Exhibit 10.7
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made as of this 10 day of August, 1999
(the "Effective Date"), by and between BSD Medical Corporation, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxx ("Employee").
WITNESSETH:
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WHEREAS, the Company and Employee desire to enter into a written
agreement to set forth certain of the terms and conditions of Employee's
employment as Xxxxx X. Xxxx of the Company;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1. Employment. The Company shall employ Employee as its President to
perform such duties as are generally associated with such office. In such
capacity, Employee shall report to and be subject to the direction and control
of the Company's Board of Directors (the "Board"). Employee shall also serve as
a member of the Board.
2. Term of Agreement. This Agreement shall be effective as of the
Effective Date and shall have an unspecified term.
3. Duties and Restrictions.
a. Duties. Employee shall perform, on behalf of the Company, all
duties and services as directed by the Board and as are customarily incident to
the position of President. Employee shall devote his full time, effort and
attention during regular business hours to the business and affairs of the
Company and shall perform his duties and services hereunder to the best of his
ability. The Company acknowledges that Employee may in the future serve as a
director, as a trustee or in a similar position with one or more other entities,
provided that such service is consented to in advance by the Board, which
consent will not be unreasonably withheld. Notwithstanding the foregoing,
Employee may engage in charitable, civic and community activities during the
term of this Agreement. Any fees or other compensation received by Employee for
service as a director, as a trustee or in a similar position with another entity
shall be retained by Employee.
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b. Confidentiality. Employee will execute and deliver to the
Company the form of Employee Nondisclosure Agreement attached as Exhibit A
hereto (the "Nondisclosure Agreement"). The provisions of the Nondisclosure
Agreement shall survive any termination of this Agreement or an extension of
Employee's tenure with the Company.
4. Compensation. For the duties and services to be performed by
Employee hereunder, the Company shall pay Employee and Employee agrees to accept
the salary and other benefits described below in this paragraph 4.
a. Salary. Employee shall receive a base salary of $125,000 per
year, payable at such times as the other executive officers of the Company are
paid, but not less frequently than one time per month. The base salary shall be
reviewed annually by the Board or its compensation committee and any increases
will be effective as of the date determined appropriate by the Board or its
compensation committee. Employee's base salary, as in effect from time to time
hereunder, shall not be decreased during the term of this Agreement.
b. Incentive Stock Plan. Employee shall be eligible to participate
in the Company's incentive stock plan. Under the Incentive Stock Option Plan,
the Employee shall be granted the Option to purchase 200,000 shares of BSD
Common Stock at the fair market value of such shares as determined by the stock
trading price averaged over the previous 30 days to the date of signing this
Agreement. This Option shall vest over the next five years in the amount of
40,000 per year. The vesting of the first 40,000 shall be one year from the
signing date of this Agreement and the vesting of 40,000 in each of the
subsequent four (4) years on the anniversary date on this Agreement.
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c. Employee Benefits. Employee shall be entitled to participate,
to the extent he is eligible under the terms and conditions thereof, in any
hospitalization or medical insurance plans, life insurance plans, retirement or
other employee benefit plans, and shall be entitled to any perquisites, which
are generally available to executives of the Company and, in addition thereto,
as in the discretion of the Board are appropriate for the President of the
Company. The Company shall be under no obligation to institute or continue the
existence of any employee benefit plan described herein and may from time to
time amend, modify or terminate any such employee benefit plan.
d. Reimbursement of Expenses. Employee shall be authorized to
incur and shall be reimbursed by the Company for reasonable expenses, provided
that such expenses are substantiated in accordance with Company policies.
5. Termination and Termination Payments and Rights.
a. Employee has the right to terminate his employment by the
Company upon not less than one (1) month prior written notice to the Company. In
the event of such election, Employee's employment shall terminate effective upon
the date set forth in such notice. In such event, the Company shall pay Employee
all compensation (including base salary as well as any bonus that has been
earned on or prior to the date of termination) due him to the date of
termination.
b. The Company shall have the right to terminate Employee's
employment without Cause (as defined below) upon not less than thirty (30) days
prior written notice to Employee. If, prior to a Change of Control (as defined
below) (i) the Company shall terminate Employee's employment without Cause, or
(ii) Employee shall terminate his employment for Good Reason (as defined below),
the Company shall pay Employee, in addition to the amounts specified by
paragraph 5(a), all compensation and benefits for a period of six (6) months,
including, but not limited to, salary at the highest rate paid to Employee prior
to such termination, the total amount of bonuses paid or payable, including by
reason of deferral, to Employee in respect of the preceding twelve months
(excluding any signing bonus paid pursuant to this Agreement and annualized for
bonuses in respect of a period of less than twelve months), and the continuation
for six (6) months of all employee benefits and perquisites provided to Employee
prior to the date of such termination.
