EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of the 1st day of December 2000 by and
between VASOMEDICAL, INC., a Delaware corporation (hereinafter the "Company")
and D. Michael Deignan, an individual residing at 6 Wax Myrtle Court, Hilton
Head Island, South Carolina 29926 (hereinafter called "Deignan").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Employment Agreement with
Deignan; and
WHEREAS, Deignan desires to enter into an Employment Agreement with the
Company;
NOW, THEREFORE, it is agreed as follows:
1. Prior Agreements Superseded. This Agreement supersedes any employment,
consulting or other agreements, oral or written, entered into between Deignan
and the Company prior to the date of this Agreement except for stock options
previously granted to Deignan, which stock options shall continue in full force
and effect.
2. Employment. The Company hereby agrees to employ Deignan and Deignan
hereby agrees to serve as President and Chief Executive Officer of the Company
with responsibility for the overall supervision, direction and administration of
all activities and affairs of the Company and performance of such other
executive duties on behalf of the Company as the Board of Directors may
determine. Deignan's duties shall also include general supervision and control
over all subsidiaries of the Company, if any. Deignan's employment hereunder
shall be on a full-time basis and Deignan shall not engage in any other
business, including directorships, except with the prior approval of the Board
of Directors of the Company.
Deignan shall serve in similar capacities of such of the subsidiary
corporations of the Company as may be selected by the Board of Directors without
additional compensation. Notwithstanding the foregoing, it is understood that
the duties of Deignan during the performance of employment shall not be
inconsistent with his position and title as President and Chief Executive
Officer of the Company.
3. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, the term of this Employment Agreement shall end on
November 30, 2001, provided that this agreement shall extend for additional
one-year periods unless Deignan receives written notice from the Company each
year on or before September 1 of said year that the Company will be terminating
the agreement. In no event, however, shall this agreement extend beyond November
30, 2005.
4. Compensation. For all services rendered by Deignan under this Agreement,
compensation shall be paid to Deignan as follows:
(a) Deignan shall be paid at the annual rate of Two Hundred Forty
Thousand ($240,000) Dollars.
(b) During the period of employment Deignan shall be eligible to
participate in the Company's stock option and stock purchase plans to the
extent determined in the discretion of the Board of Directors of the
Company or committee thereof.
(c) Deignan shall be entitled to participate in any short-term or
long-term incentive plan which the Company has in existence or which may be
adopted.
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(d) During the period of employment, Deignan shall be furnished with
office space and secretarial service and facilities commensurate with his
position and adequate for the performance of his duties.
(e) Deignan shall be entitled to fully participate in all benefit
programs available to executive employees of the Company throughout the
term of this Agreement.
(f) Deignan shall be entitled to four (4) weeks of vacation and sick
leaves consistent with current practice of the Company.
5. Expenses. Deignan shall be reimbursed for all out-of-pocket expenses
reasonably incurred by him in the performance of his duties hereunder. Expense
reports, with receipts and justifications, must be submitted to the Chairman of
the Board for approval.
6. Severance Benefits. Deignan shall be entitled to the severance benefits
provided for in subsection (c) hereof in the event of the termination of his
employment by the Company without cause or in the event of a voluntary
termination of employment by Deignan for good reason. In such event, Deignan
shall have no duty to mitigate damages hereunder. Deignan and the Company
acknowledge that the foregoing provisions of this paragraph 6 are reasonable and
are based upon the facts and circumstances of the parties at the time of
entering into this Agreement, and with this Agreement, and with due regard to
future expectations.
(a) The term "cause" shall mean:
(i) Deignan's willful and continued failure to substantially perform
his duties under this Agreement (other than any such failure resulting from
his incapacity due to physical or mental illness) after demand for
substantial performance is delivered to Deignan by the Chairman of the
Board of the Company which specifically identifies the manner in which the
Board believes Deignan has not substantially performed his duties.
(ii) Deignan's failure to refuse to follow directions from the
Company's Board of Directors provided that (a) Deignan is provided written
notice of such directions and a reasonable period in which to comply and
(b) Deignan's compliance with any such direction would not be illegal or
unlawful.
(iii) Any act or fraud, embezzlement or theft committed by Deignan
whether or not in connection with his duties or in the course of his
employment.
(iv) Any willful disclosure by Deignan of confidential information or
trade secrets of the Company or its affiliates.
For purposes of this paragraph, no act or failure to act on Deignan's
part shall be considered "willful" unless done, or omitted to be done, by
Deignan not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, Deignan shall not be deemed to have been terminated for cause
unless and until there shall have been delivered to him a copy of a notice
of termination from the Chairman of the Board of the Company after
reasonable notice to Deignan and an opportunity for Deignan with his
counsel to be heard before the Board of Directors of the Company finding
that in the good faith opinion of such Board of Directors Deignan was
guilty of the conduct set forth in clauses (i), (ii) or (iii) of this
paragraph and specifying the particulars thereof in detail.
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(b) For these purposes, Deignan shall have "good reason" to terminate
this Agreement if:
(i) the Company removes Deignan from the position of President and
Chief Executive Officer at any time during the term of this Agreement;
(ii) Deignan's place of employment is moved beyond a hundred-mile
radius, as the crow flies, from 180 Linden Avenue, Westbury, New York 11590
(or the Company's then current business address) as a direct result of an
event described in Section 14(a) or (b) hereof.
