EMPLOYMENT AGREEMENT
Exhibit 10.3
THIS EMPLOYMENT AGREEMENT (the “Agreement”) shall be effective as of November 1, 2008 (the
“Commencement Date”) by and between Welltek Incorporated, a Nevada corporation (the “Company”), and
Xxxx Xxxxxxx (“Employee”).
ARTICLE I.
EMPLOYMENT
1.1 Employment and Title. The Company employs Employee, and Employee accepts such employment,
as Chief Financial Officer and Secretary of the Company, upon the terms and conditions set forth
herein.
1.2 Duties. Subject to the power of the Board of Directors and Chief Executive Officer of the
Company, Employee will serve as Chief Financial Officer and Secretary and will faithfully and
diligently perform the services and functions relating to such offices or otherwise reasonably
incident to such offices, provided that all such services and functions will be reasonable and
within Employee’s area of expertise. Employee will, during the term of this Agreement (or any
extension thereof), devote essentially his full business time, attention and skills and reasonable
best efforts to the promotion of the business of the Company. The foregoing will not be construed
as preventing Employee from managing other businesses, making investments in other businesses or
enterprises provided that (a) Employee agrees not to become engaged in any other business activity
that interferes with his ability to discharge his duties and responsibilities to the Company and
(b) Employee does not violate any other provision of this Agreement.
1.3 Location. The principal place of employment and the location of Employee’s principal
office shall be in Orlando, Florida; provided, however, Employee shall, when requested by the Board
of Directors, or may, if he determines it to be reasonably necessary, temporarily perform outside
of Orlando, Florida such services as are reasonably required for the proper execution of his duties
under this Agreement.
1.4 Representations. Each party represents and warrants to the other that he/it has full power
and authority to enter into and perform this Agreement and that his/its execution and performance
of this Agreement shall not constitute a default under or breach of any of the terms of any
agreement to which he/it is a party or under which he/it is bound. Each party represents that no
consent or approval of any third party is required for his/its execution, delivery and performance
of this Agreement or that all consents or approvals of any third party required for his/its
execution, delivery and performance of this Agreement have been obtained.
ARTICLE II.
TERM
2.1 Term. The term of Employee’s employment hereunder (the “Term”) shall commence as of the
Commencement Date and shall continue through October 31, 2013 (the “Scheduled Termination Date”)
unless renewed or earlier terminated pursuant to the provisions
of this Agreement. Assuming all conditions of this Agreement have been satisfied and there has
been no breach of the Agreement during its initial term, Employee may extend the term for an
additional three (3) year term at Employee’s election (“Extended Term”).
ARTICLE III.
COMPENSATION
3.1 Salary. As compensation for the services to be rendered by Employee, the Company shall pay
Employee, during the Term of this Agreement, an annual base salary of not less than Two Hundred
Fifty Thousand Dollars ($250,000.00), which base salary shall accrue monthly (prorated for periods
less than a month) and shall be paid in equal monthly installments, in arrears. The base salary
will be reviewed annually, or as appropriate, by the Board of Directors and may be increased at any
time, but shall, at a minimum, be increased annually by the consumer price index.
3.2 Bonuses. The Employee shall be eligible for a discretionary bonus, payable within thirty
(30) days of the end of each calendar quarter during the Term, in an amount up to 150% of the base
salary paid to the Employee in the prior quarter (the “Bonus”). Each quarter the Board of
Directors shall determine the amount of the Bonus, if any, that will be paid to the Employee.
3.3 Stock Options. Any options issued to the Employee prior to or during the Term shall vest
in full in the event of the termination of employment of Employee and shall remain outstanding for
the full term set forth in the option agreements.
3.4 Benefits. Employee shall be entitled and the Company shall pay for the same medical,
hospital, pension, profit sharing, dental and life insurance coverage and benefits as are available
to the Company’s most senior executive officers on the Commencement Date together with the
following additional benefits:
(a) A $2,000 monthly automobile allowance, inclusive of reimbursement for all fuel, oil,
maintenance, insurance and upkeep costs associated with such vehicle.
(b) A country club membership at a country club of Employee’s choice.
(c) The Company’s normal vacation allowance for all employees who are executive officers of
the Company, but not less than four (4) weeks annually, with the option to carry over unused
vacation days. Employee shall have the option to be paid for unused vacation days, either at the
end of each year hereunder or at the end of the Term hereof.
