EXHIBIT 10.78
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EXECUTIVE EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT made as of the 25th day of October, 2005, by and
between THE SAGEMARK COMPANIES LTD., a New York corporation with its principal
offices at 1285 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Company") and XXXXXXX XXXXXX, M.D., an individual residing at 0000
Xxxxxxxxx Xxx, Xxxxxx Xxxxx, Xxxxxxx 00000 ("Executive").
W I T N E S S E T H :
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WHEREAS, the Company, through Premier P.E.T. Imaging International, Inc.
("Premier"), its wholly owned subsidiary, is engaged in the ownership, operation
and management of outpatient positron emission tomography ("PET") diagnostic
imaging centers (the "PET Centers") and is planning to expand its portfolio of
PET Centers by establishing and/or acquiring additional PET Centers throughout
the United States; and
WHEREAS, the Company desires to employ the services of a Chief Medical
Officer to assume responsibility for supervising the operations of its current
and future PET Centers, to otherwise perform a variety of services related to
establishing, acquiring, operating, and managing such PET Centers and to play a
key role in the Company's efforts to expand its portfolio of PET Centers, all
pursuant to the terms of a written employment agreement; and
WHEREAS, the Company desires to engage the services of Executive as its
Chief Medical Officer, and Executive is willing to accept such employment, all
on and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby unconditionally acknowledged, the parties hereto do hereby agree as
follows:
1. Employment. During the Term (hereinafter defined) of this
Agreement, the Company hereby employs Executive as its Chief Medical Officer and
Executive hereby agrees to accept such employment, upon and subject to the terms
and conditions set forth in this Agreement. Executive will, on the date hereof,
provide (i) notice to RCOA (hereinafter defined) of the termination of that
certain Offer of At Will Employment letter between Executive and RCOA dated May
1, 2005, and (ii) a one-hundred-twenty (120) day notice to RCOA of the
termination of his services and position as Medical Director of RCOA pursuant to
that certain Medical Director Agreement dated May 1, 2005 between Executive and
RCOA (and will provide copies of such notices to the Company).
2. Executive's Duties and Responsibilities.
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2.1. Executive will perform the following services during the
Term of this Agreement: Supervision and management of all medical related
activities of those PET Centers of the Company as designated by the Company's
Chief Executive Officer, overseeing and supervising the operations of each of
such of the Company's PET Centers including, without limitation, patient
scheduling and care, billing and collection, medical and professional services
rendered by technicians and radiologists, reviewing and making recommendations
with respect to quality control and operational protocols, reporting and record
keeping procedures, report delivery protocols and methodologies (including web
initiatives), inventory controls and procedures, education of and marketing to
target physicians, medical groups and practices, training of technical and PET
Center personnel, assisting with the hiring of personnel for such centers,
(including technologists, marketing representatives and administrative
personnel), assisting with the Company's activities relating to the acquisition
and opening of additional PET Centers, including assistance with strategic site
selection for new PET Centers, assisting with licensing and accreditation
requirements, assisting marketing agents of each such PET center, training
radiologists and supervising and overseeing radiology services at new and
existing PET Centers (other than those which are the subject of the Reading
Agreement, hereinafter defined), assisting with the negotiation of all material
agreements relating to the PET Centers, and new business development with
respect to additional PET Centers, both within and outside of the State of
Florida. Executive will, upon the Company's request, serve as the Medical
Director (or safety officer or similar position) for any of the Company's PET
Centers. Executive also agrees to perform such other services and assume such
other responsibilities consistent with such position as the Chief Executive
Officer of the Company may reasonably request of him from time to time during
the Term hereof.
2.2. Executive will have the authority, subject to the
limitations set forth below, to supervise and direct all PET Center personnel in
the New Florida Centers (hereinafter defined) and, to the extent that the
Company and Executive may mutually agree upon, in writing, such other of the
Company's PET Centers. All of the employees of such PET Centers will report
directly to Executive. Executive will report directly to the Company's Chief
Executive Officer. Notwithstanding the foregoing, Executive shall not have the
right to materially obligate the Company or Premier or, in the absence of the
written consent of the Company's Chief Executive Officer, to authorize any
material payment or disbursement on behalf of the Company, nor shall Executive
act outside of any operational guidelines or protocols established by the
Company's Board of Directors.
2.3. Executive agrees, subject to the Permitted Activities
(defined below) and to the non-compete restrictions set forth in Section 8.4
hereof, to devote his full business time, attention and energy to the
performance of his services under this Agreement during the Term hereof and
shall perform such services diligently, in good faith and in a manner consistent
with the best interests of the Company. Executive further agrees to use his best
efforts at all times during the Term hereof to preserve, protect, enhance, and
maintain the trade, business and goodwill of the Company and Premier.
