EXHIBIT 10.50

EMPLOYMENT AGREEMENT

 

This Employment Agreement is executed by JOSEPH A. LARGEY (“Executive”), who
resides at the address listed at the end of this Agreement, and SRI/SURGICAL
EXPRESS, INC. (the “Company”), a Florida corporation with its principal
executive office at 12425 Racetrack Road, Tampa, Florida 33626, to record their
agreement regarding employment of Executive by the Company and the payment by
the Company to Executive of severance compensation benefits upon the occurrence
of certain events.

 

The parties agree as follows:

 

1.     Definitions. As used in this Agreement, the capitalized terms defined
below have the respective meanings ascribed to them:

 

“Agreement” means this Employment Agreement, as originally executed by Executive
and the Company and as subsequently amended or modified by them in accordance
with its terms.

 

“Annual Salary” means the annualized, base salary payable to Executive by the
Company as of any particular date, and excludes all other cash and non-cash
compensation paid or payable to Executive.

 

“Board” means the Board of Directors of the Company.

 

“Cause” means a termination of Executive’s employment that is the result of (a)
Executive’s indictment, conviction, or plea of no contest for a felony, (b)
Executive’s violation of this Agreement, or (c) Executive’s failure
substantially to perform his duties with the Company (other than any such
failure resulting from Executive’s incapacity due to physical and mental
illness, as determined by a physician selected by the Company, with the written
approval of the Executive, such approval not to be unreasonably withheld), after
a written demand for substantial performance is delivered to Executive by the
Board.

 

“Company” means SRI/Surgical Express, Inc., a Florida corporation and a party to
this Agreement, and includes its assignees and successors (by operation of law
or otherwise).

 

“Disability” means Executive’s incapacity due to physical or mental illness that
causes him to be absent from or unfit for the full-time performance of his
duties with the Company for four consecutive months or a total of six months
during any 12 month period. Any question regarding the existence of Executive’s
Disability on which Executive and the Company cannot agree will be determined by
a qualified independent physician selected by the Company, with the prior
written approval of the Executive, such approval not to be unreasonably
withheld, which will be final and conclusive for all purposes of this Agreement.

 

“Effective Date” means December 1, 2002.

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“Executive” means the officer of the Company who is a party to this Agreement.

 

“Involuntary Termination” means termination of Executive’s employment with the
Company by the Company for any reason other than for Cause, death, or
Disability.

 

“Severance Date” means the effective date of Executive’s termination of
employment with the Company by reason of an Involuntary Termination.

 

In addition, as used in this Agreement, (a) the word “including” is always
without limitation, (b) the word “days” refers to calendar days, including
Saturdays, Sundays, and holidays, (c) words in the singular number include words
of the plural number and vice versa, and (d) the word “person” includes, in
addition to a natural person, a group, trust, joint venture, limited liability
company, unincorporated organization, government, public body or authority, and
any governmental body, agency, authority, department, or subdivision, whether
domestic or foreign or local, state, regional, or national.

 

2.     Employment. Subject to the terms and conditions of this Agreement, the
Company shall employ Executive as its Chief Executive Officer, and Executive
shall serve in the employ of the Company in that capacity. Subject to the
provisions of Section 8 regarding severance compensation on an Involuntary
Termination, Executive’s employment with and compensation by the Company are “at
will” and may be terminated with or without cause, at any time, at the option of
the Company or Executive. The terms of this Agreement do not create either an
express or implied contract of employment with the Company for any particular
period of time.

 

3.     Duties. Executive shall be responsible for such duties as are reasonable
for an employee in his capacity and as from time to time are assigned to him by
the Board. Executive shall report directly to the Board. At all times while
employed by the Company, Executive shall serve and promote the business
interests of the Company in good faith, with his full, best, and dedicated
efforts, with fidelity and loyalty, in compliance with all rules, policies,
practices, directives, and procedures of the Company. Executive faithfully and
industriously shall devote normal working hours (subject to sick leave, vacation
time, and outside endeavors provided for and permitted by the terms of this
Agreement) to the good faith performance of his duties.

