EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") is made and entered into as
of the 20th day of May 1999, by and between Dental Medical Diagnostics, Inc.,
a Delaware corporation (the "COMPANY"), and Xxxxxx X. Xxxxxxxxx
("EXECUTIVE").
1. ENGAGEMENT AND DUTIES.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Company hereby engages and employs Executive as an employee of
the Company, with the title and designation of Chairman of the Board of
Directors, Chief Executive Officer and President. Executive hereby accepts
such engagement and employment.
(b) Executive shall be responsible for the oversight and
management of the Company's operations. Executive shall report directly to
the Board of Directors of the Company (the "BOARD").
(c) Executive agrees to devote his primary business time, energies,
skills, effort and attention to his duties hereunder and will not render any
material services to any other business concern. Executive will use his best
efforts and abilities faithfully and diligently to promote the Company's
business interests.
(d) Except for routine travel incident to the business of the
Company, Executive shall perform his duties and obligations under this
Agreement principally from an office provided by the Company in Westlake
Village, California.
2. TERM OF EMPLOYMENT. Executive's employment pursuant to this
Agreement shall commence on the date set forth above and shall terminate on
the earliest to occur of any of the following:
(a) September 30, 2002;
(b) at any time, without cause, upon delivery by the Company to
Executive of 30 days' written notice of termination;
(c) upon the death of Executive;
(d) upon delivery by the Company to Executive of written notice of
termination if Executive shall suffer a physical or mental disability which
renders Executive, in the reasonable judgment of the Board, unable to perform
his duties and obligations under this Agreement for 30 days in any 12-month
period; or
(e) immediately upon delivery by the Company to Executive of
written notice of termination "for cause," by reason of: (i) any act or
omission knowingly undertaken
or omitted by Executive with the intent of causing damage to the Company, its
subsidiaries, its properties, assets or business or its stockholders,
officers, directors or employees; (ii) any act of Executive involving any
fraud, misappropriation or embezzlement, involving properties, assets or
funds of the Company or any of its subsidiaries; (iii) Executive's failure to
perform his normal duties or any provision of this Agreement, in either case,
as directed by the Board; (iv) conviction of, or pleading NOLO CONTENDERE to,
(A) any crime or offense involving monies or other property of the Company or
its subsidiaries; (B) any felony offense, or (C) any crime of moral
turpitude; or (v) the chronic or habitual use of non-prescription drugs or
consumption of alcoholic beverages.
3. COMPENSATION.
(a) During the term of his employment pursuant to this Agreement,
the Company shall pay to Executive a base salary (the "BASE SALARY") at an
annual rate of $298,000, which shall be adjusted annually pursuant to the
Consumer Price Index - U.S. City Average, or any substantially equivalent
successor thereto, for the month of July in the fiscal year immediately
preceding such adjustment, as published by the Bureau of Labor Statistics of
the United States Department of Labor. The base salary shall be payable in
installments throughout the year in the same manner and at the same times the
Company pays base salaries to other employees of the Company. Executive's
performance will be reviewed annually and, his base salary may be adjusted by
the Board in the exercise of its sole discretion; PROVIDED, HOWEVER, that in
no event shall Executive's Base Salary be adjusted to an annual rate of less
than $298,000.
(b) During the term of Executive's employment pursuant to this
Agreement, the Company shall pay all premiums on term life insurance having a
face value payable on death of no less than $2 million, on the life of the
Executive with the Executive (or his estate) as beneficiary with a minimum
10-year term, constant annual premiums.
(c) Executive shall be entitled to two weeks vacation during each
year of his employment pursuant to this Agreement.
(d) Executive, upon presentation of receipts or other appropriate
documentation, shall be entitled to reimbursement from the Company for the
reasonable costs and expenses which he incurs solely in connection with the
performance of his duties and obligations under this Agreement.
(e) The Company may deduct from any compensation payable to
Executive the amounts sufficient to cover applicable federal, state and/or
local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums and payments.
4. OTHER BENEFITS. During the term of his employment hereunder,
Executive shall be eligible to participate tn the medical and dental
insurance programs (the "BENEFIT PLANS") maintained by the Company; PROVIDED,
HOWEVER, that nothing contained in this
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Section 4 shall, in any manner whatsoever, directly or indirectly, require or
obligate the Company to adopt or implement, or to prevent, preclude or
otherwise prohibit the Company from amending, modifying, curtailing,
discontinuing or otherwise terminating the Benefit Plans at any time (whether
during or after the term hereof).
