REVISED AND RESTATED
EMPLOYMENT AGREEMENT
This Revised and Restated Employment Agreement (the "Agreement'), which
shall be effective as of March 16, 1998, is by and between OrthoLogic Corp., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxxx ("Employee").
RECITALS:
---------
A. Employee is presently employed by the Company and both parties wish
to continue and redefine the nature of the employment relationship.
B. The parties wish to set forth in this Agreement the terms and
conditions of such continuing employment.
C. This Agreement revises, restates and replaces for all purposes an
earlier version which was entitled "Employment Agreement" and was effective as
of October 17, 1997.
AGREEMENT:
----------
In consideration of the mutual covenants and agreements set forth
herein, the parties agree as follows:
1. Employment and Duties. Subject to the terms and conditions of this
Agreement, the Company employs Employee to serve in a managerial capacity and
Employee accepts such employment and agrees to perform such reasonable
responsibilities and duties as may be assigned to him from time to time by the
Company's CEO or Board of Directors (the "Board"). Until March 23, 1998,
Employee's title shall be Board Member, with responsibility for strategic
product alliances and acquisitions. After March 23, 1998, Employee shall not
have an official title. Employee will report to the Company's President and CEO.
Employee shall not have set work hours. While various projects may require more
or less time within any given month, it is contemplated that, without his
consent, Employee will not be asked to work on Company matters for more than
five days per month. Until March 23, 1998, the Company shall use its best
efforts to maintain Employee as a member of the Board; and Employee hereby
resigns from the Board, with such resignation to be effective on March 23, 1998.
Employee understands that from and after October 20, 1997, and until the end of
the term of this Agreement, the Company will not provide him with an office, but
will provide reasonable secretarial and other staff support and will provide
ancillary office equipment such as a fax machine, dictating equipment and a
computer.
2. Term. The term of Employee's employment pursuant to this Agreement
shall be for two years beginning on October 20, 1997 and ending on October 19,
1999.
1
3. Compensation.
(a) Salary. During the term of employment, the Company shall
pay Employee a minimum base annual salary, before deducting all applicable
withholdings, of $218,000 per year, payable at the times and in the manner
dictated by the Company's standard payroll policies.
(b) Bonus. Employee shall be eligible to receive discretionary
bonuses based on his accomplishments and success, as determined from time to
time by the CEO and Board. Any such bonuses shall be based upon the achievement
of individual goals and Company performance and shall be granted solely in the
discretion of the Board.
(c) Stock Options. Employee currently has options to purchase
shares of the Company's Common Stock. On October 17, 1997, the Company shall
grant to Employee, from the Company's 1987 Stock Option Plan, options to
purchase 25,000 shares of the Company's common stock, with an exercise price
equal to the fair market value of the stock on the effective date of the grant,
with such value determined as specified in the 1987 Stock Option Plan. So long
as Employee is still employed by the Company at each such time of vesting,
options to purchase 1,042 shares shall vest on November 19, 1997 and on the 19th
day of each calendar month thereafter, until such shares are fully vested;
provided that all options from such 25,000-option grant and all other unvested
options shall vest immediately upon a termination of Employee's employment for
any reason.
4. Fringe Benefits. In addition to the compensation, bonus and options
as described in Section 3, and any other employee benefit plans (including
without limitation pension, savings and disability plans) generally available to
employees, the Company shall include Employee in any group health insurance plan
and, if eligible, any group retirement plan instituted by the Company. The
manner of implementation of such benefits with respect to such items as
procedures and amounts are discretionary with the Company but shall be
commensurate with Employee's executive capacity. The Company agrees to maintain
term life insurance during the term of this Agreement in an amount equal to two
times Employee's base salary, as it may be adjusted from time to time, with the
beneficiary to be designated by Employee. Employee shall be entitled to vacation
with pay in accordance with the Company's vacation policy as in effect from time
to time. In addition, Employee shall be entitled to such holidays as the Company
may approve from time to time.
5. Expenses and Automobile. The Company shall, upon receipt of
appropriate documentation, reimburse Employee each month for his reasonable
travel, lodging, entertainment, promotion and other ordinary and necessary
business expenses consistent with Company policies. Employee shall also be
entitled to an automobile allowance of $450 per month while he is an Employee.