 

4.     Compensation and Related Matters.

 

(a)     Annual Compensation.

 

(i)     Base Salary. For all services rendered to it by Executive, the Company
shall pay to Executive a base salary at an annual rate of $300,000, beginning on
the Effective Date, payable in arrears every two weeks in 26 substantially
equal, consecutive installments in accordance with the Company’s payroll
practices in effect from time to time. The Board or its Compensation Committee
will review the Executive’s salary for a potential increase at least once each
year.

 

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(ii)     Management Incentive Bonus. Beginning with calendar year 2003,
Executive will be eligible to participate in the Company’s management incentive
bonus plan pursuant to which the Company pays performance bonus compensation to
its executives and employees based on personal and Company performance ratings
for the applicable year, each as established by the Board or its Compensation
Committee. Depending on his and the Company’s performance, Executive will be
eligible to receive a bonus of up to $100,000 for the Company’s calendar year
2003.

 

(b)     Stock Options. As of the Effective Date, the Company shall grant to
Executive a time-vested stock option to acquire one hundred fifty thousand
(150,000) shares of the Company’s Shares (the “Option Shares”) under the
Company’s 1998 Stock Option Plan (the “Option Plan”) with an exercise price
equal to the fair market value (as defined under the Option Plan) of the Shares
on the Effective Date. The option shall vest and become exercisable with respect
to one-fifth (1/5) of the Option Shares on each of the first five anniversaries
of the Effective Date, provided Executive has remained continuously employed by
the Company until the applicable date, and otherwise will have terms set forth
in the Option Plan and the Company’s standard stock option agreement. The Option
Shares will be incentive stock options to the extent permitted by the Option
Plan and applicable federal income tax provisions.

 

(c)     Other Benefits. Executive shall be entitled to participate in all other
employee benefit plans, programs and arrangements of the Company that are from
time to time in effect and that apply to the Company’s employees generally or to
its executive officers, as the case may be, subject to, and on a basis
consistent with, the terms, conditions and overall administration of such plans,
programs and arrangements. Executive shall be entitled to participate in and
receive any fringe benefits and perquisites that may become available to the
Company’s executive employees.

 

(d)     Indemnification Agreement. Concurrently with entering into this
Agreement, the Company shall enter into an Indemnification Agreement with
Executive in substantially the form attached hereto as Exhibit A.

 

(e)     D&O Insurance. During the term of this Agreement and for an additional
five years following the expiration of the term hereof (the “Coverage Period”),
Executive shall be covered (for both liability and representation) at all times
as an “Officer” or “Executive Officer” or the equivalent thereof (“D&O
Coverage”) under the Company’s directors and officers insurance policy in effect
on the Effective Date and any subsequent renewals, extensions or replacements
thereof (the “Existing Policy”); provided, however, that, if the Company ceases,
at any time during the Coverage Period, to maintain D&O Coverage on Executive
for 90 continuous days (and Executive has at least 60 days before the end of
that period notified the Company of the absence of D&O Coverage, specifically
referencing this Section), then Executive shall have the right, in his sole and
absolute discretion, to terminate his employment with the Company, and such
termination of employment shall be treated, for all purposes of this Agreement,
as an Involuntary Termination by the Company, except that salary and benefits
will be payable for only four months following the Severance Date. Executive
acknowledges that the terms of the D&O Coverage might change during the Coverage
Period.

