Employment Agreement - Vascular Sciences Corp. and Irving Siegel
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made effective as of the 1st day of
August, 2003 by and between Vascular Sciences Corporation, a Delaware
corporation, with an office, located at 5280 Solar Drive, Mississauga, Ontario,
Canada L4W 5M8 (the "Company"), and Irving Siegel (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee is currently under contract with the Company and
desires to obtain full time employment upon the terms and conditions set forth
herein;
WHEREAS, the Company wishes to continue to employ the Employee upon such
terms and conditions; and
WHEREAS, the Employee has received and will be given access by the Company
to its Trade Secrets, confidential business and professional information;
NOW, THEREFORE, for the consideration given and received herein, and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Employee and the Company hereby agree as follows:
1. Recitals Incorporated. The foregoing recitals and any referenced
Exhibits are specifically incorporated in their entirety herein and made a part
hereof.
2. Definitions.
"Bonus Criteria" has the meaning attributed thereto in Section 6(d)
hereof;
"Change of Control" means the occurrence of a transaction or a
series of transactions as a result of which the Company becomes controlled by a
person or persons other than TLC Vision Corporation ("TLC"), Diamed
Medizintechnik GmbH ("Diamed") and any of their respective affiliates; for the
purpose of the foregoing, the Company is controlled by a person or persons other
than TLC and Diamed if TLC and Diamed, together, no longer own or exercise
voting control, directly or indirectly (including voting control given under a
shareholder's agreement or under a voting trust agreement that provides that
voting securities be voted as directed by an executive of TLC or Diamed or at
the direction of the Board of Directors of the Company if, at such time, the
majority of the Board of Directors of the Company consists of nominees of TLC
and Diamed), over securities carrying more than 50% of the voting rights, on a
fully- diluted basis, ordinarily exercisable at meetings of shareholders of the
Company, such rights being sufficient to elect a majority of the directors of
the Company;
"Inventions" shall mean discoveries, concepts, innovations and
ideas, (regardless of whether they are ever awarded letters patent, trademark,
copyright or are ever determined to be eligible for the issuance of such
award(s), made developed or conceived by the Employee, whether solely or
jointly, which specifically relate(s) to the Company's Rheopheresis business,
including but not limited to confidential information
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and related devices, products, services, data, processes, methods, treatments,
therapies, materials, formulae, statistics, strategies and techniques, as well
as improvements thereof or know-how related thereto, concerning, related to,
based upon or arising from any past, present or known prospective activities of
the Related Companies or activities of the employee at the Related Companies and
anything else previously unknown (whether in whole or in part) which provides
the Related Companies with a competitive advantage;
"Non-Competition Period" shall mean that period of time commencing
upon the date of execution of this Agreement by Employee and continuing during
his employment with the Related Companies, and for no less than one (1) year
following termination of his employment with the Company (regardless of the
circumstances of termination);
"Related Companies" shall mean the Company, RHEO Clinic Inc. and
Occulogix L.P.;
"Trade Secret" shall mean information, including a formula, a
pattern, compilation, program, device, method, treatment, therapy, material or
process that: (a) derives independent economic value, actual or potential, from
not being generally known to and not being readily ascertainable by proper means
by other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
3. Employment. The Company hereby employs the Employee, and the
Employee hereby accepts such employment, upon the terms and conditions stated
herein.
4. Term. The term of employment under this Agreement shall commence on
August 1, 2003 and shall continue indefinitely until terminated in accordance
with the provisions of termination as hereafter provided in this Agreement.
5. Duties. The Employee is engaged to serve as President of the
Company, and shall have such other duties as may from time to time be reasonably
assigned to him by the Board of Directors of the Company. During the term
hereof, the Employee shall devote the necessary time, energy and attention
required to fulfill his duties and responsibilities hereunder. Nothing herein
shall preclude the Employee from being involved directly or indirectly with any
other business or profession as long as his involvement in the opinion of the
Company in such other business or profession does not interfere or conflict with
the execution of his duties hereunder. The Company acknowledges that the
Employee, in connection with a consulting agreement dated January 8, 2003
between Quest Clinical Trials Inc. ("Quest"), Rheo Clinic, Inc. and the
Employee, as amended and restated as of August 1, 2003, will be performing
services for RHEO Clinic Inc. and Occulogix L.P. concurrently with the
performance of his duties hereunder.
