EXHIBIT 10.11
MOBILE P.E.T. SYSTEMS, INC.
EMPLOYMENT AGREEMENT
SECTION ONE
PARTIES
1. This Employment Agreement (this "Agreement") is effective as of
January 1,1999 (the "Effective Date"), between Mobile P.E.T. Systems, Inc. (the
"Company"), a Delaware corporation, whose address is 2240 Shelter Island Drive,
San Diego, California 92160,, and Xxxx X. Xxxxx ("the Executive"), a California
resident, whose address is 000 Xxxx Xxxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000.
SECTION TWO
RECITALS
2.1. This Agreement is made with reference to the following facts and
circumstances:
(a) The Executive is the Company's Chairman of the Board and Chief
Executive Officer. He has outstanding and special skills and abilities and
an extensive background in and knowledge of the Company's business and the
industry in which it is engaged.
(b) The Company desires assurance of the continued association and
services of the Executive in order to retain his experience, skills,
abilities, background and knowledge, and is therefore willing to engage his
services, on the terms and subject to the conditions set forth below.
(b) The Executive desires to continue in the Company's employ, and
to obtain the benefits conferred on him by this Agreement, and he is
willing to do so on those terms and conditions.
2.2. In consideration of these recitals and the mutual promises set
forth below, the Company hereby employs the Executive, and the Executive hereby
accepts this employment, on the terms and subject to the conditions set forth in
this Agreement.
SECTION THREE
THE EXECUTIVE'S DUTIES AND AUTHORITY
3.1. POSITION. The Company shall employ the Executive as the Company's
Chief Executive Officer.
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3.2. DUTIES. The Executive shall be the Company's chief executive
officer, with full power and authority to manage and conduct all of the
Company's business in accordance with the policies, directives, business plans,
and budgets established from time to time by the Company's board of directors
(the "Board"). The Executive shall not, however, take any of the following
actions on behalf of the Company without the Board's authorization and approval:
(a) Borrow or obtaining credit in any amount or executing any
guaranty (on behalf of the Company as guarantor).
(b) Purchase or lease capital assets, offices or facilities in
excess of those contained in an annual, quarterly or monthly budget
approved by the Board.
(c) Sell, transfer or otherwise dispose of capital assets other
than in the ordinary course of business.
(d) Sell, transfer or other dispose of, or discontinue, any
existing lines of business; or purchase or otherwise acquire, or engage in,
new lines of business.
(e) Exercise any discretionary authority or control over the
management of any employee welfare or pension benefit plan or over the
disposition of the assets of any such plan.
3.3. FULL TIME EMPLOYMENT. The Executive shall devote his full
energies, interest, abilities and productive time to the performance of his
duties under this Agreement and shall not, without the Company's prior written
consent, render to others services of any kind for compensation or engage in any
other business activity that would, in either case, substantially and materially
interfere with the performance of his duties under this Agreement.
3.4. COMPETITION DURING EMPLOYMENT. During the term of his employment,
the Executive shall not, directly or indirectly, whether as a partner,
employee, 10% or more shareholder, investor or otherwise, promote,
participate or engage in any activity or other business that directly
competes with the Employer's business of operating mobile PET Systems. The
Executive's engagement and participation in the establishment of Gamma Knife
surgical centers in the United States and worldwide are permissible
activities under this paragraph. In addition, the Executive, while employed,
shall not take any action without the Employer's prior written consent to
establish, form or become employed by a competing business on termination of
his employment by the Company. The Executive's failure to comply with the
provisions of the preceding sentence shall give the Company the right (in
addition to all other remedies the Company may have) to terminate any
benefits or compensation to which the Executive may be otherwise entitled
following termination of this Agreement.
3.4. PLACE OF EMPLOYMENT. The Executive shall perform the services he
is required to perform under this Agreement at the Company's executive offices
as established from time to time by the Board; provided, however, that the
Executive may be required from time to time to travel temporarily to other
locations or on the Company's business. If the Company should change the
location of its executive offices to a location that is not within reasonable
commuting distance to the Executives residence, then the Company shall pay the
Executive's reasonable relocation expenses
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incurred in moving to a residence that is within reasonable commuting
distance to the Company's new executive offices.
SECTION FOUR
TERM OF EMPLOYMENT
4.1. TERM. The term of this Agreement (the "Term") shall be for a
period of five years beginning on January 1, 1999, and ending on December 31,
2004, unless terminated as provided in section eight.
