EXECUTION COPY
EMPLOYMENT AGREEMENT
Parties: SYNOVA HEALTHCARE GROUP, INC.
(F/N/A ADVANCED GLOBAL INDUSTRIES CORPORATION)
a Nevada Corporation ("GROUP")
000 Xxxx Xxxxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
SYNOVA HEALTHCARE, INC.,
a Delaware Corporation ("COMPANY")
0000 X. Xxxxxxxxxx Xxxx
Xxxxx 0000, Xxxxxxxx 0
Xxxxx, XX 00000
XXXXXXX X. XXXX ("EXECUTIVE")
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, XX 00000
BACKGROUND: Company is a wholly owned subsidiary of Group. Group and Company
desire to employ Executive, and Executive desires to be employed by Group and
Company, all upon the terms and conditions provided herein (the "AGREEMENT").
Group and Company are sometimes referred to herein together as, the "EMPLOYER".
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the parties hereto, intending to be
legally bound, agree as follows:
1. Employment and Term. Each of Group and Company hereby employs
Executive, and Executive hereby accepts employment with each of Group and
Company, as Chairman of the Board and Chief Executive Officer. Subject to all of
the terms and conditions of this Agreement, the term of this Agreement shall be
for a period beginning on the date hereof (the "EFFECTIVE DATE") and ending on
the third anniversary of the Effective Date, unless sooner terminated in
accordance with the other provisions hereof (the "TERM").
2. Duties. Executive shall have supervision and control of, and
responsibility for, the general management and day-to-day operations of Group
and Company, and shall have final authority in all Group and Company matters,
subject to the direction and control of the Boards of Directors (the "BOARDS")
of Group and Company, as applicable. Executive also shall perform such
additional duties and functions for, and on behalf of, Group and Company, as
applicable, consistent with his position and experience, as are reasonably
requested of him from time to time by the Boards. Executive shall devote all of
his working time, energy, skill and best efforts to the performance of his
duties under this Agreement in a manner that will faithfully and diligently
further the business and interests of the Group and Company. Executive will
faithfully comply with the corporate policies of Group and Company, as the same
may change from time to time.
3. Compensation, Benefits and Expenses.
3.1 Salary. The Employer shall pay to Executive a salary at
the annual rate of not less than $175,000 (the "SALARY"). The Salary shall be
reviewed by the Boards periodically in accordance with their normal compensation
review practices for executive officers, subject to minimum annual increases,
commencing January 1, 2006, equal to increases in the Consumer Price Index
(All-items portion, for all urban consumers), as published by the U.S. Bureau of
Labor Statistics for the 12-month period ending three months prior to the
applicable January 1. The Employer shall deduct or cause to be deducted from the
Salary and any Bonus (as hereinafter defined) all taxes and amounts required by
law to be withheld.
3.2 Bonus. In addition to the Salary and the Equity Incentive
provided under Section 3.3, Executive shall be entitled to a bonus of up to 40%
of the Salary (the "BONUS") with such Bonus to be determined by the Boards. Such
determination shall be based 30% on subjective performance factors at the
Boards' discretion and 70% on objective performance standards to be determined
and mutually agreed upon by Executive and the Boards with annual specific
performance goals to be set by the Boards in their reasonable discretion.
3.3 Equity Incentive. On or shortly after the Effective Date,
Group will grant Executive non-qualified stock options to purchase up to 375,000
(subject to customary adjustments) shares of Group Common Stock at an exercise
price of $0.25 per share. The stock options will vest upon Company meeting
certain performance goals, as follows: (i) if Company has gross revenues of at
least $9,400,000 for fiscal year 2005, 187,500 shares shall vest and become
available upon exercise; and (ii) if Company has gross revenues of at least
$27,000,000 for fiscal year 2006, an additional 187,500 shares shall vest and
become available upon exercise (such sales targets for fiscal years 2005 and
2006 hereafter referred to as the "SALES TARGETS"). If Company gross revenues in
either of 2005 or 2006 are less than the applicable Sales Target, but at least
80% of the applicable Sales Target, then a pro rata number of shares (based on
the portion of the applicable Sales Target that was met for such year) shall
vest. Employee will be required to exercise the stock options within 75 days
after they become vested. The stock options will be evidenced by a standard
stock option agreement containing additional terms and conditions that are
customary in equity grants of this type.