(d) The Employee will be entitled to participate in any benefit plan or program of the Company
which may currently be in place or implemented in the future.
(e) The Company will provide Employee with a life insurance policy in an amount of not less
than $2,000,000.
(f) During the Term, Employee will be entitled to receive, in addition to and not in lieu of
base salary, bonus or other compensation, such as other benefits as the Company may provide for its
officers in the future.
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ARTICLE IV.
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 Working Facilities and Expenses. Employee shall be furnished with an office at the
principal executive offices of the Company, or at such other location as agreed to by Employee and
the Company, and other working facilities and secretarial and other assistance suitable to his
position and reasonably required for the performance of his duties hereunder. The Company shall
reimburse Employee for all of Employee’s reasonable expenses incurred while employed and performing
his duties under and in accordance with the terms and conditions of this Agreement, subject to
Employee’s full and appropriate documentation, including, without limitation, receipts for all such
expenses in the manner required pursuant to Company’s policies and procedures and the Internal
Revenue Code of 1986, as amended and applicable regulations as are in effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise, and at its own expense,
life, disability and other insurance covering Employee or Employee and others, and Employee shall
not have any right, title or interest in or to such insurance other than as expressly provided
herein. Employee agrees to assist the Company in procuring such insurance by submitting to the
usual and customary medical and other examinations to be conducted by such physicians(s) as the
Company or such insurance company may designate and by signing such applications and other written
instruments as may be required by any insurance company to which application is made for such
insurance.
ARTICLE V.
DEATH, ILLNESS OR INCAPACITY
5.1 Death. In the event of the death of the Employee, the Company shall pay to the estate or
other legal representative of the Employee the base salary (at the annual rate then in effect)
accrued to the date of the Employee’s death and not theretofore paid to the Employee, and an
additional twenty-four (24) months of base salary and quarterly bonus payments, as a death benefit.
At the election of the estate of other legal representative, such payments may be made in a lump
sum within ninety (90) days of election, or as continued salary and bonus payments. The additional
bonus payments shall be calculated by reference to the average quarterly bonuses received by
Employee during the two (2) years immediately prior to such termination, or such shorter period of
time if the Commencement Date is less than two (2) years prior to the date of death. Rights and
benefits of the estate or other legal representative of the Employee under the benefit plans and
programs of the Company shall be determined in accordance with the provisions of such plans and
programs.
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5.2 Disability. During any time Employee suffers from a Disability (as defined below), the
employment of the Employee may be terminated by the Company or the Employee. In the event of such
termination, the Company shall pay to the Employee on a monthly basis, for
a period of twenty-four (24) months following termination, the difference between Employee’s
monthly base salary at the time of termination and any monthly disability pay benefits received by
Employee. Employee shall also be entitled to annual bonus payments for a period of twenty-four (24)
months following termination, calculated by reference to the average quarterly bonuses received by
Employee during the two (2) years immediately prior to such termination, or such shorter period of
time if the Commencement Date is less than two (2) years prior to the date of such termination. At
the election of Employee or his legal representative, such payments may be made in a lump sum
within ninety (90) days of election, or as continued salary and bonus payments. Rights and benefits
of the Employee under the other benefit plans and programs of the Company shall be determined in
accordance with the terms and provisions of such plans and programs.
For purposes hereof, the terms “disabled” or “disability” shall mean the inability of
Executive to perform all or substantially all of the duties and obligations contemplated by or
required under this Agreement as a result of an accident, illness, disease, or injury, for a period
of ninety (90) consecutive days, or any one hundred eighty (180) days in any twelve (12)
consecutive months.
ARTICLE VI.
CONFIDENTIALITY
6.1 Confidentiality. During the Term of this Agreement and thereafter, Employee shall not
divulge, communicate, use to the detriment of the Company, or for the benefit of any other
business, firm, person, partnership or corporation, or otherwise misuse any information pertaining
to the Company including, without limitation, all (i) data or trade secrets, including secret
processes, formulas or other technical data (ii) production methods; (iii) customer lists; (iv)
personnel lists; (v) proprietary information; (vi) financial or corporate records; (vii)
operational, sales, promotional and marketing methods and techniques; (viii) development ideas,
acquisition strategies and plans; (ix) financial information and records; (x) “know-how” and
methods of doing business; and (xi) computer programs, including source codes and/or object codes
and other proprietary, competition-sensitive or technical information or secrets developed with or
without the help of Employee (collectively “Confidential Information”). Employee acknowledges that
any such information or data he may have acquired was received in confidence and by reason of his
relationship to the Company. Confidential Information, data or trade secrets shall not include any
information which: (a) at the time of disclosure is within the public domain; (b) after disclosure
becomes a part of the public domain or generally known within the industry through no fault, act or
failure to act, error, effort or breach of this Agreement by Employee; (c) is known to the
recipient at the time of disclosure; (d) is subsequently discovered by Employee independently of
any disclosure by the Company; (e) is required by order, statute or regulation, of any governmental
authority to be disclosed to any federal or state agency, court or other body; or (f) is obtained
from a third party who has acquired a legal right to possess and disclose such information.
