EMPLOYMENT AGREEMENT
Exhibit 10.3
THIS AGREEMENT is made and entered into to be effective as of the 21st day of September, 2005
by and among Valley Forge Scientific Corp., a Pennsylvania corporation (“VF”), and
Xxxx X. Xxxxx, Xx. (the “Employee”).
WHEREAS, the Employee is a shareholder and director of Synergetics, Inc., a Missouri
corporation (“Synergetics”), and prior to the consummation of the merger (the “Closing”) of
Synergetics with Synergetics Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of VF, pursuant to an Agreement and Plan of Merger dated May 2, 2005, as amended (the
“Merger Agreement”), was the COO of Synergetics.
WHEREAS, the term “Company” shall mean VF following the Closing, and “Board of Directors”
shall mean the Board of Directors of the Company.
WHEREAS, the Merger Agreement provides that an express condition to Closing under the Merger
Agreement is that the Employee enter into this Agreement with the Company.
NOW, THEREFORE, in consideration of the premises hereof and of the mutual promises and
agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment and Term of Employment. The Company hereby agrees to employ the
Employee as Chief Operating Officer, and the Employee hereby agrees to serve the Company as Chief
Operating Officer, on the terms and conditions set forth herein for the period commencing on the
date of the Closing (“Commencement Date”) and expiring on the third anniversary of such date (the
“Expiration Date”), subject to the terms and conditions hereinafter set forth.
2. Extent of Duties. The Employee shall devote substantially all his working time to
the business and affairs of the Company, and shall not engage in outside business activities that
materially interfere with the performance of his duties hereunder. Other than when absent from work
for pre-approved vacation, Company holidays or sickness, the Employee will be available on Company
premises as needed to participate in activities of the Company and to accomplish those tasks
assigned to him to carry out his duties hereunder. Notwithstanding the foregoing, nothing in this
Agreement shall restrict the Employee from: (i) managing his personal investments, personal
business affairs and other personal matters; and (ii) serving on civic or charitable boards or
committees, if such civic or charitable activities do not materially interfere with the performance
of his duties hereunder or conflict with the Company’s interests. Employee shall oversee the
manufacturing operations of the Company and perform such other duties as determined by Xxxxx X.
Xxxxxxxx, Chief Executive Officer of the Company (“CEO”). Employee will be provided with
reasonable office space and engineering, manufacturing and administrative support in connection
with his duties. Employee shall assist the CEO in the transition of the manufacturing operations
in the Philadelphia area. Employee shall report on the status of his activities to and as required
by the CEO and shall use his best efforts in the performance of his duties hereunder.
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3. Compensation.
a. Base Salary. Subject to the terms and conditions of this Agreement, the Company
shall pay to the Employee a base salary at the rate of $346,000.00 per annum for the first twelve
(12) months after the Commencement Date, and at all times thereafter at a rate per annum determined
by the Compensation Committee of the Board of Directors and approved by the Board of Directors, but
in no event in an amount less than the initial base rate (the “Base Salary”) payable in accordance
with the regular payroll policies of the Company.
b. Benefits/ Vacation. The Employee shall receive such other benefits including,
healthcare, dental, life insurance, disability and under other plans, which the Company provides to
its executive officers from time-to-time. Notwithstanding the foregoing or anything contained
herein to the contrary, the Company reserves the right to adopt, amend or discontinue any employee
benefit plan or policy to all its employees in accordance with then-applicable law. Employee shall
have at least thirty (30) days paid vacation a year, which shall be in addition to paid holidays
and sick leave that the Company provides to its executive officers,
c. Bonus. In addition to the Base Salary, the Employee may receive an annual bonus as
determined in the sole discretion of the Compensation Committee of the Board of Directors.
d. Expenses. During the term of his employment hereunder, the Employee shall be
entitled to be reimbursed (in accordance with the policies and procedures established by the Board
of Directors) for all reasonable expenses incurred by him in performing services hereunder;
provided that the Employee properly accounts therefor in accordance with the Company’s policies.
e. Participation in Benefit Plans. Employee shall be entitled to participate in and
receive benefits under the Company’s benefit plans on a basis consistent with the Company’s other
executive officers.
