EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 30th day of
November, 1998 between Nugget Exploration, Inc. ("Company"), a Nevada
corporation having an office located at 815 Durbin Street, Casper, Wyoming
82601, and Dr. Leonard Vernon ("Employee:), an individual, residing at 22
Acorn Hill Drive, Voohees, New Jersey 08043.
WHEREAS, the Company is contemplating entering into the business of
providing medical imaging services;
WHEREAS, Employee has skills, contacts and experience in the medical
imaging industry that could benefit the Company towards its objectives;
WHEREAS the Company and Employee wish to enter into an Employment
Agreement pursuant to which Employee will become employed by the Company and
appointed as President of the Company.
NOW, THEREFORE, in consideration of the respective agreements
hereinafter set forth, the parties agree as follows:
1. Employment
1.01 Term. On the Commencement Date as defined herein, the Company
shall employ Employee, and Employee hereby accepts employment
with Company in the position and with the duties set forth
subject to termination in accordance with the provisions of
this Agreement.
1.02 Commencement Date. This Agreement shall commence on the date that
the Company has acquired, merged or combined with an operating
entity in the medical imaging services business.
2. Duties.
2.01 General. Employee shall continue as President of Company and
shall perform such executive duties as may from time to time
be assigned to him by Company's Board of directors,
consistent with the duties associated with those positions.
2.02 Performance. During the term of his employment, Employee
shall devote at least 50% of his business time, best efforts
and attention to the business, operations and affairs of
Company and the performance of his duties hereunder.
2.03 Employee's Representations. Employee represents and warrants to
and agrees with Company that:
(a) Neither the execution nor performance by Employee of
this Agreement is prohibited by or constitutes or will
constitute, directly or indirectly, a breach or violation
of, or will be adversely affected by, any written or other
agreement to which Employee is or has been a party or by
which he is bound.
(b) Neither Employee nor any business or entity in which
he has any interest or from which he receives any payments
has, directly or indirectly, any interest of any kind in
or is entitled to receive, and neither Employee nor any
such business or entity shall accept, from any person,
firm, corporation or other entity doing business with
company any payments of any kind on account of any
services performed by Employee during the term of his
employment.
3. Compensation and Related Matters.
3.01 Engagement Compensation. As consideration to induce Employee to
enter into this Agreement, and subject to the Commencement date,
the Company hereby grants Employee options to purchase 3,000,000
restricted shares of the Company's $.001 par value common stock at
an exercise price of $.155 per share payable in cash or notes.
The Company has determined this exercise price based on a value
equal to 50% of the Company's adjusted share price based on its
pre-split price of $.001 per share, which the Company's board of
directors authorized on October 7, 1998 to be reverse split 310 to
one. The parties have agreed to an option exercise price of half
the adjusted market price due to the fact that these shares shall
not have been registered with the Securities and Exchange
Commission and shall be issued with a restrictive legend and only
available for resale under Rule 144 or any other applicable
exemption.
3.02 Fixed Salary. As compensation for Employee's services, the
Company shall pay Employee a salary (the "Fixed Salary") at the
following rates in equal monthly (or more frequent)
installments less appropriate payroll deductions as required by
law:
For the period beginning on the Commencement Date to December 31,
1999 - $200,000 per annum.
For the period beginning January 1, 2000 to December 31, 2004 -
$300,000 per annum.
3.03 Cash Bonuses. Company shall pay employee a cash bonus the Cash
bonus) equal to 1.5% of the amount, if any, by which the
Company's Post-Tax Profits over $1 million dollars (as
hereinafter defined) for each fiscal year (commencing with the
fiscal year ending with December 31, 1998 through and
including the fiscal year ending December 31, 2002) exceeds
Post-Tax Profits for the Base Year (as hereinafter defined).
