AGREEMENT OF EMPLOYMENT
THIS AGREEMENT OF EMPLOYMENT ("Agreement") is made and entered into in
duplicate effective as of the 16th day of October, 2000, by and between Luna
Medical Technologies, Inc., a Nevada corporation ("Employer"), and Dr. James
Swanney ("Employee").
RECITALS
A. Employer is a corporation duly organized and validly existing pursuant
to the laws of the State of Nevada.
B. Employer is in the business of developing women's health centers and
providing related health services and products.
C. Employee was an associate medical director with Pfizer Inc.Canada from
1978 to 1979 and has practiced family medicine in Abbotsford, British Columbia,
Canada. Employee has served as medical director and chairman of Impact Drug and
Alcohol Treatment Program from 1989 through 1993 for the treatment and support
of substance abuse in adolescents, and holds a Diploma in Medical Jurisprudence
from Glasgow University, Scotland. Employee has also demonstrated certain skills
and abilities in connection with the management and operation of Employer.
D. Employer desires to employ Employee on and subject to the terms and
conditions specified in this Agreement.
E. Employee desires to be employed by Employer as President of Employer on
and subject to the terms and conditions specified in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
ARTICLE I.
TERM OF EMPLOYMENT
Section 1.1 Specified Term. Employer hereby employs Employee and Employee
hereby accepts employment with Employer for a period of one (1) year commencing
on the date of execution and delivery of this Agreement.
Section 1.2 Automatic Renewal of Term. The term of this Agreement shall be
renewed automatically for succeeding periods of one (1) year each unless either
party gives to the other party notice, at least ninety (90) days prior to the
expiration of any such term, of the noticing party's intention not to renew the
term of this Agreement.
1
<PAGE>
Section 1.3 "Employment Term" Defined. As specified herein, the phrases
"term of employment," "employment term," and "term of this Agreement" refer to,
and shall mean, be defined as and include, any and all renewals of the term of
this Agreement.
ARTICLE II.
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.1 General Duties. Employee shall serve as the President of
Employer and shall do and perform all services, acts, or things necessary or
appropriate to manage and conduct the business of Employer, including the hiring
and firing of all employees subject at all times to the policies established by
the Board of Directors of Employer ("Board"), and to the consent of the Board
when required by the provisions of this Agreement. The duties to be performed by
Employee shall be determined from time to time by the Board.
Section 2.2 Loyal and Conscientious Performance of Duties. Employee agrees
that to the best of his ability and experience he will at all times loyally and
conscientiously perform all of the duties and obligations required either
expressly or implicitly by the terms of this Agreement.
Section 2.3 Competitive Activities. Except for the business relationships
and ownership interests in businesses existing at the time of this Agreement,
Employee shall not, during the term of this Agreement, directly or indirectly,
either as an employee, employer, consultant, agent, principal, partner,
stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of Employer without the
express written consent of the Board.
ARTICLE III.
OBLIGATIONS OF EMPLOYER
Section 3.1 General Description. Employer shall provide Employee with the
compensation, incentives and benefits specified elsewhere in this Agreement.
Section 3.2 Office and Staff. Employer shall provide Employee with
equipment, supplies, facilities and services, suitable to Employee's position
and adequate for the performance of Employee's duties created by the provisions
of this Agreement.
Section 3.3 Reimbursement of Business Expenses.
A. Employee is authorized to incur reasonable business expenses for
promoting the business of Employer, including expenditures for entertainment,
gifts, and travel. Employer will reimburse Employee from time to time for all
such business expenses. Employer reserves the right to provide Employee a
corporate credit card for all such business expenses.
B. Employee shall also obtain and retain documentary evidence (such as
receipts or paid bills), which state sufficient information to establish the
amount, date, place, and the essential character of the expenditure, for each
expenditure and for lodging while traveling away from home.
2
<PAGE>
C. The foregoing account book and documentary evidence shall be delivered
to Employer whenever requested by Employer and thereafter shall be retained by
Employer.
D. Employer, as an alternative to reimbursing Employee for business
expenses, may provide Employee with one or more credit cards issued in the name
of Employer for Employee's use in incurring such business expenses. In the event
Employer provides Employee with any such credit cards, Employer shall pay any
and all business expenses Employee incurs for the benefit of Employer by use of
such credit cards. Additionally, in such event, Employee shall obtain and retain
the documentary evidence contemplated by the provisions of Paragraph B of this
Section 3.3.