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c. In the event of a Change of Control (as defined below) of the
Company, if (i) the Company shall terminate Employee's employment without Cause,
or (ii) Employee shall terminate his employment for Good Reason, the Company
shall vest any Options granted to the Employee for the purchase of the Company's
Stock with a 90 day period to exercise such Options. As used in this paragraph,
a "Change of Control" shall mean: any transaction or series of transactions
which result in the sale of all or substantially all of the assets of the
Company; a merger or consolidation of the Company with or into another entity,
as a result of which the shareholders of the Company immediately prior to such
merger or consolidation do not hold, directly or indirectly, immediately
following such merger or consolidation, a majority of the combined voting power
of the outstanding securities of the surviving corporation in such merger or
consolidation, irrespective of whether such surviving corporation is the
Company, such other entity or such consolidated corporation; any acquisition by
any person or entity of more than fifty percent (50%) of the issued and
outstanding equity securities of the Company, the acquisition by any person or
entity of debt instruments or equity securities of the Company which may, at any
time, be converted into fifty percent (50%) or more of the issued and
outstanding equity securities of the Company; the liquidation of the Company; or
individuals who, as of the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of such Board;
provided, however, that any individual who becomes a director of the Company
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed to have been a
member of the Incumbent Board; and provided further, that no individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Securities Exchange Act of 1934, or any other actual
or threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to have been a member of the Incumbent
Board. A Change of Control of the Company shall be deemed to have been completed
upon the date that the transaction or transactions in question are actually
completed.
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d. The Company shall have the right to terminate Employee's
employment with Cause upon written notice to Employee. In such event, the
Company shall pay Employee all compensation due him to the date of his
termination.
6. Definitions. For the purposes of this Agreement:
a. "Cause" shall mean (A) willful and repeated failure to comply
with a lawful written direction of the Board, (B) gross negligence or willful
misconduct in the performance of duties to the Company and/or its subsidiaries,
causing material harm to the Company and its subsidiaries, taken as a whole, (C)
commission of any act of fraud with respect to the Company and/or its
subsidiaries, or (D) conviction of a felony or a crime involving moral turpitude
causing material harm to the standing and reputation of the Company and/or its
subsidiaries, in each case as determined in good faith by the Board. No act or
failure to act will be considered "willful" unless it is done, or omitted to be
done, by Employee in bad faith or in direct contradiction to written
instructions or directions of the Board of Directors.
b. "Good Reason" shall mean the occurrence of any of the following
events: (i) change by the Company or its successor of Employee's position or
title of President; (ii) a reduction by the Company or its successor of
Employee's base salary; (iii) the Company's or its successor's requiring
Employee to be based anywhere other than within one hundred (100) miles of the
greater Salt Lake City metropolitan area, except for required business travel;
or (iv) the failure of the Company to obtain the written assumption of
obligations required by paragraph 10 hereof.
7. Vacation. Employee shall be entitled to paid vacation in accordance
with the Company's vacation policies for senior executive officers, as in effect
from time to time.
8. DELETED
9. Noncompetition Covenant. During the period specified below, Employee
hereby agrees that he shall not do any of the following without the prior
written consent of the Board:
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a. Compete. Carry on any business or activity (whether directly or
indirectly, as a partner, shareholder, owner, principal, agent, director,
affiliate, employee, advisor or consultant) which is competitive with the
business conducted by the Company at the time of termination of Employee's
employment. Ownership of no more than five percent of the outstanding voting
stock of a publicly traded corporation shall not constitute a violation of this
provision.
b. Solicit Business. Solicit or influence or attempt to influence
any client, customer or other person, either directly or indirectly, to direct
such client's, customer's or other person's purchase of the Company's products
and/or services away from the Company or to any person, firm, corporation,
institution or other entity other than the Company.