6. Termination.
(a) For Cause. The Company may terminate Employee's employment
for cause upon written notice to Employee stating the facts constituting such
cause, provided that Employee shall have 60 days following such notice to cure
any conduct or act, if curable, alleged to provide
2
grounds for termination for cause hereunder. In the event of termination for
cause, the Company shall be obligated to pay Employee only the minimum base
salary specified in Section 3(a) through October 19, 1999. The written notice
shall state the cause for termination. Cause shall be limited to gross or
willful neglect of duty, willful failure to abide by reasonable instructions or
policies from or set by the Board of Directors, conviction of a felony or
misdemeanor punishable by at least one year in prison, or pleading guilty or
nolo contendere to same. Without limiting the foregoing, the fact that the
Company does not request services from Employee with respect to any period or
periods of time shall not constitute cause.
(b) Without Cause. The Company may not terminate Employee's
employment without cause.
(c) Death. If Employee dies during the term of this Agreement,
this Agreement shall terminate immediately, and Employee's legal representatives
shall be entitled to receive the base salary due Employee until October 19,
1999, at a time and in a manner similar to when it would have been paid to
Employee if he had survived, except for any change in withholding justified by
the change in circumstances.
7. Confidential Information. Employee acknowledges that Employee may
receive, or contribute to the production of, Confidential Information. For
purposes of this Agreement, Employee agrees that "Confidential Information"
shall mean any and all information or material proprietary to the Company or
designated as Confidential Information by the Company and not generally known by
non-Company personnel, which Employee develops or to which Employee may obtain
knowledge or access through or as a result of Employee's relationship with the
Company (including information conceived, originated, discovered or developed in
whole or in part by Employee). Confidential Information includes, but is not
limited to, the following types of information and other information of a
similar nature (whether or not reduced to writing) related to the Company's
business: discoveries, inventions, ideas, concepts, research, development,
processes, procedures, "know-how", formulae, marketing or manufacturing
techniques and materials, marketing and development plans, business plans,
customer names and other information related to customers, price lists, pricing
policies, methods of operation, financial information, employee compensation,
and computer programs and systems. Confidential Information also includes any
information described above which the Company obtains from another party and
which the Company treats as proprietary or designates as Confidential
Information, whether or not owned by or developed by the Company, including
Confidential Information acquired by the Company from any of its affiliates.
Employee acknowledges that the Confidential Information derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use. Information publicly known without
breach of this Agreement that is generally employed by the trade at or after the
time Employee first learns of such information, or generic information or
knowledge which Employee would have learned in the course of similar employment
or work elsewhere in the trade, shall not be deemed part of the Confidential
Information. Employee further agrees:
3
a. To furnish the Company on demand, at any time during or
after employment, a complete list of the names and addresses of all present,
former and potential suppliers, financing sources, clients, customers and other
contacts gained while an employee of the Company in Employee's possession,
whether or not in the possession or within the knowledge of the Company.
b. That all notes, memoranda, electronic storage,
documentation and records in any way incorporating or reflecting any
Confidential Information shall belong exclusively to the Company, and Employee
agrees to turn over all copies of such materials in Employee's control to the
Company upon request or upon termination of Employee's employment with the
Company.
c. That while employed by the Company and thereafter Employee
will hold in confidence and not directly or indirectly reveal, report, publish,
disclose or transfer any of the Confidential Information to any person or
entity, or utilize any of the Confidential Information for any purpose, except
in the course of Employee's work for the Company.
d. That any idea in whole or in part conceived of or made by
Employee during the term of his employment, consulting, or similar relationship
with the Company which relates directly or indirectly to the Company's current
or planned lines of business and is made through the use of any of the
Confidential Information of the Company or any of the Company's equipment,
facilities, trade secrets or time, or which results from any work performed by
Employee for the Company, shall belong exclusively to the Company and shall be
deemed a part of the Confidential Information for purposes of this Agreement.
Employee hereby assigns and agrees to assign to the Company all rights in and to
such Confidential Information whether for purposes of obtaining patent or
copyright protection or otherwise. Employee shall acknowledge and deliver to the
Company, without charge to the Company (but at its expense) such written
instruments and do such other acts, including giving testimony in support of
Employee's authorship or inventorship, as the case may be, necessary in the
opinion of the Company to obtain patents or copyrights or to otherwise protect
or vest in the Company the entire right and title in and to the Confidential
Information.
