PARADIGM MEDICAL INDUSTRIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
5th day of June, 2000, by and between Paradigm Medical Industries, Inc., a
Delaware corporation (the "Company") and Xxxx X. Xxxxxx (the "Employee"), to
become effective as of June 5, 2000 (the "Effective Date").
WHEREAS, Employee was formerly employed with Vismed, Inc., a California
corporation headquartered in San Diego, California and doing business as Dicon
("Dicon"); and
WHEREAS, the Company is acquiring Dicon and desires to employ Employee, and
Employee desires to become employed by 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:
I. Employment
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.
(a) Employee shall be employed in the position of President and
Chief Operating Officer and, subject to direction from the Chief
Executive Officer of the Company, 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 strategic services and duties for the
Company as may be assigned or delegated to him from time to time by
the Chief Executive Officer or Board of Directors. Employee shall be a
member of the Company's Executive Committee and shall report directly
to the Company's Chief Executive Officer.
(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.
(c) The principal location at which Employee's services are to be
performed shall be in the Company's office in San Diego, California.
As required by the needs of the Company's business, Employee also
shall perform services in the Company's headquarters office in Salt
Lake City, Utah and in other places the Company conducts business when
deemed appropriate and necessary by the Chief Executive Officer or
Board of Directors.
(d) Employee may engage in other activities an invest his
personal assets in other business or ventures to the extent that such
other activities, business, or ventures do not materially interfere
with the performance of his duties under this Agreement and do not
violate the provisions of paragraph 6, paragraph 7 or other provisions
of this Agreement.
3. Compensation and Benefits.
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
$150,000. Such Annual Salary will be payable in equal bi-weekly
installments or at such other intervals as may be established for the
Company's customary pay schedule and shall be pro-rated for any
partial pay period. The Annual Salary is subject to such adjustments
as the Board of Directors may determine from time to time in its sole
discretion. However, the Annual Salary shall not be reduced below
$150,000 without the consent of Employee.
(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
Board of Directors of the Company, in its sole discretion, shall
determine the amount of any bonus 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 Board of Directors of the
Company on an annual basis. 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), which objective must be satisfied as a
condition to the payment of any bonus to Employee. Employee shall have
the right to prepare and submit a proposed bonus plan to the Board of
Directors for its review and consideration. Employee shall also have
the right to direct any portion of the bonus to be paid into a
deferred compensation fund.
(c) Termination of All Dicon Compensation and Benefits. Any
compensation or other benefits to which Employee is entitled from
Dicon shall expire upon execution of this Agreement and shall no
longer be of any force or effect. Without limiting the generality of
the foregoing sentence, it is specifically understood and agreed that
- 2 -
the obligations of Dicon under that certain Salary Reduction Agreement
dated October 20, 1995 between Dicon and Employee, shall expire and
become null and void upon execution of this Agreement.
(d) Incentive Stock Option Plan. Employee 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 150,000 shares of the Company's common stock
pursuant to the terms and conditions of said plan including, but not
limited to, three year vesting.
(e) 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.
(f) Life Insurance. The Company shall provide Employee with a
life insurance policy in an amount equal to twice his Annual Salary.
(g) Vacation, Sick Leave, and Holidays. Employee shall be
entitled to four (4) 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.
(h) Car Allowance. Employee shall be entitled to an automobile
allowance of $500 per month payable on the first day of each month.
The Company shall also be responsible for the payment of insurance and
property taxes relating to such automobile.
(i) Deductions. The Company shall have th 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.
(j) Signing Bonus. As a bonus for signing this Agreement, the
Company agrees to issue to Employee as soon as administratively
feasible after the date of this Agreement, 28,500 shares of the
authorized but previously unissued common stock of the Company. It is
agreed that the certificate representing such stock shall bear the
customary restricted stock legend.
- 3 -
4. Business Expenses.
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
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. The Company shall
reimburse Employee for Employee's regular monthly membership dues at the
University Club in San Diego, California.
5. Term and Termination.
(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.
For purposes of this Agreement, the word "Term" shall mean the initial
Term and any extensions thereof made in accordance with subparagraph
(b) of this paragraph 5.
(b) Extension of Term. The Term of this Agreement shall be
automatically extended by one year unless either party elects not to
do so. If either party elects not to extend the Term of this
Agreement, that party must notify the other party, in writing, not
less than 90 days prior to the last day of the Term of the Agreement
then in effect. If either party fails to give such written notice at
least 90 days prior to the expiration of the Term then in effect, the
Term automatically extends for an additional year.
(c) 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 for two
(2) consecutive years the annual performance goals and objectives,
which shall be mutually determined by Employee and the Board of
Directors. A determination of whether Employee's actions justify
termination for cause and the date such termination is effective shall
be made by the Board of Directors in its sole discretion.
- 4 -
(d) 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 twenty-six (26) 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.
(e) 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 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 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 keep all medical and dental benefits
that are in effect as of the date of termination in force, at the sole
cost to the Company, for six months after the date of termination.
(iii) 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.
(iv) The Company shall have the right, for 30 days after the
termination date, at the Company's sole discretion, to redeem all the
outstanding shares of the Company that Employee owns, at the current
fair market value of the shares, subject to the restrictions that may
- 5 -
apply under law.
(v) 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 the restrictions that may apply under
the law including restrictions applicable to any options granted under
the Company's 1995 Incentive Stock Option Plan.
(f) 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, six months 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 110 percent 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.
(g) Effect of Termination. In the event Employee's employment is
terminated hereunder, all obligations of the Company and all
obligations of Employee shall cease. 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 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
(a) Covenant. Employee hereby covenants and agrees that during
the Term of this Agreement and for a period of six (6) months
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.
- 6 -
(b) Definition of Defined Business. As used herein, the term
"Defined Business" shall mean 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.
(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) Acknowledgement of Reasonableness of Restrictions. Employee
specifically acknowledges and agrees that the six-month
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
- 7 -
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.
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.
8. Assignment.
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.
- 8 -
9. Inventions
(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
he 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.
10. Waiver or Modification.
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.
- 9 -
11. Severability.
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.
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: 00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
(or the last residence address given by
Employee to the Company)
To the Company at: Paradigm Medical Industries, Inc.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Mackey Price & Xxxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
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.
13. Attorney's Fees.
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.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts entered into and to be
performed entirely within such State.
- 10 -
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
EMPLOYEE:
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
THE COMPANY:
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx, President and
Chief Executive Officer
EA-605M.PMI
- 11 -