(c) The severance benefits under this section in the event of termination
without cause or by Deignan for "good reason", shall consist of the continued
payment to Deignan for a period of one year from the date of termination, of the
annual salary provided in Section 4(a) hereof plus the immediate vesting of the
options that would normally vest in that year.
7. Death. In the event of Deignan's death during the term of this
Agreement, Deignan's legal representative shall be entitled to receive his per
annum base salary as provided in paragraph 4(a) of this Agreement to the last
day of the calendar quarter following the calendar quarter in which Deignan's
death shall have occurred and thereafter to receive one-half (1/2) of the base
salary provided in paragraph 4(a) of this Agreement for the balance of the
period covered by this Employment Agreement.
8. Non-Competition.
(a) Deignan agrees that, during the term of this Agreement, he will not,
without the prior written approval of the Board of Directors of the Company,
directly or indirectly, through any other individual or entity, (a) become an
officer or employee of, or render any services [including consulting services]
to, any competitor of the Company, (b) solicit, raid, entice or induce any
customer of the Company to cease purchasing goods or services from the Company
or to become a customer of any competitor of the Company, and Deignan will not
approach any customer for any such purpose or authorize the taking of any such
actions by any other individual or entity, or (c) solicit, raid, entice or
induce any employee of the Company, and Deignan will not approach any such
employee for any such purpose or authorize the taking of any such action by any
other individual or entity. However, nothing contained in this paragraph 8 shall
be construed as preventing Deignan from investing his assets in such form or
manner as will not require him to become an officer or employee of, or render
any services (including consulting services) to, any competitor of the Company.
(b) During the term hereof and at all times thereafter, Deignan shall
not disclose to any person, firm or corporation other than the Company any trade
secrets, trade information, techniques or other confidential information of the
business of the Company, its methods of doing business or information concerning
its customers learned or acquired by Deignan during Deignan's relationship with
the Company and shall not engage in any unfair trade practices with respect to
the Company.
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9. Enforcement.
(a) The necessity for protection of the Company and its subsidiaries
against Deignan's competition, as well as the nature and scope of such
protection, has been carefully considered by the parties hereto in light of the
uniqueness of Deignan's talent and his importance to the Company. Accordingly,
Deignan agrees that, in addition to any other relief to which the Company may be
entitled, the Company shall be entitled to seek and obtain injunctive relief
(without the requirement of any bond) for the purpose of restraining Deignan
from any actual or threatened breach of the covenants contained in paragraph 8
of this Agreement.
(b) If for any reason a court determines that the restrictions under
paragraph 8 of this Agreement are not reasonable or that consideration therefor
in adequate, the parties expressly agree and covenant that such restrictions
shall be interpreted, modified or rewritten by such court to include as much of
the duration and scope identified in paragraph 8 as will render the restrictions
valid and enforceable.
10. Notices. Any notice to be given to the Company or Deignan hereunder
shall be deemed given if delivered personally, telefaxed or mailed by certified
or registered mail, postage prepaid, to the other party hereto at the following
addresses:
To the Company: Vasomedical, Inc.
180 Linden Avenue
Westbury, New York 11590
To Deignan: D. Michael Deignan
6 Wax Myrtle Court
Hilton Head Island, South Carolina 29926
Either party may change the address to which notice may be given hereunder by
giving notice to the other party as provided herein.
11. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, and upon Deignan,
his heirs, executors, administrators and legal representatives.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties except as specifically otherwise indicated herein.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York.
14. In the event (a) the Company has been consolidated or merged into or
with any other corporation or all or substantially all of the assets of the
Company have been sold to another corporation, with or without the consent of
Employee, in his sole discretion; or (b) the Company undergoes a Change of
Control, as hereinafter defined below, without prior Board approval; then
Employee is entitled to the following settlement benefits:
(i) a lump-sum payment for the greater of (A) twelve (12) months of the annual
salary provided in section 4(a) hereof or (B) the balance of compensation
for the term of this Employment Agreement; and
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(ii) any and all stock options and warrants held by Employee shall become
immediately vested and exercisable; if
(A) Employee voluntarily and unilaterally resigns his position with
the Company within 30 days of an event described in Section 14(a)
or (b) hereof, or
(B) Employee is given notice of termination directly as a result of
such Change in Control within six (6) months of an event
described in Section 14(a) or (b) hereof, or
(C) Employee's place of employment is moved beyond a hundred-mile
radius, as the crow flies, from 180 Linden Avenue, Westbury, New
York 11590 (or the Company's then current business address) as a
direct result of an event described in Section 14(a) or (b)
hereof.
A "Change of Control" of the Company, or in any person directly or
indirectly controlling the Company, shall mean:
(i) a change of control as such term is presently defined in Regulation
240.12b-2 under the Securities Exchange Act of 1934 (the "Exchange Act");
(ii) if during the Term of employment any "person" (as such term is used in
Section 13(d) and 14(d) of the Exchange Act) other than the Company or any
person who on the date of this Employment Agreement is a director or officer of
the Company, becomes the "beneficial owner" (as defined in Rule 13(d)03 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% of the voting power of the Company's then outstanding
securities; or
(iii) if during the Term of employment the individuals who at the beginning
of such period constitute the Board cease for any reason other than death,
disability or retirement to constitute at least a majority thereof."
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
VASOMEDICAL, INC.
By: /S/ Abraham E. Cohen
---------------------------------
Abraham E. Cohen
Chairman of the Board
/S/ D. Michael Deignan
---------------------------------
D. Michael Deignan
Employee
