EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated August 15, 2001 between Imaging
Diagnostic Systems, Inc., a Florida corporation (the "Company"), and Xx Xxxxxx
(the "Executive").
WITNESSETH:
WHEREAS, The Company is engaged in the business of developing laser based
medical optical imaging devices; and
WHEREAS, the Company has the intent to market and sell its products and
services to clients and potential clients throughout the world; and
WHEREAS, the Executive has expertise in the field of Operations,
WHEREAS, the Company wishes to enter into an Employment Agreement to employ
the Executive as its Chief Operating Officer and Executive Officer, charged with
all the responsibilities and duties legally required by the State of Florida;
and
WHEREAS, in the course of the Executive's employment, the Executive will
have access to and acquire knowledge of valuable trade secrets, confidential
information and other proprietary information belonging and relating to the
Company and its business, and which the Company has a legitimate interest in
protecting; and
WHEREAS, the Company and Executive are willing to accept such employment
and render such services, all upon and subject to the terms and conditions
contained in this Employment Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the promises and the mutual covenants
set forth in this Agreement, and intending to be legally bound, the Company and
the Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive and the Executive
hereby accepts employment upon the terms and condition hereinafter set forth.
2. TERM & TERMINATION.
i. Term. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period
commencing on August 15, 2001 and ending three years from that
date (the "Term").
ii. Termination without Cause. The Company may terminate the
Executive's employment without Cause. Such termination will
become effective upon the dated specified in such notice,
provided that such date is at least 30 days from the date of
specified in such notice. Upon such notice the Executive shall
not be entitled to any additional compensation or benefits after
his termination date.
iii. Termination for Cause. The Company may terminate the Executive
pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination shall
become effective upon the giving of such notice. Upon such
termination the Executive shall have no right to compensation,
commission, bonus, benefits or reimbursement pursuant to this
contract, for any period subsequent to the termination. Further
the Executive shall have no right to any non-unvested stock
options. For purposes of this section, "cause" shall mean; (1)
the Executive is convicted of a felony; (2) the Executive, in
carrying out his duties hereunder, has been found in a civil
action by the Company, to have committed willful gross negligence
or willful gross misconduct resulting, in either case, in
material harm to the Company; (3) the Executive misappropriates
Company funds or otherwise defrauds the Company; (4) the
Executive materially breaches any provision of this Agreement;
(5) the Executive materially fails to perform his duties under
section four (4) resulting in harm to the Company.
iv. Death or Disability. This Agreement will terminate upon the death
or disability of the Executive. For purposes of this Section,
"disability" shall mean that for a period of six (6) months in
any 12-month period the Executive is incapable of substantially
fulfilling his duties because of physical, mental or emotional
incapacity from injury, sickness or disease. The Executive is not
entitled to any compensation or benefits after said date of death
or disability.
v. Special Termination. The executive, with or without a change in
title or formal corporate action, shall no longer exercise all of
his duties and responsibilities then the Executive, by written
notice to the Company, or the Company materially breaches this
Agreement.
vi. Voluntary Termination. The Executive, on 30 days prior written
notice to the Company, may terminate his employment voluntarily.
Upon such termination, the Company will pay the Executive's
compensation through the date of such termination. After such
date, the Executive shall no longer be entitled to receive
compensation, reimbursement, non-vested stock options or
benefits.
vii. Continuing Effect. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of
Sections 7,8,9,10,11 and 12 shall remain in full force and effect
and the provisions of these Sections shall be binding upon the
legal representatives, successors and assigns of the Executive.
3. COMPENSATION.
1) The Company will pay the Executive an annual base salary of $110,000 per
annum in equal semi-monthly installments.
2) During the term of his employment, the Executive shall be entitled to
participate in employee benefits plans or programs of the Company, if any, to
the extent the Executive is eligible to participate hereunder.
a) The Executive is entitled to participate in the Company's the
Company's 401k retirement savings plan immediately.
b) The Company's Comprehensive Group Insurance Program maintained by
the Company will be available to the Executive after a 90-day
probationary period.
3) The Company will reimburse the Executive for his COBRA coverage until
the 90-day probationary period is completed.
4) The Executive shall receive incentive options to purchase up to an
aggregate of 500,000 shares of the Company's common stock at an exercise price
of $.77 per share. The options shall vest as follows:
(i) Options to purchase up to 166,666.66 shares may be exercised
after 12 months (August 15, 2002) of continuous employment.
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(ii) Options to purchase up to 166,666.66 shares may be exercised
after 24 months (August 15, 2003) of continuous employment.