SECTION FIVE
COMPENSATION
5.1. BASE SALARY. The Company shall pay the Executive a base annualized
salary ("Salary") of $150,000. The Company shall pay the Executive Salary in
arrears in semi-monthly installments, or in accordance with the Company's
standard payroll payment practices in effect from time to time. For each
calendar year during the Term, beginning in calendar year 2000, the Employee's
Salary shall be increased by 10% if the average market price of the Company's
common stock for the month of December of the preceding year (December 1999 in
the case of calendar year 2000) has increased by at least 10% above the average
market price for the month of December of the second preceding year (December
1998 in the case of calendar year 2000).
5.2. STOCK OPTIONS. Any stock options made available to employee are
to be determined at the next Company Board Meeting.
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5.3. DISCRETIONARY BONUS. The Board shall, at least annually, review
and evaluate the Executive's performance, and consider awarding him a
discretionary bonus based upon that evaluation, and any other factors that the
Board, in its discretion, deems appropriate.
SECTION SIX
EXECUTIVE BENEFITS
6.1. GENERAL. The Company shall provide the Executive with the same
Executive benefits (such as vacation, health insurance, sick leave, disability
insurance) that it provides its other Executives, as and when he becomes
eligible for them.
6.2. EXPENSE REIMBURSEMENT. The Company shall reimburse the Executive
for his reasonable and necessary out-of-pocket expenses incurred in the
performance of his duties under this Agreement, upon his timely submission of
written requests therefore together with such receipts and documentation as the
Company may reasonably request, all in accordance with the Company's policies
and procedures in effect from time to time.
SECTION SEVEN
OWNERSHIP OF INTANGIBLES
7.1. All processes, inventions, patents, copyrights, trademarks, and
other intangible rights that may be conceived or developed by the Executive,
either alone or with others, during the term of his employment by the Company,
whether or not conceived or developed during his working hours, and with respect
to which the Company's equipment, supplies, facilities or trade secret
information was used, or that relate at the time of conception or reduction to
practice of the invention to the Company's business or to its actual or
demonstrably anticipated research and development, or that result from any work
performed by the Executive for the Company, shall be the sole property of the
Company. The Executive shall disclose to the Company all inventions conceived
during the Term of this Agreement and for one year thereafter, whether or not
the property of the Company under the preceding sentence, provided that such
disclosure shall be received by the Company in confidence. The Executive shall
execute all documents, including patent applications and assignments, required
by the Company to establish its rights under this paragraph 7.1.
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SECTION EIGHT
TERMINATION
8.1. TERMINATION BY THE COMPANY, FOR CAUSE. The Company may terminate
this Agreement at any time without notice if at any time from and after the
Effective Date the Executive is convicted of a felony, or of a misdemeanor
involving fraud or other moral turpitude; or is guilty of gross carelessness or
willful misconduct that has a direct, substantial and materially adverse effect
on the Company's business or operations.
8.2. TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate this Agreement at any time without cause, by giving the Executive
written notice of its election to do so. If the Company terminates this
Agreement other than for the reasons set forth in paragraphs 8.1, then the
Company shall immediately pay the Executive a lump sum amount equal to four
(4) months' salary, prorated, for each year of this agreement completed with
a minimum payment equal to 6 months' salary of the Executive's salary at the
time of termination.
8.3. TERMINATION BY RESIGNATION. The Executive my terminate this
Agreement by giving the Company not less than 30 days' prior written notice of
resignation. The Executive shall not be entitled to any Salary accruing after
the effective date of his resignation under paragraph 8.2 if he terminates this
Agreement.
8.4. TERMINATION ON DISABILITY. If, at the end of any calendar month
during the Term, the Executive is and has been for the four consecutive calendar
months then ending, or for 80% or more of the normal working days during the six
consecutive full calendar months then ending, unable due to mental or physical
illness or injury to perform his duties under this Agreement in his normal and
regular manner, this Agreement shall then terminate, subject to the Executive's
right to receive any disability benefits then provided by the Company.
8.5. TERMINATION BY DEATH. This Agreement shall terminate upon the
Executive's death.
8.5. MERGER, ASSET SALE. In the event of a merger in which the Company
is not the surviving entity, or of a sale of all or substantially all of the
Company's assets, the Company may assign this Agreement and all rights and
obligations under it to any business entity that succeeds to all or
substantially all of the Company's business.
8.6. RIGHTS AND OBLIGATIONS AFTER NOTICE OF TERMINATION. If either the
Company or the Executive gives notice of termination of this Agreement, or if it
becomes known that this Agreement will otherwise terminate in accordance with
its provisions, the Company may, in its sole discretion and subject to its other
obligations under this Agreement, relieve the Executive of his duties under this
Agreement.
