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Exhibit
10.1
TRANSITION AGREEMENT
This
Transition Agreement (the “Agreement”) is entered
into as of September 27, 2007 (the “Effective
Date”), by and between Implant Sciences Corp.
(“Implant” or the “Company”) and Dr.
Anthony Armini (“Armini”) (collectively, the
“Parties”).
NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties
agree as follows:
1.
Transition Period.
Effective September 27, 2007 (the “Transition Date”),
Armini has resigned from (i) his positions as President and Chief
Executive Officer of Implant, and (ii) all positions, offices and
directorships with any subsidiaries of Implant. Armini agrees
not to be nominated or serve as Director of the Company at the next
annual meeting of the stockholders of the Company. Beginning on the
Transition Date and ending on the earlier of September 30, 2009 or
a termination of Armini’s employment pursuant to Paragraph 2
below (the “Transition Period”), Armini shall be
employed by Implant in a non-executive capacity as a Science
Advisor. In that capacity, he shall report solely to
Implant’s President and Chief Executive Officer
(“CEO”). During the Transition Period, Armini
shall meet and/or communicate with Company management and senior
Company technical and scientific personnel and provide such
information and expertise as he may possess for the purpose of
transitioning to senior Company technical and scientific personnel
his knowledge and expertise relating to ion implantation and
semiconductors and related activities conducted by the Company,
upon the CEO’s reasonable request. In addition, Armini will
cooperate with the Company in connection with the OSI Systems Inc.
lawsuit, including but not limited to being available to meet with
the Company’s counsel to prepare for discovery or trial,
providing affidavits as necessary and to testify truthfully as a
witness when reasonably requested by the Company at reasonable
times and for reasonable time periods. Armini will also assist the
Company in the divesture of the brachy therapy assets and providing
such other assistance and advice as are mutually agreed to. The
Parties agree that Armini shall not perform any work or take any
action on behalf of the Company during the Transition Period except
as explicitly directed and authorized by the CEO and, except for
reasonable transition assistance as specifically set forth
above. The Parties further agree that Armini shall perform
all work and provide all assistance hereunder at such times and
locations as are mutually agreed to by the CEO and Armini and
Armini shall be permitted to work from his home whenever
possible. It is understood that Armini’s position is
not full-time and that, with the exception of the transition
assistance specifically set forth above, his services will be
subject to his availability and other obligations he may then
have.
During
the Transition Period, the Company shall compensate Armini at
the annual rate of $250,000, less applicable taxes and
withholdings, to be paid pursuant to Implant’s normal
payroll cycle with a Final Payment of $9,615.38 due upon
execution, delivery and non-revocation of the Release of
Claims attached hereto as Exhibit A (the
“Release”), as further described in Paragraph
4. For the duration of the Transition Period, the
Company shall continue to provide Armini with insurance
coverage under its group health, dental and other plans, under
the same terms that applied to Armini on the Transition Date,
subject to the terms of those plans. During the
Transition Period, Armini shall not be eligible for a bonus or
other incentive compensation, nor shall he accrue vacation or
sick time and shall not be entitled to the use of a Company
car or for automobile payments. On the Transition Date the
Company shall pay Armini for his accrued vacation until the
Transition Date.
2.
Termination During the Transition Period.
The Company may not terminate Armini’s employment during the
Transition Period other than for Cause, which shall be defined as
(a) material breach in the performance of his duties under this
Agreement or the agreements set forth in Section 9 herein which
could cause material damage to the Company after a 10-day written
notice and opportunity to cure period or such longer period as is
reasonably required to cure such breach with diligence and good
faith efforts; (b) willful misconduct which is materially injurious
to the Company; or (c) the conviction of a fraud or felony or
criminal offense involving dishonesty or moral turpitude or breach
of trust.
Armini
may terminate this Agreement for any reason on thirty (30)
days prior written notice to the Company. Notwithstanding
Armini’s termination of this Agreement he shall be
required to continue to assist the Company in the OSI
litigation, as before such termination. If the Company
terminates Armini’s employment during the Transition
Period with Cause, or if Armini shall terminate this
agreement, Armini shall not be entitled to receive the
Payments or benefits set forth herein, and any entitlement(s)
Armini has, might have, had, or might have had to
compensation, bonuses, wages, or participation in any benefit
plan, policy, program, compensation agreement or practice of
the Company shall cease. Such compensation shall terminate
immediately, except as required by law and provided that his
stock options shall be governed by the terms
thereof.
3.
