Exhibit 10 (a)(i)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of September 1,
2001, between OmniComm Systems, Inc., a Delaware corporation, (the "Company"),
and Randall G. Smith (the "Executive").
WITNESSETH:
WHEREAS, the Executive has experience in managing at a senior level
the technology of a publicly traded company (or a division of such a company)
involved in the clinical trials business;
WHEREAS, the parties acknowledge that the Executive's abilities and
services are unique and essential to the prospects of the Company; and,
WHEREAS, in light of the foregoing, the Company desires to employ the
Executive as its Chief Technology Officer and the Executive desires to accept
such employment.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment upon the terms and conditions hereinafter
set forth.
2. Term and Termination. This Agreement shall commence on September
1, 2001 and shall terminate as of the earlier of:
(a) 3 years from the date hereof;
(b) the death or disability of the Executive. Disability shall
mean the Executive's inability, due to sickness or injury, to perform
effectively his duties hereunder for a period of at least 90
consecutive days;
(c) thirty (30) days after notice is given by the Company to the
Executive after a material breach hereof by the Executive; or,
(d) thirty (30) days after notice is given by the Executive to
the Company after a material breach hereof by the Company.
The exercise of the Company's or the Executive's right to terminate this
Agreement pursuant to clause (c) or (d) hereof, as the case may be, shall not
abrogate the rights and remedies of the terminating party in respect of the
breach giving rise to such termination.
3. Salary. For all services rendered under this Agreement:
(a) During the term of his employment, the Company shall pay the
Executive an annual salary of $150,000. The Executive's salary may be paid in
the form of cash and/or stock, as agreed upon by the parties. This amount may
be increased at the discretion of the Board of Directors and shall be adjusted
to compensate for annual cost of living increases.
(b) During the term of his employment, the Executive shall
be entitled to participate in employee benefit plans or
programs of the Company, if any, to the extent the
Executive is eligible to participate thereunder. Such
plans and programs shall include, but not be limited
to, the following:
(i) major medical health insurance for the Executive, his
spouse and two children; and
(ii) four weeks paid vacation.
(c) The Executive shall be permitted to participate in the
Company's stock option plan. The number of shares subject to
options, type of options, and vesting of the options are set
forth on Exhibit "A," attached hereto as if fully set forth
herein.
(d) The Company shall also pay the Executive a bonus based upon
achieving technology related milestones set forth in a particular
calendar year. The Executive shall be entitled to receive a bonus
to be agreed upon by the Executive and the Company's Board of
Directors. The Company's Board of Directors and the Executive
shall agree upon the milestones and if the Executive meets the
milestone conditions, he shall be paid 30 days after the end of
the Company's calendar year.
(e) The Executive shall also be entitled to severance pay equal
to six (6) months salary and benefits in the event of termination
by the Company for any reason other than commission of a felony
or a crime involving moral turpitude relating to services
provided to the Company, or termination by the Company pursuant
to Paragraph 2(c). Options which have vested prior to the date of
termination shall remain exercisable during the severance period.
Unvested options shall terminate in accordance with the terms of
the respective Stock Opti on Agreements.
4. Duties. The Executive shall be employed as Chief Technology
Officer of the Company and, subject to the direction of the Board of Directors
and the Company's officers designated by the Board of Directors, shall perform
and discharge well and faithfully the duties which may be assigned to him from
time to time by the Company in connection with the conduct of its business. If
the Executive is elected or appointed a director of the Company or any
subsidiary thereof during the term of this Agreement, the Executive will serve
in such capacity without further compensation.
5. Extent of Services. Except as set forth below, the Executive
shall devote his entire time, attention and energies to the business of the
Company and shall not during the term of this Agreement be engaged, whether or
not during normal business hours, in any other business or professional
activity, whether or not such activity is pursued for gain, profit, or other
pecuniary advantage. Notwithstanding the foregoing, the Executive shall be
allowed to serve on the Board of Directors of other companies so long as such
Board participation does not interfere with the Executive fulfilling his duties
to the Company and the Executive obtains the prior written approval of the
Company's Board of Directors. In addition, the Executive shall be allowed to
provide consulting services to other companies so long as he obtains the prior
written approval of the Company's Board of Directors, turns over to the Company
the entire amount of the compensation he receives as a result of providing such
services, and provides such services no more than three (3) days per month.
6. Disclosure of Information. The Executive recognizes and
acknowledges that the Company's trade secrets and proprietary information and
processes, as they may exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the Executive's duties hereunder. The Executive will not,
during or after the term of his employment by the Company, in whole or in part,
disclose such secrets, information or processes to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
nor shall the Executive make use of any such property for his own purposes or
for the benefit of any person, firm, corporation or other entity except the
Company under any circumstances during or after the term of his employment,
provided that after the term of his employment these restrictions shall not
apply to such secrets, information and processes which are then in the public
domain provided that the Executive was not responsible, directly or indirectly,
for such secrets, information or processes entering the public domain without
the Company's consent. The Executive agrees to hold as the Company's property,
all memoranda, books, papers, letters, formulas and other data, and all copies
thereof and therefrom, in any way relating to the Company's business and
affairs, whether made by him or otherwise coming into his possession, and on
termination of his employment, or on demand of the Company, at any time, to
deliver the same to the Company. In the event an action is instituted and prior
knowledge is an issue, it shall be the obligation of the Executive to prove by
clear and convincing evidence that the confidential information disclosed was in
the public domain, was already known by the Executive prior to his employment
with the Company, or was developed independently by the Executive.