(iii) Options to purchase up to 166,666.66 shares may be exercised
after 36 months (August 15, 2004) of continuous employment.
In the event that the Company experiences a change of control, defined as a
sale of the Company, the Company is acquired by another company or similar
situation, then all options vest immediately. (Please see stock option agreement
for specific details.) In the event the Executive is terminated without cause,
any options that were scheduled to vest within the next twelve (12) months will
vest and remain exercisable during the next twelve (12) months, which period
shall commence on the date of termination. In the event the Executive is
terminated with cause only that portion of the option exercisable at the time of
such termination of employment may thereafter be exercised. It may not be
exercised more than three (3) months after said termination or after the
expiration of the option, which ever is sooner.
5) After one (1) continuous year of employment, the Executive will be
entitled to nine (9) paid holidays and three (3) weeks of vacation per year,
without loss of compensation or other benefits to which he is entitled under
this Agreement, to be taken at such times as the Executive may select and the
affairs of the Company may permit.
4. DUTIES.
(a) General Duties. The Executive shall be employed as the COO of the
Company, with duties and responsibilities that are customary for such Executive,
including overseeing product development and manufacturing, subject to the
direction of the Company's CEO and as directed by the company by-laws. The
Executive will use the standard of care befitting of such an executive in
performing his duties and in discharging his responsibilities pursuant to this
Agreement, which duties and responsibilities shall be discharged competently,
carefully, and faithfully.
(b) Performance Standards. The Board of Directors and the CEO of the
Company, with the input of the Executive, will establish performance criteria,
including but not limited to strategic goal accomplishments to measure the
Executive's performance. These goals may be changed from time to time as the
Board of Directors and the CEO of the Company sees fit.
(c) Extent of Services. The Executive will devote all of his time,
attention and energies during normal business hours (exclusive of periods of
sickness and disability and of such normal holiday and vacation periods as have
been established by the Company) to the affairs of the Company. The Executive
will not enter the employ of, or serve as a consultant to, or in any way perform
any services with or without compensation to any other persons, business or
organization without the prior consent of the board of directors of the Company;
provided, that the Executive shall be permitted to devote a limited amount of
his time, without compensation, to charitable or similar organizations.
5. PLACE OF PERFORMANCE. The Executive hereby acknowledges that the
Company's existing and potential clients are located throughout the world and
that the Company is actively engaged in marketing and selling its products and
services to such clients throughout the world.
6. NON-DISCLOSURE OF INFORMATION. The Executive recognizes and acknowledges
that the Company's trade secrets and proprietary information and processes,
("Confidential Business and Technical Information") as they may exist from time
to time, are valuable, special and unique assets of the Company's business,
access to and knowledge of which are essential to the performance of the
Executive's duties hereunder.
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The Executive will not, during or after the term of his employment by the
Company, in whole or in part, disclose such Confidential Business and Technical
Information to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the Executive make use of any such
Confidential Business and Technical Information for his own purposes or for the
benefit of any person, firm, corporation or other entity except the Company
under any circumstances during or after the term of his employment, provided
that after the term of his employment these restrictions shall not apply to such
secrets, information and processes which are then in the public domain provided
that the Executive was not responsible, directly or indirectly, for such
secrets, information or processes entering the public domain without the
Company's consent.
In the event an action is instituted and prior knowledge is an issue, it
shall be the obligation of the Executive to prove by clear and convincing
evidence that the Confidential Business and Technical Information disclosed was
in the public domain, was already known by the Recipient, or was developed
independently by the Recipient. The Executive agrees to hold as the Company's
property, all memoranda, books, papers, letters, formulas and other data, and
all copies thereof and there from, in any way relating to the Company's business
and affairs, whether made by him or otherwise coming into his possession, and
upon termination of his employment, or on demand of the Company, at any time, to
deliver the same to the Company.
7. NON-COMPETITION AGREEMENT.
(a) The Executive acknowledges and agrees that, pursuant to Florida Statute
Section 542.335, based on having access to and acquiring knowledge of highly
sensitive and valuable trade secrets, and confidential or proprietary
information belonging or relating to the Company, the Executive would be in a
position to cause serous and irreparable harm to the Company in the event that,
following the termination of his employment hereunder, the Executive were to
compete with or be involved in an enterprise which competes with the Company,
engages in the same business as the Company, or performs research and
development in the field of medical optical imaging.