 

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(f)     Relocation Expenses. The Company shall pay Executive up to $10,000 to
cover incidental expenses incurred in connection with his relocation to Tampa
that are evidenced by a receipt submitted to the Company. In addition, the
Company shall reimburse Executive for (i) all reasonable costs incurred by
Executive in connection with Executive moving his family and personal belongings
from Colorado Springs, Colorado to the Tampa, Florida area, subject to and in
accordance with the Company’s policy governing relocations and (ii) health
insurance premiums for Executive and his family during the first 90 days of
Executive’s employment with the Company. The Company shall also pay all
customary real estate fees incurred in connection with Executive selling his
principal residence in Colorado Springs, Colorado and closing costs, loan fees
and Florida excise taxes incurred in connection with Executive purchasing a
principal residence in the Tampa, Florida area. For up to seven (7) months
following the Effective Date (or any shorter time period until Executive
purchases a principal residence in Tampa), the Company shall reimburse Executive
for: (i) reasonable apartment rental fees or hotel room charges incurred by
Executive in occupying an apartment or hotel room in the Tampa, Florida area and
(ii) one round trip commercial airline ticket every two weeks for travel between
Colorado and Tampa, Florida by Executive or Executive’s spouse. Executive shall
establish his principal residence in Tampa, Florida on or before April 1, 2003.

 

(g)     Expenses. The Company shall reimburse Executive for all reasonable and
customary expenses incurred by Executive in performing his duties under this
Agreement, including all expenses of travel and accommodations while away from
home on business or at the request of and in the service of the Company;
provided that the expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.

 

(h)     Legal Fees. The Company shall reimburse Executive for up to $2,000 of
expenses (including reasonable fees of legal counsel and related out of pocket
expenses) incurred by Executive with the negotiation, documentation, execution
and delivery of this Agreement.

 

5.     Competition and Trade Secrets.

 

Executive acknowledges that in the course of his employment by the Company he
will obtain knowledge of confidential information regarding the Company’s
business and affairs and develop relationships with its employees, customers,
and suppliers. Executive covenants and agrees that:

 

(a)     Executive, directly or indirectly, in any capacity, either for himself,
or on behalf of any corporation, partnership, joint venture, business trust, or
other person or entity, shall not:

 

(i)     during the term of this Agreement, for any additional period of time
that Executive continues to be an employee of the Company, and for a period of
two (2) years immediately after Executive’s employment with the Company ceases
for any reason (whether or not voluntary), (A) engage in any business, or
acquire an interest in any business, or become affiliated as an agent, employee,
partner, consultant, director, officer, stockholder, or proprietor of any
business, that competes with the Company’s product offerings (and planned
product offerings) at the time of termination, in the United States or any other
place in which the Company does business; (B) influence or attempt to  

 

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influence any agent, customer, supplier, or distributor who has, or had during
the 18 months preceding the date of employment termination, a business
relationship with the Company, to cease or adversely alter its business
relationship with the Company; or (C) influence or attempt to influence any
employee of the Company to terminate his employment with the Company for any
purpose or accept employment with another person; and

 

(ii)     at any time while this Agreement remains in effect and thereafter,
divulge, disclose, or communicate, for any reason or in any manner, to any
person or entity, any information (written or otherwise) concerning trade
secrets or other confidential information relating to the Company’s business or
financial affairs, including the name of any customer or supplier or the
business plans, methods, processes, and operating procedures of the Company.

 

(b)     Executive makes the preceding covenants in consideration for, and as a
necessary condition of, Executive’s employment by the Company. The preceding
covenants are independent of any obligation of the Company to Executive,
including any obligations of the Company to Executive under this Agreement or
arising from any aspect of the employment relationship, and are not subject to
any set-off, defense, deduction, or counterclaim based on any claim Executive
might have against the Company. Executive stipulates that the duration and
geographic scope of these restrictions are reasonable limitations necessary to
protect the Company’s business interests, that the restrictions do not unduly
oppress Executive’s occupational future or opportunities, and that Executive has
been adequately compensated for these restrictions. The “prohibited period” of
the obligation set forth in paragraph (a)(i) above will be extended by any
period of time during which Executive is in breach of the obligation.