7. Inventions. The Executive hereby sells, transfers and assigns to
the Company or to any person, or entity designated by the Company, all of the
entire right, title and interest of the Executive in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or
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conceived by the Executive, solely or jointly, or in whole or in part, during
the term hereof which (i) relate to methods, apparatus, designs, products,
processes or devices sold, leased, used or under construction or development by
the Company or any subsidiary, or (ii) otherwise relate to or pertain to the
business, functions or operations of the Company or any subsidiary, or (iii)
arise wholly or partly from the efforts of the Executive during the term hereof.
The Executive shall communicate promptly and disclose to the Company, in such
form as the Company requests, all information, details and data pertaining to
the aforementioned inventions, ideas, disclosures and improvements; and, whether
during the term hereof or thereafter, the Executive shall execute and deliver to
the Company such formal transfers and assignments and such other papers and
documents as maybe required of the Executive at the Company's expense to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications and, as to copyrightable material, to obtain
copyright thereon. Any invention by the Executive within one (1) year following
the termination of this Agreement shall be deemed to fall within the provisions
of this paragraph unless proved by the Executive to have been first conceived
and made following such termination.
8. Covenant Not to Compete.
(a) During the term hereof and for a period of one (1) year
thereafter, the Executive shall not compete, directly or indirectly, with the
Company, interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any customer, client,
supplier, consultant, or employee of the Company and any customer, client,
supplier, consultant or employee of the Company, including, without limitation,
employing or being an investor (representing more than 5% equity interest) in,
or officer, director, or consultant to, any person or entity which employs any
former key or technical employee whose employment with the Company was
terminated after the date which is one year prior to the date of termination of
the Executive's employment therewith. An activity competitive with an activity
engaged in by the Company shall mean performing services whether as an employee,
officer, consultant, director, partner, or sole proprietor for any person or
entity engaged in the business then engaged in by the Company, which services
involve the development and marketing of a web-based system to collect, manage,
and compile clinical trial and research data.
(b) It is the desire and intent of the parties that the provisions of
this Section shall be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this Section shall be adjudicated to
be invalid or unenforceable, this Section shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of this Section in the
particular jurisdiction in which such adjudication is made.
(c) Nothing in this Section shall reduce or abrogate the Executive's
obligations during the term of this Agreement under Sections 4 and 5 hereof.
9. Remedies. If there is a breach or threatened breach of the
provisions of Section 6, 7 or 8 of this Agreement, the Company shall be entitled
to an injunction restraining the Executive from such breach. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
for such breach or threatened breach.
10. Assignment. This Agreement may not be assigned by any party
hereto; provided that the Company may assign this Agreement: (a) to an affiliate
so long as such affiliate assumes the Company's obligations hereunder; provided
that no such assignment shall discharge the Company of its obligations herein,
or (b) in connection with a merger or consolidation involving the Company or a
sale of more than 50% of the Company's securities or assets, to the surviving
corporation or purchaser as the case may be, so long as such assignee assumes
the Company's obligations thereunder.
11. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered mail to the
Executive at his residence at:
Randall G. Smith
214 N. Park Ave.
Batesville, IN 47006
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and to the Company at:
OmniComm Systems, Inc.
3250 Mary Street, Suite 402
Coconut Grove, Florida 33133
Attention: Chief Financial Officer
12. Waiver of Breach. A waiver by the Company or the Executive of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other party.
13. Entire Agreement. This instrument contains the entire agreement
of the parties. It may be changed only by an agreement in writing signed by a
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Florida. All questions with respect to the
construction hereof and the rights and liabilities of the parties hereto shall
be governed by the laws of the State of Florida. Any action or proceeding
arising out of or relating hereto shall be brought in Miami-Dade County, State
of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first hereinabove written.
OmniComm Systems, Inc.
By: /s/ David Ginsberg, D.O.
------------------------
Dr. David Ginsberg
Chief Executive Officer
Executive
/s/ Randall G. Smith
-------------------
Randall G. Smith
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Exhibit "A"
Incentive and Non-Qualified Stock Option
Total Number of Shares Subject to Options: 210,000
Vesting Schedule: 3 years
Amount Price Vesting Date
Year 1 2001 70,000 Market Price+10% September 1, 2001
Year 2 2002 70,000 Market Price+10% September 1, 2002
Year 3 2003 70,000 Market Price+10% September 1, 2003
Other rights:
1. "Piggyback" rights in equal proportion to other employees.
2. Acceleration of all unvested options in the event of change in control,
defined as a sale of more than 50% of the Company's securities or assets to a
third party other than shares sold to Commonwealth Associates, LLP or its
affiliates in the Series B or Series C Preferred Private Placements.
3. Options will be granted as Incentive Stock Options (ISO's) to the extent
possible under Sec. 422 of the Internal Revenue Code of 1986.
4. Length of options: ISO 5 years; NonQ 7 years
5. Existing options granted, but unissued, under Stock Option Agreements
preceding this Employment Agreement shall remain in force.
Notes:
1. ISO: Incentive stock option pursuant to Sec. 422 of the Internal Revenue
Code of 1986. ISO option price shall be the fair market value at the date of
grant x 110%
2. NonQ: Non-qualified stock option.
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