8. Loyalty During Employment Term. Employee agrees that during the term
of Employee's employment by the Company, Employee will give undivided loyalty to
the Company, and will not engage in any way whatsoever, directly or indirectly,
in any business that is competitive with the Company or its affiliates, nor
solicit, or in any other manner work for or assist any business which is
competitive with the Company or its affiliates. During the term of Employee's
employment by the Company, Employee will undertake no planning for or
organization of any business activity competitive with the Company or its
affiliates, and Employee will not combine or conspire with any other employee of
the Company or any other person for the purpose of organizing any such
competitive business activity. However, Employee shall be entitled to make a
passive investment in a publicly traded stock of a competitor of the Company so
long as he does not at any time own more than 5% of the total outstanding stock
of such competitor.
9. Non-competition; Non-solicitation. The parties acknowledge that
Employee will acquire much knowledge and information concerning the business of
the Company and its affiliates as the result of Employee's employment. The
parties further acknowledge that the scope of business
4
in which the Company is engaged as of the date of execution of this Agreement is
world-wide and very competitive and one in which few companies can successfully
compete. Certain activities by Employee after this Agreement is terminated would
severely injure the Company. Accordingly, between the termination of his
Employment for any reason, and October 20, 1999, Employee will not:
a. Engage in any work activity for or in conjunction with any
business or entity that is in competition with or is preparing to compete with
the Company;
b. Persuade or attempt to persuade any potential customer or
client to which the Company or any of its affiliates has made a proposal or
sale, or with which the Company or any of its affiliates has been having
discussions, not to transact business with the Company or such affiliate, or
instead to transact business with another person or organization;
c. Solicit the business of any customers, financing sources,
clients, suppliers, or business patrons of the Company or any of its
predecessors or affiliates which were customers, financing sources, clients,
suppliers, or business patrons of the Company at any time during Employee's
employment by the Company, or within three years prior to the Effective Date of
Employee's employment, provided, however, that if Employee becomes employed by
or represents a business that exclusively sells products that do not compete
with products then marketed or intended to be marketed by the Company, such
contact shall be permissible; or
d. Solicit, endeavor to entice away from the Company or any of
its affiliates, or otherwise interfere with the relationship of the Company or
any of its affiliates with, any person who is employed by or otherwise engaged
to perform services for the Company or any of its affiliates, whether for
Employee's account or for the account of any other person or organization.
10. Injunctive Relief. It is agreed that the restrictions contained in
Sections 7, 8, and 9 of this Agreement are reasonable, but it is recognized that
damages in the event of the breach of any of those restrictions will be
difficult or impossible to ascertain; and, therefore, Employee agrees that, in
addition to and without limiting any other right or remedy the Company may have,
the Company shall have the right to an injunction against Employee issued by a
court of competent jurisdiction enjoining any such breach without showing or
proving any actual damage to the Company. This paragraph shall survive the
termination of Employee's employment.
11. Part of Consideration. Employee also agrees, acknowledges,
covenants, represents and warrants that he is fully and completely aware that,
and further understands that, the restrictive covenants contained in Sections 7,
8, and 9 of this Agreement are an essential part of the consideration for the
Company entering into this Agreement and that the Company is entering into this
Agreement in full reliance on these acknowledgments, covenants, representations
and warranties.
12. Time and Territory Reduction. If any of the periods of time and/or
territories described in Sections 7, 8, and 9 of this Agreement are held to be
in any respect an unreasonable
5
restriction, it is agreed that the court so holding may reduce the territory to
which the restriction pertains or the period of time in which it operates or may
reduce both such territory and such period, to the minimum extent necessary to
render such provision enforceable.
13. Survival. The obligations described in Sections 7 and 9 of this
Agreement shall survive any termination of this Agreement or any termination of
the employment relationship created hereunder.
14. Indemnification. The Company will provide indemnification to
Employee in accordance with the current Certificate and Bylaws of the Company
and the Indemnification Agreement dated March 16, 1998 (the "Indemnification
Agreement"). These obligations shall survive the termination of Employee's
employment for any reason.