ARTICLE IV.
COMPENSATION OF EMPLOYEE
Section 4.1 Annual Salary. As compensation for the services to be rendered
by Employee pursuant to provisions of this Agreement, Employer shall pay
Employee an annual salary in the amount of One Hundred Fifty Thousand Dollars
($150,000.00), in United States Dollars, payable in equal monthly installments.
Employee reserves the right to receive his annual salary in the form of shares
of Employer's $.001 par value common stock. A number of such shares of that
common stock to be issued by Employer to Employee as that compensation shall be
determined by dividing the amount of the compensation of which Employee elects
to receive in shares of that common stock by the per share trading price of that
common stock at the closing of the last business day of the month preceding the
month in which Employee elects to receive those shares.
Section 4.2 Tax Withholding. Employer shall have the right to deduct or
withhold from the compensation due and payable to Employee pursuant to the
provisions of this Agreement any and all amounts required for federal income and
Social Security taxes and all state or local taxes now applicable or which may
be enacted and may become applicable in the future.
Section 4.3 Assignment of Annual Salary. Employee may assign any and all
compensation payable pursuant to this Agreement and all deferred compensation to
any nominee.
Section 4.4 Incentive Compensation. As further compensation, and as an
incentive for Employee to enter into this agreement, Employer shall issue to
Employee five hundred thousand (500,000) shares of Employer's $.001 par value
common stock.
ARTICLE V.
EMPLOYEE BENEFITS
Section 5.1 Annual Vacation. During the employment term, Employee shall be
entitled to an annual vacation leave of twenty (20) days each year without loss
of compensation. Employee may be absent from his employment for vacation only at
such times as the Board shall determine from time to time. In the event that
Employee is unable for any reason to take the total amount of vacation time
authorized herein during any year, he may accrue that time and add it to
vacation time for any following year.
Section 5.2 Paid Holidays. Employee shall be entitled to a holiday with
full pay on each nationally recognized holiday in Canada during the term of this
Agreement.
3
<PAGE>
Section 5.3 Health Care Benefits. Employer shall include Employee in any
hospital, surgical, or medical benefit plan adopted and maintained by Employer.
Section 5.4 Stock Option Plans. Employer intends to adopt a stock option
plan for the benefit of employees and Employee shall be entitled to participate
in that plan on terms and conditions as approved by the Board.
ARTICLE VI.
PROPERTY RIGHTS OF THE PARTIES
Section 6.1 Confidentiality of Trade Secret Data.
A. Employee agrees that all information communicated to him with respect to
the work conducted by or for Employer, whether or not that information was
directly or intentionally communicated, is confidential. Employee also agrees
that all information, conclusions, recommendations, reports, advice, or other
documents generated by Employee pursuant to this Agreement is confidential.
Employee further acknowledges and agrees that all confidential data described
herein is and constitutes trade secret information that belongs wholly to, and
is the exclusive property of, Employer.
B. Employee promises and agrees that he shall not disclose any confidential
information to any other person unless specifically authorized in writing by
Employer to do so. If Employer gives Employee written authorization to make any
disclosure, Employee shall do so only within the limits and to the extent of
that authorization.
C. Employee shall use his best efforts to prevent inadvertent disclosure of
any confidential information to any third party by using the same care and
discretion that he uses with similar data he designates as confidential.
D. Employee acknowledges and agrees that all information concerning the
health centers and related products currently being developed by Employer, and
any future or proposed projects or products of Employer, are and constitute an
exceptionally valuable trade secret of Employer. That information includes,
among other matters, the facts that any particular work or project is planned,
under consideration, or in development or production, as well as any
descriptions of any existing, pending, or proposed work.
Section 6.2 Use and Disclosure of Confidential Data. Employee shall not use
any confidential information or circulate it to any other person, except when
specifically authorized in advance by Employer.
Section 6.3 Copies of Confidential Information. Employee agrees that copies
of confidential information may not be made without the express written
permission of Employer and that all such copies shall be returned to Employer
along with the originals upon termination of this Agreement or upon the request
of the Board at any time.
Section 6.4 Ownership of Customer Records.
A. All records of the accounts of customers and debtors, disks, files,
ledgers, tapes and other storage devices and any and all records and books
relating in any manner whatsoever to the customers of Employer, including, but
not limited to, credit reports or memorandum, reports of transactions made to
Employer, and
4
<PAGE>
demographic or economic data discovered by Employee during the term of this
Agreement, whether prepared by Employee or otherwise coming into Employee's
possession, shall be the exclusive property of Employer regardless of who
actually purchased the original book, record, tape, disk or other storage
device.
