the Company at: Paradigm Medical Industries, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Mackey Price & Xxxxxxxx
000 Xxxxxxxx Xxxxx II
00 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective twenty-four (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.
13. 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.
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14. 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/
-------------------------------------------
Xxxx X. Xxxxxx
THE COMPANY:
PARADIGM MEDICAL INDUSTRIES, INC.
By:/s/
-------------------------------------------
Xxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
EA-D12M.PMI
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