For purposes of this Agreement, the term "Post-Tax Profits"
shall mean Company's Income after Income Taxes and
Extraordinary Item(s) set forth in Company's Consolidated
Statement of Operations included in Company's Annual Report
on Form 10-K. In the event of termination of employment,
Employee's right to receive Cash Bonuses shall terminate as
of the effective date of such termination, provided, however,
Employee shall receive a Cash Bonus, if earned but unpaid,
for the last fiscal year ending prior to the effective date
of such termination. The Company shall pay Employee such
other cash and stock bonuses as are determined by the Board
of Directors.
3.04 Expenses. Company shall pay or reimburse Employee for all
reasonable travel, hotel, entertainment and other business
expenses incurred in the performance of Employee's duties upon
submission of appropriate vouchers and other supporting data
including a leased vehicle not to exceed $500 per month
beginning April 1, 1999.
3.05 Benefits. Employee shall be entitled to (i) receive such
benefits as are typically provided to executives holding his
position in public corporations of similar size; (ii)
participate in all general pension, profit-sharing, life,
medical, disability and other insurance and employee benefit
plans and programs at any time in effect for executive
employees of company, provided, however, that nothing herein
shall obligate Company to establish or maintain any employee
benefit plan or program, whether of the type referred to in
this clause (ii) or otherwise; and (iii) six (6) weeks vacation
during each twelve month period of employment at mutually
agreeable times.
4. Termination:
4.01 For Cause. Company shall have the right to terminate the
employment of Employee hereunder at any time for Cause (as
hereinafter defined). For purposes of this Agreement "Cause"
shall mean and include the occurrence of any of the following
acts or events by or relating to Employee: (1) any
material misrepresentation by Employee in this agreement; (2)
any material breach of any obligations of Employee under this
Agreement which remains uncured for more than thirty (30) days
after written notice thereof by the Board of Directors to
Employee; (3) habitual insobriety of Employee while performing
his duties hereunder, or (4) theft or embezzlement, from the
Company; provided, however, if during the term of this Agreement,
there shall occur a Change of Control (as hereinafter defined),
(A) The Company may not terminate the employment of employee for
Cause if Employee's conduct subsequent to such Change of Control
is consistent with his conduct prior to such Change of Control or
for any act or omission which was known to Company and which
occurred prior to such Change of Control and (B) the term "cause"
shall be deemed amended so as to delete therefrom the occurrence
of the acts or events by or relation to Employee set forth above.
In the event of termination for cause, Employee's fixed salary
shall terminate as of the effective date of termination of
employment.
4.02 Without Cause. Company may not terminate the employment of
Employee except for Cause.
4.03 Disability. If Employee, by reason of illness, mental or
physical incapacity or other disability, is unable to perform this
regular duties hereunder (as may be determined by the Board of
Directors), Company shall continue to pay employees salary for the
balance of the term of this Agreement, provided, however, in the
event Employee recovers from any such illness, mental or physical
incapacity or other disability (as may be determined an
independent physician to which Employee shall make himself
available for examination at the reasonable request of the Board
of Directors), Employee shall immediately resume his regular
duties hereunder. Any payments to Employee under any disability
insurance or plan maintained by Company shall be applied against
and shall reduce the amount of the salary payable by Company under
this agreement.
4.04 Death. In the event of Employee's death, Company shall continue
to pay Employee's Fixed Salary for the balance of the term of this
Agreement, provided, however, that, if Company is the beneficiary
of life insurance on Employee's life, it shall use the proceeds
of such insurance promptly upon receipt thereof to prepay (in
inverse order of maturity), the Fixed Salary remaining it be paid
discounted to present value using an assumed interest rate of 8%
per annum. Company shall have the right (but not the obligation)
to obtain a life insurance policy on Employee's life. The
proceeds of any such life insurance policy shall be payable to
Company. Employee shall cooperate with Company and use his best
efforts in all respects in regard to obtaining a life insurance
policy, including, without limitation, undergoing a physical
examination upon reasonable request.