Notwithstanding the foregoing, Executive shall have the right to devote a
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portion of his business time to (i) performing services under that certain
Exclusive Radiology Services Agreement between Premier and Executive of even
date herewith (the "Reading Agreement"), (ii) providing up to six lectures per
year and to retain any fees received by Executive for such lectures (Executive
will bear the costs and expenses of attending such lectures), (iii) managing
Executive's investments in a restaurant and a jazz magazine in which he is a
principal, (iv) performing services on behalf of Advanced Diagnostic Imaging
Professional Services, P.L.L.C. ("ADIP") pursuant to that certain Professional
Services Agreement dated as of May 1, 2005 between ADIP and Radiology
Corporation of America ("RCOA"), which services consist of interpreting and
reporting of PET/CT scans performed at RCOA's Delray Beach, Florida imaging
center, and in accordance with the terms of the Reading Agreement (but only
until the earlier of the date on which the Company opens a PET Center in Boca
Raton or Delray Beach, Florida or the date on which the Company acquires RCOA's
Delray Beach imaging center), and (v) attendance at up to four routine
nationally recognized mutually agreed upon academic meetings (the cost of such
attendance being borne by the Company, less any costs paid for or reimbursed to
Executive by any sponsor thereof) provided that the activities described in
clauses (ii), (iii), (iv) and (v) only require Executive to spend a minimal
amount of his time and do not interfere with the services to be rendered by
Executive under this Agreement and the Reading Agreement.
2.4. Executive shall perform his services wherever his
services are required. The Company acknowledges that Executive resides in
Florida and will render his services from Florida, however, when and to the
extent required to perform the services provided for under this Agreement,
Executive will travel (at the Company's expense) to such other locations at
which the Company requires such services. Executive will not be required to
relocate his current residence at any time during the Term hereof.
2.5. During the Term of this Agreement, Executive shall
provide the Company with notice of all proposed transactions or opportunities
that may be brought to his attention or otherwise introduced to him in the
positron emission tomography, magnetic resonance or multi-modality imaging field
promptly after the Executive's knowledge or receipt of notice thereof and the
Company shall have the exclusive right as between the Company and Executive to
take advantage or otherwise act upon any of such proposed transactions or
opportunities.
2.6. In the event that, at any time during the Term hereof,
the Company decides to obtain key man life insurance on Executive's life, with
the Company as the beneficiary thereof, Executive will cooperate with the
Company and its insurer in its effort to obtain such insurance.
3. Term.
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3.1. The term of this Agreement shall commence as of October
23, 2005 and expire on October 22, 2010, subject to renewal as provided in
Section 3.2 below and earlier termination as provided in Section 3.3 hereof (the
"Term").
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3.2. The Term of this Agreement will be automatically renewed
for, as applicable, (i) three successive two year periods unless either party
provides the other with notice of its intent not to renew the Agreement upon the
expiration of the aforementioned initial five year period, or any such renewal
period, not less than twelve (12) months prior to the expiration of such initial
five year period, or any such renewal period, or (ii) five years if, on or
before October 22, 2010, there are five New Florida Centers which have commenced
their operations by such date (i.e., performed a PET scan on a patient for a
fee). For purposes of this Agreement, the term "New Florida Centers" shall mean
any PET Center acquired or established by the Company in Florida during the Term
of this Agreement. References in this Agreement to the Term shall include all of
the aforementioned renewal periods.
3.3. Pursuant to the provisions of Section 3.1 above, the
Term of this Agreement shall terminate on the earlier to occur of any of the
following events:
(a) The death of Executive;
(b) The Permanent Disability (hereinafter defined) of
Executive as provided in Section 6 hereof; or
(c) The failure and/or refusal of Executive to
perform his services or comply with his obligations under this Agreement and/or
any breach of any of his representations, warranties or covenants under this
Agreement, provided that, with respect to any such failure, refusal or breach
which is curable, Executive is given notice thereof by the Company and fails to
cure any such breach within thirty (30) days after such notice; or
(d) A final conviction of Executive for a felony or
other crime involving embezzlement, fraud or misappropriation of funds, in all
of such instances to the extent such crimes involve the Company or its
subsidiaries or affiliated companies (including Premier); or
(e) Upon and subject to notice from the Company, in
the event of the termination of the Reading Agreement; or
(f) The failure to achieve any Milestone. For
purposes of this Agreement, the term "Milestone" shall mean the acquisition or
opening (i.e. performing a PET scan on a patient for a fee) of at least (A) two
PET Centers in Florida on or before October 22, 2006, and (B) at least one PET
Center in Florida from and after October 22, 2006 and on or before October 22,
2007 (unless such failure is caused by the Company's inability to provide or
obtain the financing required to acquire or establish any such PET Center due to
any lack of creditworthiness of the Company, or if the Company, notwithstanding
the satisfaction of the Milestone Criteria (defined below) for establishing and
opening new PET Centers, subsequently determines not to establish any such PET
Center). For purposes of this Agreement, the term "Milestone Criteria" shall
mean the completion of due diligence with respect to each proposed new PET
Center in Florida by Executive and the Company's Chief Executive Officer
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personally visiting physicians located within the target referral base of any
such PET Center proposed to be established and determining that the contemplated
scan volume from such physicians to such center will be sufficient to enable it
to operate at least on a breakeven basis. The Company hereby agrees that RCOA's
Delray Beach imaging center (or a PET Center located in Boca Raton or Delray
Beach, Florida) and the proposed PET Centers in Tamarack and Jacksonville,
Florida will, if acquired or opened within the aforementioned periods, satisfy
the Milestone. Notwithstanding the foregoing, in the event that the Company
desires to terminate this Agreement pursuant to this Section 3.3(f), it must
provide notice of termination to Executive on or before January 31, 2008 and, in
the event the Company does not provide such notice within such period, it shall
be deemed to have waived its right to terminate this Agreement under this
Section 3.3(f).