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6. Compensation.
(a) The Company shall pay to the Employee as compensation for all
services rendered by the Employee hereunder an annual base salary of
CDN$150,000, subject to such deductions as may be agreed upon by the parties or
required by law. The Board of Directors of the Company, or the Compensation
Committee thereof, shall review the Employee's performance and base salary on an
annual basis and may provide for such increase, if any, in the base salary as it
may determine appropriate. This salary shall be paid in accordance with
Company's customary payroll procedure.
(b) The Company shall provide incentive compensation, stock
options and vacation to the Employee in accordance with its plans, policies and
procedures as may be in effect, which may be amended from time to time. The
Company warrants that all such incentive compensation, stock options and
vacation made available to the Employee shall be consistent with those offered
and made available to other employees at the same or similar level as that of
the Employee. The parties anticipate that one of such plans will be a stock
option plan providing for the grant to employees of options to purchase the
common stock of the Company, which plan the Company expects to implement before
December 31, 2003.
(c) The Company acknowledges that employee benefits are currently
provided to the Employee by Quest and the Company agrees to reimburse Quest for
the cost to Quest of providing such benefits. In the event that Quest no longer
provides benefits to the Employee, the Company agrees to provide the Employee
with employee benefits in accordance with its benefit plans, policies and
procedures as may be in effect, which may be amended from time to time. The
Company warrants that all such benefits made available to the Employee shall be
consistent with those offered and made available to other employees at the same
or similar level as that of the Employee. Notwithstanding the foregoing, in the
event that Employee cannot participate in one or more of such plans by reason of
the Employee's Canadian citizenship or residency, then the Company shall provide
a reasonably equivalent cash reimbursement to permit the Employee to obtain such
benefits on an individual basis, or on a group basis with other Canadian
employees of the Company, to the extent reasonably available.
(d) Subject to achieving objectives determined on an annual basis
by the Board of Directors of the Company (the "Bonus Criteria") (the first set
of Bonus Criteria being set out in Schedule A hereto), the Employee shall be
entitled to an annual bonus of up to a maximum of 100% of Employee's annual base
salary, which bonus shall be calculated based on the formula set out in the
Bonus Criteria.
(e) The Employee shall be reimbursed for all reasonable and usual
out-of-pocket expenses incurred as the result of any and all business-related
activities pursuant to this Agreement, all in accordance with a uniform policy
established by the Board of Directors of the Company from time to time;
provided, however, that reimbursement under this Section shall not be made until
and unless the Employee has furnished the Company with an appropriate receipt or
such other documents as may be
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reasonably required by the Company to substantiate the nature and amount of the
expenses incurred by the Employee.
7. Termination of Agreement.
(a) Termination For Cause. The Company may elect to impose
disciplinary sanctions, up to and including termination of this Agreement
without notice or payment in lieu of notice in the event:
(i) The Employee is convicted of a criminal or statutory
offence substantially related to or adversely affecting the Employee's
ability to perform hereunder in a safe, competent and ethical manner,
where such cause is not prohibited by law;
(ii) Subject to applicable human rights legislation, the
Company determines that the Employee has a substantial dependence on any
addictive substance, including but not limited to, narcotic drugs or other
controlled substances that is substantially related to or adversely
affects the Employee's ability to perform hereunder in a safe, competent
and ethical manner;
(iii) The Employee commits an act of fraud, or an unethical
practice related to his obligations hereunder;
(iv) The Employee commits an act damaging to the reputation
in the community of any Related Companies;
(v) The Employee presents, submits or prepares fraudulent or
false claims, documents and/or records, including employment records and
employment information;
(vi) The Employee willfully fails or refuses to comply with
all policies, procedures, standards and regulations of any Related Company
that are established from time to time, or willfully fails or refuses to
substantially perform or observe all other covenants and conditions which
are required to be performed and observed by the Employee under this
Agreement.