c. Solicit Personnel. Solicit any employee of the Company for
employment by anyone other than the Company. For purposes of this Section, the
term "solicit" shall not include the following activities by Employee: (i)
advertising for employment in any bulletin board (including electronic bulletin
boards), newspaper, trade journal or other publication available for general
distribution to the public; (ii) participation in any hiring fair or similar
event open to the public not targeted at the Company's employees, (iii) use of
recruiting or employee search firms that have been instructed by Employee not to
target any such employee, and (iv) negotiating with and/or offering employment
to any such employee who initially contacts Employee or one of his affiliates or
who engages in discussions with Employee or one of his affiliates as a result of
any of the activities included in clauses (i)-(iii). Employee may employ any
such employee provided that neither he nor any of his affiliates has solicited
such employee in contravention of this paragraph 9(c).
d. Termination. The covenants set forth in this paragraph 9 shall
be effective commencing as of the date hereof and shall continue for a period of
one year following termination of Employee's employment with the Company.
10. Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) or to all or substantially all of the Company's business and/or
assets shall assume (in writing or by operation of law) the obligations under
this Agreement and agree expressly to perform the obligations under this
Agreement in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. The terms
of this Agreement and all of the rights of the parties hereunder shall inure to
the benefit of, and be enforceable by, Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
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11. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or sent by facsimile or five days after having been mailed
by U.S. registered or certified mail, return receipt requested and postage
prepaid. Mailed notices to Employee shall be addressed to Employee at the
address recorded in Employee's personnel file. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its President or Secretary.
12. Share Purchase. In connection with the execution of this Agreement,
the Company may in future grant to Employee Xxxxx Xxxx the right to purchase
from the company additional shares of the Company's common shares, as deemed
appropriate at the time solely by the BSD Board of Director at the time.
13. Miscellaneous Provisions.
a. Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Employee and by an officer of the Company (other than
Employee) authorized by the Board to sign such modification, waiver or
discharge. No waiver by either party or any breach of, or of compliance with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
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b. Entire Agreement. No agreement, representation or understanding
(whether oral or written and whether express or implied), which is not expressly
set forth in or attached to this Agreement has been made or entered into by
either party with respect to the subject matter hereof.
c. Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of Utah
applicable to contracts wholly made and performed in such state.
d. Severability. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such term and provision to
circumstances other than those as to which it is held invalid or unenforceable,
and a suitable and equitable term or provision shall be substituted therefor to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.
e. Employment Taxes. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.
f. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but both of which together will
constitute one and the same instrument.
14. Arbitration of Disputes. Any controversy, dispute or claim arising
out of or relating to this Agreement, the breach thereof, or the employment
relationship between the parties which cannot be resolved amicably by the
parties shall be settled by arbitration in Salt Lake City, Utah, before a single
arbitrator, in accordance with the rules of the American Arbitration
Association. This arbitration shall be binding on the parties and the
arbitration decision may be enforced in a court of competent jurisdiction in
accordance with the laws of the State of Utah. The only exception to the
preceding sentences of this provision is in paragraph 15 below, relating to
injunction proceedings. The Company will be responsible for the arbitration
costs incurred in arbitrating any said dispute, unless the arbitration decision,
taken as a whole, is adverse to Employee.
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15. Injunctive Relief. Employee stipulates that the covenants contained
in paragraph 14 to be performed by him under this Agreement are of special,
unique, unusual, and extraordinary value and that the breach of such covenants
cannot reasonably or adequately be compensated in damages. Accordingly, Employee
agrees that any breach of paragraph 9 or of Exhibit A to this Agreement by
Employee will entitle the Company to injunctive or other equitable relief to
prevent such breach, either before an arbitrator as provided in paragraph 14
above, or before any court having jurisdiction over the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[Company] BSD Medical Corporation
By:
Its:
Employee:
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EXHIBIT A
EMPLOYEE NONDISCLOSURE AGREEMENT
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This Agreement is entered into this _____ day of ___________, 1999, by
and between BSD Medical Corporation, a Delaware corporation (hereinafter the
"Company"), having a principal business office at 0000 Xxxx 0000 Xxxxx, Xxxx
Xxxxxx, Xxxx 00000 and Xxxxx X. Xxxx ("Employee"), an individual residing at202
Xxxxxxxx Xxxx, Xxxxx Xxxx Xxxx, Xxxx, 00000.
