AMENDED AND RESTATED CONTRACT OF EMPLOYMENT
FOR CHIEF EXECUTIVE OFFICER
THIS AMENDED AND RESTATED CONTRACT OF EMPLOYMENT FOR CHIEF
EXECUTIVE OFFICER (the "Agreement") is made and entered into to
be effective as of the 6th day of FEBRUARY, 2001, by and
between Z/I Imaging Corporation, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxx, Xx. (the "Executive").
WITNESSETH:
WHEREAS, the Executive is currently employed by the Company
pursuant to the terms of that certain Contract of Employment for
Chief Executive Officer effective as of October 1, 1999; and
WHEREAS, the Company and the Executive desire to continue
that employment relationship and to amend and restate the terms
and conditions of such employment;
NOW, THEREFORE, in consideration of the premises hereof and
of the mutual promises and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment and Term of Employment. The Company hereby
agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, on the terms and conditions set forth
herein for the period commencing as of the date set forth above
and expiring on September 30, 2002, provided that this Agreement
shall be automatically renewed for additional one-year terms
unless either party gives written notice to the contrary at least
six (6) months prior to expiration of the initial or any renewal
term of this Agreement.
2. Positions and Duties. The Executive shall serve, in name
and in fact, as Chief Executive Officer of the Company and shall
have such powers and duties as are customarily associated with
such position. In addition, if requested and properly elected,
Executive shall serve on the Company's Board of Directors. The
Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company, shall use his
best efforts to advance the best interests of the Company, and
shall not engage in outside business activities which interfere
with the performance of his duties hereunder.
3. Representations and Warranties. The Executive represents
and warrants that the Executive is under no contractual or other
restrictions or obligations that will significantly limit the
Executive's activities on behalf of the Company or prohibit or
limit the disclosure or use by the Executive of any information
which directly or indirectly relates to the nature of the Company
or the services to be rendered by the Executive under this
Agreement.
4. Compensation.
(a) Base Salary. Until October 1, 2001, the Executive shall
receive a base salary at the rate of U.S. $225,000 per annum
during the term of this Agreement (as adjusted, the "Base
Salary"), payable in substantially equal periodic payments, which
shall be made no less frequently than monthly during the period
of the Executive's employment hereunder. Beginning on October 1,
2001 and each subsequent October 1 during the term of this
Agreement, the Company shall conduct a salary and performance
review and shall pay to the Executive the Base Salary determined
by the Board of Directors. Notwithstanding anything to the
contrary in this Section 4(a), Executive's Base Salary shall be
at least U.S. $225,000 per annum during the term of this
Agreement.
(b) Incentive Compensation. In addition to Base Salary, the
Executive shall be entitled to receive incentive compensation as
determined by the Board of Directors (the "Incentive
Compensation"), whether such Incentive Compensation is generally
available to employees of the Company or specifically available
to Executive.
(c) Expenses. During the term of his employment hereunder, the
Executive shall be entitled to be reimbursed (in accordance with
the policies and procedures established by the Board of Directors
for Company officers) for all reasonable expenses incurred by him
in performing services hereunder, provided that the Executive
properly accounts therefor in accordance with Company policy.
(d) Benefits. During the term of his employment hereunder, the
Company shall provide the Executive with the same benefits that
it provides generally to its other employees, including but not
limited to medical, pension, vacation, bonus, profit-sharing and
savings plans and similar benefits as such plans and benefits may
be adopted by the Company from time to time.
(e) Insurance. In addition to life insurance made available to
all employees of the Company, the Company shall, at its expense,
maintain life insurance payable to the Executive's designated
beneficiary in an amount equal to U.S. $1 million.
(f) Car Allowance. During the term of the Executive's
employment hereunder, the Company shall pay the Executive a
vehicle allowance equal to U.S. $600 per month.
5. Indemnification and Insurance. The Company shall indemnify
the Executive with respect to matters relating to the Executive's
services as an officer and/or director of the Company or any of
its Affiliates (as hereinafter defined) to the extent set forth
in the Company's Bylaws as amended from time to time and in
accordance with the terms of any other indemnification which is
generally applicable to executive officers of the Company or any
of its Affiliates that may be provided by the Company or any such
Affiliate from time to time. The foregoing indemnity is
contractual and will survive any adverse amendment to or repeal
of the Bylaws. The Company shall also cover the Executive under a
policy of officers' and directors' liability insurance providing
coverage that is comparable to that provided now or hereafter to
any other executive officer or director of the Company. The
provisions of this Section 5 shall survive the termination of the
Executive's employment for any reason and the term of this
Agreement. "Affiliate" means, with respect to the Company, each
individual, corporation, trust, partnership, limited partnership,
association, limited liability company, joint stock association
or other legal entity which controls, is controlled by, or is
under common control with the Company.
6. Offices. In addition to serving as Chief Executive Officer
of the Company, the Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries or
Affiliates.