B. All such books, records, disks, and storage devices shall be immediately
returned to Employer by Employee on any termination of the employment term.
C. If Employee produces any record, book, ledger, tape, disk, or similar
storage device to be used for record keeping, Employee shall immediately notify
Employer, who shall then immediately reimburse Employee for any costs incurred
by Employee; provided, however, such costs were authorized by Employer in
advance.
Section 6.5 Soliciting Customers After Termination of Employment.
A. Employee acknowledges and agrees that the names and addresses of
Employer's customers and debtors constitute trade secrets of Employer and that
the sale or unauthorized use or disclosure of any Employer's trade secrets
obtained by Employee during his employment with Employer constitutes unfair
competition.
B. For a period of two (2) years immediately following the termination of
his employment with Employer, Employee shall not directly or indirectly make
known to any person the names or addresses of any of the customers of Employer
or any other information pertaining to those customers, or call on, solicit,
take away, or attempt to call on, solicit, or take away any of the customers of
Employer on whom Employee called on or with whom Employee became acquainted
during his employment with Employer, either for himself or for any other person.
Section 6.6 Unfair Competition. Employee acknowledges and agrees that the
sale or unauthorized use or disclosure of any of Employer's trade secrets
obtained by Employee during the course of his employment pursuant to the
provisions of this Agreement, including information concerning Employer's
current or any future and proposed work, projects, services, or products, the
facts that any such work, services, or products are planned, under
consideration, or in production, as well as any descriptions thereof, constitute
unfair competition.
Section 6.7 No Unfair Competition. Employee promises and agrees not to
engage in any unfair competition with Employer at any time, whether during or
following the completion of his employment with Employer.
ARTICLE VII.
TERMINATION OF EMPLOYMENT
Section 7.1 Termination for Cause.
A. Employer reserves the right to terminate this Agreement if Employee
willfully breaches or habitually neglects the duties which he is required to
perform pursuant to the provisions of this Agreement; or commits such acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties.
5
<PAGE>
B. Employer, at its option, may terminate this Agreement for the reasons
stated in this section by giving written notice of termination to Employee
without prejudice to any other remedy to which Employer may be entitled either
at law, in equity, or pursuant to the provisions of this Agreement.
C. The notice of termination required by this section shall specify the
grounds for the termination and shall be supported by a statement of relevant
facts.
D. Termination pursuant to this section shall be considered "for cause" for
the purposes of this Agreement.
Section 7.2 Termination Without Cause.
A. This Agreement shall be terminated upon the death of Employee.
B. Employer reserves the right to terminate this Agreement not less than
three (3) months after Employee suffers any physical or mental disability that
would prevent the performance of his duties pursuant to the provisions this
Agreement. Such a termination shall be effected by giving thirty (30) days'
written notice of termination to Employee.
C. Termination under this section shall not be considered "for cause" for
the purposes of this Agreement.
Section 7.3 Effect of Merger, Transfer of Assets, or Dissolution.
(a) This Agreement shall not be terminated by any voluntary or involuntary
dissolution of Employer resulting from either a merger or consolidation in which
Employer is not the consolidated or surviving corporation, or a transfer of all
or substantially all of the assets of Employer.
(b) In the event of any such merger or consolidation or transfer of assets,
Employer's rights, benefits, and obligations hereunder may be assigned to the
surviving or resulting corporation or the transferee of Employer's assets.
Section 7.4 Payment Upon Termination. Notwithstanding any provision of this
Agreement, if Employer terminates this Agreement without cause, it shall pay
Employee an amount equal to Employee's current annual gross compensation.
Pursuant to this Section 7.4, annual gross compensation shall include the annual
salary plus any stock options or warrants that the Employee may possess.