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6.2 Records. All documents, papers, materials, notes, books, correspondence, drawings and
other written and graphic records relating to the Company’s business which Employee shall prepare
or use, or come into contact with, shall be and remain the sole property
of the Company and, effective immediately upon the termination of the Employee’s employment
with the Company for any reason, shall not be removed from the Company’s premises without the
Company’s prior written consent and any such documents, papers, materials, notes, books,
correspondence, drawings and other written and graphic records upon request shall be returned to
the Company.
ARTICLE VII.
TERMINATION
7.1 Termination For Cause. This Agreement and the employment of Employee may be terminated by
the Company “For Cause” under any one of the following circumstances:
(a) Employee has committed any material act of fraud, misappropriation or theft against the
Company.
(b) Employee’s default breach of any material provision of this Agreement; provided, that
Employee shall not be in default hereunder unless (i) he shall have failed to cure such default or
breach within thirty (30) days of written notice thereof by the Company to Employee or (ii)
Employee shall have duly received notice of at least three (3) prior instances of such breach or
default (whether or not cured by Employee).
(c) Employee engages in willful misconduct in the performance of his duties hereunder;
provided, that Employee shall not be in default hereunder unless (i) he shall have failed to cure
such default or breach within fifteen (15) days of written notice thereof by the Company to
Employee, or (ii) Employee shall have duly received notice of at least three (3) prior instances of
such breach or default (whether or not cured by Employee).
(d) At the election of the Employee.
A termination For Cause under this Section 7.1 shall be effective upon the date set forth in a
written notice of termination delivered to Employee.
7.2 Termination Without Cause. This Agreement and the employment of the Employee may be
terminated “Without Cause” as follows:
(a) By mutual agreement of the parties hereto.
(b) Upon termination by the Company for any reason other than described in Sections 5.1, 5.2
or 7.1 or the removal of Employee from the office of CFO of the Company or in the event the Company
fails to afford Employee the power and authority generally commensurate with the position of CFO.
A termination Without Cause under Section 7.4(b) hereof shall be effective upon the date set
forth in a written notice of termination delivered in accordance with the notice provisions of such
sections. A termination Without Cause under
Section 7.2(a) shall be automatically effective upon
the date of mutual agreement.
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7.3 Effect of Termination For Cause. If Employee’s employment is terminated “For Cause”
pursuant to Section 7.1:
(a) Employee shall be entitled to accrued base salary and benefits under Sections 3.1 and 3.4,
respectively, through the date of termination.
(b) Employee shall be entitled to accrued bonuses under Section 3.2 hereof through the date of
termination.
(c) Employee shall be entitled to reimbursement for expenses accrued through the date of
termination in accordance with the provisions of Section 4.1 hereof.
(d) All unvested Option Shares granted to Employee shall be forfeited.
(e) Except as provided in Article XI, this Agreement shall thereupon terminate and cease to be
of any further force or effect.
7.4 Effect of Termination Without Cause. If Employee’s employment is terminated “Without
Cause” pursuant to Section 7.2:
(a) (i) If there is three (3) or more years remaining on the Team of this Agreement at the
time of termination, Employee shall be paid in a lump sum amount within thirty (30) days of such
termination an amount equal to the product obtained by multiplying the annual base salary then in
effect times the number of years (including fractions thereof) remaining on the Term of this
Agreement at the time of termination; or (h) if there is less than three (3) years remaining on the
Term of this Agreement at the time of Termination, Employee shall be paid in a lump sum amount
within thirty (30) days of such termination an amount equal to 2.9 times the base salary as set
forth in Section 3.1.
(b) Employee shall be entitled to reimbursement for expenses accrued through the date of
termination in accordance with the provisions of Section 4.1 hereof.