4.05 Change of Control. If during the term of this Agreement, there
shall occur a Change of Control, Employee may terminate his
employment hereunder for Good Reason (as hereinafter defined) at
any time during the term of this Agreement in which case he shall
be entitled to receive a payment equal to 2.99 times Employee's
average annual compensation paid by Company (including bonuses, if
any) during the three years preceding the date of termination (the
Service Payment), provided, however, that such Severance Payment
shall be reduced if and only to the extent necessary to avoid the
imposition of an excise tax on such Severance Payment under
Section 4999 of the Internal Revenue Code of 1986, as amended.
The Severance Payment shall be payable to Employee on the date of
termination as follows:
For purposes of this Agreement, a ("Change of Control")
shall be deemed to have occurred on the first day on which a
Change of Control, as defined in the Securities Exchange Act
of 1934 shall have occurred. For the purposes of this
Agreement, "Good Reason" shall mean any of the following
(without Employee's express prior written consent):
(a) The assignment to Employee by Company of duties
inconsistent with Employee's then positions, duties,
responsibilities, titles, or offices of any reduction
in his duties or responsibilities or any removal of
Employee from or any failure to re-elect Employee to
any such positions, except in connection with the
termination of Employee's employment for Cause, or
disability (as described in Section 4.03 herein) or as
a result of Employee's death or by termination of
employment by Employee other than for Good Reason;
(b) A relocation of company's principal executive
offices to a location outside of the Southern New
Jersey or Northern Delaware area or Company's
requiring Employee to be based anywhere other than the
location at which Employee on the date hereof performs
Employee's duties, except for required travel on
Company's business to an extent substantially
consistent with Employee's business travel obligations
on the date hereof or any adverse change in the office
assignment or secretarial and other support accorded
to Employee on the date hereof;
(c) A failure by company to continue in effect any
benefit or compensation plan (including any pension,
profit-sharing, bonus, life, medical, disability and
other insurance and employee benefit plans and
programs) in which Employee with substantially similar
benefits or the taking of any actions by Company which
would adversely affect Employee's participation in or
reduce Employee's benefits under any such plans;
(d) The taking of any action by Company which would
deprive Employee of any material fringe benefit
enjoyed by Employee on the date hereof.;
(e) The failure by Company to obtain the specific
assumption of this Agreement by any successor or
assignee of Company or any person acquiring
substantially all of Company's assets.
5. Confidential Information: Non-Competition
5.01 Confidential Information Employee shall not, at any time during
or following termination or expiration of the term of this
Agreement, directly or indirectly, disclose, publish or
appropriate, use or cause permit or induce any person to
appropriate or use, any proprietary secret or confidential
information of Company not in the public domain including, without
limitation, knowledge or information relating to its trade
secrets, business methods, the names or requirements of its
customers all of which Employee agrees are and will be of great
value to Company and shall at all times be kept confidential.
Upon termination or expiration of this Agreement, Employee shall
promptly deliver or return to Company all materials of a
proprietary, secret or confidential nature relating to Company
together with any other property of Company which may have
therefore been delivered to or may then be in possession of
Employee.
5.02 Non-Competition. During the term of this Agreement, Employee
shall not, within a ten (10) mile radius of Company's corporate
offices or imaging centers which Company owns and/or manages,
without the prior written consent of Company in each instance,
directly or indirectly, in any manner or capacity, whether for
himself or any other person and whether as proprietor, principal
owner shareholder, partner, investor, director, officer, employee
representative, distributor, consultant, independent contractor or
otherwise engage or have any interest in any entity which is
engaged in any business or activity then conducted or engaged in
by Company, provided, however, that the foregoing shall not be
deemed to prohibit Employee from engaging in the practice of
chiropractic, or on any other business permitted under this
agreement. Notwithstanding the foregoing, however Employee may at
any time own in the aggregate as a passive but not active
investment nor more than 5% of the stock or other equity interest
of any publicly-traded entity which engages in a business
competitive with the Company.