3.4 Benefits. Executive shall be entitled to participate in
all savings, stock purchase, group insurance, disability (insurance), equity
incentive and other standard employee benefit plans maintained or adopted by the
Employer, now existing or established in the future, to the extent Executive is
eligible under the general provisions of those plans; provided, however, that,
without limiting anything else herein, Executive is guaranteed the following
benefits during the Term:
(a) full medical and dental coverage;
(b) short-term and long-term disability coverage; and
(c) life insurance coverage in the amount of at least
two (2) times the Executive's then-applicable Salary.
2
3.5 Vacation. Executive shall be entitled to three weeks of
vacation during each calendar year, excluding the Employer's paid holidays,
during the first two years of the Term; thereafter, Executive shall be entitled
to four weeks of vacation during each calendar year.
3.6 Expenses. Executive shall be reimbursed by the Employer
for all ordinary, necessary and reasonable expenses actually incurred by
Executive in the course of the performance of services under this Agreement.
4. Termination; Compensation Continuation.
4.1 Termination upon Death. Executive's employment with the
Employer shall terminate as of the date of his death, at which time all of
Executive's rights to compensation and benefits under Section 3 of this
Agreement or otherwise shall immediately terminate, except that Executive's
heirs, personal representatives or estate shall be entitled to (a) any unpaid
portion of Executive's Salary for periods before the date of termination; (b)
any equity granted to Executive under Section 3.3 hereof or otherwise; (c) any
accrued benefits up to the date of termination; and (d) any benefits that are
required to be provided to Executive's dependents after the date of termination
under the general provisions of the employee benefit plans in which Executive
participated as of the date of his death.
4.2 Termination upon Disability. "DISABILITY" means any
physical or mental incapacity, illness or infirmity that prevents or
significantly restricts Executive from performing the normal duties of a
business executive on a full-time basis. If Executive suffers a Disability and
the Disability continues for more than four consecutive months or for periods
aggregating more than four months during any 12 month period, then the Employer
shall have the right to terminate Executive's employment upon written notice to
Executive, at which time all of Executive's rights to compensation and benefits
under Section 3 of this Agreement or otherwise shall immediately terminate,
except that Executive shall be entitled to (a) any unpaid portion of Executive's
Salary for periods before the date of termination; (b) any equity granted to
Executive under Section 3.3 hereof; (c) any accrued benefits up to the date of
termination; and (d) any benefits that are required to be provided after the
date of termination under the general provisions of the employee benefit plans
in which Executive participated as of the date of termination.
4.3 Termination by the Employer for Cause. The Employer may,
upon written notice to Executive after a vote of at least two-thirds of the
Group Board, immediately terminate Executive's employment for Cause. "CAUSE"
shall exist if Executive neglects his duties under this Agreement in any
material respect, commits an act of dishonesty or breach of trust that
materially injures the business or interests of the Employer, or breaches this
Agreement in any material respect; provided that Executive is given written
notice specifying, in reasonable detail, the nature of the alleged neglect, act
or breach, and either: (a) Executive has a reasonable opportunity to take
remedial action but fails or refuses to do so; or (b) in the Employer's
reasonable judgment, an opportunity to take remedial action would not be
meaningful or appropriate under the circumstances. "CAUSE" also shall exist if
Executive is convicted of a felony. Upon a termination of Executive's employment
for Cause, all of Executive's rights to compensation and benefits under Section
3 of this Agreement or otherwise shall immediately terminate, except that
Executive shall be entitled to (a) any unpaid portion of Executive's Salary for
periods before the date of termination; (b) any accrued benefits up to the date
of termination; (c) any benefits that are required to be provided after such
date under the general provisions of the employee benefit plans in which
Executive participated as of the date of termination; and (d) any equity granted
to Executive under Section 3.3 hereof or otherwise.
3
4.4 Termination without Cause. The Employer may, upon written
notice of at least 120 days to Executive after a vote of at least two-thirds of
the Board, terminate Executive's employment without Cause. Upon a termination of
Executive's employment without Cause, (a) the Company shall continue to pay to
Executive for the greater of (i) the period of time remaining under the Term or
(ii) a period of one year, Salary at the rate in effect on the date of
termination, plus a pro-rated bonus (the "PRO-RATED BONUS"), based on the Bonus
received by Executive for the last year prior to termination, and (b) the
Company shall continue to provide to Executive, for the period set forth in
clause (a) of this Section 4.4, any benefits that are required to be provided
after such date under the general provisions of the employee benefit plans in
which Executive participated as of the date of termination. Upon any termination
under this Section 4.4, Executive shall also be entitled to any equity granted
to Executive under Section 3.3 of this Agreement.