(c) Employee shall be entitled to receive all amounts of additional Bonuses under Section 3.2
hereof through the expiration of the Term hereof, which amounts shall be calculated by reference to
the average quarterly bonuses received by Employee during the two (2) years immediately prior to
such termination, or such shorter period of time if the Commencement Date is less than two (2)
years prior to the date of termination.
(d) Employee shall be entitled to receive all benefits as would have been awarded under
Section 3.4 hereof through the expiration of the Term hereof; which benefits shall be awarded as
and when the same would have been awarded under the Agreement had it not been terminated.
(e) Except as provided in Article XI, this Agreement shall thereupon terminate and cease to be
of any further force or effect.
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7.5 Termination Upon Change In Control. If within a two (2) year period following any Change
in Control there occurs:
(a) Any termination of the Employee, other than as set forth in Section 5.1, Section 5.2 or
Section 7.1 of this Agreement;
(b) A material diminution of the Employee’s responsibilities, as compared with the Employees
responsibilities immediately prior to the Change in Control;
(c) Any reduction in the sum of Employee’s base salary (as set forth in Section 3.1) or bonus
(as set forth in Section 3.2) as of the date immediately prior to the Change in Control;
(d) Any failure to provide the Employee with benefits at least as favorable as those enjoyed
by similarly situated senior corporate officers at the Company under the Company’s pension, life
insurance, medical, health and accident, disability or other written employee plans under which the
form and/or amounts of benefits are prescribed in applicable documents;
(e) Any relocation of the Employee’s principal site of employment to a location more than 25
miles from the Employee’s principal site of employment as of the date immediately prior to the
Change in Control; or
(f) Any material breach of this Agreement on the part of the Company;
then, at the option of Employee, exercisable by the Employee within thirty (30) days after the
occurrence of any of the foregoing events, the Employee may resign from employment with the Company
(or, if involuntarily terminated, give notice of intention to collect benefits under this
Agreement) by delivering a notice in writing (the “Notice of Termination”) to the Company, and
shall be entitled to the severance pay and benefit continuation provisions of Section 7.4 in their
entirety, provided, however, that the severance pay shall be the total of 2.9 times annual base
salary then in effect and 150% of the bonus for the calendar year preceding such Notice of
Termination, payable, at Employee’s option, either as salary continuation for 18 months, or in a
lump sum, payable within 90 days of Employee’s election. In addition to the foregoing, the Company
agrees to provide Employee with payment sufficient to provide for a gross-up of any excise, income,
and other taxes resulting from imposition of the parachute penalties of the Internal Revenue Code
or applicable state tax laws.
7.6 Change of Control Defined. For purposes of this Agreement, a Change of Control shall be
deemed to have occurred in the event of:
(a) The acquisition by any person or entity, or group thereof acting in concert, of
“beneficial” ownership (as such term is defined in Securities and Exchange Commission (“SEC”) Rule
13d-3 under the Securities Exchange Act of 1934, as amended) (the “Exchange Act”), of securities of
the Company which, together with securities previously owned, confer upon such person, entity or
group the voting power, on any matters brought to a vote of shareholders, of thirty percent (30%)
or more of the then outstanding shares of capital stock of the Company; or
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(b) The sale, assignment or transfer of assets of the Company or any subsidiary or
subsidiaries, in a transaction or series of transactions, if the aggregate consideration
received or to be received by the Company or any such subsidiary in connection with such sale,
assignment or transfer is greater than fifty percent (50%) of the book value of the Company’s
assets on a consolidated basis immediately before such transaction or the first of such
transactions, as determined by the Company in accordance with generally accepted accounting
principles; or
(c) The merger, consolidation, share exchange or reorganization of the Company (or one or more
subsidiaries of the Company) as a result of which the holders of all of the shares of capital stock
of the Company as a group would receive less than fifty percent (50%) of the voting power of the
capital stock or other interests of the surviving or resulting corporation or entity; or
(d) The adoption of a plan of liquidation or the approval of the dissolution of the Company;
or
(e) The commencement (within the meaning of SEC Rule 14d-2 under the Exchange Act) of a tender
or exchange offer which, if successful, would result in a Change of Control of the Company; or
(f) A determination by the Board of Directors of the Company, in view of then current
circumstances or impending events, that a Change of Control of the Company has occurred or is
imminent, which determination shall be made for the specific purpose of triggering the operative
provisions of this Agreement.
ARTICLE VIII.
