Exhibit 10.1
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PARADIGM MEDICAL INDUSTRIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 18th day of March, 2004, by and between PARADIGM MEDICAL INDUSTRIES, INC.,
a Delaware corporation (the "Company") and XXXX X. XXXX (the "Employee"), to be
effective as of April 1, 2004 (the "Effective Date").
WITNESSETH:
WHEREAS, the Company desires to employee Employee, and Employee desires
to become employed by the Company;
NOW THEREFORE, In consideration of Employee's employment by the
Company, and the mutual promises and covenants contained in, and the mutual
benefits to be derived from this Agreement, and to set forth and establish the
terms and conditions upon which Employee shall be employed by the Company, the
parties hereto agree as follows:
1. Employment
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The Company hereby employs Employee and Employee hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Terms and Conditions of Employment.
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(a) Employee shall be employed in the position of President and
Chief Executive Officer of the Company and shall supervise, control and
be responsible for all aspects of the business operations of the
Company and its subsidiaries, including direct supervision of the day-
to-day operations of all departments of the Company and its
subsidiaries. Employee shall also perform such related services and
duties for the Company as may be assigned or delegated to him from time
to time by the Board of Directors.
(b) Throughout his employment hereunder, Employee shall devote his
full time, energy and skill to perform the duties of his employment
(reasonable vacations in accordance with this Agreement and reasonable
absences due to illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts to follow and
implement all management policies and decisions of the Board of
Directors.
3. Compensation and Benefits.
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As the entire consideration for the services to be performed and the
obligations incurred by Employee hereunder, and subject to the terms and
conditions hereof, during the Term of this Agreement Employee shall be entitled
to the following:
(a) Salary. Commencing from the effective date of this Agreement,
the Company shall pay Employee an annual salary ("Annual Salary") of
$175,000. Such Annual Salary, which shall be pro-rated for any partial
employment period, will be payable in equal bi-monthly installments or
at such other intervals as may be established for the Company's
customary pay schedule. The Annual Salary is subject to such
incremental increases as the Board of Directors may determine from time
to time in its sole discretion. The first review of the Annual Salary
by the Board of Directors shall be as of September 30, 2003.
(b) Bonus. As further compensation to Employee, and as further
consideration for his entering into this Agreement and the services to
be rendered by Employee hereunder, the Company may pay Employee
annually following the end of each fiscal year, a cash bonus. The
Company's Board of Directors, in its sole discretion, shall determine
the amount of any bonuses and the terms and conditions under which
Employee shall receive the bonus. Such bonus shall be paid to Employee
upon the satisfaction by the Company of the performance objectives that
shall be determined by the Company's Board of Directors. Employee shall
have the right to prepare and submit a proposed bonus plan to the Board
of Directors for its review and consideration. Without limiting the
generality of the foregoing, one of the performance objectives shall be
an increase in the earnings per share (EPS) of the Company over the
previous year's earnings per share (EPS). Employee shall also have the
right to direct any portion of the bonus to be paid into a deferred
compensation fund.
(c) Incentive Stock Option Plan. Employe shall be entitled to
participate in the Company's Company's 1995 Stock Incentive Plan to the
extent of Employee's eligibility under such plan. Upon execution of
this Agreement, the Company shall cause to be issued to Employee stock
options for 1,000,000 shares of the Company's common stock pursuant to
the terms and conditions of said plan. The options shall be exercisable
at $.13 per share and vest in thirty-six equal monthly installments of
27,778 shares, beginning on April 30, 2004, until such shares are
vested. The vesting of the shares is contingent upon the continued
employment of Employee with the Company. In the event of a change of
control of the Company, then all outstanding stock options would have
been vested at the end of the Term had Employee remained employed by
the Company to the end of the Term, subject to any restrictions that
may apply under the law, shall be immediately vested. A change of
control shall be deemed to have occurred if (A) a tender offer shall be
made and consummated for the ownership of more than 25% of the
outstanding shares of common stock of the Company, (B) the Company
shall be merged or consolidated with another corporation and, as a
result of such merger or consolidation, less than 25% of the
outstanding shares of common stock of the surviving or resulting
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corporation shall be owned in the aggregate by the former shareholders
of the Company, as the same shall have existed immediately prior to
such merger or consolidation, (C) the Company shall sell all or
substantially all of its assets to another corporation that is not a
wholly-owned subsidiary or affiliate, (D) as a result of, or in
connection with, any contested election for the Board of Directors of
the Company, or any tender or exchange offer, merger or business
combination or sale of assets, or any combination of the foregoing (a
"Transaction"), the persons who were directors of the Company before
the Transaction shall cease to constitute a majority of the Board of
Directors of the Company, or any successor thereto, or (E) a person,
within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in
effect on the date hereof) of the Securities Exchange Act of 1934
("Exchange Act") other than any officer or director of the Company,
shall acquire more than 20% of the outstanding shares of common stock
of the Company (whether directly, indirectly, beneficially, or of
record).