(b) Termination Without Cause. The Employee or the Company may
voluntarily elect to terminate this Agreement without cause by delivering to the
other party, at least sixty (60) days prior to the date upon which termination
is desired, written notice of such intention to terminate; provided, however,
that, if either party gives notice pursuant to this Section 7(b), the Company
shall have the right to relieve the Employee, in whole or in part, of his duties
under this Agreement (without reduction in compensation), with compensation to
the Employee payable to the date of termination.
(c) Payment Upon Termination. If the employment of the Employee is
terminated by the Employee or by the Company pursuant to the provisions of
Section 7(a), then the Company shall pay to the Employee any compensation earned
but not paid to the Employee prior to the effective date of such termination and
shall not
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be required to make any further or other payment to the Employee, except only to
the extent required by applicable employment standards legislation. If the
employment of the Employee is terminated by the Company pursuant to the
provisions of Section 7(b), then the Company shall pay to the Employee:
(i) any compensation earned but not paid to the Employee
prior to the effective date of such termination;
(ii) severance pay equal to:
(A) 24 months' salary hereunder, if such termination
occurs prior to August 1, 2005 and no Change of Control has occurred
within six months preceding the date of termination;
(B) 30 months' salary hereunder, if such termination
occurs prior to August 1, 2005 and a Change of Control has occurred
within six months preceding the date of termination;
(C) 36 months' salary hereunder, if such termination
occurs after July 31, 2005 but before August 1, 2008; and
(D) 48 months' salary hereunder, if such termination
occurs after July 31, 2008;
in each case, payable in either equal monthly
installments or in a lump sum payment at the discretion of the employee;
(iii) an amount representing the pro-rated portion, to the
date of termination, of the total bonus that would otherwise be payable to
the Employee based on an extrapolation of the Employee's performance to
the date of termination with respect to the performance measurements
identified in the Bonus Criteria over the entire measurement period
contemplated in the Bonus Criteria.
In either event, such payment(s) shall be in full and complete
discharge of any and all liabilities or obligations of the Company to the
Employee hereunder, and the Employee shall be entitled to no further benefits
under this Agreement. Any amounts owing to the Employee under any retirement
plans or other compensation arrangements, if any, with the Company shall be
handled solely in accordance with the terms of such plans or arrangements and
not by the terms of this Agreement.
(d) Adjustment to Payment Upon Termination. If pursuant to Section
6(a) hereof, the Employee's base salary is increased, the Board of Directors of
the Company, or the Compensation Committee thereof, may, in their complete
discretion, reduce the number of months' salary payable pursuant to Section
7(c)(ii), provided, however, that at no time shall the amount of severance pay
payable pursuant to Section 7(c)(ii) be less than the amount of severance that
would have been payable based on an annual base salary of CDN$150,000.
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8. Interests of the Company. The Employee acknowledges and agrees that:
(a) The Related Companies have, own or possess the right to
certain legitimate business interests, Trade Secrets, professional information
and confidential information; and
(b) The Related Companies' possession, ownership and use of such
legitimate business interests, Trade Secrets, professional and confidential
information derives actual or potential independent economic value from not
being generally known to, and not being readily ascertainable by proper means by
other persons who could potentially obtain economic value from its disclosure or
use; and
(c) The Related Companies have taken and will continue to
undertake substantial efforts that are commercially reasonable under the
circumstances to maintain the secrecy of its present and future legitimate
business interests, Trade Secrets and other professional and confidential
information, and requires Employee to do the same; and
(d) Companies or individuals or other entities that provide goods
and services similar to those of the Related Companies derived from its access
to its Trade Secrets gained from a current or former Employee of any of the
Related Companies, without their express permission, license or franchise,
regardless of geographic location, would cause irreparable harm and undue
hardship, and would materially jeopardize the business of the Related Companies
and materially jeopardize the ability of the Related Companies to attain their
goals, thus reducing significantly their value should the Employee compete with
any Related Company, or assist, induce or cause other persons to compete with
any Related Company; and
(e) The value of such harm would be substantial and
unquantifiable. As such, Employee agrees that the violation of this covenant
would cause irreparable harm to the Related Companies.