Section 7.5 Termination by Employee. Employee may terminate his obligations
pursuant to this Agreement by giving Employer at least sixty (60) days written
notice in advance.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1 Recovery of Litigation Costs. In the event any party shall
institute any action or proceeding to enforce any provision of this Agreement to
seek relief from any violation of this Agreement, or to otherwise obtain any
judgment or order relating to or arising from the subject matter of this
Agreement, each prevailing party shall be entitled to receive from each losing
party such prevailing party's
6
<PAGE>
actual attorneys' fees and costs incurred to prosecute or defend such action or
proceeding, including, but not limited to, actual attorneys' fees and costs
incurred preparatory to such prosecution and defense. Moreover, while a court of
competent jurisdiction may assist in determining whether or not the fees
actually incurred are reasonable under the circumstances then existing, that
court is not to be governed by any judicially or legislatively established fee
schedule, and said fees and costs are to include those as may be incurred on
appeal of any issue and all of which fees and costs shall be included as part of
any judgment, by cost bill or otherwise, and where applicable, any appellate
decision rendered in or arising out of such action or proceeding. For purposes
of this Agreement, in any action or proceeding instituted by a party, the
prevailing party shall be that party in any such action or proceeding (i) in
whose favor a judgment is entered, or (ii) prior to trial, hearing or judgment
any other party shall pay all or any portion of amounts claimed by the party
seeking payment, or such other party shall eliminate the condition, cease the
act, or otherwise cure the act of commission or omission claimed by the party
initiating such action or proceeding.
Section 8.2 Governmental Rules and Regulations. The provisions of this
Agreement are subject to any and all present and future orders, rules and
regulations of any duly constituted authority having jurisdiction of the
relationship and transactions contemplated by the provisions of this Agreement.
Section 8.3 Notices. All notices, requests, demands or other communications
pursuant to this Agreement shall be in writing or by telex or facsimile
transmission and shall be deemed to have been duly given (i) on the date of
service if delivered in person or by telex or facsimile transmission (with the
telex or facsimile confirmation of transmission receipt acting as confirmation
of service when sent and provided such telexed or telecopied notices are also
mailed by first class, certified or registered mail, postage prepaid); or (ii)
seventy-two (72) hours after mailing by first class, registered or certified
mail, postage prepaid, and properly addressed as follows:
If to Employee: Dr. James Swanney
308-2051 McCallum Road
Abbotsford, British Columbia V2S 3N5
If to Employer: Luna Medical Technologies, Inc.
201-2001 McCallum Road
Abbotsford, British Columbia V2S 3N4
or at such other address as the party affected may designate in a written notice
to such other party in compliance with this section.
Section 8.4 Entire Agreement. This Agreement is the final written
expression and the complete and exclusive statement of all the agreements,
conditions, promises, representations, warranties and covenants between the
parties with respect to the subject matter of this Agreement, and this Agreement
supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person with respect to the subject matter specified in this Agreement. This
Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to
amend this Agreement and is signed by each of the parties. Each of the parties
represents, warrants and covenants that in executing this Agreement that such
party has (i) relied solely on the terms, conditions and provisions specified in
this Agreement and (ii) placed no reliance whatsoever on any statement,
representation, warranty, covenant or promise of any other party, or any other
7
<PAGE>
person, not specified expressly in this Agreement, or upon the failure of any
party or any other person to make any statement, representation, warranty,
covenant or disclosure of any nature whatsoever. The parties have included this
section to preclude (i) any claim that any party was in any manner whatsoever
induced fraudulently to enter into, execute and deliver this Agreement, and (ii)
the introduction of parol evidence to vary, interpret, supplement or contradict
the terms, conditions and provisions of this Agreement.
Section 8.5 Severability. In the event any part of this Agreement, for any
reason, is declared to be invalid, such decision shall not affect the validity
of any remaining portion of this Agreement, which remaining portion shall remain
in complete force and effect as if this Agreement had been executed with the
invalid portion of this Agreement eliminated, and it is hereby declared the
intention of the parties that the parties would have executed the remaining
portion of this Agreement without including any such part, parts or portion
which, for any reason, hereafter may be declared invalid.
Section 8.6 Captions and Interpretation. Captions of the sections of this
Agreement are for convenience and reference only, and the words contained in
those captions shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions of this Agreement. The
language in all parts to this Agreement, in all cases, shall be construed in
accordance with the fair meaning of that language and as if that language was
prepared by all parties and not strictly for or against any party.
Section 8.7 Further Assurances. Each party shall take any and all action
necessary, appropriate or advisable to execute and discharge such party's
responsibilities and obligations created by the provisions of this Agreement and
to further effectuate and carry out the intents and purposes of this Agreement
and the relationship contemplated by the provisions of this Agreement.
