InMEDICA DEVELOPMENT CORPORATION
Employment Confidentiality
and Competition Agreement
THIS AGREEMENT, is made and entered into by and between InMEDICA
Development Corporation, a Utah corporation and or any of its subsidiary
corporations (hereinafter referred to as "Employer") and Xxxxx Xxxxxx
(hereinafter referred to as the "Employee"), as follows:
WHEREAS, Employer and Employee have entered into this Agreement on the
1 day of December 1999; and
WHEREAS, the Employee desires to obtain gainful employment with
Employer and will be fairly compensated for services rendered to Employer at his
level of responsibility with the Employer; and
WHEREAS, the Employee realizes and acknowledges that such employment
will entail exposure to or training in Employer's technology, software, designs,
design processes, know-how, processes, techniques and Employer's financial
condition (hereinafter referred to as the "confidential and proprietary
information"); and
WHEREAS, the Employee acknowledges (I) that such information is
confidential and constitutes a valuable business asset of Employer which has
been developed at considerable time and expense to Employer, (ii) that such
information properly belongs to Employer and is information proprietary to
Employer, (iii) that exposure to said information is conditional upon the
Employee's agreement and undertaking to keep and preserve the same for the sole
use and benefit of Employer, (iv) that as to such information Employee shall
1
become a fiduciary in respect to employer, and (v) that this Agreement to limit
unfair competition against Employer by the use of said proprietary information
is an essential and material inducement to Employer to provide Employee with
employment;
NOW, THEREFORE, it is herewith agreed and promised:
1. Employment. Employer does hereby employ Employee on a full-time
basis as chief executive officer and president of Employer. Employee shall
become a member of the board of directors of Employer. Employee shall work under
the direction of board of directors of Employer. The initial term of employment
shall be for six (6) months but will be automatically extended for an additional
six (6) months if Employer is able to raise or have a firm commitment for at
least an additional One Hundred Fifty Thousands Dollars ($150,000) in capital
and/or long term indebtedness prior to the end of the initial six (6) month
term. If extended as provided for above, the term of employment will continue to
be extended thereafter at intervals of one year each, unless either party hereto
elects at any time 30 days or more before the end of the initial term or any
extensions thereto, to have the employment terminate at the end of such term.
2. Compensation. Employer has and shall maintain an errors and omission
insurance policy for Employee and other officers and directors. For the services
of Employee and other considerations granted by Employee hereunder, Employer
shall pay to Employee the following compensation:
(a) The sum of Five Thousand Eight Hundred Thirty Three and 33/100
Dollars ($5,833.33.00) per month in salary.
2
(b) employer shall furnish Employee with such fringe benefits as the
board of directors approves, comparable to those furnished to other executive
officers of Employer.
(c) Employer currently has no health insurance or life insurance
coverage available for its employees and consequently no such coverage will be
afforded to Employee.
(d) Employer shall as a signing bonus, immediately cause one hundred
thousand (100,000) shares of its restricted Common Stock to be transferred to
Employee on the condition that Employee execute an Investment Letter, in
standard form, acknowledging and agreeing that such shares are restricted and
may not be resold by Employee except under Rule 144.
(e) Employer shall pay Employee a bonus equal to two and one-half
percent (2.5%) of the net amount of any capital raised by Employer and/or for
which was substantially agreed to during the initial six (6) month term hereof.
Monies raised from Xxxxx Xxxxx, Xx. Xxxx Xxxxxx or Dr. J. Xxxx Xxxxx shall not
be included as capital. Capital raised would include private placements of
Employer's stock or other securities and also loans which are convertible into
such securities at the option of Employer, long term (greater than seven years)
loans, convertible loans or similar arrangements. Employee may, at his sole
option, take such bonus in cash or in restricted Common Stock of Employer at
$.30 per share or any combination thereof.
3
(f) If Employer or substantially all of its assets are acquired by a
non-related entity during the term hereof or if there is a change in control of
Employer through merger, consolidation or other combination of Employer or a
substantially all of the terms to an agreement providing for any of the above is
negotiated during the term hereof, Employer shall use its best efforts to secure
Employee a minimum of twelve months employment with the successor entity or if
employment cannot be accomplished, Employer shall pay Employee a severance pay
equal to three (3) month's salary. In addition, Employer shall in any case pay
to Employee a bonus equal to one and one half percent (1 1/2 % of the
acquisition price or value of such acquisition decreased by $2,200,000 (the
capitalized market value of all outstanding shares of Employer as of the date of
this agreement) and further decreased by the amount of all equity raised by
Employer during the term hereof on which Employee has already been paid a bonus
pursuant to section 2 (e), above. Employee may, at his sole option, take such
bonus in cash or up to 100,000 shares in restricted Common Stock of Employer at
$.30 per share (with appropriate equitable adjustment for any stock splits or
similar changes in capitalization) or any combination thereof.