(g) The delivery of notice to the Company by
Executive of the termination of this Agreement for any breach or default by the
Company of any of its representations, warranties, obligations or covenants
under this Agreement; provided that, with respect to any such breach or default
which is curable, any such breach or default is not cured within thirty (30)
days after such notice from Executive.
4. Compensation. In consideration of the performance of the
Executive's services under this Agreement during the Term hereof, the Company
shall pay Executive the following compensation:
4.1. An annual base salary of Two Hundred Fifty Thousand
Dollars ($250,000) (the "Base Salary"), such salary to be paid to Executive in
twelve (12) equal monthly installments (less all applicable withholding and
other payroll tax deductions), in advance, on the first day of each month during
the Term hereof. The Base Salary for the first and last month of the Term hereof
shall be prorated based upon the number of days in each of such months (and such
prorated Base Salary for October 2005 in the amount of $6,164.38 (less all such
deductions) will be paid to Executive upon the execution of this Agreement).
4.2. The Company shall, in addition to the Base Salary,
reimburse Executive for all ordinary and necessary out-of-pocket expenses
incurred by him in the performance of his services under this Agreement, subject
to and upon receipt by the Company of invoices or other documentation in support
thereof. Such expenses for which Executive shall be entitled to reimbursement
shall include, but not be limited to, travel, entertainment and lodging
expenses, a dedicated work station located in Executive's current home office
(including a high speed internet computer connection) and a cellular telephone
(with international service).
4.3. In addition to the Base Salary, Executive shall be
entitled to participate in all benefit programs of the Company which are in
effect during the Term hereof for its executive officers, including, without
limitation, any retirement, pension, profit sharing, insurance, hospitalization,
disability or other employee benefit plan of any type (including, without
limitation, any incentive, profit sharing, bonus or stock option plan), it being
understood that Executive shall have the same rights and privileges to
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participate in such Company benefit plans as any other officer or executive
employee of the Company, except for any perquisites granted pursuant to separate
employment agreements between the Company and its officers.
4.4. The Company will pay Executive the sum of One Hundred
Thousand Dollars ($100,000) as a fee (the "PET Center Fee") with respect to each
PET Center opened (i.e., performing a PET scan on a patient for a fee) or
acquired by the Company in Florida during the Term of this Agreement. The PET
Center Fee will be payable to you subject to and from the first One Hundred
Thousand Dollars ($100,000) of Distributions (defined below) received by the
Company from the entity which owns and/or operates the PET Center for which such
fee is payable. For such purposes, the term "Distributions" shall mean all
amounts received by the Company from such entity which are attributable to
distributions by such entities to the owners thereof of profits or cash flow,
exclusive of any amounts paid to the Company or Premier with respect to funds
invested in or loaned to any such entity. Notwithstanding the foregoing, and in
lieu of the PET Center Fee described above, in the event that the Company
acquires National PET Scan, LLC ("National PET") or RCOA's Delray Beach imaging
center during the Term of this Agreement, the Company will pay you a finder's
fee in the amount of the greater of One Hundred Thousand Dollars ($100,000) or
an amount equal to 5% of the total purchase price paid by the Company to
National PET or RCOA, as applicable, in connection with any such acquisition.
Such fee will be payable to you upon and subject to the closing of any such
acquisition. The Company will pay Executive for all fees payable to Executive
under this Section which have been earned, but not fully paid, upon the date of
the expiration or any earlier termination of this Agreement (other than a
termination pursuant to Section 3.3(d) hereof), notwithstanding any such
expiration or earlier termination (such payment obligation to survive any such
expiration or earlier termination).