4.5 Termination for Good Reason. Executive may terminate his
employment hereunder for Good Reason. For purposes of this Agreement, "GOOD
REASON" means (a) a Change in Control of Group or Company (as defined below),
(b) any change in location of Executive's office that would require Executive to
increase his commute by 60 miles or more, (c) any assignment to Executive of any
duties other than those contemplated by, or any limitation of the powers of
Executive in any respect not contemplated by, Section 2 hereof, (d) any removal
of Executive from or any failure to re-elect Executive to any of the positions
indicated in Section 1 hereof, or (e) a reduction in Executive's rate of
compensation or a reduction in Employee's fringe benefits, or any material
breach of this Agreement by the Employer.
For purposes of this Agreement, "CHANGE IN CONTROL" of Group or Company means a
change in control of a nature that would be required to be reported in response
to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), whether or not the Group
or Company is then subject to such reporting requirements; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
after the Effective Date (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Company representing 20% or more of the combined voting power of the Group or
Company's, as applicable, then outstanding securities; or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Boards and any new director, whose
election by the Boards or nomination for election by the Group's or Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof.
4
If Executive terminates his employment for Good Reason, Executive shall be
entitled to (x) continue to receive Executive's then-current Salary for the
period of time set forth in Section 4.4(a) of this Agreement, plus a Pro-rated
Bonus, based on the Bonus received by Executive for the last year prior to
termination, and (y) the Employer shall continue to provide to Executive, for
the period set forth in Section 4.4(a), any benefits that are required to be
provided after such date under the general provisions of the employee benefit
plans in which Executive participated as of the date of termination. Executive
shall also be entitled to any equity granted to him under Section 3.3 of this
Agreement.
4.6 Return of Materials upon Termination. Upon termination of
Executive's employment with the Employer, regardless of the reason, Executive
(or his heirs, personal representatives or estate) shall promptly return to
Employer all documents (including all copies thereof) and other materials and
property of the Employer, or which pertains to any of their businesses,
including without limitation all correspondence files, customer and prospect
lists, price lists, contracts, software, manuals, technical data, forecasts and
budgets, in Executive's possession or control, no matter from whom or in what
manner acquired.
5. Discoveries. Executive shall communicate to the Employer, in writing
when requested, and preserve as proprietary and confidential information of the
Employer, all marketing strategies, new product ideas, and other works and
ideas, whether or not patentable or copyrightable, pertaining in any manner to
the Business (as defined in Section 6.1.1), that are developed or conceived by
Executive, whether alone or jointly with others, at any time (during or after
business hours) during the term of Executive's employment with the Employer. All
such works and ideas shall be the Employer's exclusive property, and Executive
hereby irrevocably assigns to the Employer any rights, title and interest in and
to any and all such works and ideas of Executive thereto. Executive acknowledges
that all original works of authorship which are made by Executive (solely or
jointly with others) within the scope of Executive's employment and which are
protected by copyright are "WORKS MADE FOR HIRE" pursuant to the United States
Copyright Act (17 U.S.C. Section 101). At the Employer's expense, Executive
shall, at any time and from time to time (including, without limitation, after
termination of Executive's employment with the Employer), (a) sign any documents
and take any other actions that the Employer deems necessary to confirm their
ownership of such works and ideas, and (b) otherwise fully cooperate with the
Employer to allow them to take full advantage of such works and ideas.
6. Restrictive Covenants of the Executive.
6.1 Certain Acknowledgements. Executive expressly acknowledges
that:
6.1.1 "BUSINESS" means and includes (i) the creation of
in-home diagnostic tests for consumer management of long-term health; (ii)
providing all services and assistance necessary for the marketing and
distribution of such diagnostic tests and related products; and/or (iii) any
other efforts pertaining to the development, manufacturing and marketing of
products that allow consumers to diagnose and/or monitor health conditions;
5
6.1.2 the Business is highly competitive, is marketed
throughout the United States and may be marketed in many other locations
worldwide;
6.1.3 during his tenure as an employee of the Employer, he
will have access to, receive, learn, develop and/or conceive proprietary and
confidential knowledge and information of the Employer, such knowledge and
information must be kept in strict confidence to protect the Business for the
benefit of the Employer's competitive position in the marketplace; and such
confidential information could be useful to competitors of the Employer for
indefinite periods of time; and
6.1.4 the covenants of this Section 6 (the "COVENANTS") are a
material part of the Agreement between the parties hereto and are an integral
part of the obligations of the Executive hereunder; the Covenants are supported
by good and adequate consideration; and the Covenants are reasonable and
necessary to protect the legitimate business interests of the Employer.