5. COMPENSATION UPON TERMINATION. Upon termination of this Agreement,
Executive shall receive all Base Salary earned through the date of
termination. If Executive's employment is terminated by the Company during
the term hereof pursuant to Section 2(b) hereof, Executive shall receive as
severance: (a) an amount equal to all Base Salary which would have been
payable to Executive through the earlier to occur of (i) September 30, 2002
and (ii) the three-month anniversary of the Executive's final date of
employment with the Company, in either case payable at the rate of
Executive's Base Salary at the time of his termination; (b) the right to
participate in all Company Benefit Plans for a period of 12 months following
the date of his termination; and (c) the full vesting of all option rights
granted to Executive by the Company. If Executive's employment hereunder
should be terminated for any of the reasons set forth in Sections 2(a) and
2(c) through 2(e) hereof, Executive shall not be entitled to any severance
pay, benefits continuance or other compensation not expressly set forth in
the first sentence of this Section 5.
6. CONFIDENTIALITY AND TRADE SECRETS. Executive shall not, at any time
during or after the term of his employment, exploit, use for any purpose not
specifically related to Executive's employment by the Company pursuant to the
terms of this Agreement or disclose to any person (except as required by law
after first notifying the Company and giving the Company an opportunity to
object) any confidential information including, but not limited to: price
lists, pricing information, customer lists, customer names, financial
information, knowledge, trade secrets, know-how, unprinted or printed data,
and related intangible property developed during or prior to the term of this
Agreement, belonging to, used by, or developed by or for the benefit of the
Company (collectively, the "TRADE SECRETS").
7. RETURN OF CORPORATE PROPERTY AND TRADE SECRETS. Upon any
termination of this Agreement, Executive shall turn over to the Company all
property, writings or documents then in his possession or custody belonging
to or relating to the affairs of the Company or comprising or relating to
Trade Secrets.
8. DISCOVERIES AND INVENTIONS. If Executive, while employed by the
Company, makes, either solely or jointly with others, any discovery,
improvement or invention which would pertain or relate in any way to the
business, products, publications or processes of the Company, its
subsidiaries or affiliates, such discovery, improvement or invention (whether
or not of patent, copyright or trademark nature) shall be the exclusive
property of the Company. Executive shall execute and deliver to the Company
without further compensation, any and all documents which the Company deems
necessary or appropriate to prepare or prosecute applications for patents,
copyrights, or trademarks upon such discovery, improvement or invention, for
the purposes of assigning and transferring to the Company Executive's entire
right, title and interest in and to such discovery, improvement or invention,
and patents, copyrights or trademarks therefor, and otherwise more fully and
perfectly to evidence the
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Company's ownership thereof. This Section 8 shall not apply to any
discovery, improvement or invention Executive made prior to the commencement
of Executive's employment with the Company.
9. NON-COMPETITION. Executive agrees that, during the term of this
Agreement and the three-year period following the termination of this
Agreement, Executive agrees (a) not have any ownership interest (of record or
beneficial) in or have any interest as an employee, salesman, consultant,
officer or director of, or otherwise aid or assist in any manner, any firm,
corporation, partnership, proprietorship or other business which is
competitive with the Company anywhere in the world (a "COMPETITIVE
ACTIVITY"); PROVIDED, HOWEVER, that Executive may own, directly or
indirectly, solely as an investment, securities of any person which is in
competition with Company, which securities are traded in any national
securities exchange or market, if Executive (i) is not a controlling person
of, or a member of a group which controls, such person; or (ii) does not,
directly or indirectly, own to percent or more of any class of securities of
such person (a "PERMITTED COMPETITIVE ACTIVITY"); (b) not to request or
advise any then current employee of the Company to leave the employ of the
Company; or (c) make an offer of employment to any person who was employed by
the Company in the six months immediately preceding the making of such
employment offer. In addition, in consideration for Executive's obligations
pursuant to this Section 9 during the three-year period following the
termination of this Agreement, the Company agrees to pay Executive the annual
sum of $100,000, payable in equal monthly installments.