9. Covenant not to Compete. Recognizing that the business and success
of each Related Company is predicated upon the existence and preservation of its
legitimate business interests, Trade Secrets and other professional and
confidential information, the Employee covenants and agrees that during the
Non-Competition Period, in the geographic area for which the Related Company has
distribution rights for the products and services that it offers, he will not,
directly or indirectly (through one or more intermediaries), whether
individually, or as an officer, director, agent, shareholder, partner, joint
venturer, investor, consultant or otherwise, compete, induce or cause others to
compete, induce or attempt to compete, in whole or in part with, or assist any
individual, company, business enterprise or other entity in competing or
intending or attempting to compete in whole or in part with, the business then
engaged in by the Related Company, or expressly contemplated to be undertaken by
the Related Company.
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10. Secrecy. The Employee agrees that he shall not at any time disclose
or cause the disclosure of any information relating to any Related Company
obtained before or during the course of his employment, including any Related
Company's Trade Secrets, and other professional and confidential information and
shall maintain such as secret. Further, the Employee shall not, whether directly
or indirectly use, or cause others to use, communicate, disclose or disseminate
any information of a secret, proprietary, confidential or generally undisclosed
nature relating to any Related Company, including, without limitation, its
structure, its contacts, its products, processes and services, including
information relating to testing, research, development, manufacturing, financial
condition, statistics, marketing and selling, and the Employee shall strictly
maintain the foregoing as secret.
11. No Interference. The Employee agrees that he will not, whether for
his own account or for the account of any other individual, partnership, firm,
company or other business organization (other than a Related Company), directly
or indirectly hire, employ, solicit, endeavor to entice away from any Related
Company, or otherwise interfere with the relationship of any Related Company,
with any person who is employed by or otherwise engaged to provide products to
or perform services for the Company, nor will Employee directly or indirectly
interfere with the business of any Related Company or its customers, suppliers,
or other such persons or entities with which any Related Company transacts
business for any purpose, which may result in or may be construed to result in
having an adverse effect upon any Related Company's business activities, Trade
Secrets or professional and confidential information of any Related Company.
12. Assignment of Inventions.
(a) During his employment by the Company, all Inventions made by
the Employee shall be the sole and exclusive property of the Company, and the
Employee agrees to perform the provisions of this Section without the payment by
the Company of any royalty or any consideration therefore whatsoever, other than
the regular compensation paid to the Employee in his capacity as an Employee.
The Company shall have the royalty-free right to use in its business, and to
make, use and sell products, processes and/or services derived from any
Inventions, as well as improvements thereof or know-how related thereto, which
are conceived or made by the Employee during the period he is engaged by the
Company or with the use or assistance of the Company's facilities, materials or
personnel.
(b) The Employee will not assert any rights under any Inventions
as having been made or acquired by him prior to his being employed by the
Company or during the term of his employment if based on or otherwise related to
the business, Trade Secrets or other professional or confidential information of
the Company.
(c) All Inventions based on or related to any Related Company's
business, Trade Secrets, or other professional or confidential information,
which the Employee makes, discovers or conceives, shall be the sole property of
the Company. In the event that the Employee develops and/or conceives of an
Invention, he shall
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notify the Company of such an Invention. At such time, the Employee shall apply,
at the Company's request and expense, for any and all letters patent or
copyrights domestic and/or foreign as the Company, in its sole discretion may
desire, either in the Employee's name or otherwise as the Company shall desire
and so designate.
(d) The Employee hereby assigns to the Company or to any person or
entity designated by the Company any and all of his rights to such Inventions,
and to applications for Canadian and/or foreign letters patent, trade or other
marks, or copyrights and to Canadian and/or foreign letters patent, trademarks
or copyrights granted upon such Inventions. The Employee also agrees to promptly
execute written assignments of all his rights in any and all modifications,
continuations, continuations in part, divisions, extensions, and any and all
other lineages of said patent(s) and/or copyright(s) and trademark(s) which
relate to such Inventions to the Company, or its designee, and further agrees to
sign and properly execute any and all such necessary and lawful papers as the
Company requires, at the Company's sole discretion and expense, to carry out
such assignments and for filing and prosecuting domestic and/or foreign patent,
copyright and/or trademark applications. The Employee also agrees to perform
such further acts, which may be required to carry out the intent of this
Agreement.