5. Warrant.
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5.1. As an inducement to Executive entering into this
Agreement, the Company will deliver to Executive, within ten (10) days of the
date hereof, a warrant (the "Warrant"), exercisable for a period of five years
from the date hereof to purchase up to 500,000 shares of the Company's Common
Stock (the "Warrant Shares") at an exercise price of $1.60 per share (such price
representing the closing price of the Company's common stock on October 11,
2005, as agreed upon between the parties hereto pursuant to that certain letter
agreement dated October 11, 2005, hereinafter referred to as the "Letter of
Intent"). The Warrant will provide that Executive's right to acquire the Warrant
Shares shall vest as follows: (i) 100,000 Warrant Shares upon the execution of
this Agreement, (ii) 100,000 Warrant Shares on each of October 22, 2006, October
22, 2007, October 22, 2008 and October 22, 2009 and (iii) 100,000 Warrant Shares
on the date, if any, that each New Florida Center commences its operations
(i.e., performs a PET scan for a fee on a patient) or on the closing date of the
acquisition of any such New Florida Center during the Term of this Agreement
(with respect to the vesting provisions set forth in clauses (ii) and (iii), the
applicable Warrant Shares will vest on the earlier of such dates if and as they
occur). Notwithstanding the foregoing, the Warrant Shares which have not vested
will immediately vest upon any issuance by the Company of a non-renewal notice
prior to October 22, 2010 as provided in Section 3.2 hereof or upon any
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termination of this Agreement by Executive pursuant to Section 3.3(g) hereof. In
the event this Agreement is terminated by the Company pursuant to Section 3.3(c)
or Section 3.3(f), the Warrant will expire on the date of any such termination
(Executive will be entitled to retain any Warrant Shares acquired by him upon
the exercise of the Warrant prior to the date of any such termination). In
addition, the Warrant shall also grant Executive one demand registration right
with respect to the vested Warrant Shares underlying such Warrants and
"piggy-back" registration rights with respect thereto.
5.2. Executive will have the right to exchange all (but not
part) of the 400,000 vested Warrant Shares for a 20% equity interest in all of
the New Florida Centers existing on the date of any such exchange, without
making any payment to the Company therefor, provided that Executive makes such
election, in writing, prior to any exercise of the Warrant and not later than
October 22, 2008. In the event that Executive fails to provide such notice to
the Company by such date, Executive's exchange right described herein will
terminate as of October 22, 2008. In the event that Executive exercises his
exchange right under this Section 5.2, the Company agrees that, at all times
thereafter, all costs and expenses allocated by the Company to the aforesaid New
Florida Centers will be allocated on a basis consistent with the allocation of
such costs and expenses at all imaging centers owned by the Company in which it
has physician partners at the time of any such exchange.
5.3. Executive will execute any lock-up agreement with
respect to the Warrant and/or the Warrant Shares which is requested by any
placement agent or underwriter of the Company's securities, provided that such
lock-up agreement is on the same terms and conditions as the lock-up agreement
signed by the other officers and directors of the Company at the time and with
respect to such request.
6. Disability. Notwithstanding anything to the contrary contained
in this Agreement, if, during the Term hereof, Executive suffers a Permanent
Disability (hereinafter defined), the Company shall continue to pay Executive
the Base Salary during the period of such disability, provided, however, that in
the event Executive is so disabled for a period of sixty (60) consecutive days
or ninety (90) days in any year during the Term hereof (the "Disability Period")
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Disability Period. The term "Permanent Disability" shall mean the inability of
Executive to perform a material portion of his services under this Agreement as
determined by an independent physician selected by the Company.
7. Confidentiality and Non-Disclosure Covenant. During the Term of
this Agreement, Executive hereby acknowledges that he will obtain and be
entrusted with unpublished and material confidential and proprietary information
relating to the Company's (for purposes of this Section 7, this shall include
Premier as well as the Company), prospective locations or sites for future PET
Centers, present and proposed business and operations including, without
limitation, financial information relating to the Company's present and proposed
business and operations, the cost and pricing of the Company's services,
proposed acquisitions of the Company, the terms of all material agreements to
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which the Company is a party and the sources and terms of the Company's existing
or proposed debt, equity or equipment financing. All of such information that
may be obtained by Executive shall, for purposes hereof, be referred to herein
as "Confidential Information". Executive hereby agrees that, unless the
Confidential Information becomes publicly known through legitimate origin not
involving any improper act or omission of Executive, neither he, nor any entity
or person owned or controlled directly or indirectly by him, shall, during the
Term of this Agreement or thereafter, use for his own benefit or for the benefit
of others for any purpose and in any manner whatsoever, divulge to any person,
firm, corporation or other entity or otherwise publish or disclose any
Confidential Information (except as necessary in connection with the performance
of Executive's services under this Agreement). This Section 7 shall survive the
expiration or termination of this Agreement. Notwithstanding the foregoing,
Executive shall not be in breach of this covenant with respect to any use or
disclosure of any Confidential Information by him which is or becomes available
in the public domain or is required as a result of any legal process served upon
him in any judicial or administrative proceeding (provided that Executive
provides prompt notice of any such process served upon him in order to enable
the Company to timely contest the same, at its expense), or was obtained by
Executive from a third party without such third party's breach of agreement or
obligation of trust.