 

(c)     Each provision of the preceding covenants should be construed and
interpreted so that it is valid and enforceable under applicable law. However,
if a court of competent jurisdiction determines that the duration, geographical
area, or proscribed activities of the restrictions under this Agreement would
cause strict application of those restrictions to be invalid or unenforceable in
a particular jurisdiction, the restrictions automatically will be reformed to
shorten their duration, diminish their geographical area, or confine their
proscribed activities to the extent necessary (but only to that extent) to make
the restrictions valid and enforceable.

 

6.     Remedy at Law Insufficient. Executive acknowledges that damages at law
will be an insufficient remedy if Executive violates the terms of Section 5, and
that the Company would suffer a decrease in value and irreparable damage as a
result of such violation. Accordingly, on a violation of any of those covenants,
the Company, without excluding or limiting any other available remedy, shall be
entitled to the following remedies:

 

(a)     Upon posting a bond of up to $10,000 and filing with a court of
competent jurisdiction an appropriate pleading and affidavit specifying each
obligation breached by Executive, automatic entry by a court having jurisdiction
of an order granting an injunction or specific performance compelling Executive
to comply with that obligation, without proof of monetary damage or an
inadequate remedy at law;

 

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(b) The recovery from Executive of all profit, remuneration, or other
consideration that Executive gains from breaching the covenant and all damages
that the Company suffers as a result of the breach; and

 

(c) Reimbursement of all costs and expenses incurred by the Company in enforcing
those obligations or otherwise defending or prosecuting any litigation arising
out of Executive’s obligations, including premiums for bonds, fees for experts
and investigators, and legal fees, costs, and expenses incurred before a lawsuit
is filed and in trial, appellate, bankruptcy, and judgment-execution
proceedings.

 

The foregoing remedies are cumulative to all other remedies afforded by law or
in equity, and the Company may exercise any such remedy concurrently,
independently, or successively.

 

7.     Inventions or Improvements. Any inventions, discoveries, know-how, or
improvements, which Executive may conceive, make, invent, or develop during his
employment by the Company, connected with Executive’s work or related in any way
to the Company’s business or future business, shall be the absolute property of
the Company and shall be promptly disclosed to the Company by the Executive.
Executive shall assign to the Company the rights to such inventions and
improvements and any patent applications filed or granted.

 

8.     Severance Agreement.

 

(a)     Term. The agreements in this Section 8 shall be in effect for a term
beginning on the Effective Date and ending automatically, without further
obligation, when Executive ceases to be employed by the Company for any reason,
other than an Involuntary Termination.

 

(b)     Involuntary Termination.

 

(i)     Severance Payment. In the event of Executive’s Involuntary Termination,
the Company shall pay to Executive (A) within 15 days after the termination of
Executive’s employment with the Company, (1) the full amount of any earned but
unpaid Annual Salary through the Severance Date, and (2) the full amount of any
accrued and unpaid expenses reimbursements to which Executive is legally
entitled (Executive, or Executive’s legal representative on Executive’s behalf,
shall have 10 days after the date of termination of Executive’s employment to
submit to the Company properly completed expense reimbursement forms for
reimbursable business expenses incurred by Executive through and including the
Severance Date), and (B) at such time as Executive would have been entitled to
receive his Management Incentive Bonus for the year in which such Involuntary
Termination occurs if Executive had been employed on the last day of such year,
a pro rated portion of Executive’s Management Incentive Bonus for such year (the
pro rated portion shall be equal to the aggregate amount of such Management
Incentive Bonus for such year (determined by the Board of Directors, acting in
good faith) multiplied by a fraction (a) the numerator of which is the number of
days elapsed during such year through and including the Severance Date and (b)
the denominator of which is 365). In addition, the Company shall continue to (A)
pay to the Executive his Annual Salary as scheduled, for a period of one year
following the Severance Date, as his sole severance compensation benefit, and
(B) fully fund all health

 

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insurance benefits provided to Executive under Section 4(c) hereof (at the
levels in effect on the Severance Date) for a period of one year following the
Severance Date.