(e) Any and all developments or inventions made outside of the
scope, direction, influence or intent of the definition of Inventions made
herein, shall remain the sole and exclusive property of the Employee, except
that the Company shall have "shop rights" for the royalty-free use of any and
all such inventions developed independently by Employee.
(f) The Employee shall acknowledge and deliver promptly to the
Company or to any person or entity designated by the Company without charge to
the Company but at its expense such written instruments (including applications
and assignments) and do such other acts, such as giving testimony, as may be
necessary in the opinion of the Company to obtain, maintain, extend, reissue and
enforce any and all Canadian and/or foreign letters patent, trademark(s) and
copyright(s) relating to the Inventions and to vest the entire right and title
thereto in the Company or its nominee. The Employee acknowledges and agrees that
any copyright developed or conceived of by the Employee during the term of
Employee's engagement which is related to the business of the Company shall be a
"work for hire" under the copyright laws of the United States and other
applicable jurisdictions.
13. Existing Inventions. The Company expressly disclaims any beneficial
interest in or ownership of any and all inventions or Inventions previously
developed by the Employee so long as all such inventions and Inventions are
delineated and identified as a matter of record by the Employee on Exhibit "A"
attached hereto. The Employee hereby warrants that all inventions or
improvements which have been made or conceived or first reduced to practice by
the Employee alone or jointly with others, which he desires to remove from the
scope of this Agreement are listed on Exhibit "A," and the Employee represents
that such list is complete. If there is no such list on
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Exhibit "A," the Employee represents that he has made no inventions and/or
improvements at the time of the signing of this Agreement.
14. No Violation, The Employee represents warrants and agrees that his
execution of and performance of all the terms of this Agreement does not and
will not breach any agreement or duty to which he is subject at the time of
execution of this Agreement. The Employee agrees not to enter into any written
or oral agreement in conflict herewith and represents and agrees that he has not
brought and will not bring with him to the Company or use in the performance of
his responsibilities at the Company any materials or documents of a former
company which are not generally available to the public.
15. Indemnification. The Company will indemnify and hold harmless the
Employee in respect of liability, damage, cost or expense, including reasonable
legal fees incurred in connection with the defenses of any claim, action, suit
or proceeding to which the Employee is a party, or threat thereof, by reason of
being an employee of the Company, to the extent permitted by the Business
Corporations Act (Ontario). Notwithstanding the forgoing, the Company will not
indemnify and hold harmless the Employee from any act or omission arising out of
(i) the fraudulent conduct of the Employee, or (ii) any other act or omission of
the Employee committed outside of the scope of the Employee's duties.
16. Travel Visa. The Company shall arrange for requisite visa for the
Employee to travel to the US from Canada for travel by the Employee for the
business of the Company.
17. Tax Preparation Assistance. The Company agrees to provide sufficient
resources and assistance to the Employee to enable the Employee to properly file
Canadian personal tax and other tax returns as may be required to be filed by
the Employee.
18. Mediation. If at any time during the currency of this Agreement, or
after the termination hereof, any dispute, difference or question shall arise,
or any failure to agree, shall occur among the parties hereto respecting this
Agreement or anything herein contained, the parties agree that they will
endeavour to settle any dispute, difference or question, which they are unable
to settle through direct negotiations or through negotiations by their
solicitors, by mediation before resorting to arbitration as set out below.
Either party may request mediation and the parties shall within fifteen
(15) days of such request, concurrently select a mediator. In the event the
parties neglect or refuse or are unable to agree upon a single mediator, then
either party to the dispute may apply to a judge of the Superior Court of
Justice at Toronto to appoint such single mediator. The parties shall
participate in good faith in a mediation and any related negotiations for a
period of sixty days following the date of the appointment of the mediator in
accordance with procedures adopted by the mediator. The parties will bear the
costs of the mediation equally or as subsequently agreed at or after the
mediation.