(d) Additional Benefits. Employee shall also be entitled to
participate, to the extent of Employee's eligibility, in any employee
benefit plans made available by the Company to its employees during the
Term of this Agreement, including, without limitation, such profit
sharing plans, 401K and cafeteria plans, and health, life,
hospitalization, dental, disability or other insurance plans as may be
in effect from time to time. Such participation shall be in accordance
with the terms established from time to time by the Company for
individual participation in any such plans.
(e) Life Insurance. The Company shall provide Employee with a life
insurance policy in an amount equal to twice his Annual Salary.
(f) Vacation, Sick Leave, and Holidays. Employee shall be entitled
to three weeks of vacation, and also sick leave and holidays at full
pay in accordance with the Company's policies established and in effect
from time to time.
(g) Deductions. The Company shall have the right to deduct and
withhold from the compensation due to Employee hereunder, including
Employee's Annual Salary and Compensation Bonus, if any, such taxes and
other amounts as may be customary or required by law.
4. Business Expenses.
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The Company shall promptly reimburse Employee for all reasonable
out-of-pocket business expenses incurred in performing Employee's duties
hereunder, in accordance with the Company's policies with respect thereto in
effect from time to time (including without limitation policies regarding prior
consent for significant expenditures), provided that Employee promptly furnishes
to the Company adequate records and other documentary evidence required by all
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federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such business expense as a deduction
on the federal and state income tax returns of the Company.
5. Term and Termination.
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(a) Term. The Term of this Agreement shal commence on the
Effective Date of this Agreement, and subject to earlier termination or
extension as provided below, and except for the provisions of this
Agreement and the Exhibits hereto which, by their terms, continue in
force beyond the termination hereof, the Term of this Agreement shall
end on the third anniversary of the Effective Date of this Agreement
(April 1, 2007).
(b) Termination on Death and for Cause. This Agreement, and
Employee's employment hereunder, shall terminate upon Employee's death
and is otherwise immediately terminable for cause (as defined below)
upon written notice from the Company to Employee. As used in this
Agreement, "cause" shall include: (i) habitual neglect of or deliberate
or intentional refusal to perform any of Employee's duties or
obligations under this Agreement or to follow Company policies or
procedures; (ii) fraudulent or criminal activities; (iii) any grossly
negligent or dishonest or unethical activity; (iv) breach of fiduciary
duty, deliberate breach of Company rules resulting in loss or damage to
the Company, or unauthorized disclosure of Company trade secrets or
confidential information; or (v) if Employee fails to fulfill the
performance goals and objectives, which shall be mutually determined by
Employee and the Board of Directors.
(c) Termination for Disability. The Company's Board of Directors
may terminate this Agreement, upon written notice to Employee, for the
"disability" (as defined below) of Employee at the expiration of a
consecutive four week period of disability if the Board of Directors
determines in its sole discretion that Employee's disability will
prevent Employee from substantially performing Employee's duties
hereunder. As used in this Agreement, "disability" shall be defined as
(i) Employee's inability, by reason of physical or mental illness or
other cause, to perform substantially Employee's duties hereunder; or
(ii), in the discretion of the Board of Directors, as it is defined in
any disability insurance policy in effect at the Company during the
time in question. Employee shall receive full compensation, benefits,
and reimbursement of expenses pursuant to the terms of this Agreement
from the date disability begins until the date Employee receives notice
of termination under this paragraph or until Employee begins to receive
disability benefits pursuant to a Company disability insurance policy,
whichever occurs first.
(d) Involuntary Termination for Other than Cause. The Company may
terminate Employee's employment hereunder during the Term of employment
other than for Cause by giving Employee at least ten days written
notice. In such event, the Company shall pay to Employee all salary and
bonuses accrued up to and including the date of termination, all unused
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vacation and all unreimbursed expenses which are reimbursable pursuant
to paragraph 4 incurred prior to such termination. In addition, the
Company shall have the following rights and duties:
(i) The Company shall pay to Employee a severance payment
in an amount equal to six (6) months (or one-half) of Employee's
Annual Salary in effect on the date of termination, but not more
than the Salary left to be paid during the remainder of the Term
(the "Severance Payment"). The Severance Payment shall be paid in
approximately equal bi-weekly installments, or at such other
intervals as may be established for the Company's customary pay
schedule, at the annual rate of Employee's Salary on the date of
termination.
(ii) The Company shall pay to Employee all deferred
compensation, if any, owed to Employee under any other agreement.