6.2 Nondisclosure Covenants. At all times after the date hereof,
except with the Employer's prior written consent, or except in connection with
the proper performance of services for and as an employee of the Employer,
Executive shall not, directly or indirectly, in any capacity:
6.2.1 communicate, publish or otherwise disclose to any
Person, or use for the benefit of any Person, any confidential or proprietary
property, knowledge or information of the Employer or concerning any of its
business, databases, assets or financial condition, no matter when or how such
knowledge or information was acquired, including (i) the identity of customers
and prospects, their specific requirements, and the names, addresses and
telephone numbers of individual contacts at customers and prospects; (ii)
prices, renewal dates and other detailed terms of customer and supplier
contracts and proposals; (iii) pricing policies, marketing and sales strategies,
methods of delivering products and services, and product and service development
projects and strategies; (iv) designs, concepts, know-how, user manuals,
technical manuals and other documentation for communications networks and
related technologies; (v) employment and payroll records; (vi) forecasts,
budgets, acquisition models and other nonpublic financial information; and (vii)
expansion plans, management policies, methods of operation, and other business
strategies and policies; including acquisition strategies, policies and
acquisition targets, or
6.2.2 disclose or use any proprietary products or services or
other confidential or proprietary knowledge or information of the Employer, no
matter when or how acquired, for any purpose not in furtherance of the
businesses and interests of the Employer.
6.3 Noncompetition Covenants. During the Term and for a period
ending one year after termination of employment with the Employer, except with
the Employer's prior written consent, Executive shall not, directly or
indirectly, in any capacity, at any location worldwide:
6.3.1 solicit, divert or appropriate or attempt to solicit,
divert or appropriate for the purpose of competing with the Employer, any Person
who, during and after Executive's employment with Employer, was a customer or
employee of the Employer, to become a customer or employee of any other Person
that conducts a business competitive with the Business of the Employer as such
is conducted by the Employer during the Term; or
6
6.3.2 establish, own, manage, operate, finance or control, or
participate in the establishment, ownership, management, operation, financing or
control of, or be a director, officer, employee, salesman, agent or
representative of, or be a consultant to, or act in any other capacity (with or
without compensation) for any Person that conducts a business competitive with
the Business of the Employer as such is conducted by the Employer during the
Term.
6.4 Certain Exclusions. For purposes of this Section 6,
confidential and proprietary knowledge and information of the Employer shall not
include any knowledge and information that (i) is now known by or readily
available to the general public, or that becomes known by or readily available
to the general public other than as a result of any breach of this Section 6 or
(ii) is required by law, regulation or court order to be disclosed, provided
that prior written notice is given to the Employer, and the Executive, to the
extent legally permitted, uses reasonable efforts to provide the Employer a
reasonable opportunity to obtain a protective or similar order prior to such
disclosure. The ownership by Executive of not more than one percent of the
outstanding securities of any public company shall not, by itself, constitute a
breach of the Covenants contained in Section 6, even if such public company
competes with the Employer.
6.5 Enforcement of Covenants. Executive expressly acknowledges that
it would be extremely difficult to measure the damages that might result from
any breach of any of the Covenants, and that any breach of any of the Covenants
will result in irreparable injury to the Employer for which money damages could
not adequately compensate. If a breach of the Covenants occurs, the Employer
shall be entitled, in addition to all other rights and remedies that the
Employer may have at law or in equity, to have an injunction issued by any
competent court enjoining and restraining Executive and all other Persons
involved therein from continuing such breach. The existence of any claim or
cause of action that Executive or any such other Person may have against the
Employer shall not constitute a defense or bar to the enforcement of any of the
Covenants. If the Employer must resort to litigation to enforce any of the
Covenants that has a fixed term, then such term shall be extended for a period
of time equal to the period during which a breach of such Covenant was
occurring, beginning on the date of a final court order (without further right
of appeal) holding that such a breach occurred or, if later, the last day of the
original fixed term of such Covenant, provided, however, that such extension
will only apply if the Employer commences such litigation prior to the end of
the fixed term of any such covenant.