RECITALS
A. The Company has developed or may develop and/or acquire proprietary
technology and other confidential information relating to its business
activities, systems and methods.
B. Employee desires to be employed by the Company and to provide
assistance, as directed by the Company, in connection with the Company's
business.
C. In fulfilling the duties of his employment with the Company, the
parties contemplate that Employee should have access to information concerning
the Company.
NOW THEREFORE, in consideration of the mutual covenants and promises
hereinafter contained, the employment and/or continued employment of Employee,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Employee hereby agree as follows:
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TERMS OF AGREEMENT
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Section 1: Definitions
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1.1 As used in this Agreement, the terms "Technology" shall mean
proprietary devices, systems, methods and products developed and/or acquired by
the Company relating to its business as presently conducted or as conducted in
the future, including, but not limited to, computer software, diagrams,
blueprints, patent applications, prototypes, trade secrets, know-how, data and
technical information relating thereto.
1.2 As used in this Agreement, the term "Confidential Information"
shall mean the Technology as well as any and all knowledge and information
regarding the Company which Employee acquires as a result of his employment with
the Company. Confidential Information includes all written and oral
communications regarding the Technology and marketing, financial, costing and
other information related to the Company or its business, whether in the form of
lists, memoranda, letters, transcripts, sound or video recordings, computer
software, printed materials, or other information storage or recording media.
Excluded from the definition of Confidential Information is non-proprietary data
which is known or available to the public generally.
Section 2: Disclosure by the Company
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2.1 Subject to the terms and conditions of this Agreement, the Company
will employ and/or continue to employ Employee and will disclose to Employee
and/or allow Employee to have access to such Confidential Information as the
Company believes is reasonably necessary to enable Employee to fulfill his
duties.
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Section 3: Employee's Obligation of Confidence
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3.1 Employee acknowledges that the Confidential Information made
available to Employee under this Agreement is owned and shall continue to be
owned solely by the Company. Employee will not use or divulge any Confidential
Information to any individual or entity without the Company's prior written
consent, except to the extent that such Confidential Information (1) is used by
the Executive during the Employment Period in the performance of his duties
pursuant to this Agreement or (2) is required to be disclosed by any law,
regulation or order of any court or regulatory commission, department or agency.
3.2 Notwithstanding the provisions of paragraph 3.1 above, Employee
shall have no obligation of confidence with respect to information which
Employee can reasonably demonstrate:
(i) was in his possession in tangible form prior to the date of
this Agreement, or
(ii) was independently developed by or for him without reference
to any of the Confidential Information disclosed under this Agreement, or
(iii) was independently developed by or for him from sources
without reference to any of the Confidential Information of the Company, or
(iv) has become generally known in the trade or to the public
either prior to or subsequent to the Company's disclosure to Employee through no
fault of Employee.
3.3 If Employee contends that any information does not constitute
Confidential Information because of one or more of the provisions of paragraph
3.2 above, then, if such contention is not accepted by the Company, Employee
shall not disregard his duty to hold such information in confidence under this
Section 3 unless and until final adjudication is rendered by a court of
competent jurisdiction in favor of Employee.
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3.4 Except in connection with the performance of his duties as an
officer or director of the Company, Employee shall not remove from the Company's
place of business any of the Company's books, records, discs, tapes, documents
or any copies of such documents, or make any copies of such books, records or
documents for use outside of the Company's place of business except as
specifically authorized in writing by the Company.
Section 4: Ownership and Disclosure of Improvements
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4.1. The Company is and shall be the owner of all rights, title and
interest in and to the following: (1) all original computer software, technical
data or written materials originated and/or prepared for the Company by
Employee, including designs, plans and specifications, (2) all ideas, concepts,
know-how, or techniques relating to such technical data or written materials
developed during the course of Employee's employment with the Company; and (3)
all inventions, discoveries, or improvements, including ideas, concepts,
know-how, or techniques relating to the Technology that were (a) developed by
Employee or (b) conceived or originated by Employee solely or jointly with
others (i) at the Company's request or expense, at its facilities, (ii) in the
course of Employee's employment with the Company, or (iii) based on knowledge or
information obtained from the Company during the course of such employment.