5.03 Reasonableness. Employee agrees that each of the provisions of
this section 5 is reasonable and necessary for the protection of
Company; that each such provision is and is intended to be
divisible; that if any such provision (including any sentence,
clause or part) shall be contrary to law or invalid or
unenforceable in any respect in any jurisdiction, or as to any one
or more period of time, areas of business activities, or any part
thereof, the remaining provisions shall not be affected but shall
remain in full force and effect as to the other remaining parts;
and that any invalid or unenforceable provision ,shall be deemed
without further action on the part of the parties hereto,
modified, amended ad limited to the extent necessary to render the
same valid and enforceable in such jurisdiction. Employee further
recognizes and agrees that any violation of any of his agreements
in this Section 5 would cause such damage or injury to company as
would be irreparable and the exact amount of which would be
impossible to ascertain and that, for such reason, among others,
Company shall be entitled, as a matter of course, to injunctive
relief from any court of competent jurisdiction restraining any
further violation. Such right to injunctive relief shall be
cumulative and in addition to, and not in limitation of, all other
rights and remedies which Company may possess.
5.04 Survival The provisions if this section 5 shall survive the
expiration or termination of this Agreement for any reason.
6. Miscellaneous.
6.01 Notices. All notices under this Agreement shall be in writing and
shall be deemed to have been dully given if personally delivered
against receipt or if mailed by first class registered or
certified mail; return receipt requested, addressed to Company and
to Employee at their respective addresses set forth in the first
page of this Agreement, or to such other person or address as may
be designated by like notice hereunder. Any such notice shall be
deemed to have been given on the day delivered, if personally
delivered, or on the third day after the date or mailing if
mailed.
6.02 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto
and their respective heirs, legal representatives, successors and,
in the case of Company, assigns, but no other person shall acquire
or have any rights under or by virtue of this Agreement, and the
obligations of Employee under this Agreement may not be assigned
or delegated.
6.03 Governing Law Severability. This Agreement shall be governed by
and construed and enforced in accordance with the laws and
decisions of the State of Delaware applicable to contracts made
and to be performed therein without giving effect to the
principals of conflict of laws. In addition to the provisions of
5.03 above, the invalidity or unenforceability of any other
provision of this Agreement, or the application thereof to any
balance of this Agreement, which shall remain in full force and
effect, or the application thereof to other persons and
circumstances.
6.04 Entire Agreement; Modification; Interpretation. This Agreement
contains the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersedes
all prior negotiations and oral understandings, if any. Neither
this Agreement nor any of its provisions may be modified, amended
waived, discharged or terminated, in whole or in part, except in
writing signed by the party to be charged. No waiver of any such
provisions, or any breach of or default under this Agreement
shall be deemed or shall constitute a waiver of any other
provision breach or default. All pronouns and words used in this
Agreement shall be read in the appropriate number and gender, the
masculine, feminine and neuter shall be interchangeably and the
singular shall include the plural and vice versa, as the
circumstances may require.
6.05 Indemnification. Employee shall indemnify and hold Company free
and harmless from and against and shall reimburse it for any and
all claims, liabilities, damages, losses, judgments, costs and
expenses (including reasonable counsel fees and other reasonable
out-of-pocket expenses) arising out of or resulting from any
breach or default of any of his representations, warranties and
agreements in this Agreement. Company shall indemnify and hold
Employee free and harmless from and against and shall reimburse
him for any and all claims, liabilities, damages, losses,
judgments, costs and expenses (including reasonable counsel fees
and other reasonable out-of-pocket expenses) arising out of or
resulting from any breach or default of any of its
representations, warranties and agreements in this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
By: Dr. Leonard Vernon, D.C.
/s/ Dr. Leonard Vernon
______________________________
Nugget Exploration, Inc.
By: Tyson Schiff
/s/ Tyson Schiff
______________________________