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SECTION NINE
CONFIDENTIAL INFORMATION
9.1. CONFIDENTIAL INFORMATION. During the period of time that the
Company has been in business, it has acquired, created and developed, and will
continue to acquire, create and develop certain confidential and proprietary
information, which the Executive has been and will continue to be exposed to,
and he has had and will continue to have an opportunity to learn about the
Company's customers (including records and information pertaining to its
customers and to the relationship between these customers and the Company),
operations, methods of doing business, research and development, know-how,
formulas, processes, trade secrets, computer programs, algorithms, finances
(including all non-public financial statements and information), and other
confidential and proprietary information belonging to the Company (collectively,
"Confidential Information"). The term, "Confidential Information," includes all
documents, materials, and information concerning the Company that are furnished,
made available, or otherwise disclosed to the Executive, except information that
was or becomes generally available to the public other than as a result of a
disclosure by or through the Executive. All such information is considered
secret and is disclosed to the Executive in Confidence.
9.2. DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as required in the
course of his employment by the Company, the Executive shall not directly or
indirectly disclose to any third person any of the Company's Confidential
Information without the Company's prior written consent. This covenant shall
survive the termination of this Agreement.
9.3. UNFAIR COMPETITION. The Executive understands, acknowledges and
agrees that the Company is engaged in the business of providing and operating
mobile Positron Emission Tomography services in the United States, and is
expanding those services worldwide. For so long as the Executive is an
Executive of the Company, and for a period of 24 (twenty-four) months from
the date that he is no longer an Executive of the Company ( the "Restricted
Period"), the Executive agrees that he will not directly or indirectly
compete with the Company in the business of providing and operating mobile
Positron Emission Tomography services in the United States. As used in the
preceding sentence, "compete" means, but is not necessary limited to, the
Executive's engaging in or carrying on, either for himself or as an officer.
director, Executive, shareholder, partner, member, agent, associate,
consultant or affiliate of, or investor in any other person or entity that is
engaged in any activity described in the first sentence of this paragraph.
The Executive also agrees that for so long as the Executive is an Executive
of the Company and for the Restricted Period, he will not directly or
indirectly recruit, hire, assist others in recruiting or hiring, or refer to
others concerning employment, any person who is an Executive of the Company
or an affiliate of the Company. The provisions of this paragraph shall not
apply to the Executive if the Company terminates his employment or this
Agreement for any reason other than for one or more of the reasons set forth
in paragraph 8.1 above.
9.4. EQUITABLE ENFORCEMENT. The Executive represents and agrees that
he finds the restrictions contained in sections 9.2 and 9.3 to be fair and
reasonable. He also understands,
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acknowledges and agrees that if he were to breach any of his obligations
contained in sections 9.2 or 9.3, the Company would suffer immediate and
irreparable harm, and that an award of money damages would not be adequate to
fully compensate the Company for such harm. Accordingly, if the Executive
breaches or threatens to breach any of his obligations contained in
sections 9.2 or 9.3, the Company shall be entitled to a temporary restraining
order and a preliminary or temporary injunction, from any court having
jurisdiction, until the issue of such breach or threatened breach is finally
determined by arbitration pursuant to article ten. If such court determines
that it is reasonably likely that an arbitrator or arbitrator will find that
any of those obligations are not enforceable, in whole or in part, due to any
unreasonable restriction of duration, geographical area or activity, or any
combination thereof, such court shall nevertheless enjoin the breach thereof
as to such duration, geographical area and activity that the court determines
is fair and reasonable, pending arbitration proceedings to settle any
controversy or claim relating to the enforceability of the Executive's
obligations under sections 9.2 or 9.3. The court shall not require the
Company to post any bond or other surety as a condition to granting and
maintaining any temporary restraining order or preliminary injunction
pursuant to this paragraph 9.4.
SECTION TEN
DISPUTE RESOLUTION
10.1. BINDING ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or a breach of this Agreement, shall be settled by
arbitration, at San Diego, California, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, before a panel of
three arbitrators, one appointed by each of the Company and the Executive, and
the third chosen by the two so appointed. The decision of the arbitrators shall
be final, and judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction. The prevailing shall be awarded reasonable
attorneys and arbitration costs.
10.2. INTERIM RELIEF FROM A COURT. In additional to the interim
equitable enforcement provisions of paragraph 9.4, any party may request a court
to provide interim or provisional relief, and such request shall not be deemed
incompatible with this agreement to arbitrate or as a waiver of that agreement.