(g) Employer shall provide Employee an office and office equipment at
the office of its subsidiary corporation. In addition, Employee may chose to
maintain an office at his residence.
3. Solicitation of Customers. The Employee shall not directly or
indirectly solicit business in any matter pertaining to the Business of
4
Employer, as such term is defined below, from any established customer, supplier
or competitor of Employer at any time during the existence of any employment
relationship between Employer and the Employee or subsequent to the termination
thereof as provided in Section 9 hereof, and any such solicitation, whether
successful or not, shall be deemed to be a prima facie material breach of this
Agreement.
4. Non-Disclosure of Proprietary Information. The Employee shall not
directly or indirectly, at any time disclose the confidential and proprietary
information of Employer to any customer, supplier or competitor of Employer not
to any other person or entity who is not an employee of Employer and any such
disclosure shall be deemed to be a prima facie material breach of this
Agreement.
5. Conversion, Use or Exploitation of Proprietary Information. The
Employee shall not directly or indirectly use, exploit or convert or cause to be
used, exploited or converted the confidential and proprietary information of
Employer to his own use and benefit or to the use and benefit of any other
person other than Employer, and any such use, exploitation or conversion shall
be deemed to be a prima facie material breach of this Agreement.
6. Non-Competition. The Employee shall not enter into any business or
occupation in direct or indirect competition with the Business of the Employer
at any time during the existence of an employment relationship between Employer
and the Employee or subsequent to the termination thereof as provided in Section
9 hereof, and any such competition shall be deemed to be a prima facie material
breach of this Agreement. For purpose herein, the "Business of the Employer" is
5
the business of developing, manufacturing and selling of a non-invasive
diagnostic blood parameters using electrical impedance.
7. Solicitation of Employees. The Employee shall not, during the
existence of any employment relationship between Employer and Employee or
subsequent to the termination thereof as provided for in Section 9 hereof,
solicit or encourage any other employee of Employer to terminate any employment
agreement with Employer in favor of alternative employment or business venture,
and any such solicitation, whether successful or not shall be deemed a prima
facie material breach of this Agreement.
8. Post-Termination Unfair Competition. The Employee agrees and
understands that any direct or indirect use, exploitation of and/or disclosure
of the confidential and proprietary information of Employer in competition with
the Business of the Employer, even after the termination of any employment
relationship between Employer and the Employee, would constitute an
unconscionable abuse of the confidentiality and fiduciary duties assumed by the
Employee under this Agreement and would constitute unfair competition against
Employer. Therefore, the Employee shall not, at any time within three years
after termination of any employment relationship between Employer and the
Employee, commit or suffer others to commit any of the acts or omissions
prescribed in Sections 4 and 5 hereof.
9. Post-Termination Competitive Limits. The Employee agrees and
understands that it is often difficult to establish the details of instances of
unfair competition and the like. Therefore, the Employee agrees that the purpose
6
and intent of this Agreement may be best effectuated by a nonexclusive, express
limitation upon post-termination competition with Employer. For this reason, the
Employee agrees that Employee shall not, at any time within the lesser of twelve
months after termination of any employment relationship between Employer and
Employee or the length of Employee's employment hereunder, commit or suffer
others to commit any of the acts or omissions prescribed in Section 3, Section 6
or Section 7 hereof within any geographic area in which Employer is then
actively doing the Business of the Employer.
10. Performance Standard. The Employee agrees that during the term of
said employment he will, faithfully, diligently, and to the utmost of his
ability, do and perform such acts and duties in connection with said employment
as may be specified by the Board of Directors of Employer from time to time.
11. Devotion of Time. The Employee agrees that during the term of this
Agreement, he will not directly or indirectly engage in or acquire an interest
in any other business, calling or enterprise which will require his personal
attendance during business hours and will not directly or indirectly, at any
time, engage in or acquire any interest in any business, calling or enterprise
which is or may be contrary to or in competition with the interests, welfare or
benefit of Employer. Employee shall devote his efforts to the benefit of
employer on a full-time basis during the entire term hereof.
12. Termination. Employee may terminate his employment with Employer at
anytime after the first six months of employment upon sixty (60) days written
notice. In such event, the termination shall be effective as of the end of the
notice period and all salary and fringe benefits provided for in Section 2 (a)
and (b) shall be computed and paid up to and including the effective date of
termination. To the extent the acquisition bonus provided for in Section (f) has
7
been substantially earned on the date of termination it shall be paid even if
the acquisition occurs after the termination. The Employer shall have the
following rights with respect to termination of Employee's employment,
notwithstanding anything to the contrary herein.
(a) Death. If Employee dies during the term of his employment,
Employee's employment shall be deemed to be terminated on the date of death.
