EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as "Agreement") is
entered into as of June 1, 2002 (the "Effective Date"), by and between Vicor
Technologies, Inc. (hereinafter referred to as the "Company") and Xxxxx X. Xxxxx
(hereinafter referred to as "Employee").
WHEREAS, the Company desires to employ Employee as an executive of the
Company; and
WHEREAS, the Company and Employee desire to set forth in this Agreement all
of the terms and conditions of said employment;
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained in this Agreement, the Company and Employee agree as follows:
1. TERM OF EMPLOYMENT. The term of employment hereunder will commence on the
Effective Date and end on the three year anniversary of the Effective Date,
unless sooner terminated in accordance with the provisions hereof (the "Term");
provided, however that on each anniversary date of the Effective Date the Term
shall be automatically extended for an additional one (1) year period.
2. DUTIES AND RESPONSIBILITIES. The Company hereby employs Employee as its
Interim Chief Executive Officer with such powers and duties as are set forth in
the Company's bylaws for its chief executive officer, and those which are
customarily held by a corporation's chief executive officer. The Employee shall
devote such amount of his time and attention to the performance of services for
the Company as shall be necessary to perform the duties of his office. However,
nothing in this Agreement shall prevent Employee from continuing in his capacity
as Chief Executive Officer of XXXX & Associates International, Inc., or from
acting as a board member or other advisory capacity with any other companies so
long as such positions do not conflict with the Employee's performance of his
duties hereunder or conflict or compete with the science or technology of Vicor.
3. COMPENSATION.
a. BASE SALARY. The Company promises to pay Employee during the first year
of employment hereunder an annualized base salary of $150,000 (the "Base"), less
applicable deductions, payable in installments according to the Company's normal
payroll practices. Employee's Base will be adjusted upward on each anniversary
of the Effective Date (or more frequently, at the Company's discretion) by a
percentage equal to not less than the higher of the increase in the consumer
price index for the preceding year or the increase in the core rate of inflation
for the preceding year, each as reported by the United Sates government, to
reflect cost of living increases. To the extent that the compensation committee
of the Board of Directors (the "Compensation Committee") determines, at any time
and from time to time, that as a result of any active employment or similar
roles with other companies engaged in by Employee, Employee is spending
materially less time in the performance of services for the benefit of the
Company than he had customarily done so, then the Compensation Committee may
proportionately reduce the Base during any such periods to reflect same,
effective immediately
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after the delivery of notice to Employee to such effect. Any such reduction in
Base shall cease at such time as Employee once again returns to a customary
level of time in the performance of services for the benefit of the Company, as
determined by the Compensation Committee.
b. OTHER BENEFITS. Employee will be entitled to participate in such
incentive plans, bonus plans and other benefits as are offered from time to time
by the Company to its executive level employees, including medical coverage or
reimbursement therefore for the Employee and his family and an extended
disability insurance plan, each at the Company's cost, including any right to
receive any stock options. Employee will also be entitled to participate in any
other benefits that the Company may maintain from time to time for all
employees, provided that Employee meets the respective eligibility requirements.
c. EXPENSE REIMBURSEMENT. The Company agrees to reimburse Employee for all
reasonable expenses incurred by him in the discharge of his duties hereunder.
The Employee agrees to maintain records of such expenses in such form as the
Company may request and make such records available to the Company as and when
requested.
d. BOARD SEAT. For so long as Employee is employed by the Company, the
Employee shall remain a member of the Company's Board of Directors. In addition,
subject to the vote of the shareholders of the Company from time to time, the
Employee shall continue to be a member of the Company's Board of Directors after
he ceases to be employed by the Company for any reason.
e. TAXES. All sums payable to the Employee hereunder shall be subject to
all federal, state and municipal laws or governmental regulations now or
hereafter in existence requiring the withholding, deduction, or payment
therefrom of sums for income or other taxes payable by or for or assessable
against the Employee.
f. STOCK. As additional incentive for joining Vicor, Employee will be
entitled to purchase 250,000 shares of common stock at a purchase price of $3.00
per share and 100,000 warrants (entitling the purchase of shares of common stock
with an exercise price of $.01). As consideration for the purchase price,
employee will execute a non-interest bearing note payable to the Company in the
amount of $750,000 secured by the common stock. The note shall be due and
payable in 5 years from the date of issue and may be forgiven by the Company at
its sole option and discretion.
4. VACATION. The Employee may take a maximum of four (4) weeks vacation during
each twelve (12) month period during the Term at times to be reasonably
determined by mutual agreement between the Company and Employee. Employee shall
be entitled to carryover up to one (1) week per year of unused vacation to
future periods.