Separation From Employment.
Effective on the earlier of Armini’s termination in
accordance with Paragraph 2 or September 30, 2009 (the
“Separation Date”), Armini’s employment with the
Company shall cease. On or shortly after the Separation Date,
the Parties agree to execute the Release, which shall cover the
duration of the Transition Period.
4.
Final Payment. Upon
the Separation Date, following the Company’s receipt of the
fully-executed Release, and provided Armini’s employment was
not terminated for Cause, or terminated by Armini for any reason,
the Company will issue to Armini final payment of $9,516.38, less
applicable taxes and withholdings (the “Final
Payment”).
5.
Health and Life Insurance Benefits.
Armini may elect to continue his current group medical and/or
dental insurance coverage following the Separation Date, provided
he or his eligible dependent(s) remain eligible for such coverage
under the federal law known as COBRA and provided that he makes the
COBRA payments to the Company on or prior to the time they are due.
Information outlining Armini’s rights and responsibilities
under COBRA will be forwarded to him on or near the Separation
Date.
Following
the Separation Date, any entitlement Armini has, might have,
had, or might have had to compensation, bonuses, wages, or
participation in any benefit plan, policy, program, contract
or practice of the Company, shall terminate, except as
required by federal or state law, by applicable plan terms, or
by the express terms of this Agreement.
6.
Stock Options.
On September 28, 2007, the Company will grant Armini qualified
stock options to purchase an aggregate of 200,000 shares of Common
Stock of the Company at an exercise price equal to 110% of the
closing price (if he is a 10% shareholder) on September 28, 2007.
The stock options shall vest in equal quarterly installments of
25,000 options with the first installment vesting on September 28,
2007 and the remaining installments vesting every three months
thereafter. The options shall expire ninety days from the
Separation Date. The Parties acknowledge that Armini has been
awarded prior to the date hereof options to purchase 212,200 shares
of the Company’s common stock, 204,200 of which options are
fully vested. The grant dates, vesting dates and exercise
prices of such options are set forth in Exhibit B hereto.
Armini shall have the right to exercise any or all of his option
shares until the earlier of (a) ninety (90) days after the
Separation Date or (b) the date they would otherwise expire by
their terms.
7.
Property; Computers.
Armini represents and warrants that no later than September 28,
2007, he will return to the CFO any and all documents, products,
files, notes, memoranda, records, reports, materials and
information related to the Company and its business that may be at
his home or in his possession, including all copies, extracts and
summaries thereof, whether in hard copy or electronic format.
He further agrees that prior to returning these items, he will not
disclose them or their contents to any person or entity or use them
or their contents for any purpose except for the benefit of the
Company. Armini also agrees that he will not attempt at any
time in the future, for any purpose, to access or use any of
Company’s computers or computer networks or systems,
including their servers and electronic mail system, unless
authorized to do so by the CEO.
Armini
further agrees to return, no later than September 28, 2007, to
the CFO all property and equipment of the Company in his
possession, including but not limited to the Company car,
computer equipment,(other than his lap top) cellular phones,
PDAs, access cards and/or keys, passwords or
access
codes,
calling cards and credit cards. In turn, the Company
agrees that it shall return to Armini, no later than September
28, 2007, any personal effects remaining in his Implant
office.
For
the duration of the Transition Period, the Company shall make
available to Armini such information and Company equipment as
may be reasonably required to perform his services for the
Company during that Period. In addition, Armini may keep the
Company’s lap top that he was using prior to the
Transition Date and his E-mail account until the Separation
Date.
8.
Cooperation.
From the execution of this Agreement forward, Armini agrees to
reasonably cooperate with the Company in the defense or prosecution
of any threatened or actual claims or actions which may be brought
by, against or on behalf of the Company, its predecessors or any of
its current or former partners, agents, employees, directors or
affiliates and which relate to events or occurrences that
transpired or are alleged to have transpired during his tenure with
the Company. Such cooperation shall include, without
implication of limitation, being available to meet with the
Company’s counsel to prepare for discovery or trial and to
testify truthfully as a witness when reasonably requested by the
Company at reasonable times and for reasonable time
periods.
9.
Confidentiality of Company Information; Restrictive
Covenants.
The Parties agree that all of Section 7, Disclosure and Assignment
of Intellectual Property, Section 8, Confidentiality, and Section
9, Restriction, contained in the Employment Agreement which Armini
and the Company entered into as of June 30, 2004 are incorporated
herein by reference and shall remain in full force and effect
following the execution of this Agreement.