10. SECURITIES REPURCHASE RIGHT. If, prior to October l, 2002,
Executive's employment hereunder is terminated and Executive engages in any
Competitive Activity other than a Permitted Competitive Activity, then the
Company shall have the right to purchase from Executive that number of shares
of the Company's Common Stock, par value $0.01 per share, (the "COMMON
STOCK") equal to fifty percent of (x) the greater of the number of shares of
Common Stock held by Executive on the date that the Registration Statement
was declared effective by the Commission, less the number of Original Shares
sold by Executive prior to the date of termination of this Agreement (the
"TERMINATION DATE") pursuant to Rule 144 ("RULE 144 SALES") under the
Securities Act of 1933, as amended; or (y) the number of shares of Common
Stock, if any, acquired by Executive prior to the Termination Date pursuant
to the exercise of any options and/or warrants granted to Executive in
consideration of services rendered to the Company by Executive (the "OPTION
SHARES") less the number of Option Shares sold in Rule 144 Sales. The per
share purchase price of any share of the Common Stock purchased by the
Company pursuant to this Section 10 shall equal fifty percent of the fair
market value of a share of the Common Stock on the Termination Date. For the
purposes of this Section 10, fair market value shall mean (1) if the Common
Stock is listed on the New York Stock Exchange, the American Stock Exchange
or any successor to either of such exchange, the average of the closing price
(as reported by such exchange) for the Common Stock for the ten trading days
immediately preceding the Termination Date, (2) if the Common Stock is traded
in the Nasdaq National Market, the Nasdaq Small Cap Market or any successor
to either of such markets, the average of the last sale price (as reported by
such market) for the ten trading days immediately preceding the Termination
Date, or (3) if
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the Common Stock is not listed on any such exchange or
market, the good faith determination of the Board as to the value of a share
of Common Stock on the Termination Date. Notwithstanding anything herein to
the contrary, the provisions of this Section 10 shall not apply, and the
Company shall have no purchase right, if Executive is terminated without
cause, or if Executive terminates his employment with the Company as a result
of any breach by the Company of its obligations hereunder. The certificates
representing the shares of Common Stock which are subject to this Section 10
shall bear a legend indicating that such shares are subject to this Section.
11. INJUNCTIVE RELIEF. Executive hereby recognizes, acknowledges and
agrees that, in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations hereunder, the Company would suffer great
and irreparable harm, injury and damage, the Company would encounter extreme
difficulty in attempting to prove the actual amount of damages suffered as a
result of such breach, and the Company would not be reasonably or adequately
compensated in damages in any action at law. Executive therefore covenants
and agrees that, in addition to any other remedy the Company may have at law,
in equity, by statute or otherwise, in the event of any breach by Executive
of any of his covenants, agreements, duties or obligations hereunder, the
Company shall be entitled to seek and receive temporary, preliminary and
permanent injunctive and other equitable relief from any court of competent
jurisdiction to enforce any of the rights of the Company, or any of the
covenants, agreements, duties or obligations of Executive hereunder, and/or
otherwise to prevent the violation of any of the terms or provisions hereof,
all without the necessity of proving the amount of any actual damage to the
Company or any affiliate thereof resulting therefrom; PROVIDED, HOWEVER, that
nothing contained in this Section 11 shall be deemed or construed in any
manner whatsoever as a waiver by the Company of any of the rights which the
Company may have against Executive at law, in equity, by statute or otherwise
arising out of, in connection with or resulting from the breach by Executive
of any of his covenants, agreements, duties or obligations hereunder.
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12. ARBITRATION.
(a) GENERAL. All disputes, controversies or unresolved questions
that arise under or with respect to this Agreement shall be settled by
arbitration under this Section 12. The party desiring arbitration shall give
notice to that effect to the other party. Arbitration shall be conducted in
accordance with the Employment Dispute Resolution Rules or then existing
rules for arbitration of employment disputes issued by the American
Arbitration Association. Any arbitration proceedings hereunder shall be held
in Los Angeles County, California, United States of America before a panel of
three arbitrators (one selected by Executive, one selected by the Company and
one selected by the other two arbitrators). The arbitrators shall only
interpret and apply the terms and provisions of this Agreement and shall not
change any such terms or provisions or deprive either party of any right or
remedy expressly or impliedly provided for in this Agreement (or any
agreement relating hereto). The arbitration of such issues, including the
determination of any amount of damages suffered by any party, shall be final
and binding upon the parties hereto to the maximum extent permitted by law.