(b) Disability. If Employee shall become unable to perform the duties
required by Employee under this Agreement due to physical or mental disability
or other incapacity, the Employer shall have the right, upon written notice to
Employee, to terminate said Employee>
(c) Without cause. Employer may terminate employee anytime after the
first six months of employment without cause upon Thirty (30) days written
notice. In the event of such termination during the initial six months of
employment, the salary provided for in Section 2(a) shall continue for the
remainder of the employment term. In the event of such termination after the
initial six months of employment, the salary provided for in Section 2(a) shall
continue for three months after the termination date if the termination was by
the Employer for reasons other than death or disability. To the extent the
bonuses provided for in Sections (e) or (f) have been substantially earned on
the date of termination it or they shall be paid upon completion of the
capitalization or acquisition even if this occurs after the termination.
13. Remedies. In the case that any action or legal proceeding is
brought to enforce this Agreement or to recover for damages caused by its
8
breach, the prevailing party shall be entitled to recover its actual attorney's
fees and court costs. In addition thereto, Employer shall be entitled to the
following remedies, which shall be cumulative and which shall not be mutually
exclusive:
(a) an immediate, ex-parte restraining order and preliminary injunction
in the case of any prima facie material breach of this Agreement;
(b) a restraining order and preliminary injunction in the case of any
other material breach of this Agreement.
(c) a permanent prohibitory injunction against any and all conduct in
breach of this Agreement;
(d) actual and consequential damages sustained as a result of the
breach of this Agreement, it being understood that lost profits and impaired
competitive position shall be deemed to constitute proper and recoverable
elements of any such damage award;
(e) exemplary damages in an amount to be assessed by the court; (f) any
and all other remedies otherwise available to Employer at law or in
equity.
14. Inducement. The Employee has entered into this Agreement as an
inducement to secure employment from Employer. By the execution of this
Agreement, the Employee intends to secure the detrimental reliance on Employer.
Therefore, the Employee understands and agrees that Employer may and will rely
on this Agreement.
00.Xxxxxx Position and Circumstances of Execution. The Employee
understands and agrees that Employer does not have any special dominance in the
9
market for its products and services and has not exercised any market power to
control or regulate prices or terms of trade by the execution of this Agreement.
The Employee has executed this Agreement as a free, voluntary and knowing act,
without the presence of any coercion, force or duress of any kind.
16. Severability. In the event that any provision herein contained is
held to be invalid, illegal, unenforceable, or void by any Court of competent
jurisdiction, the same shall be deemed severable from the remainder of this
Agreement and shall in no way affect any other provision herein contained.
Provided, however, that if such provision shall be deemed invalid, illegal or
enforceable as to the extent of its scope or breadth, the parties hereto
specifically agree that such provision shall be deemed valid to the fullest
extent of the scope or breadth permitted by law.
17. Final Agreement. This is the full and final understanding of the
parties on the subject of this Agreement. All prior discussions and negotiations
have been merged herein. This Agreement may not be modified, save and except
only in a writing signed by the Employee and Employer and attached hereto.
18. Controlling Law and Miscellaneous. Employer is a Utah corporation.
This Agreement shall be subject to, controlled by and interpreted under the laws
of the State of Utah. Employer and Employee both consent to the exclusive
jurisdiction of the Third district Judicial Court in and for Salt Lake County,
State of Utah in any dispute that should arise under this Agreement. This
Agreement may be executed by a signed facsimile sent to the other party and may
be executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute the same
10
instrument. In the event of a dispute between the parties arising out of this
Agreement, the successful party shall be reimbursed by the other party hereto
for all costs and expenses of such dispute, including, but not limited to,
reasonable attorney fees.
19. In-Line Diagnostics, Inc. Employee is currently employed by In-Line
Diagnostics, Inc. ("In-Line") and has executed a "Confidential Agreement" with
In-Line. Employer wishes to engage Employee solely upon the express condition
that Employee will in every respect comply with and perform each and every term
of his Confidential Agreement with In-Line. Any breach by Employee of said
agreement shall be deemed to be a breach of this Agreement. Although the
technologies of In-Line and Employer both seek to accomplish the same task,
Employer has developed technology which is dissimilar to that of In-Line's and
expressly states it does not desire and will not accept any In-Line confidential
or proprietary information from Employee. Employee expressly agrees and
covenants he will not break any term of the In-Line Confidential Information
Agreement and will take no action which would in any way cause Employer any
liability of any nature which in any way relates to or is directly or indirectly
caused by or stems from said agreement. Anything herein to the contrary
notwithstanding, Employee is not expected to take and shall not take any action
that is prohibited by said agreement.
DATED this 1 day of Dec, 1999.
InMEDICA DEVELOPMENT CORPORATION EMPLOYEE
By: /s/ Xxxxx X. Xxxxx /s/ Xxxxx Xxxxxx
------------------ ----------------
Xxxxx X. Xxxxx Xxxxx Xxxxxx
Its: Chairman Xxxxx Xxxxxx
11