8. Non-Competition; Non-Solicitation.
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8.1. Executive acknowledges and recognizes the highly
competitive nature of the business and proposed business of the Company and
hereby agrees that, during the Term hereof and for a period of one year after
the expiration or any earlier termination of the Term of this Agreement (other
than any such earlier termination by Executive pursuant to the provisions of
Section 3.3(g) hereof) (such period to be referred to hereinafter as the
"Applicable Period"), he will not, directly or indirectly, on his own behalf or
in the service of or on behalf of others, whether as an officer, director,
stockholder, partner, trustee, principal, employee, consultant, agent, or owner
of any capital stock, partnership interest or other interest in any corporation,
partnership or other entity, or in any other capacity, own an interest in,
perform any services or conduct any activity for or on behalf of any entity
(including any institution) which is engaged in owning, operating, or managing a
diagnostic imaging center or other facility providing PET and/or magnetic
resonance imaging services ("MRI") and which is located or provides services to
patients within an area consisting of a twenty-five (25) mile radius of any
facility which is owned and/or operated and/or managed, in whole or in part, by
the Company (for these purposes to include any parent, subsidiary or affiliate
thereof) (a "Facility"), (such prohibited activities being referred to herein as
a "Precluded Business Activity"). Executive acknowledges that, due to the nature
of the Company's business, it is essential to provide for as broad a
geographical limitation as possible with respect to the aforementioned covenant
inasmuch as the Company will make substantial capital investments in and
commitments for each of its aforementioned Facilities. Without limiting the
generality of the foregoing, it is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this Section
8.1 to be reasonable, the Executive agrees that in the event it is finally
judicially determined by a court of competent jurisdiction that the specified
time period or geographical area or scope of the foregoing restriction is
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unreasonable, arbitrary, or against public policy, contrary to law, invalid and
unenforceable, the remaining provisions of this Agreement (including the
remaining provisions of this Section) shall not be rendered void, shall not be
affected thereby and shall remain in full force and effect and the provisions
hereof which are the subject of any such judicial determination shall be deemed
amended to apply to any such lesser time period, geographical area, or scope
which is judicially determined or indicated to be reasonable, non-arbitrary and
not violative of public policy, not contrary to law, invalid and/or
unenforceable and such provisions, as modified, may be enforced by the Company
against the Executive in accordance with the terms hereof. Notwithstanding the
foregoing, nothing contained in this Section is intended to nor shall preclude
(i) the ownership by Executive of not more than five (5%) percent of the
outstanding securities of any publicly owned corporation or other entity engaged
in a Precluded Business Activity, provided that such ownership is solely for
investment purposes and is not coupled with any working relationship between
Executive and such corporation or entity, or (ii) Executive's ownership and/or
operation of an MRI imaging facility at RCOA's Boca Raton imaging center
pursuant to that certain Sublease Agreement between Executive and RCOA, provided
that Executive divests himself of any interest in such imaging center prior to
the Company acquiring or opening a PET Center in Boca Raton or Delray Beach,
Florida (in which event, the Company will reimburse Executive for the $74,480
owed to Executive by RCOA pursuant to that certain Settlement Agreement between
Executive and RCOA, less all amounts received by Executive upon the sale or
other disposal of Executive's interest in such center, or otherwise pursuant to
such Sublease or Settlement Agreement. Furthermore, in the event that the
Company acquires RCOA's Delray Beach imaging center, the Company will own 100%
of the equity interests of the non-MRI portion of such center and 51% of the
equity interests of the MRI portion thereof and Executive will own 49% of such
equity interests in the MRI portion thereof and will be reimbursed for 51% of
the amounts then owed to Executive by RCOA pursuant to the terms of such
Settlement Agreement. Executive hereby represents to the Company that RCOA owes
Executive, as of the date hereof, $74,480 under such Settlement Agreement.
8.2. Executive will not, at any time during or after the Term
hereof, directly or indirectly, (i) solicit the business of any referring
physician, client or customer or partner (i.e., any equity owner of any imaging
facility owned, operated or managed by the Company or Premier) of the Company
for purposes of performing PET or MRI procedures, or (ii) solicit, interfere
with, or endeavor either to cause any employee, agent, consultant, customer or
supplier of the Company or Premier to leave his or her employment with the
Company, or terminate its relationship with the Company, or (iii) induce or
attempt to induce any such employee, agent, consultant, customer or supplier to
breach any employment agreement or other agreement or arrangement that such
employee, agent, consultant, customer, or supplier may have with the Company.