Section 8.8 Number and Gender. Whenever the singular number is used in this
Agreement, and when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa; and the word "person" shall include corporation, firm,
trust, joint venture, trust, estate, municipality, governmental agency, sole
proprietorship, political subdivision, fraternal order, club, league, society,
organization, joint stock company, association partnership or other form of
entity.
Section 8.9 Execution in Counterparts. This Agreement shall be prepared in
multiple copies and forwarded to each of the parties for execution. All of the
signatures of the parties may be affixed to one copy or to separate copies of
this Agreement and when all such copies are received, and signed by all the
parties, those copies shall constitute one agreement which is not otherwise
separable or divisible. Counsel for Employer shall keep all of such signed
copies and shall conform one copy to show all of those signatures and the dates
thereof and shall mail a copy of such conformed copy to each of the parties
within thirty (30) days after the receipt by such counsel of the last signed
copy, and shall cause one such conformed copy to be filed in the principal
office of such counsel.
Section 8.10 Successors and Assigns. This Agreement shall inure to the
benefit of and obligate the undersigned parties and their respective successors
and assigns. Whenever, in this Agreement, a reference to any party is made, such
reference shall be deemed to include a reference to the successors and assigns
of such party. The provisions of this section notwithstanding, no provision of
this section shall be construed or interpreted as a consent to the assignment or
delegation by any party of such party's respective rights and obligations
created by the provisions of this Agreement.
8
<PAGE>
Section 8.11 Reservation of Rights. The failure of any party at any time
hereafter to require strict performance by the other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect or diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms and conditions specified in this Agreement, and any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of either party or such party's agents, officers or employees, and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to the non-waiving party specifying such waiver. Each
party reserves such party's rights to insist upon strict compliance with the
provisions of this Agreement at all times.
Section 8.12 No Breach of Existing Agreements. Each party hereby
represents, warrants and covenants, upon the execution of this Agreement, such
party is not a party to any oral or written agreement which may be breached by
such party's execution of this Agreement.
Section 8.13 Concurrent Remedies. No right or remedy specified in this
Agreement conferred on or reserved to the parties is exclusive of any other
right or remedy specified in this Agreement or by law or equity provided or
permitted; but each such right and remedy shall be cumulative of, and in
addition to, every other right and remedy specified in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. The termination of this
Agreement for any reason whatsoever shall not prejudice any right or remedy
which either party may have, either at law, in equity or pursuant to the
provisions of this Agreement.
Section 8.14 Time. Time is of the essence of this Agreement and each and
all of the provisions of this Agreement.
Section 8.15 Choice of Law and Consent to Jurisdiction. This Agreement
shall be deemed to have been entered into in the State of Nevada, and all
questions concerning the validity, interpretation or performance of any of the
terms, conditions and provisions of this Agreement or of any of the rights or
obligations of the parties, shall be governed by, and resolved in accordance
with, the laws of the State of Nevada. Any and all actions or proceedings, at
law or in equity, to enforce or interpret the provisions of this Agreement shall
be litigated in courts having situs within the State of Nevada, and each party
hereby consents to the jurisdiction of any local, state or federal court located
within the State of Nevada and consents that any service of process in such
action or proceeding may be made by personal service upon such party wherever
such party may be then located, or by certified or registered mail directed to
such party at such party's last known address.
Section 8.16 Assignability. Neither party shall sell, assign, transfer,
convey or encumber this Agreement or any right or interest in this Agreement or
pursuant to this Agreement, or suffer or permit any such sale, assignment,
transfer or encumbrance to occur by operation of law without the prior written
consent of the other party. In the event of any sale, assignment, transfer or
encumbrance consented to by such other party, the transferee or such
transferee's legal representative shall agree with such other party in writing
to assume personally, perform and be obligated by the covenants, obligations,
terms, conditions and provisions specified in this Agreement.
9
<PAGE>
Section 8.17 Consent to Agreement. By executing this Agreement, each party,
for himself, represents such party has read or caused to be read this Agreement
in all particulars, and consents to the rights, conditions, duties and
responsibilities imposed upon such party as specified in this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement of Employment
in duplicate and in multiple counterparts, each of which shall have the force
and effect of an original, on the date specified in the preamble of this
Agreement.
"EMPLOYER" "EMPLOYEE"
Luna Medical Technologies, Inc.,
a Nevada corporation
By: Elizabeth A. Findlay /s/ Dr. James Swanney
----------------------------- -----------------------------
Dr. James Swanney
Its: Secretary Pro Tem
10