7. Termination.
(a) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been
absent from his duties hereunder on a full time basis for ninety
(90) consecutive days, the Company may terminate its obligations
hereunder, except for those obligations provided for in Section
8(a) hereof. The determination of whether the Executive is
disabled due to physical or mental illness shall be made by a
licensed physician satisfactory to the Executive and to the
Company.
(b) Termination Upon Death. If the Executive should die during
the term of this Agreement, the Company's obligations under this
Agreement shall cease, except for those obligations set forth in
Section 8(a) hereof, and the Executive's employment shall be
terminated.
(c) Termination by the Company. The Company may terminate the
Executive's employment hereunder at any time for Cause or for any
other reason. For the purposes of this Agreement, "Cause" shall
mean: (i) Executive's willful, intentional or grossly negligent
failure to perform his duties under this Agreement diligently and
in accordance with the directions of the Board of Directors; (ii)
admission or final conviction of (or plea of guilty, nolo
contendere or similar effect to) Executive of a misdemeanor
materially adversely affecting the Company or of any felony;
(iii) Executive's commission of an act of fraud against, or
Executive's material misappropriation of property belonging to,
the Company; or (iv) any material breach by Executive of any
provision of this Agreement that is not remedied by Executive
within 30 days of Executive's receipt of written notice from the
Company, which notice shall include a detailed and specific
description of the alleged material breach or breaches.
(d) Notice of Termination. Any termination by the Company
pursuant to this Section 7 shall be communicated by written
notice of termination to the other party hereto.
(e) Resignation as Director. If Executive's employment with the
Company is terminated for any reason, and at the time of such
termination Executive is serving on the Company's Board of
Directors, Executive shall resign his position on the Company's
Board of Directors effective no later than the effective date of
the termination of Executive's employment with the Company;
provided, that Executive's obligation to resign as set forth in
this Section 7(e) shall be conditioned upon the Company's payment
to Executive of all applicable payments and other benefits
arising from such termination as required by this Agreement.
8. Compensation Upon Termination or During Disability.
(a) If the Executive's employment is terminated as a
result of disability under Section 7(a), the Executive shall
receive an amount which, when added to any disability benefits
provided for by the Company, equals his Base Salary until the
twelve (12) month anniversary of the termination. If the
Executive's employment shall be terminated because of the
Executive's death, the Company shall pay to the Executive's
estate, in a single lump sum, an amount equal to the Base Salary
payable through the six (6) month anniversary of the termination.
(b) If the Executive's employment shall be terminated for Cause
or if the Executive voluntarily terminates his employment, the
Company shall pay the Executive his Base Salary earned through
the date on which his employment is terminated. The Company
shall then have no further obligations to the Executive under
this Agreement.
(c) If the Company shall terminate the Executive's employment
under this Agreement pursuant to Section 7(c) hereof other than
for Cause, then the Company shall pay the Executive, as
liquidated damages or severance or both, his Base Salary payable
in substantially equal periodic payments no less frequently than
monthly for the longer of (i) a period ending on the twelve (12)
month anniversary of the termination, or (ii) a period ending on
the natural expiration date of the then-current term (without
giving effect to automatic renewal terms) of this Agreement.
9. Change in Control.
(a) In the event:
(i) a Change in Control (as defined below) occurs
during the term of this Agreement and prior to the earlier
to occur of the first anniversary of the Change in Control
or the expiration of the then-current term of this
Agreement, (A) the Executive is terminated by the Company
pursuant to Section 7(c), but not for Cause, or (B) the
Executive terminates, or gives notice of termination, for
Good Reason (as defined below); or
(ii) prior to the effectiveness of a firm
commitment underwritten public offering pursuant to a
registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of the Company's common
stock for the account of the Company in which the aggregate
price to the public for shares sold by the Company equals or
exceeds $10,000,000, Executive's service as a director of
the Company terminates for any reason other than for Cause
or Executive's death, disability or resignation;
then, in lieu of any payment and benefits payable pursuant to
Section 8 above, Executive shall be entitled to payment and
benefits as set forth in Section 9(b) below.
(b) If payment and benefits are required under Section
9(a) above, the Company shall:
(i) pay to the Executive as severance pay, in one
lump sum, in cash, no later than the tenth day following
termination, an amount equal to 3 times the Base Salary then
in effect; and
(ii) to the extent that Executive is eligible to,
and timely elects to, receive continuation coverage under
any group health plan providing coverage which is subject to
the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations
promulgated thereunder ("COBRA"), the Company shall timely
reimburse Executive to the extent permitted by law for any
premiums required for such COBRA coverage subject to the
limitations set forth in this Section 9(b)(ii). The
Company's obligation to reimburse Executive shall expire
upon the earlier to occur of (A) the date which is 18 months
after the date Executive's employment is terminated, or (B)
the date that Executive becomes an employee of another
company providing Executive with coverage substantially
similar to that provided to Executive by the Company
immediately prior to the termination of Executive's
employment. Notwithstanding anything to the contrary in
this Section 9(b)(ii), the payment of premiums by the
Company is not intended to alter in any way the provisions
of any group health plan of the Company, and all time
limits, effects of subsequent coverage and all other
relevant provisions of any such plan remain unchanged and
shall control Executive's entitlement to coverage or
benefits under such plan.