4. Termination.
a. Termination for Cause. The Company shall have the right to terminate Employee’s
employment for Cause (as defined herein) at any time during the term of this Agreement by giving
written notice to the Employee thereof. In such event, the Company shall pay the Employee the Base
Salary and all benefits due him under this Agreement through the day of such termination. The
Employer shall have no further obligations to the Employee under this Agreement, except obligations
required under law.
b. Termination without Cause. The Company shall have the right to terminate
Employee’s employment without Cause (as defined herein) at any time during the term of this
Agreement by giving written notice to the Employee thereof. The termination shall become effective
immediately upon notice. In the event that the Company terminates the Employee’s employment
without Cause, the Company shall (i) pay to the Employee an amount equal to his Base Salary, as set
forth in Section 3 a, above (and any previously earned bonus) for the period from the termination
until the Expiration Date (the “Severance Period”); and (ii) provide to Employee health care
benefits
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under the Company’s benefit plans for the Severance Period. The payment of the amount in
Section 4 b (i), above, shall be made in equal monthly installments over the Severance Period in accordance
with Company payroll policies then in effect. Employee shall execute a release relating to his
employment in favor of the Company, and the Company shall have no further obligations to the
Employee under this Agreement, except for the obligations under this Section 4 b and obligations
required under law.
c. Termination Upon Death . In the event of the Employee’s death during the term of
this Agreement, all obligations of the parties hereunder shall terminate immediately, and the
Employer shall pay to the Employee’s legal representatives the Base Salary (and any previously
earned bonus) due the Employee through the end of the month in which his death shall have occurred.
Except as provided in this Section 4c, upon termination by reason of Death of the Employee, the
Company shall have no further obligations to the Employee, his beneficiary or estate under this
Agreement, except obligations required under law.
d. Termination Due to Disability. If this Agreement is terminated by either party as
a result of the Employee’s Disability (as defined below), in addition to the benefits otherwise due
the Employee and as otherwise required by law, the Company will pay Employee his Base Salary (and
any previously earned bonus) until the effective date of the termination of employment due to the
Disability (“Disability Effective Date”). The Employee shall be eligible to receive disability
insurance coverage at those levels which the Company provides to its executive officers from
time-to-time. In the event Employee’s employment is terminated at any time due to Disability,
Employee will continue to receive his Base Salary during any waiting period required under the
Company’s disability insurance policy then in effect and such payments will terminate upon the
expiration of any such waiting period. In the event Employee’s employment is terminated due to
Disability during the period Employee is prohibited from selling his stock in the Company pursuant
to that certain Shareholders Agreement of even date herewith, the Company will pay Employee his
Base Salary during the prohibition period, less any benefits received by Employee under Company’s
disability insurance coverage. Any amounts paid to the Employee pursuant to disability insurance
policies provided by the Company shall be offset against the amount of Base Salary due or paid to
Employee under this Section 4 d for the same periods covered by the payments under the disability
insurance policies. Except as provided herein, upon termination as a result of Employee’s
Disability, the Company shall have no further obligations to Employee under this Agreement, except
as otherwise required under law. For purposes of this Agreement, the Employee will be deemed to
have a “Disability” if, for physical or mental reasons, the Employee is unable to perform the
Employee’s essential duties under this Agreement without reasonable accommodation for ninety (90)
consecutive days, or one hundred eighty (180) days during any twelve (12)-month period, as
determined in accordance with this Section 4 d. The disability of the Employee will be determined
by a medical doctor selected by written agreement of the Company and the Employee upon the request
of either party by notice to the other. If the Company and the Employee cannot agree on the
selection of a medical doctor, each of them will select a medical doctor and the two medical
doctors will select a third medical doctor who will determine whether the Employee has a
disability. The determination of the medical doctor selected under this Section 4 d will be
binding on both parties. The Employee must submit to a reasonable number of examinations by the
medical doctor making the determination of disability under this Section 4 d, and the Employee
hereby authorizes the disclosure and release to the Company of such determination and all
supporting medical records. If the
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Employee is not legally competent, the Employee’s legal
guardian or duly authorized attorney-in-fact will act in the Employee’s stead, for the
purposes of selecting the medical doctor, submitting the Employee to the examinations, and
providing the authorization of disclosure as required under this Section 4 d.
e. Termination by Employee with Good Reason. The Employee may terminate his
employment for Good Reason (as defined herein) at any time during the term of this Agreement, by
giving written notice to the Company thereof. In the event that Employee terminates his employment
for Good Reason, the Company shall (i) pay to the Employee an amount equal to his Base Salary, as
set forth in Section 3 a, above (and any previously earned bonus) for the Severance Period and (ii)
provide to Employee health care benefits under the Company’s benefit plans for the Severance
Period. The payment of the amount in Section 4 e (i), above, shall be made in equal monthly
installments over the Severance Period in accordance with Company payroll policies then in effect.
Employee shall execute a release relating to his employment in favor of the Company, and the
Company shall have no further obligations to the Employee under this Agreement, except for the
obligations under this Section 4 e and obligations required under law.
f. Termination by Employee without Good Reason. The Employee may terminate his
employment at any time, by giving advance written notice to the Company. Any such termination
shall become effective on the date specified in such notice, which shall not be earlier than ninety
(90) days after the date of such notice (or such earlier date that the Employer may determine in
its sole discretion), and the Employee shall continue to perform his duties pursuant to the terms
of this Agreement for such period.
g. Definitions.
