PARADIGM MEDICAL INDUSTRIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
5th day of June, 2000, by and between Paradigm Medical Industries, Inc., a
Delaware corporation (the "Company") and Xxxx X. Xxxxxx (the "Employee"), to
become effective as of June 5, 2000 (the "Effective Date").
WHEREAS, Employee was formerly employed with Vismed, Inc., a California
corporation headquartered in San Diego, California and doing business as Dicon
("Dicon"); and
WHEREAS, the Company is acquiring Dicon and 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
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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
Operating Officer and, subject to direction from the Chief Executive
Officer of the Company, 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 strategic services and duties for the Company as may be
assigned or delegated to him from time to time by the Chief Executive
Officer or Board of Directors. Employee shall be a member of the Company's
Executive Committee and shall report directly to the Company's Chief
Executive Officer.
(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.
(c) The principal location at which Employee's services are to be
performed shall be in the Company's office in San Diego, California. 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 and in other places the Company conducts business when deemed
appropriate and necessary by the Chief Executive Officer or Board of
Directors.
(d) Employee may engage in other activities and 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 $150,000.
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. However, the Annual
Salary shall not be reduced below $150,000 without the consent of
Employee.
(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 annually
following the end of each fiscal year, a cash bonus. The Board of
Directors of the Company, in its sole discretion, shall determine the
amount of any bonus and the terms and conditions under which Employee
shall receive the Bonus. Such bonus shall be paid to Employee upon the
satisfaction by the Company of the performance objectives that shall be
determined by the Board of Directors of the Company on an annual basis.
Without limiting the generality of the foregoing, one of the performance
objectives shall be an increase in the earnings per share (EPS) of the
Company over the previous year's earnings per share (EPS), which objective
must be satisfied as a condition to the payment of any bonus to Employee.
Employee shall have the right to prepare and submit a proposed bonus plan
to the Board of Directors for its review and consideration. Employee shall
also have the right to direct any portion of the bonus to be paid into a
deferred compensation fund.
(c) Termination of All Dicon Compensation and Benefits. Any
compensation or other benefits to which Employee is entitled from Dicon
shall expire upon execution of this Agreement and shall no longer be of
any force or effect. Without limiting the generality of the foregoing
sentence, it is specifically understood and agreed that the obligations of
Dicon under that certain Salary Reduction Agreement dated October 20, 1995
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between Dicon and Employee, shall expire and become null and void upon
execution of this Agreement.
(d) Incentive Stock Option Plan. Employee 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 150,000 shares of the Company's common stock pursuant to the terms and
conditions of said plan including, but not limited to, three year vesting.
(e) 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.
(f) Life Insurance. The Company shall provide Employee with a life
insurance policy in an amount equal to twice his Annual Salary.
(g) Vacation, Sick Leave, and Holidays. Employee shall be entitled to
four (4) 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.
(h) Car Allowance. Employee shall be entitled to an automobile
allowance of $500 per month payable on the first day of each month. The
Company shall also be responsible for the payment of insurance and
property taxes relating to such automobile.
(i) 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.
(j) Signing Bonus. As a bonus for signing this Agreement, the Company
agrees to issue to Employee as soon as administratively feasible after the
date of this Agreement, 28,500 shares of the authorized but previously
unissued common stock of the Company. It is agreed that the certificate
representing such stock shall bear the customary restricted stock legend.
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4. Business Expenses.
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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 regular monthly membership dues at the
University Club in San Diego, California.
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 and the
Exhibits hereto which, by their terms, continue in force beyond the
termination hereof, the Term of this Agreement shall end on the third
anniversary of the Effective Date of this Agreement. 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 year 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 90 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 90 days prior to the
expiration of the Term then in effect, the Term automatically extends for
an additional year.
(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 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 for two (2) consecutive years the annual
performance goals and objectives, which shall be mutually determined by
Employee and the Board of Directors. 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.
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(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 twenty-six (26) 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 or until Employee begins to receive
disability benefits pursuant to a Company disability insurance policy,
whichever occurs first.
(e) 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 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, the Company shall have
the following rights and duties:
(i) The Company shall pay to Employee a severance payment in an
amount equal to 6 months (or one-half) of Employee's Annual Salary in
effect on the date of termination, but not more than the Salary left to
be paid during the remainder of the Term (the "Severance Payment"). The
Severance Payment shall be paid in approximately equal bi-weekly
installments, or at such other intervals as may be established for the
Company's customary pay schedule, at the annual rate of Employee's Salary
on the date of termination.
(ii) The Company shall keep all medical and dental benefits that
are in effect as of the date of termination in force, at the sole cost to
the Company, for six months after the date of termination.
(iii) The Company shall pay to Employee all deferred compensation,
if any, owed to Employee, under any other Agreement. However, any amounts
owed under a 401(k) or other plan qualified under the Internal Revenue
Code shall be paid in accordance with the terms and provisions of such
plans.
(iv) The Company shall have the right, for 30 days after the
termination date, at the Company's sole discretion, to redeem all the
outstanding shares of the Company that Employee owns, at the current fair
market value of the shares, subject to the restrictions that may apply
under law.
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(v) 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 the restrictions that may apply under the law
including restrictions applicable to any options granted under the
Company's 1995 Incentive Stock Option Plan.
(f) 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, six months 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 110 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.
(g) 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 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
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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 two
years 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 shall 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 Services 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.
(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
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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.
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
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(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
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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 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: 00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
(or the last residence address given by
Employee to the Company)
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To the Company at: Paradigm Medical Industries, Inc.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Mackey Price & Xxxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
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.
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.
14. Governing Law.
--------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts entered into and to be
performed entirely within such State.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
EMPLOYEE:
/s/ Xxxx X. Xxxxxx
------------------
Xxxx X. Xxxxxx
THE COMPANY:
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President and
Chief Executive Officer
EA-605M.PMI
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