(c) As used herein, a "Change in Control" means the
happening of any of the following:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, other than the Company or a wholly-
owned subsidiary thereof, any employee benefit plan of the
Company or any of its subsidiaries, becomes the beneficial
owner of the Company's securities having 50% or more of the
combined voting power of the then outstanding securities of
the Company that may be cast for the election of directors
of the Company (other than as a result of an issuance of
securities initiated by the Company in the ordinary course
of business); or
(ii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business
combination, sales of assets or contested election, or any
combination of the foregoing transactions, less than a
majority of the combined voting power of the then
outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the
election of the directors of the Company or such other
corporation or entity after such transaction are held in the
aggregate by the holders of the Company's securities
entitled to vote generally in the election of directors of
the Company immediately prior to such transaction; or
(iii) during any period of two consecutive
years, individuals who at the beginning of any such period
constitute the Board of Directors of the Company cease for
any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the
Company's stockholders, of each director of the Company
first elected during such period was approved by a vote of
at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the
beginning of any such period.
(d) For purposes of this Agreement, "Good Reason"
shall mean the occurrence of any of the following events without
the Executive's express written consent:
(i) the assignment to the Executive by the
Company of duties inconsistent with the Executive's
position, duties, responsibilities and status with the
Company immediately prior to a Change in Control, or a
change in the Executive's titles or offices as in effect
immediately prior to a Change in Control, or any removal of
the Executive from or any failure to reelect the Executive
to any of such positions; provided, that any such event that
occurs in connection with the termination of employment for
disability, for retirement, for Cause, as a result of the
Executive's death, or by the Executive other than for Good
Reason, shall not fall within the purview of this Section
9(d)(i);
(ii) a reduction by the Company in the Executive's
Base Salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this
Agreement;
(iii) a relocation of the Company's principal
executive offices to a location outside of Huntsville,
Alabama, or the Executive's relocation, as required by the
Company, to any place other than the location at which the
Executive performed the Executive's duties prior to a Change
in Control, except for required travel by the Executive on
the Company's business to an extent substantially consistent
with the Executive's business travel obligations at the time
of a Change in Control;
(iv) any material breach by the Company of any
provision of this Agreement; or
(v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
10. Binding Agreement. This Agreement and all obligations of
the Company hereunder shall be binding upon the successors and
assigns of the Company. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, and legatees.
11. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxx X. Xxxxxx, Xx.
000 Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
If to the Company:
Z/I Imaging Corporation
000 Xxxxxxx Xxxx, Xxxxx 0
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Corporate Secretary
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
12. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city,
and other taxes as shall be required pursuant to any law or
government regulation or ruling.
13. Enforcement of Agreement. The Company shall pay or
reimburse the Executive for all costs and expenses (including
court costs and reasonable attorney's fees) incurred by the
Executive in connection with any litigation seeking to enforce
the Executive's rights under this Agreement, provided that the
Executive is substantially successful in such litigation.
14. Governing Law. This Agreement shall be construed according
to the laws of Alabama, without giving effect to the principles
of conflicts of laws of such state.
15. Amendment; Modification; Waiver. This Agreement may be
amended only by the written agreement of the parties hereto. No
provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is
agreed to in writing signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto or compliance with any condition or provision
of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
16. Binding Effect.
(a) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer, or delegate this Agreement or any rights or obligations
hereunder except as expressly provided for herein. Without
limiting the generality of the foregoing, Executive's right to
receive payments hereunder shall not be assignable, transferable,
or delegable, whether by pledge, creation of a security interest
or otherwise, other than by a transfer by his will or by the laws
of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this paragraph, the Company
shall have no liability to pay any amount so attempted to be
assigned, transferred, or delegated.
(b) The Company and Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of
the agreements contained herein and, in the event of any such
breach, the Company and Executive hereby agree and consent that
the other shall be entitled to a decree of specific performance,
mandamus, or other appropriate remedy to enforce performance of
this Agreement.
17. Entire Contract. This Agreement constitutes the entire
agreement and supersedes all other prior and contemporaneous
agreements, employment contracts and understandings, both written
and oral, express or implied with respect to the subject matter
of this Agreement, including the Contract of Employment for Chief
Executive Officer effective October 1, 1999, between the
Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
Z/I IMAGING CORPORATION
By: /s/ X. X. Xxxxxxxx
-------------------
Name: XXX XXXXXXXX
-------------------
Title: CHAIRMAN
-------------------
/S/ Xxxxx X. Xxxxxx Xx.
--------------------------
Xxxxx X. Xxxxxx, Xx.