8.3. Executive hereby acknowledges that the provisions of
Section 7 and of this Section 8 are necessary for the protection of the
Company's business and goodwill and are considered by Executive to be fair and
reasonable. Executive further acknowledges that he has fully and carefully
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reviewed, considered and understands all of the restrictions imposed upon him
under Section 7 and this Section 8. Accordingly, Executive hereby acknowledges
and agrees that in the event of any actual or threatened breach by him of the
provisions of Section 7 and/or this Section 8, there will be no adequate remedy
at law for any such breach or threatened breach and that any such breach or
threatened breach may cause irreparable harm to the Company and, therefore,
Executive hereby consents in any such instance to the granting of injunctive or
other equitable relief to the Company, as a non-exclusive remedy, in any court
of competent jurisdiction, without the necessity of showing any actual damage or
that monetary damages would not provide an adequate remedy at a law or posting a
bond therefor.
8.4. Executive hereby represents and warrants to the Company
that the only non-compete covenants that Executive is bound by as of the date
hereof, are the following:
(a) Pursuant to that certain Professional Services Agreement dated
effective as of May 1, 2005 by and between RCOA Florida I, LLC ("RCOA Florida")
and ADIP, Executive is bound by a covenant not to solicit that will be valid and
in full force and effect from two (2) years following the date on which such
agreement is terminated, and that prohibits ADIP and its employed or retained
radiologists including Executive from (i) soliciting or inducing employees or
agents of RCOA Florida to terminate their relationship with RCOA Florida or to
engage in any activity that would violate any of the following, (ii) soliciting
or inducing hospitals, diagnostic imaging centers, physicians, patients,
providers or other current customers of RCOA Florida ("Clients") to terminate
their relationship with RCOA Florida, or to do business with any other entity
engaged in any aspect of the providing of mobile or fixed-site PET/CT imaging
services, (iii) interfering with or disrupting or attempting to disrupt, or the
taking of any action that could reasonably be expected to disrupt any past or
present or prospective relationship, contractual or otherwise, between RCOA
Florida and a Client or any other entity with which RCOA Florida or any of its
subsidiaries do business or (iv) assisting others to engage in any of the
foregoing activities. These provisions have no effect on the activities of
Executive outside a fifteen (15) mile radius of the center (the "Territory")
located at 00000 Xxx Xxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxx (the "Center")
provided the solicitations of Clients inside the Territory are confined to
periodicals or newspapers of general circulation and/or involve Clients with
which Executive had and can prove he had an existing professional relationship
prior to the Client becoming a Client of RCOA Florida;
(b) Pursuant to that certain Sublease Agreement by and between RCOA
Florida and ADIP that is currently in effect and continuing for the period of
the sublease as well as a period of two (2) years following its expiration or
termination, ADIP (i) may not, directly or indirectly (and therefore includes
Executive) provide the professional or technical components of PET or PET/CT
services or own, lease, manage, invest, control, participate in, consult with,
render services for, or in any manner engage in any business that provides
mobile or fixed PET or combined PET/CT services within the Territory, and (ii)
may not solicit or attempt to hire away any employee or agent of RCOA or
otherwise encourage or attempt to encourage any employee or agent of RCOA to
leave its employment with RCOA or cease to provide services to RCOA.
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(c) Pursuant to that certain Professional Services Agreement by and
between National PET and Executive dated October 22, 2002 and as amended by that
First Amendment dated effective January 1, 2004, Executive shall not, for a
period of one year from October 22, 2005, provide professional services
("Professional Services" [defined to mean (A) receiving, reading and
interpreting PET Scan Data ("PET SCAN READING"), (B) dictating and overseeing
accurate transcription of appropriate reports and other related information
arising from PET SCAN READING, (C) preparation and filing of additional or
supplementary reports as may be required or appropriate for accuracy, improved
patient care, licensure, accreditation, reimbursement or other purposes or (D)
consult with other physicians and others as may be necessary or appropriate to
provide service, care, diagnoses, interpretation and treatment to patients] to
any business, company, or entity that competes with National PET within a twenty
five (25) mile radius of any of the following National PET facilities: National
PET Scan Broward,LLC, National PET Scan Dade, LLC, Narional PET Scan Xxxxx, LLC
and National PET Scan Pinellas, LLC This restriction does not prohibit Executive
from owning a facility that competes with National PET as long as Executive does
not personally compete. Furthermore, this restriction does not apply to
Executive's provision of services to RCOA Florida or any affiliate, subsidiary,
successor or assign of RCOA Florida. Finally, this restriction will earlier end
as to any of such specific National PET facilities if any such facility no
longer engages predominantly in PET imaging
8.5. Executive hereby represents and warrants to the Company
that neither he nor any of his affiliates (including ADIP) know, or should know,
of any breach or default by either of them of any agreement to which he or any
such affiliate is a party with RCOA or National PET and that neither Executive
nor any such affiliate has received any notice of any such breach or default.
9. Representations and Warranties. The Company and Executive hereby
represent and warrant to each other as follows:
9.1. All action on the part of the Company and Executive
necessary for the authorization, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, has been
taken and this Agreement constitutes a valid and legally binding obligation of
the Company and Executive, as applicable, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting generally the enforcement of
creditors' rights and by general principles of equity.