4.2 Employee will promptly communicate and disclose to the Company all
such data, materials, ideas, concepts, know-how, techniques, inventions,
discoveries and improvements, whether patentable or not, referred to in
paragraph 4.1 above, together with any and all other enhancements,
modifications, and/or improvements of or to the Technology which Employee
conceives, works upon, or otherwise becomes aware of during the term of this
Agreement.
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4.3 Employee will irrevocably assign, transfer and set over to the
Company the entire right, title and interest in and to each such idea, concept,
technique, invention, discovery, improvement, enhancement and modification
referred to in paragraphs 4.1 and 4.2 above, including without limitation all
right and title in and to any data, materials, know-how, patents, copyrights, or
trade secrets which embody all or any part thereof. Employee will also execute,
acknowledge, and deliver any and all instruments, documents and papers and do
any and all other things that may be deemed to be reasonably necessary by the
Company to carry out the provisions of this Section 4.
Section 5: Restrictive Covenants
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5.1 Employee agrees that during the term of this Agreement and
thereafter for a period of one (1) year he will not directly or indirectly use
any of the Company's Confidential Information in any business, profession or
other endeavor which is either directly or indirectly in competition with the
business of the Company.
Section 6: Term and Termination
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6.1 This Agreement shall remain in effect for so long as Employee
continues his employment with the Company. Upon termination of Employee's
employment with the Company for any reason, with or without cause, this
Agreement shall automatically terminate. However, the obligations contained in
Sections 3, 4, 5, and 6 shall survive the termination of this Agreement. In
addition, the termination of this Agreement shall not affect any of the rights
or obligations of either party arising prior to or at the time of the
termination of this Agreement, or which may arise by any event causing the
termination of this Agreement.
6.2 Within two (2) weeks following the written request of the Company
after the termination of this Agreement for any reason, Employee shall furnish
the Company with written notice specifying that through reasonable care and to
the best of his knowledge, all Confidential Information has been returned to the
Company, including all originals and all copies of any documentation containing
any portion of the Company's Confidential Information.
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Section 7: Remedies
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7.1 Employee acknowledges that compliance with Sections 3, 4, and 5 is
necessary to protect the business and goodwill of the Company and that a breach
of any of these provisions will irrevocably and continually damage the Company,
for which money damages may not be adequate.
7.2 Consequently, in the event that Employee breaches or threatens to
breach any of the obligations of Sections 3, 4 and/or 5 of this Agreement, the
Company shall be entitled to a preliminary and permanent injunction prohibiting
Employee from violating this Agreement in order to prevent the continuation of
such harm and to obtain money damages insofar as they can be determined.
7.3 Nothing in this Agreement shall be construed to prohibit the
Company from also pursuing any other remedy available to it, the parties having
agreed that all remedies are to be cumulative.
Section 8: Miscellaneous Provisions
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8.1 Neither party shall have the right to assign any rights or
obligations under this Agreement without the prior written approval of the other
party, except that the Company shall have the right to assign this Agreement as
part of any merger, acquisition, reorganization, or similar transaction.
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8.2 The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability, of any other
provision of this Agreement, and each provision shall be enforced to the maximum
extent permitted by applicable law.
8.3 This Agreement shall be binding upon and shall inure to the benefit
of the parties, their successors, assigns, executors, administrators, and
personal representatives.
8.4 This Agreement is the complete and exclusive statement of the
agreement between the parties relating to the subject matter of this Agreement,
and this Agreement supersedes all proposals, or prior agreements and
understandings, whether oral or written, and all other communications relating
to the subject matter of this Agreement.
8.5 This Agreement may only be amended, or any provision herein waived,
by written instrument executed by each party hereto. No waiver of any provision
hereof shall constitute a waiver of any other provision hereof, whether or not
similar, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided herein.
8.6 This Agreement and its validity and interpretations shall be
governed by and construed in accordance with the laws of the State of Utah,
notwithstanding any choice of law rules of Utah or any other state or
jurisdiction.
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IN WITNESS WHEREOF, the parties have signed and entered into this
Agreement as of the date first above written.
The Company:
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/s/ Xxxx X. Xxxxxx
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By: Xxxx X. Xxxxxx
Its: Acting President and Chairman
Employee: /s/ Xxxxx X. Xxxx
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