(b) Until termination of his/her employment and for a period of 24 months
commencing on the date of termination, the Executive, directly or indirectly, in
association with or as a stockholder, director, officer, consultant, executive,
partner, joint venture, member or otherwise of or through any person, firm,
corporation, partnership, association or other entity, covenants that the
Executive will not compete with the Company or any of its affiliates in the
design, manufacture, construction, offer, sale or marketing of products or
services that are competitive with the products or services offered by the
Company, within the United States or anywhere in the world. The Executive
covenants and agrees that during his employment and for a period of 24 months
immediately following the termination of such employment, the Executive will
not, either individually or in partnership or jointly or in conjunction with any
person, firm, business, corporation, partnership joint venture, entity,
syndicate or association, as an executive, principal, agent, officer director
consultant, advisor, distributor, dealer, contractor, trustee, lender,
shareholder or in any manner or capacity whatsoever, directly or indirectly, be
employed by, render services to, carry on or be engaged in, or be concerned with
or be interested in or advise, lend money to, guarantee the debts or obligations
of, or in any manner participate in the management, operation or control of any
business which is directly competitive with the business of the Company, engages
in the same business as the company or performs research and development in the
medical optical imaging field with any entity located anywhere in the world.
(c) For the purposes of this paragraph a business shall be deemed to be in
"direct competition" or "directly competitive" with the Company if such business
is engaged in developing, manufacturing, marketing, selling, or distributing
medical optical imaging devices.
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8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive acknowledges
that during his employment he will learn and will have access to confidential
information regarding the Company and its affiliates, including without
limitation (i) confidential or secret plans, programs, documents, agreements or
other material relating to the business, services or activities of the Company
and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to as
"confidential information"). The Executive acknowledges that such confidential
information as is acquired and used by the Company or its affiliates is a
special, valuable and unique asset. All records, files, materials and
confidential information obtained by the Executive in the course of his
employment with the Company are confidential and proprietary and shall remain
the exclusive property of the Company or its affiliates, as the case may be. The
Executive will not, except in connection with and as required by his performance
of his duties under this Agreement, for any reason use for his own benefit or
the benefit of any person or entity with which he may be associated or disclose
any such confidential information to any person, firm, corporation, association
or other entity for any reason or purpose whatsoever without the prior written
consent of the board of directors of the Company, unless such confidential
information previously shall have become public knowledge through no action by
or omission of the Executive.
9. NON-SOLICITATION OF EXECUTIVES
The Executive covenants and agrees that while he is employed by the Company
and for a period of twenty-four (24) months immediately following the
termination of such employment, he will not, directly or indirectly, in any
manner whatsoever, on his own behalf, or on behalf of any person, firm,
business, corporation, partnership, joint venture, entity, syndicate or
association solicit, induce or cause, or attempt to induce or cause any person
who was any executive or consultant or in relationship with, or to cease
providing services to the Company.
10. REASONABLENESS OF CONFIDENTIALITY, NON-COMPETITION AND
NON-SOLICITATION OBLIGATION AND COVENANTS
(a) The Executive hereby acknowledges and confirms that the obligations and
covenants set out in the above paragraphs are reasonable and necessary to
protect the legitimate interests of the Company. Without limiting the generality
of the foregoing, the Executive hereby acknowledges and confirms that given,
among other things, the nature and international scope of the Company's
operations and of the employment duties to be performed by the Executive
hereunder, the geographic scope and duration of the restrictions set fourth
above are reasonable and necessary to protect the legitimate interests of the
Company.
(b) The Executive further acknowledges and agrees that these obligations
and covenants will not preclude him from becoming gainfully employed following
their termination of his employment in his/her profession.
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11. INVENTIONS.
(a) The Executive hereby sells, transfers and assigns to the Company or to
any person, or entity designated by the Company, all of the entire right, title
and interest of the Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable material, made
or conceived by the Executive, solely or jointly, or in whole part, during the
term hereof which (i) relate to methods, apparatus, designs, products, processes
or devices sold, leased, used or under construction or development by the
Company or any subsidiary, or (ii) otherwise relate to or pertain to the
business, functions or operations of the Company or any subsidiary, or (iii)
arise wholly or partly from the efforts of the Executive during the term hereof.
The Executive shall communicate promptly and disclose to the Company, in such
form as the Company requests, all information, details and data pertaining to
the aforementioned inventions, ideas, disclosures and improvements; and, whether
during the term hereof or thereafter, the Executive shall execute and deliver to
the Company such formal transfers and assignments and such other papers and
documents as may be required of the Executive at the Company's expense to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications and, as to copyrightable material, to obtain
copyright thereon. Any invention by the Executive within one (1) year following
the termination of the Agreement shall be deemed to fall within the provisions
of the paragraph unless proven by the Executive to have been first conceived and
made following such termination.