 

(ii)     No Mitigation or Offset. Executive’s right to the foregoing severance
compensation will be conditioned on Executive’s execution of a release in favor
of the Company in a form reasonably satisfactory to the Company and his strict
compliance with Sections 5 and 7 of this Agreement. Executive does not have any
duty to seek or obtain other employment after the termination of Executive’s
employment with the Company, whether voluntary or involuntary. Moreover, the
Company shall pay to Executive the foregoing severance compensation benefits
without reduction for any compensation that Executive earns or could earn from
other employment.

 

9.     Legal Matters. The validity, construction, enforcement, and
interpretation of this Agreement are governed by the laws of the State of
Florida and the United States of America, excluding the laws of those
jurisdictions pertaining to the resolution of conflicts with laws of other
jurisdictions. If any dispute arises between Executive and the Company with
respect to this Agreement, either party may elect (but is not obligated) to
submit the dispute to arbitration before a panel of arbitrators in accordance
with the Florida Arbitration Code by giving the other party a notice of
arbitration in accordance with Section 8 of this Agreement. If a party elects to
arbitrate a dispute, arbitration will be the sole and exclusive method of
resolving the dispute, the other party must arbitrate the dispute, and each
party will be barred from filing a lawsuit concerning the subject matter of the
arbitration, except to obtain an equitable remedy.

 

The arbitration panel will consist of three arbitrators, with the first
arbitrator selected by the Company, the second selected by Executive, and the
third neutral arbitrator selected by agreement of the first two arbitrators.
Each party shall select an arbitrator and notify the other party of the
selection within 30 days after the effective date of the notice of arbitration
and the two arbitrators selected by the parties shall select the third
arbitrator within 45 days after the effective date of the notice of arbitration.
A party who fails to select an arbitrator within the prescribed 30-day period
waives the right to select an arbitrator or to have an additional, neutral
arbitrator selected by the arbitrator selected by the other party, and the
arbitrator chosen by the other party will constitute the “arbitration panel” for
purposes of this Agreement.

 

Every arbitrator must be independent (not a relative of Executive or an officer,
director, employee, or shareholder of the Company, the Company or any
Subsidiary) without any economic or financial interest of any kind in the
outcome of the arbitration. Each arbitrator’s conduct will be governed by the
Code of Ethics for Arbitrators in Commercial Disputes (1986) that has been
approved and recommended by the American Bar Association and the American
Arbitration Association.

 

Within 120 days after the effective date of the notice of arbitration, the
arbitration panel shall convene a hearing for the dispute to be held on such
date and at such time and place in Tampa, Florida, as the arbitration panel
designates upon 60 days’ advance notice to Executive and the Company. The
arbitration panel shall render its decision within 30 days after the conclusion
of the hearing. The decision of the arbitration panel will be binding and
conclusive as to Executive and the Company and, upon the pleading of either
party, any court having

 

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jurisdiction may enter a judgment of any award rendered in the arbitration,
which may include an award of damages. The arbitration panel shall hear and
decide the dispute based on the evidence produced, notwithstanding the failure
or refusal to appear by a party who has been duly notified of the date, time,
and place of the hearing.

 

Executive and the Company (a) consent to the personal jurisdiction of the state
and federal courts having jurisdiction over Hillsborough County, Florida, (b)
stipulate that the proper, exclusive, and convenient venue for any legal
proceeding arising out of this Agreement is Hillsborough County, Florida, and
(c) waive any defense, whether asserted by a motion or pleading, that
Hillsborough County, Florida, is an improper or inconvenient venue. EXECUTIVE
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT TO A JURY TRIAL IN
ANY LAWSUIT BETWEEN EXECUTIVE AND THE COMPANY WITH RESPECT TO THIS AGREEMENT.