However, any amounts owed under a 401(k) or other plan qualified
under the Internal Revenue Code shall be paid in accordance with
the terms and provisions of such plans.
(iii) All outstanding stock options allocated to Employee,
which would have been vested at the end of the Term had Employee
remained employed by the Company to the end of the Term, shall be
immediately vested, subject to any restrictions that may apply
under the law including restrictions applicable to any options
granted under the Company's 1995 Incentive Stock Option Plan.
(e) Mutual Voluntary Termination. In the event the parties
mutually agree in writing to terminate this Agreement, Employee agrees,
at the Company's request, to continue providing services for a
requested period of time up to, but not more than, 30 days after such
voluntary termination (the "Transition Period") to facilitate
transition. Employee shall be an independent contractor and not an
employee during the Transition Period and shall be available to assist
in the transition during such period. During the Transition Period,
Employee shall receive compensation equal to 100% of the Salary at the
time of the voluntary termination. Payment of such compensation shall
be made at least monthly. It is understood and agreed that Employee,
during the Transition Period, may be seeking other opportunities and
will not be devoting 100 percent of his time to the affairs of the
Company. The Company may elect to terminate the independent contractor
relationship with Employee prior to the end of the Termination Period
once Employee accepts a full time position with another company.
(f) Effect of Termination. In the event Employee's employment is
terminated hereunder, all obligations of the Company and all
obligations of Employee shall cease, except as otherwise provided
herein. Upon such termination, Employee or Employee's representative or
estate shall be entitled to receive only the compensation, benefits,
and reimbursement earned or accrued by Employee under the terms of this
Agreement prior to the date of termination computed pro rata up to and
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including the date of termination, but shall not be entitled to any
further compensation, benefits, or reimbursement from such date, unless
otherwise mutually agreed in writing by the parties.
6. Covenant Not to Compete
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(a) Covenant. Employee hereby covenants and agrees that during the
Term of this Agreement and for a period of two years thereafter, he
will not, except as a director, officer, employee or consultant of the
Company, or any subsidiary or affiliate of the Company, directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected with
(as director, officer, employee, consultant, agent, independent
contractor of otherwise) in any other manner with any business engaged
in the Defined Business (as described below) which is the same or
substantially similar in nature to the business engaged in by the
Company in the State of Utah, and each of the other states in the
United States, and each foreign country, in which the Company may
engage (whether directly or indirectly through subsidiaries,
affiliates, franchisees, licensees, representatives, agents or
otherwise) during the term of this Agreement and Employee's employment
with the Company.
(b) Definition of Defined Business. As used herein, the term
"Defined Business" shall mean the business of ophthalmic
instrumentation and engaging in the business of ophthalmic
instrumentation and engaging in any business currently engaged in by
the Company or contemplated by the Company.
(c) Non-Solicitation Agreement. Employee shall not, directly or
indirectly, employ, solicit for employment, or advise or recommend to
any other person that they employ or solicit for employment, any
employee of the Company (or any subsidiary or affiliate), during the
Term of this Agreement and Employee's employment with the Company and
for a term of two years thereafter; provided however, that this
paragraph shall not preclude Employee from giving an employment
reference at the request of any employee of the Company or at the
request of a prospective employer of such employee.
(d) Conflicting Employment. Employee shal not, during the Term of
his employment with the Company, engage in any other employment,
occupation, consulting or other business activity directly related to
the business in which the Company is now involved or becomes involved
during the Term of his employment, nor will Employee engage in any
other activities that conflict with his obligations to the Company.
(e) Unique and Essential Nature of Service of Employee. Employee
understands and acknowledges that the Company is entering into this
Agreement in reliance upon the unique and essential nature of the
personal services Employee is to perform as an employee of the Company
and that irreparable injury would befall the Company or its
subsidiaries or affiliates should Employee serve a competitor of, or
compete, with the Company or any of its subsidiaries or affiliates.
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(f) Injunctive and Equitable Relief. Employee covenants and agrees
that the Company's remedy at law for any breach or violation of the
provisions of this Paragraph 6 are inadequate and that, in the event of
any such breach or violation, the Company shall be entitled to
injunctive relief in addition to any other remedy, at law or in equity,
to which it may be entitled.
(g) Acknowledgment of Reasonableness of Restrictions. Employee
specifically acknowledges and agrees that the two-year post-employment
limitation upon his activities as specified above, together with the
geographical limitations set forth above, are reasonable limitations as
to time and place upon Employee's post-employment activities and that
the restrictions are necessary to preserve, promote and protect the
business, accounts and good-will of the Company and impose no greater
restraint than is reasonably necessary to secure such protection.