(b) No Payment. The Executive acknowledges and agrees that no separate or
additional payment will be required to be made to his/her in consideration of
his/her undertakings in this Section 8.
12. EQUITABLE RELIEF.
(a) The Company and the Executive recognize that the services to be
rendered under this Agreement by the Executive are special, unique and of
extraordinary character, and that in the event of the breach by the Executive of
the terms and conditions of this Agreement or if the Executive, without the
prior consent of the Board of Directors of the Company, shall leave his
employment for any reason and take any action in violation of Section 6, Section
7, Section 8, or Section 9, the Company will be entitled to institute and
prosecute proceedings in any court of competent jurisdiction referred to in
Section 11(b) below, to enjoin the Executive from breaching the provisions of
Section 6 or Section 7, or Section 8. In such action, the Company will not be
required to plead or prove irreparable harm or lack of an adequate remedy at
law. Nothing contained in this Section 11 shall be construed to prevent the
Company from seeking such other remedy in arbitration in case of any breach of
this Agreement by the Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in state court in Broward
County, Florida where the Company maintains its principal offices. The Executive
and the Company irrevocably and unconditionally submit to the jurisdiction of
such court and agree to take any and all future action necessary to submit to
the jurisdiction of such courts. The Executive and the Company irrevocably waive
any objection that they now have or hereafter or hereafter may have to the
laying of venue of any suit, action or proceeding brought in any such court and
further irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Final
judgment against the Executive or the Company in any such suit shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy or which shall be conclusive evidence of the fact and the
amount of any liability of the Executive or the Company therein described, or by
appropriate proceedings under any applicable treaty or otherwise.
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13. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
obligations hereunder may not be assigned or alienated and any attempt to do so
by the Executive will be void.
14. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances, as they exist on the date hereof. Should a
decision, however, be made at a later date by a court of competent jurisdiction
that the character, duration or geographical scope of such provisions is
unreasonable, then it is the intention and the agreement of the Executive and
the Company that this Agreement shall be construed by the court in such a manner
as to impose only those restrictions on the Executive's conduct that are
reasonable in the light of the circumstances and as are necessary to assure to
the Company the benefits of this Agreement. If, in any judicial proceeding, a
court shall refuse to enforce all of the separate covenants deemed included
herein because taken together they are more extensive than necessary to assure
to the Company the intended benefits of this Agreement, it is expressly
understood and agreed by the parties hereto that the provisions of this
Agreement that, if eliminated, would permit the remaining separate provisions to
be enforced in such proceeding shall be deemed eliminated, for the purposes of
such proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be invalid or
unenforceable or is prohibited by the laws of the state or jurisdiction where it
is to be performed, this Agreement shall be considered divisible as to such
provision and such provision shall be inoperative in such state or jurisdiction
and shall not be part of the consideration moving from either of the parties to
the other. The remaining provisions of this Agreement shall be valid and binding
and of like effect as though such provision were not included.
14. NOTICES AND ADDRESSES. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
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To the Company: Imaging Diagnostic Systems, Inc.
0000 X.X. 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
To the Executive: Xx Xxxxxx
c/o Imaging Diagnostic Systems, Inc.
0000 X.X. 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
15. COUNTERPART. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
16. ARBITRATION. Except for any controversy or claim seeking equitable
relief as provided in Section 11 of this Agreement, any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof or any other dispute between the parties, shall be
submitted to one arbitrator and settled by arbitration in Fort Lauderdale,
Florida, in accordance with the rules, then obtaining, of the American
Arbitration Association. Any reward made by such arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
17. ATTORNEYS FEES. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, the prevailing party shall be entitled to
reasonable attorneys fees, costs and expenses.
18. GOVERNING LAW. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
20. ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to carry out
the purpose and intent of this Agreement and to fulfill the obligations of the
parties hereunder.
21. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
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22. WAIVER OF BREACH. A waiver by the Company or the Executive of a breach
of any provision of the Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as this 15th day of August 2001.
Imaging Diagnostic Systems, Inc. Executive
/s/ Xxxxx X. Xxxxxx /s/ Xx Xxxxxx
---------------------------- ---------------------
Xxxxx X. Xxxxxx, Chairman & CEO Xx Xxxxxx, COO
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