 

In any mediation, arbitration, or legal proceeding arising out of this
Agreement, the losing party shall reimburse the prevailing party, on demand, for
all costs incurred by the prevailing party in enforcing, defending, or
prosecuting any claim arising out of this Agreement, including all fees, costs,
and expenses of agents, experts, attorneys, witnesses, arbitrators, and
supersedes bonds, whether incurred before or after demand or commencement of
legal or arbitration proceedings, and whether incurred pursuant to trial,
appellate, mediation, arbitration, bankruptcy, administrative, or
judgment-execution proceedings.

 

10.     Notices. Every notice, demand, or consent required or permitted under
this Agreement will be valid only if it is in writing and delivered personally
or by telex, telecopy, telegram, cablegram, commercial courier, or first-class,
postage prepaid, United States mail (whether or not certified or registered and
regardless of whether a return receipt is requested or received by the sender),
and addressed by the sender to the intended recipient at the address set forth
in the preamble of this Agreement (with respect to the Company, addressed to the
Chief Financial Officer, with a copy to Hill, Ward & Henderson, P.A., 101 East
Kennedy Boulevard, Suite 3700, Tampa, Florida 33602, Attn: David S. Felman, or
other current corporate counsel to the Company) or to such other address as the
intended recipient has previously designated to the sender by notice given in
accordance with this section. A validly given notice, demand, or consent will be
effective on the earlier of its receipt, if delivered personally or by telex,
telecopy, telegram, cablegram, or commercial courier, or on the third day after
it is postmarked by the United States Postal Service, if delivered by first
class, postage prepaid, United States mail.

 

11.     Waiver; Modification; Severability. A waiver, amendment, cancellation,
or modification of this Agreement will be valid and effective only if it is in
writing and signed by or on behalf of both parties to this Agreement. No delay
or course of dealing by a party to this Agreement in exercising any right,
power, or remedy under this Agreement will operate as a waiver of any right,
power, or remedy of that party, except to the extent expressly manifested in
writing by that party. The failure at any time of a party to require performance
by the other party of any provision of this Agreement will in no way affect the
party’s right thereafter to enforce the provision or this Agreement. In
addition, the waiver by either party of a breach of any provision of this
Agreement will not constitute a waiver of any succeeding breach of the provision
or a waiver of the provision itself. Whenever possible, each provision of this

 

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Agreement should be construed and interpreted so that it is valid and
enforceable under applicable law.

 

12.     Miscellaneous. Headings preceding the text of the sections of this
Agreement are solely for convenient reference and neither constitutes a part of
this Agreement nor affects its meaning, interpretation or effect. This Agreement
records the final, complete, and exclusive understanding between the parties
regarding the subject matter of it and supersedes any prior or contemporaneous
agreement, understanding, or representation, oral or written, by either of them.
Nothing in this Agreement, whether express or implied, is intended or should be
construed to confer upon, or to grant to, any person, except the Company,
Executive and their respective heirs, assignees, and successors, any claim,
right, remedy, or privilege under, or because of, this Agreement or any
provision of it. This Agreement is binding on every assignee and successor of
the Company. The parties may execute this Agreement in counterparts. Each
executed counterpart will constitute an original document, and all executed
counterparts, together, will constitute the same agreement. This Agreement will
become effective from and as of the Effective Date.

 

EXECUTED: as of December 1, 2002 in Tampa, Florida

 

 

WITNESSES:

     

SRI/SURGICAL EXPRESS, INC.,

           

a Florida corporation

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By:

 

/s/     N. John Simmons, Jr.

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Title:

 

Chairman of the Board

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“EXECUTIVE”

WITNESSES:

     

/s/     Joseph A. Largey

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(Signature)

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Joseph A. Largey

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(Printed Name)

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4865 Longwood Point

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(Street Address)

       

Colorado Springs, CO 80906

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(City, State and Zip Code)

 

 

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