9.2. The authorization, execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
will not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, a breach or default under any
provision of any instrument, judgment, order, writ, decree or agreement to which
the Company or Executive, as applicable, is a party or by which it or he is
bound.
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9.3. There is no action, suit, proceeding, or investigation
pending, or to the knowledge of the Company or Executive, as applicable,
currently threatened against the Company or Executive, as applicable, in any way
relating to the validity of this Agreement or the right of the Company or
Executive, as applicable, to enter into or to perform under this Agreement or
consummate the transactions contemplated hereby.
10. Indemnification.
---------------
10.1. Executive will be entitled to all of the same rights of
indemnification granted by the Company to its officers, including
indemnification rights under that certain Indemnification Agreement between
Sagemark and its executive officers dated January 3, 2003.
10.2. The Company shall indemnify and fully defend, save and
hold harmless Executive, if Executive shall at any time or from time to time
during the Term hereof suffer any damage, liability, loss, cost or expense
(including all reasonable attorneys' fees and expenses of counsel reasonably
satisfactory to the Company) (collectively, the "Losses") arising out of or
resulting from:
(a) any untruth or inaccuracy in any representation
or warranty of the Company, or the breach of any representation or warranty of
the Company, contained in this Agreement; or
(b) any failure of the Company to perform or observe
any term, provision, covenant or agreement contained in this Agreement; or
(c) any action or proceeding commenced against
Executive by National PET based upon a claimed breach or default of Executive's
restrictive covenant with National PET (and/or its affiliates), except for (i)
actions or proceedings with respect to any such claimed breach or default by
Executive which occurred or arose prior to the date of this Agreement, (ii) any
such actions or proceedings which are based upon services performed for the
Company by Executive (or Executive's actions or omissions) which are outside of
the scope of the services provided for in, or are otherwise in breach of, this
Agreement, or (iii) any such actions or proceedings if the claims contained
therein constitute a breach of Executive's representations in Sections 8.4 and
8.5 hereof.
10.3. Executive shall indemnify and fully defend, save and
hold harmless the Company, if the Company shall at any time or from time to time
suffer any Losses arising out of or resulting from:
(a) any untruth or inaccuracy in any representation
or warranty of Executive, or the breach of any representation or warranty of
Executive, contained in this Agreement; or
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(b) any failure of Executive to perform or observe
any term, provision, covenant or agreement contained in this Agreement.
10.4. If, with respect to a third party, an event occurs or is
alleged to have occurred and either party hereto asserts that the other has
become obligated to provide indemnification under this Section 10 (an "Indemnity
Claim"), the party seeking indemnification (the "Indemnitee") shall give written
notice promptly to the indemnifying party (the "Indemnitor"). The failure to so
notify Indemnitor shall not, however, release Indemnitor from any obligation or
liability it may have to such Indemnitee under this Section unless such failure
materially prejudices Indemnitor. Indemnitor agrees to defend, contest or
otherwise protect the Indemnitee against any Indemnity Claim at Indemnitor's
sole cost and expense. The Indemnitee shall have the right, but not the
obligation, to participate at its own expense in the defense thereof by counsel
of the Indemnitee's choice and shall in any event cooperate with and assist
Indemnitor to the extent reasonably possible. If Indemnitor fails to timely
defend, contest or otherwise protect against such Indemnity Claim , the
Indemnitee shall have the right to do so, including, without limitation, the
right to make any compromise or settlement thereof, and the Indemnitee shall be
entitled to recover the entire cost thereof from Indemnitor, including, without
limitation, reasonable attorneys' fees, disbursements and amounts paid as the
result of such Indemnity Claim , and Indemnitor shall be bound by any
determination made in such Indemnity Claim or any compromise or settlement
effected by the Indemnitee. If Indemnitor assumes the defense of any Indemnity
Claim , (a) it will be conclusively established for purposes of this Agreement
that the claims made in that Indemnity Claim are within the scope of and subject
to indemnification hereunder, (b) no compromise or settlement of such claims may
be effected by Indemnitor without the Indemnitee's written consent unless (i)
there is no finding or admission of any violation of federal, state, local,
municipal, foreign, international, multinational or other administrative order,
law, ordinance, principal of common law, regulation, statute or treaty or any
violation of the rights of any person and no effect on any other claims that may
be made against the Indemnitee and (ii) the sole relief provided is monetary
damages that are paid in full by Indemnitor; and (c) the Indemnitee will have no
liability with respect to any compromise or settlement of such claims effected
without its written consent. Notwithstanding anything to the contrary contained
in Sections 10.2, 10.3 or in this Section 10.4, if any Indemnitee settles or
compromises any Indemnity Claim without Indemnitor's prior written consent,
Indemnitor shall have no obligation for indemnification under Sections 10.2,
10.3 or this Section 10.4.