(i) For the purposes of this Agreement, “Cause” shall mean: (A) Employee’s
conviction of any felony, or conviction of embezzlement or misappropriation of money
or other property of the Company; (B) any act of gross negligence in performing
Employee’s duties assigned to him under Section 2 of this Agreement; (C) Employee’s
willful refusal to execute his duties assigned to him under Section 2 of this
Agreement (other than by reason of Disability); or (D) the Employee’s breach of the
non-competition terms of this Agreement; provided however, that the occurrence of
any events described in clause (B) and (C) shall not constitute Cause unless
Employee has first received written notice containing a reasonably detailed
description of such occurrence and a period of five (5) business days from receipt
of such notice to cure such event and an opportunity for the Employee, together
with his counsel of other representatives, to be heard before the Board of
Directors. Upon Employee’s cure of such event during the cure period, Cause shall be
deemed not to have occurred.
(ii) For purposes of this Agreement, “Good Reason” shall mean, without
Employee’s express written consent (which consent may be denied, withheld or delayed
for any reason) during the period from the Commencement Date to the Expiration Date
(A) a failure to pay, or a reduction by the Company of, Employee’s Base Salary; (B)
the failure or refusal by the Company to provide Employee the
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benefits set forth in this Agreement; (C) the assignment to Employee of any duties materially inconsistent
with Employee’s duties as described in Section 2, above, which
assignment is not cured by the Company within five (5) business days after
written notification thereof by Employee; (D) a requirement by the Company that
Employee be based anywhere more than more than 35 miles from the Company’s current
St. Louis area corporate offices; (E) a change in the Employee’s title of Chief
Operating Officer; (F) if Employee is no longer a member of the Board of Directors
, other than by death, Disability, a removal by Shareholder vote, or for Cause;
(G) the Company otherwise commits a material breach of this Agreement, which breach
is not cured by the Company within a period of five (5) business days after receipt
of written notice from Employee; or (H) a termination of Employee’s employment other
than for Cause, or other than due to death or Disability.
h. Obligations Upon Voluntary Termination. If the Employee voluntarily terminates his
employment, other than for Good Reason, the Company shall pay the Employee his Base Salary earned
through the date on which his employment is terminated. The Employer shall then have no further
obligations to the Employee under this Agreement except as otherwise provided in Company’s benefit
plans and as required by law.
5. Binding Agreement. This Agreement and all obligations of the Company hereunder
shall be binding upon the successors and assigns of the Company. This Agreement and all rights of
the Employee hereunder shall inure to the benefit of and be enforceable by the Employee’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and
legatees.
6. Non-Competition.
a. If the Employee is terminated for Cause pursuant to Section 4 a or if Employee voluntarily
terminates his employment without Good Reason, until the later of (i) December 31, 2008 or (ii) two
(2) years following the termination of employment, or if the Employee is terminated by the Employer
for any reason other than Cause or if Employee terminates his employment with Good Reason, for the
remainder of the term of this Agreement, the Employee will not, directly or indirectly, within the
territorial limits of the United States of America, without the prior written consent of the
Company, which consent may be withheld in the Company’s sole discretion, own, manage, operate,
control or participate in the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any financial interest in or aid or
assist anyone else in the conduct of any business that is in competition with any business
conducted by the Company; provided, however, that the foregoing will not prohibit beneficial
ownership (as determined under Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
five percent (5%) or less of the voting stock or other securities of any publicly held corporation.
b. For one (1) year following the Expiration Date or earlier termination of this Agreement,
the Employee will not, directly or indirectly, recruit or hire or solicit any person who, during
the twelve-month period preceding the date of recruitment or hiring or solicitation, was an
employee of the Company.
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c. If the Employee is terminated for Cause pursuant to Section 4(a) or if Employee voluntarily
terminates his employment without Good Reason, until the later of (i)
December 31, 2008 or (ii) two (2) years following the termination of employment, or if the Employee
is terminated by the Employer for any reason other than Cause or if Employee terminates his
employment with Good Reason, for the remainder of the term of this Agreement, the Employee will
not, directly or indirectly, divert or take away or attempt to divert or take away any customers
upon whom Company called or whom the Company solicited or for whom the Company performed services
or sold products at any time within the one (1) year period prior to termination of Employee’s
employment (or for whom the Company had actively planned during such one (1) year period to perform
or sell, provided such plans are documented or known to Employee) for products or services
competitive with those offered by or available from the Company or any Affiliate at the time of the
termination of Employee’s employment.