The parties intend that this Section 12 shall be valid, binding, enforceable
and irrevocable and shall survive the termination of this Agreement.
(b) EXCEPTION. Notwithstanding the foregoing provisions of this
Section 12, a party having given the other party at least ten days' notice of
the other party's alleged breach may in good faith seek immediate equitable
relief from a court of competent jurisdiction to enable the instituting party
to prevent irreparable harm (alleged to arise from the alleged breach)
pending arbitral relief.
(c) ARBITRATORS' FEES. The prevailing party shall recover all
fees, costs and expenses of any arbitrator, whether selected by the Executive
on the one hand or Company on the other hand.
(d) EXPEDITED PROCEDURE. By mutual agreement, the parties may
agree to have the arbitration conducted on an expedited basis. Thereafter,
the arbitrator shall be empowered to expedite the proceedings by all
reasonable means consistent with a fair hearing of the dispute. Such means
may include the imposition of accelerated discovery and hearing schedules,
requiring submissions within abbreviated time periods and imposing limits on
numbers of witnesses and the length of hearings.
(e) ENFORCEMENT. Judgment upon the decision of the arbitrator may
be entered in any court having jurisdiction over the party against which
enforcement is sought.
13. ATTORNEYS' FEES. If any action, suit arbitration or other
proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall recover all of such party's costs and attorneys' fees
incurred in each and every such action, suit or other proceeding, including
any and all appeals or petitions therefrom. As used herein, "ATTORNEYS'
FEES" shall mean the full and actual costs of any legal services actually
rendered in connection with the matters involved, calculated on the basis of
the usual fee charged by the attorneys
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performing such services, and shall not be limited to "reasonable attorneys'
fees" as defined by any statute or rule of court.
14. MISCELLANEOUS.
(a) NOTICES. All notices, requests and other communications
(collectively, "NOTICES") given pursuant to this Agreement shall be in
writing, and shall be delivered by personal service or by United States first
class, registered or certified mail (return receipt requested), postage
prepaid, addressed to the party at the address set forth below:
If to Company:
DENTAL MEDICAL DIAGNOSTICS, INC.
_______________________________
_______________________________
Attn: __________________________
Telephone: _____________________
Fax: ___________________________
If to Executive:
Xxxxxx X. Xxxxxxxxx
___________________________________
___________________________________
Telephone: ( )
Fax: ( )
Any Notice shall be deemed duly given when received by the addressee thereof,
provided that any Notice sent by registered or certified mail shall be deemed
to have been duly given three days from date of deposit in the United States
mails, unless sooner received. Either party may from time to time change its
address for further Notices hereunder by giving notice to the other party in
the manner prescribed in this section.
(b) ENTIRE AGREEMENT. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein. No
representations, oral or otherwise, express or implied, other than those
contained in this Agreement have been relied upon by any party to this
Agreement.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
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(d) CAPTIONS. The various captions of this Agreement are for
reference only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(f) BUSINESS DAY. If the last day permissible for delivery of any
Notice under any provision of this Agreement, or for the performance of any
obligation under this Agreement, shall be other than a business day, such
last day for such Notice or performance shall be extended to the next
following business day (PROVIDED, HOWEVER, under no circumstances shall this
provision be construed to extend the date of termination of this Agreement).
(g) SUCCESSORS AND ASSIGNS. This Agreement and all obligations and
benefits of Executive and the Company hereunder shall bind and inure to the
benefit of Executive and the Company, their respective affiliates, and their
respective successors and assigns. Conversely, no assignment of this
Agreement, of any of the rights and/or duties hereunder by any party hereto
shall be valid without the prior written consent of the other party.
(h) AMENDMENTS AND WAIVERS. No amendment or waiver of any term or
provision of this Agreement shall be effective unless made in writing. Any
written amendment or waiver shall be effective only in the instance given and
then only with respect to the specific term or provision (or portion thereof)
of this Agreement to which it expressly relates, and shall not be deemed or
construed to constitute a waiver of any other term or provision (or portion
thereof) waived in any other instance.
In witness whereof, the parties have executed this Agreement as of the
date first set forth above.
Company: Executive:
DENTAL MEDICAL DIAGNOSTICS, INC.
By:_________________________ ________________________
Its:________________________ Xxxxxx X. Xxxxxxxxx
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