11. Miscellaneous.
-------------
11.1. This Agreement constitutes the sole and entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, representations, warranties, statements,
promises, information, arrangements and understandings, whether oral or written,
express or implied, between the parties hereto with respect to the subject
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matter hereof (including the Letter of Intent). This Agreement may not be
changed or modified except by an instrument in writing signed by the party to be
bound thereby.
11.2. All notices, consents, requests, demands and other
communications required or permitted to be given under this Agreement shall be
in writing and delivered personally, receipt acknowledged, or mailed by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the parties hereto as follows (or to such other address and/or to
such other persons as either of the parties hereto shall specify by notice given
in accordance with this provision):
(a) If to the Company:
The Sagemark Companies Ltd.
1285 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxx Xxxxxxx
with a copy to:
Premier P.E.T. Imaging International, Inc.
0000 X.X. Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Mr. Xxxxxx Xxxxxxx
and
Xxxxxx X. Xxxxxxx, Esq.
00 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
(b) If to Executive:
Xxxxxxx Xxxxxx, M.D.
0000 Xxxxxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxxx XX, Esq.
Xxxxxxx & Xxxxxxx
Three Xxxxx Center, 12th Floor
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
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Except as otherwise expressly provided elsewhere in this Agreement, all
such notices, consents, requests, demands and other communications shall be
deemed given when personally delivered as aforesaid, or, if mailed as aforesaid,
on the earlier of (i) the date of receipt or rejection by the addressee, or (ii)
the third business day after the date of mailing thereof, except for a notice of
a change of address which shall be effective only upon receipt.
11.3. Neither party hereto may assign this Agreement or their
respective rights, benefits or obligations hereunder without the written consent
of the other party hereto. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, personal
representatives, administrators, executors and permitted assigns. Nothing
contained herein is intended to confer upon any person or entity, other than the
parties hereto (and Premier), and their respective successors, heirs, personal
representatives, administrators, executors or permitted assigns, any rights,
benefits, obligations, remedies or liabilities under or by reason of this
Agreement.
11.4. No waiver of this Agreement shall be effective unless in
writing and signed by the party to be bound thereby. The waiver by either party
hereto of a breach of any provision of this Agreement, or of any representation,
warranty, or covenant in this Agreement by the other party hereto shall not be
construed as a waiver of any subsequent breach or of any other provision,
representation, warranty, or covenant of such other party, unless the instrument
of waiver expressly so provides.
11.5. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York with respect to contracts made
and to be fully performed therein, without regard to the conflicts of laws
principles thereof. The parties hereto hereby agree that, in the event of any
action or proceeding brought by the Company against Executive to enforce the
provisions of this Agreement, such action or proceeding may be brought in a
Federal or state court located in New York County, New York. If, however,
Executive commences any action or proceeding against the Company to enforce the
terms of this Agreement, any such action or proceeding may be commenced in a
Federal or state court located in Palm Beach County, Florida. By their execution
hereof, each of the Company and Executive hereby consent and irrevocably submit
to the in personam jurisdiction of such Federal and state courts and agree that
any process in any such action or proceeding commenced in any such court under
this Agreement may be served upon him, or it, as applicable, personally, by
certified or registered mail, return receipt requested, or by Federal Express or
other courier service, with the same full force and effect as if personally
served upon him or it in New York or Palm Beach County, as applicable. Each of
the parties hereto hereby waive any claim that the jurisdiction of any such
court is not a convenient forum for any such action or proceeding and any
defense of lack of in personam jurisdiction with respect thereto. In the event
of any action or proceeding under this Agreement, the party prevailing therein
shall be entitled to payment from the other party hereto of all of its costs in
connection therewith, including its counsel fees and disbursements.
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11.6. The parties hereto hereby agree that, at any time and
from time to time during the Term hereof, upon the reasonable request of the
other party hereto, they shall do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, such further acts, deeds,
assignments, transfers, conveyances and assurances as may be reasonably required
to more effectively consummate this Agreement and the transactions contemplated
thereby or to confirm or otherwise effectuate the provisions of this Agreement.
11.7. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, is finally determined by a
court or to any extent to be illegal, invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held illegal, invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Agreement shall be valid and shall be enforced to the fullest extent permitted
hereunder and by law.
11.8. The parties to this Agreement hereby acknowledge that
they have been represented by separate counsel in connection with the
negotiations and execution of this Agreement.
11.9. The Section headings contained in this Agreement are for
the purpose of convenience only and are not intended to define or limit the
contents of said Sections.
11.10. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the year and date first above written.
WITNESS: THE SAGEMARK COMPANIES LTD.
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXXXXX X. XXXXXXX
-------------------------------- ----------------------------------------
Xxxxxxxx X. Xxxxxxx, President and Chief
Executive Officer
WITNESS:
/s/ XXXX X. XXXXXX /s/ XXXXXXX XXXXXX
-------------------------------- ----------------------------------------
Xxxxxxx Xxxxxx, M.D.
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