7. Unauthorized Disclosure.
a. During the period of his employment hereunder and for a period of two years thereafter, the
Employee shall not, without the prior written consent of the Board of Directors disclose to any
person (other than a person to whom disclosure is necessary or appropriate in connection with the
performance by the Employee of his duties as an employee of the Company and other than the
Employee’s attorneys and advisors, who have agreed to keep such disclosures confidential) any
confidential information obtained by him while in the employ of the Company with respect to any of
the Company’s products, improvements, designs or styles, methodologies, processes, customers,
methods of marketing or distribution, systems, procedures, plans, proposals, or policies.
b. Employee recognizes that the Company possesses a proprietary interest in all of the
information described in this Section 7 and that it has the exclusive right and privilege to use,
protect by copyright, patent or trademark, manufacture or otherwise exploit the processes, ideas
and concepts described therein to the exclusion of Employee, except as otherwise agreed between the
Company and Employee in writing. Employee expressly agrees that any products, inventions,
discoveries or improvements made by Employee, his agents or affiliates, during the term of this
Agreement, based on or arising out of the information described in Section 7 shall be the property
of and inure to the exclusive benefit of the Company. Employee further agrees that any and all
products, inventions, discoveries or improvements developed by Employee (whether or not able to be
protected by copyright, patent or trademark) in the scope of his employment, or at any time during
the term of this Agreement, or involving the use of the Company’s time, materials or other
resources, shall be promptly disclosed to the Company and shall become the exclusive property of
the Company.
c. The foregoing provision of this Section 7 shall be binding upon the Employee’s heirs,
successors, and legal representatives.
8. Injunction. The Employee acknowledges and agrees that, in the event of a breach of
Section 6 or Section 7 hereof by the Employee, the Company would be irreparably harmed and that
monetary damages would be an inadequate remedy in favor of the Company. Accordingly, the
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Employee
and the Company agree that in the event of such a breach, the Company shall be entitled to
injunctive relief against the Employee, in addition to any other remedies or damages available to
them.
9. Notice. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given
when hand delivered or when delivered to the recipient by a nationally recognized next business day
overnight courier addressed as follows:
If to the Employee:
Xxxx X. Xxxxx, Xx.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to Company:
Synergetics USA, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
X’Xxxxxx, XX 00000
Attn: Chief Executive Officer
0000 Xxxxxxxxx Xxxxxx Xxxxx
X’Xxxxxx, XX 00000
Attn: Chief Executive Officer
With a copy to:
Xxxxxx X. Guest, Jr., Esq.
Doster, Mickes, Xxxxx & Xxxxx, Xxxxxx & Guest L.L.C.
00000 Xxxxxxxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Doster, Mickes, Xxxxx & Xxxxx, Xxxxxx & Guest L.L.C.
00000 Xxxxxxxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
or to such other address as any party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
10. Withholding of Taxes. The Company may withhold from any amounts payable under
this Agreement all federal, state, city, and other taxes as shall be required to be withheld by the
Company pursuant to any applicable law or government regulation or ruling.
11. Severability. If any provision of this Agreement is declared or found to be
illegal, unenforceable, or void, in whole or in part, then the parties shall be relieved of all
obligations arising under such provision, but only to the extent such provision is illegal,
unenforceable, or void, it being the intent and agreement of the parties that this Agreement shall
be deemed amended by modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if such is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same objectives. The foregoing
notwithstanding, if the remainder of this Agreement shall not be affected by such declaration or
finding and is capable of substantial performance, then each provision not so affected shall be
enforced to the extent permitted by law.
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12. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to the choice of laws principles
thereof.
13. Amendment; Modification; Waiver. This Agreement may be amended only by the
written agreement of the parties hereto. No provisions of this Agreement may be modified, waived,
or discharged unless such waiver, modification, or discharge is agreed to in writing signed by
Employee and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time.
14. Binding Effect. This Agreement is personal in nature and none of the parties
hereto shall, without the consent of the other, assign, transfer, or delegate this Agreement or any
rights or obligations hereunder except as expressly provided for herein; provided, however, that
the Company shall be permitted to assign or transfer this Agreement without the consent of the
Employee in connection with the merger, consolidation or reorganization of the Company; provided
that such merged, consolidated or reorganized entity assumes all of the terms of this Agreement in
writing. Without limiting the generality of the foregoing, Employee’s right to receive payments
hereunder shall not be assignable, transferable, or delegable, whether by pledge, creation of a
security interest or otherwise, other than by a transfer by his will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer contrary to this paragraph,
the Company shall have liability to pay any amount so attempted to be assigned, transferred, or
delegated.
15. Entire Contract. This Agreement constitutes the entire agreement and supersedes
all other prior and contemporaneous agreements, employment contracts and understandings, both
written and oral, express or implied, with respect to the subject matter of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| Valley Forge Scientific Corp. | ||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Title: | President and Chief Executive Officer | |||
| /s/ Xxxx X. Xxxxx, Xx. | ||||
| Xxxx X. Xxxxx, Xx. | ||||
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