10.
Accord and Satisfaction.
Armini agrees that the payments and benefits set forth in this
Agreement, together with all other payments and benefits previously
provided to him by the Company, are complete payment, settlement,
satisfaction and accord with respect to all obligations and
liabilities of the Releasees to Armini, and with respect to all
Claims that could be asserted by Armini against any of the
Releasees regarding any relationship between Armini and the
Company, and any change in or cessation of any such relationship,
including, without limitation, all claims for wages, salary,
expenses, incentive pay, bonuses, business expenses, paid time off,
equity interests, severance pay, attorneys’ fees,
compensatory damages, exemplary damages, or other compensation,
benefits, costs or sums. The Company agrees that
Armini’s undertakings in this Agreement, and the performance
of such undertakings, are complete payment, settlement,
satisfaction and accord with respect to all obligations and
liabilities of Armini to the Company. Provided, however, that
nothing in this Agreement is intended to release or discharge any
of the Company’s insurance or indemnity obligations to Armini
regarding Armini’s service as President, Chief Executive
Officer and member of the Board of the Company or any other
position with the Company or its subsidiaries he may have
held.
11.
Non-Disparagement; References and Other
Communications.
From the execution of this Agreement forward, Armini agrees not to
make any statement, written or oral, which disparages the Company,
its business and services, or any of its partners, members,
directors, officers, employees, or agents. Armini further
agrees not to make any statement or take any action which has the
intended or foreseeable effect of harming the business interests of
the Company, and to refrain from engaging in any communications
regarding the Company with shareholders, research analysts or
others in the financial community. In addition, Armini
agrees that he will refrain from speaking to third parties on
behalf of the Company unless requested to do so by the
CEO.
For
its part, the Company agrees that its senior executive
officers and the members of the Company’s Board of
Directors will not make any statement, written or oral, to any
person or entity not affiliated with the Company (excluding
agents of the Company) which disparages Armini, his business
reputation and qualifications, or his employment as Chief
Executive Officer of the Company.
Nothing
in this Paragraph shall prohibit or bar the Parties from
providing truthful testimony in any legal proceeding or in
communicating with any governmental agency or representative
or from making any truthful disclosure required under law;
provided, however, that advance written notice is provided by
either party of the intent to make such disclosures and
provided that best efforts will be used to ensure that this
Paragraph is complied with to the maximum extent
possible. Moreover, nothing herein shall prevent Armini
from participating in any proceeding before any federal or
state administrative agency to the fullest extent permitted by
applicable law, provided that he will be prohibited to the
fullest extent authorized by law from obtaining monetary
damages in any agency proceeding in which he does so
participate.
The
parties agree to issue a press release in the form attached
hereto as Exhibit C and agree that any public statements will
be in accordance with Exhibit C and/or with any SEC
filings.
12.
General Release by Armini.
Armini, on behalf of himself and his spouse, heirs, children,
successors, current and former agents, representatives, executors,
beneficiaries, administrators, trustees, attorneys and assigns,
voluntarily releases and discharges the Company and its
predecessors, successors, and current and former assigns,
agents, officers, partners, members, directors, shareholders,
employees, subsidiaries, representatives, insurers, investors,
attorneys, affiliates, and any other related entities; and all
persons acting by, through, under, or in concert with any of them
(any and all of which are referred to as “Releasees”),
from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, causes of action, damages,
losses, expenses, and debts of any nature whatsoever, known or
unknown (“Claims”), which Armini has, claims to have,
ever had, or ever claimed to have had against Releasees through the
Transition Date. This general release of Claims includes,
without implication of limitation, all Claims relating to
Armini’s employment and separation from employment with the
Company; all Claims relating to Armini’s relationship to,
interest, equity or investment in, memberships in, or partnerships
with the Company; all Claims of discrimination, harassment and
retaliation prohibited by any federal, state, or local statute,
regulation, or ordinance, including without implication of
limitation, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans With Disabilities
Act, the Family and Medical Leave Act, the Employee Retirement
Income Securities Act and Massachusetts General Laws Chapter 151B;
and all other statutory or common law Claims. Armini also
waives any Claim for reinstatement, attorneys’ fees,
interest, or costs, and all Claims for wages or other compensation,
provided that this Release shall not be construed to (a) impair his
right to enforce the terms of this Agreement, or (b) release or
discharge any of Implant’s insurance or indemnity obligations
to Armini regarding Armini’s service as President, Chief
Executive Officer, and member of the Board of the Co
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