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All conduct, opinions and statements made in the course of the mediation shall
be kept confidential. No party shall call the mediator as a witness for any
purpose in any arbitration or judicial proceeding nor shall any party seek
access to any documents prepared for or delivered to the mediator or any notes
or records of the mediator in any arbitration or judicial proceeding. Evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible
or non-discoverable as a result of its presentation or use in the mediation.
19. Arbitration. If the parties fail to resolve their differences by
negotiation or mediation, the Company and the Employee agree that any dispute or
difference or question arising out of, in relation to or in connection with this
Agreement, or the making, interpretation, construction, performance or breach
thereof, shall be referred to a single arbitrator to be appointed by the parties
to the dispute within fifteen (15) days of such referral or, if the parties to
the dispute neglect or refuse or are unable to agree upon a single arbitrator,
then either party to the dispute may apply to a Judge of the Superior Court of
Justice at Toronto to appoint such single arbitrator. The arbitrator may grant
injunctive or other relief in such dispute or controversy. The decision of the
Arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any Court
of competent jurisdiction. The parties agree that, any provision of applicable
law notwithstanding, they will not request, and the arbitrator shall have no
authority to award punitive or exemplary damages against any party. In the event
that the prevailing party in any arbitration proceeding is the Employee, the
costs of the arbitration, including administrative and arbitrator's, legal and
expert witness fees of both parties shall be borne by the Company on a
substantial indemnity basis as that term is defined by the Rules of Civil
Procedure. In the event that the prevailing party in any arbitration proceeding
is the Company, administrative and arbitrators fees shall be shared equally by
the parties and each party shall be responsible for their respective legal,
expert witness and other fees. The arbitration shall be regarded as a reference
under and shall be proceeded with pursuant to the provisions of the Arbitration
Act, 1991 (Ontario).
20. Successors and Assigns. This Agreement shall be binding upon the
Employee, his heirs, executors and administrators; provided, however, the
Employee shall not have the right to assign this Agreement.
21. Prior Agreements. If the Employee currently has a written or other
Employment Agreement with the Company, then this Agreement supersedes and
replaces the provisions of such Agreement.
22. Severability. Wherever there is any conflict between any provision
of this Agreement (or part thereof), and any statute, law, regulation or
judicial precedent, the latter shall prevail, but in such event the provisions
of this Agreement thus affected shall be curtailed and limited only to the
extent necessary to bring it within the requirement of the law. In the event
that any provision of this Agreement shall be held by a court of proper
jurisdiction to be indefinite, invalid or otherwise unenforceable, the entire
Agreement shall not fail on account thereof, but the balance of the Agreement
shall continue in full force and effect.
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Agreement shall not fail on account thereof, but the balance of the Agreement
shall continue in full force and effect.
23. Choice of Law, Choice of Forum. This Agreement shall be governed and
construed exclusively by laws of the Province of Ontario, except for any law,
rule or principle which might require application of the substantive law of
another jurisdiction. Exclusive venue shall lie with the provincial or federal
courts of competent jurisdiction in Ontario, Canada.
24. Entire Agreement; Amendment and Waiver. This Agreement and the
Exhibits attached hereto, constitute the entire understanding of the parties
hereto relating to the subject matter hereof and supersede all prior agreements
or understandings with respect to the subject matter hereof among the parties.
This Agreement may be amended, and the observance of any term of this Agreement
may be waived only with the written consent of each of the parties hereto. Any
such wavier does not imply or express that any other similar or dissimilar
wavier shall be granted or agreed to by the Company.
25. Section Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
26. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first written above.
Vascular Sciences Corporation
By: /s/ Elias Vamvakas
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ELIAS VAMVAKAS
/s/ Bill Dumencu /s/ Irving Siegel
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Witness Irving Siegel
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SCHEDULE A
INITIAL BONUS CRITERIA
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