6.6 Scope of Covenants. If any Covenant, or any part thereof, or
the application thereof, is construed to be invalid, illegal or unenforceable,
then the other Covenants, or the other portions of such Covenant, or the
application thereof, shall not be affected thereby and shall be enforceable
without regard thereto. If any of the Covenants is determined to be
unenforceable because of its scope, duration, geographical area or other factor,
then the court making such determination shall have the power to reduce or limit
such scope, duration, area or other factor, and such Covenant shall then be
enforceable in its reduced or limited form.
7
7. Miscellaneous
7.1 Prior Agreements and Claims. Executive represents and
warrants to Employer that (a) there are no restrictions, contracts, agreements
or understandings to which Executive is a party or by which he is bound that
would prevent or make unlawful his execution of this Agreement and his
employment with the Employer hereunder, (b) his execution of this Agreement and
his employment with the Employer hereunder do not constitute a breach of any
contract, agreement or understanding, oral or written, to which he is a party or
by which he is bound, and (c) he is free and able to execute this Agreement and
enter into employment with the Employer hereunder.
7.2 Assignment. Employer may assign its rights and duties
under this Agreement to any entity that is the successor, by operation of law or
otherwise, to the business of Employer, and the nature of Executive's duties
under this Agreement do not change in any material respect. This Agreement,
being for the personal services of Executive, shall not be assignable by him.
7.3 Definition of "Person." As used herein, "PERSON" means any
individual, sole proprietorship, joint venture, partnership, limited liability
company, company, bank, association, cooperative, trust, estate, government,
governmental, administrative or regulatory body, or other entity of any nature.
7.4 Notices. All notices, consents or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or one
business day after being sent by a nationally recognized overnight delivery
service, charges prepaid. Notices also may be given by facsimile and shall be
effective on the date transmitted if confirmed within 48 hours thereafter by a
signed original sent in the manner provided in the preceding sentence. Notice to
Executive shall be sent to his most recent address of record with the Employer.
Notice to the Employer shall be sent to Group's headquarters to the attention of
its Board. Either party may change its address for notice and the address to
which copies must be sent by giving notice of the new addresses to the other
party in accordance with this Section 7.4, provided that any such change of
address notice shall not be effective unless and until received.
7.5 Controlling Law, Jurisdiction and Process. This Agreement
is made under, and shall be construed and enforced in accordance with, the laws
of the Commonwealth of Pennsylvania applicable to agreements made and to be
performed solely therein, without giving effect to principles of conflicts of
law. In any action involving or relating to this Agreement, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
state and federal courts located in the Commonwealth of Pennsylvania, (b) each
of the parties irrevocably waives the right to trial by jury, and (c) each of
the parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 7.4 hereof.
8
7.6 Termination of Earlier Agreement. The parties acknowledge
and agree that the Employment Agreement dated as of September 1, 2003, between
Company and Executive is hereby terminated and superseded by this Agreement.
7.7 Other Provisions. This Agreement states the entire
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior oral and written communications and agreements, and all
contemporaneous oral communications and agreements, with respect to the subject
matter hereof. This Agreement shall bind, benefit and be enforceable by and
against Executive and his heirs, personal representatives, estate and
beneficiaries, and Employer and its successors and assigns. No amendment or
modification of this Agreement, and no waiver of any provision of this Agreement
or any breach or default thereof, shall be effective unless in writing and
signed by the party against whom enforcement is sought. No failure to exercise,
delay in exercising, or single or partial exercise of any right, power or remedy
by either party, and no course of dealing between the parties, shall constitute
a waiver of, or shall preclude any other or further exercise of, any right,
power or remedy. If any provision of this Agreement is construed to be invalid,
illegal or unenforceable, then the remaining provisions hereof shall not be
affected thereby and shall be enforceable without regard thereto. This Agreement
may be executed in any number of counterparts, each of which when so executed
and delivered shall be an original hereof. Section and subsection headings in
this Agreement are for convenience of reference only, do not constitute a part
of this Agreement, and shall not affect its interpretation.
[SIGNATURE PAGE FOLLOWS]
9
Witness the due execution and delivery hereof on and as of
February 10, 2005.
SYNOVA HEALTHCARE GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Operating Officer
SYNOVA HEALTHCARE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Operating Officer
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx X. Xxxx
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
10