(h) Limitation on Scope or Duration. In the event that any
provision of this Paragraph 6 shall be held invalid or unenforceable by
a court of competent jurisdiction by reason of the geographic or
business scope or the duration thereof, such invalidity or
unenforceability shall attach only to the scope or duration of such
provision and shall not affect or render invalid or unenforceable any
other provision of this Paragraph 6 and, to the fullest extent
permitted by law, this Paragraph shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable but
rather to provide the broadest protection to the Company permitted by
law.
7. Confidential Information Agreement.
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Employee agrees that Employee will keep confidential and will not,
during or after this Agreement, disclose, divulge, furnish or make accessible to
any person, firm, corporation or other business entity, any information, trade
secrets, customer information, marketing information, sales information, cost
information, technical data, know-how, secret processes, discoveries, methods,
patentable or unpatentable ideas, formulae, processing techniques or technical
operations relating to the business, business practices, methods, products,
processes, equipment or any confidential or secret aspect of the business of the
Company (collectively, the "Confidential Information") without the prior written
consent of the Company. Upon the termination of this Agreement for any reason,
and at any time prior thereto upon request by the Company, Employee shall return
to the Company all written records of any Confidential Information, together
with any and all copies of such records, in Employee's possession. Any
Confidential Information which Employee may conceive of or make during the Term
of this Agreement shall be and remain the property of the Company. Employee
agrees promptly to communicate and disclose all such Confidential Information to
the Company and to execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment thereof to it.
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8. Assignment.
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This Agreement is for the unique personal services of Employee and is
not assignable or delegable in whole or in part by Employee without the consent
of the Board of Directors of the Company. This Agreement may be assigned or
delegated in whole or in part by the Company and, in such case, the terms of
this Agreement shall inure to the benefit of, be assumed by, and be binding upon
the entity to which this Agreement is assigned.
9. Inventions
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(a) Disclosure of Inventions. Employee hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or
jointly with others, any inventions, improvements, original works of
authorship, formulas, processes, computer programs, techniques,
know-how, or data relating to the Defined Business (hereinafter
referred to collectively as "Inventions") while he is employed by the
Company, he will promptly disclose such Inventions to the Company or to
any person designated by it. Notwithstanding the fact that Employee may
determine that the Company has no right to such Invention, he shall
nevertheless promptly disclose any such Invention to the Company or to
any person designated by it upon reasonable request.
(b) Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions related to ophthalmic instrumentation shall be the sole and
exclusive property of the Company, and the Company shall have the right
to use and to apply for patents, copyrights, or other statutory or
common law protection for such Inventions in any country. Employee
hereby assigns to the Company any rights which he may acquire in such
Inventions. Furthermore, Employee agrees to assist the Company in every
proper way at the Company's expense to obtain patents, copyrights, and
other statutory common law protections for such Inventions in any
country and to enforce such rights from time to time. Specifically,
Employee agrees to execute all documents as the Company may desire for
use in applying for and in obtaining or enforcing such patents,
copyrights, and other statutory or common law protections together with
any assignments thereof to the Company or to any person designated by
the Company. In the event the Company is unable for any reason
whatsoever to secure Employee's signature to any lawful document
required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, Employee
hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agents and attorneys-in-fact to
act in his stead to execute such documents and to do such other lawful
and necessary acts to further the issuance and protection of such
patents, copyrights, or other statutory or common law protection, such
documents or such acts to have the same legal force and effect as if
such documents were executed by or such acts were done by Employee.
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10. Waiver or Modification.
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Any waiver, modification or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and such document is signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision hereof or any subsequent breach of the same provision
hereof.
11. Severability.
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If any provision of this Agreement is found to be unenforceable by a
court of competent jurisdiction, the remaining provisions shall nevertheless
remain in full force and effect.
12. Notices.
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Any notice required or permitted hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, or by telex or telegram
to the party to the address set forth below or to such other address as either
party may designate from time to time according to the terms of this paragraph:
To Employee at: Xxxx X. Xxxx
000 Xxxxx X Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
To the Company at: Paradigm Medical Industries, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Mackey Price & Xxxxxxxx
000 Xxxxxxxx Xxxxx II
00 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
A notice delivered personally shall be effective upon receipt. A notice
sent by facsimile or telegram shall be effective 24 hours after the dispatch
thereof. A notice delivered by mail or by private courier shall be effective on
the 3rd day after the day of mailing.
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13. Attorney's Fees.
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In the event of any action at law or equity to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and court costs in addition to any other relief to which such
party may be entitled.
14. Governing Law.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Utah applicable to contracts entered into and to be
performed entirely within such State.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first set forth above.
EMPLOYEE:
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
THE COMPANY:
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman of the Board
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