15. Testimony. If Employee has knowledge of or is alleged to have
knowledge of any matters which are the subject of any pending, threatened or
future litigation involving the Company (or any subsidiary), he will make
himself available to testify if and as necessary. Employee will also make
himself available to the attorneys representing the Company in connection with
any such litigation or dispute for such purposes as they may deem necessary or
appropriate, including but not limited to the review of documents, discussion of
the case and preparation for any legal proceedings. This Agreement is not
intended to and shall not be construed so as to in any way limit or affect the
testimony which Employee gives in any such proceedings. Further, it is
understood and agreed that Employee will at all times testify fully, truthfully
and accurately, whether in deposition, hearing, trial or otherwise.
16. Nondelegability of Employee's Rights and Company Assignment Rights.
The obligations, rights and benefits of Employee hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are such
obligations, rights or benefits subject to involuntary alienation, assignment or
transfer. Upon mutual agreement of the parties, the Company upon reasonable
notice to Employee may transfer Employee to an affiliate of the Company, which
affiliate shall assume the obligations of the Company under this Agreement. This
Agreement shall be assigned automatically to any entity merging with or
acquiring the Company.
17. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Arizona,
exclusive of the conflict of law provisions thereof, and the parties agree that
any litigation pertaining to this Agreement shall be in courts located in
Maricopa County, Arizona.
18. Attorneys' Fees. If any party finds it necessary to employ legal
counsel or to bring an action at law or other proceeding against the other party
to enforce any of the terms hereof, the party prevailing in any such action or
other proceeding shall be paid by the other party its reasonable attorneys' fees
as well as court costs all as determined by the court and not a jury.
19. Notices. All notices, demands, instructions, or requests relating
to this Agreement shall be in writing and, except as otherwise provided herein,
shall be deemed to have been given for
6
all purposes (i) upon personal delivery, (ii) one day after being sent, when
sent by professional overnight courier service from and to locations within the
Continental United States, (iii) five days after posting when sent by United
States registered or certified mail, with return receipt requested and postage
paid, or (iv) on the date of transmission when sent by facsimile with a
hard-copy confirmation; if directed to the person or entity to which notice is
to be given at his or its address set forth in this Agreement or at any other
address such person or entity has designated by notice.
To the Company: ORTHOLOGIC CORP.
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx, XX 00000.
Attention: Chief Executive Officer
To Employee: Xxxxx X. Xxxxxxxxx
0000 X. Xxxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
20. Entire Agreement. This Agreement, the Indemnification Agreement and
the Invention, Confidential information and Non-Competition Agreement previously
executed by Employee constitute the final written expression of all of the
agreements between the parties, and are a complete and exclusive statement of
those terms. They supersede all understandings and negotiations concerning the
matters specified herein. Any representations, promises, warranties or
statements made by either party that differ in any way from the terms of these
three written Agreements shall be given no force or effect. The parties
specifically represent, each to the other, that there are no additional or
supplemental agreements between them related in any way to the matters herein
contained unless specifically included or referred to herein. No addition to or
modification of any provision of any of such Agreements shall be binding upon
any party unless made in writing and signed by all parties. To the extent that
there is any conflict between this Agreement and the Invention, Confidential
information and Non-Competition Agreement, the provisions of this Agreement
shall govern. To the extent there is any conflict between this Agreement and the
Indemnification Agreement, the Indemnification Agreement shall govern.
21. Waiver. The waiver by either party of the breach of any covenant or
provision in this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.
22. Invalidity of Any Provision. The provisions of this Agreement are
severable, it being the intention of the parties hereto that should any
provisions hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the remaining provisions
hereof, but the same shall remain in full force and effect as if such invalid or
unenforceable provisions were omitted.
23. Attachments. All attachments or exhibits to this Agreement are
incorporated herein by this reference as though fully set forth herein. In the
event of any conflict, contradiction or ambiguity between the terms and
conditions in this Agreement and any of its attachments, the terms of this
Agreement shall prevail.
7
24. Interpretation of Agreement. When a reference is made in this
Agreement to an article or section, such reference shall be to an article or
section of this Agreement unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
25. Headings. Headings in this Agreement are for informational purposes
only and shall not be used to construe the intent of this Agreement.
26. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same agreement.
27. Binding Effect; Benefits. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
This Agreement has been executed by the parties as of March 16, 1998.
ORTHOLOGIC CORP.
("Company")
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx, President and CEO
XXXXX X. XXXXXXXXX
("Employee")
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
8