10.3. EQUITABLE ENFORCEMENT. The parties acknowledge and agree that in
the event of a breach or threatened breach of this Agreement, or a party's
failure to perform any provision hereof to be performed by that party, damages
would be extremely difficult if not impossible to determine, and that the other
parties to this Agreement would not have any adequate remedy at law. The parties
agree that an arbitrator may grant injunctive relief and specific performance in
his or her award, and that any court having jurisdiction my enforce such
equitable relief.
10.4. REFORMATION. In any arbitration proceedings relating to The
Executive's obligations under sections 9.2 or 9.3 above, if the arbitrators
should find that any of the restrictions contained in those paragraphs or any of
the Executive's obligations thereunder to be unenforceable, in whole
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or in part, due to any unreasonable restriction of duration, geographical
area or activity, or any combination thereof, then the arbitrators shall have
the Executive's and the Company's express authority to reform those
restrictions and obligations to reasonable restrictions and obligations, and
to grant the Company any other legal or equitable relief reasonably necessary
to protect the Company's interest in its Confidential Information, and to
prevent the Executive from unfairly competing with the Company.
ARTICLE ELEVEN
INDEMNIFICATION
11.1. The Company shall defend and indemnify the Executive against, and
hold him harmless from, all claims (whether or not well-founded) and liability
of any nature whatsoever that may be asserted by him by third parties (including
derivative claims asserted by third parties on behalf of the Company) that arise
out of, or are related to, or are in any way connected with his employment by
the Company or his service as a director of the Company, to the fullest extent
permitted by applicable law. Without limiting the generality of the foregoing,
the Company shall defend and indemnify the Executive, and hold him harmless from
any claim or liability as a guarantor or surety of any obligation of the
Company. The Company's obligations under this paragraph shall survive the
termination of this Agreement.
ARTICLE TWELVE
MISCELLANEOUS PROVISIONS
12.1. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties and supersedes all prior oral and written agreements,
understandings, commitments and practices between them, including all prior
employment agreements, whether or not fully performed before the date of this
Agreement. No amendments to this Agreement may be made except by a writing
signed by both parties.
12.2. LAW GOVERNING. This Agreement shall be construed and enforced
in accordance with the laws of California.
12.3. NOTICES. All notices, consents and other communications under
this Agreement shall be in writing (including facsimile transmissions) and shall
be deemed given on the earliest of (i) the day of actual receipt; (ii) the day
sent by facsimile transmittal with electronic confirmation of receipt, if sent
on a business day before 5:00 p.m., the recipient's time, otherwise the next
business day after the day sent; (iii) the next business day after delivery to a
national delivery service for overnight delivery, with delivery receipt
requested; and (iv) the fifth business day after deposit in the United States
mail, certified or registered with postage prepaid, return receipt requested, in
any such case addressed to the parties as set forth below or at such other
address as a party may specify by notice given pursuant to this Section 12.3:
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IF TO THE COMPANY: IF TO THE EXECUTIVE:
Mobile P.E.T. Systems, Inc. Xxxx X. Xxxxx
0000 Xxxxxxx Xxxxxx Xxxxx 000 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000 Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000 Facsimile No. (000) 000-0000
12.4. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable, the remainder of this Agreement shall nevertheless remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
12.5. BINDING EFFECT. This Agreement shall bind and accrue to
the benefit of the parties and their respective successors in interest.
12.5. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be binding and enforceable, but all of which, taken
together, shall constitute one agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of
the date set forth in paragraph 1.1 above.
THE COMPANY: THE EXECUTIVE:
MOBILE P.E.T. SYSTEMS, INC.,
by direction of its Board of Directors,
By /s/ Xxxxx Xxxxxx /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Name Xxxxx Xxxxxx, Director
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Date signed: 5/1/99 Date signed: 5/1/99
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CONSENT OF THE BOARD OF DIRECTORS
The undersigned, being all of the directors of Mobile P.E.T.
Systems, Inc. (the "Company"), hereby consent to the Company's execution of
the foregoing Employment Agreement (the "Agreement") with Xxxx X. Xxxx,
ratify, confirm and approve all of the Agreement's provisions, and direct any
officer of the Company to execute the Agreement on the Company's behalf.
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/s/ Xxxx X. Xxxxx /s/ Xxxxx Xxxxxx
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Xxxx Xxxxx, President and CEO Xxxxx Xxxxxx, Director
Date signed 5/1/99 Date signed 5/1/99
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