NON-COMPETITION AND NON-INTERFERENCE
8.1 Non-Competition. Employee agrees that during the Term of this Agreement and, in the case
of a termination “For Cause”, for a period of one (1) year thereafter, Employee will not directly,
indirectly, or as an agent on behalf of or in conjunction with any person, firm, partnership,
corporation or other entity, own, manage, control, join, or participate in the ownership,
management, operation, or control of, or be financially interested in or advise, lend money to, or
be employed by or provide consulting services to, or be connected in any manner with any person
engaged in the Company’s business within a 10 mile radius of any area within the United States
which the Company is engaging in business or has immediate plans to engage in business.
8.2 Non-Interference. Employee agrees that during the Term of this Agreement and, in the case
of a termination “For Cause,” for a period of one (1) year thereafter, Employee will not, directly,
indirectly or as an agent on behalf of or in conjunction with any person, firm, partnership,
corporation or other entity, induce or entice any employee of the Company to leave such employment
or cause anyone else to do so.
8.3 Severability. If any covenant or provision contained in Article VIII is determined to be
void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity
of any other covenant or provision hereof.
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ARTICLE IX.
INDEMNIFICATION
9.1 Indemnification. The Company shall to the full extent permitted by law indemnify, defend
and hold harmless Employee from and against any and all claims, demands, liabilities, damages,
losses and expenses (including reasonable attorney’s fees, court costs and disbursements) arising
out of the performance by him of his duties hereunder except in the case of his willful misconduct
and will carry directors and officers’ insurance of $10,000,000 with $250,000 deductible.
ARTICLE X.
BOARD OF DIRECTORS
10.1 Election to Board. As a condition to Employee’s obligations hereunder, he will be elected
to the Company’s Board of Directors, and each year during the Term the Company will cause the
Employee to be nominated to serve in such capacity.
ARTICLE XI.
MISCELLANEOUS
11.1 No Waivers. The failure of either party to enforce any provision of this Agreement shall
not be construed as a waiver of any such provision, nor prevent such party thereafter from
enforcing such provision or any other provision of this Agreement.
11.2 Notices. Any notice to be given to the Company and Employee under the terms of this
Agreement may be delivered personally, by telecopy, telex or other form of written electronic
transmission, or by registered or certified mail, postage prepaid, and shall be addressed as
follows:
| If to the Company: | 0000 Xxxxx Xxxxxx Xxxxxx Xxxxx 000 Xxxxxxx, Xxxxxxx 00000 |
|||
| If to Employee: | 0000 Xxxxx Xxxxxx Xxxxxx Xxxxx 000 Xxxxxxx, Xxxxxxx 00000 |
Either party may hereafter notify the other in writing of any change in address. Any notice shall
be deemed duly given (i) when personally delivered, (ii) when telecopied, telexed or transmitted by
other form of written electronic transmission (upon confirmation of receipt) or (iii) on the third
day after it is mailed by registered or certified mail, postage prepaid, as provided herein.
11.3 Severability. The provisions of this Agreement are severable and if any provision of this
Agreement shall be held to be invalid or otherwise unenforceable, in whole or in part, the
remainder of the provisions, or enforceable parts thereof, shall not be affected thereby.
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11.4 Successors and Assigns. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of the Company,
including the survivor upon any merger, consolidation, share exchange or combination of the Company
with any other entity. Employee shall not have the right to assign, delegate or otherwise transfer
any duty or obligation to be performed by him hereunder to any person or entity.
11.5 Entire Agreement. This Agreement supersedes all prior and contemporaneous agreements and
understandings between the parties hereto, oral or written, and may not be modified or terminated
orally. No modification, termination or attempted waiver shall be valid unless in writing and
signed by the party against whom such modification, termination or waiver is sought to be enforced.
This Agreement was the subject of negotiation by the parties hereto and their counsel.
11.6 Governing Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Florida without reference to the conflict of law principles thereof.
11.7 Section Readings. The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said sections.
11.8 Further Assurances. Each party hereto shall cooperate and shall take such further action
and shall execute and deliver such further documents as may be reasonably requested by the other
party in order to carry out the provisions and purposes of this Agreement.
11.9 Counterparts. This Agreement may be executed in counterparts, all of which taken together
shall be deemed one original.
ARTICLE XII.
SURVIVAL
12.1 Survival. The provisions of Articles VI, VII, IX, and X, of this Agreement shall survive
the termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| Welltek Incorporated |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| EMPLOYEE | ||||
| Xxxx Xxxxxxx | ||||
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