5. INABILITY TO PERFORM JOB DUTIES. If Employee becomes unable to substantially
perform his employment duties pursuant to this Agreement due to mental or
physical incapacity (a "Disability"), the Company shall continue his
compensation under this Agreement at one-half of his regular rate during the
first three months of such Disability. Thereafter no compensation shall be
payable until such time as Employee becomes able to resume his job duties for
the Company, except to the extent any amounts are payable pursuant to any
Company-maintained
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disability insurance. In the event that Employee is Disabled for a cumulative
period of greater than six (6) months within any span of twelve (12) months,
this Agreement and Employee's employment may be terminated by the Company. For
purposes of this Agreement, Disability shall be determined by a medical doctor
who is mutually agreeable to the Company and the Employee; in the event that
Company and Employee cannot agree on a medical doctor, then each of Company and
Employee shall select a medical doctor, and the selected medical doctors shall
select a third medical doctor who shall individually determine whether
Disability exists pursuant to this Section. Following a termination of this
Agreement by Company pursuant to this Section 5, Company shall pay to Employee
all accrued compensation and benefits and all normal post-termination benefits
available under any of Company's retirement plan, insurance programs or other
benefit plans.
6. TERMINATION BY COMPANY FOR CAUSE. The Company may terminate this Agreement,
and Employee's employment "for cause" at any time. As used herein, "for cause"
shall mean any one of the following:
a. The death of the Employee; or
b. The Employee has a guardian of his person or estate appointed by a court
of competent jurisdiction; or
c. The Employee is Disabled for a cumulative period of greater than six (6)
months in any twelve (12) month period; or
d. The conviction of the Employee of a felony or of any crime involving
moral turpitude (but excluding any offenses involving operation of a motor
vehicle); or
e. The misuse, misappropriation or embezzlement of Company funds or
property by Employee, as determined by a court of competent jurisdiction; or
f. Any willful gross neglect or willful gross misconduct of Employee
resulting in material economic harm to the Company; provided that the Company
shall give Employee thirty (30) days' written notice thereof during which thirty
(30) day period Employee may cure same; or
g. The habitual and sustained use of alcohol or drugs by Employee which
interferes with the performance of Employee's duties for the Company.
In the event the Company terminates Employee's employment for cause,
Employee's right to continued payment of salary and other compensation shall
automatically terminate and be forfeited, and the Company shall pay to Employee
all compensation and benefits accrued through the date of termination. In
addition, Employee shall be entitled to any post-termination benefits to which
Employee would otherwise be entitled under any retirement plans, insurance
programs or other benefit plans.
7. TERMINATION BY EMPLOYEE WITHOUT CAUSE. Employee may terminate this Agreement
and his employment with the Company without cause upon thirty (30) days prior
written notice to the Company. Employee may be required to perform his job
duties and will be paid his
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regular compensation up to the date of the termination. At the option of the
Company, the Company may require Employee to immediately terminate employment
upon receiving said thirty (30) days' notice from Employee of the termination of
this Agreement. In such event, the Company will pay to Employee an amount equal
to thirty (30) calendar days of his Base.
8. TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY THE EMPLOYEE FOR GOOD REASON.
a. The Employee may resign (and thereby terminate his employment under this
Agreement) at any time for Good Reason (as defined below), upon not less than
thirty (30) days' prior written notice to the Company specifying in reasonable
detail the reason therefor, provided, however, that if the reason for
resignation for Good Reason is susceptible of a cure, the Company shall have a
period of thirty (30) days after such written notice to effect a cure. For
purposes of this Agreement, "Good Reason" shall mean (a) any material failure by
the Company to comply with any material obligation imposed by this Agreement
(including the failure of a successor to the Company to assume this Agreement or
any purported termination hereof which is not in compliance with any applicable
notice provisions hereof); (b) a reduction of Employee's Base or a material
reduction in the Employee's title, position, duties or responsibilities; (c) the
Employee's assignment to an office of the Company located more than fifty (50)
miles from the Company's current Boca Raton, Florida office; or (d) the
Company's creation of working conditions that a reasonable person in the
Employee's position would consider unreasonable or intolerable, as determined by
the Compensation Committee. The Company may terminate the employment of Employee
without cause and the Employee may terminate the Agreement with Good Reason, in
each case, at any time upon 30 days' prior written notice, provided that in
either such event the Company shall be obligated to pay Employee, in a lump sum
within fifteen (15) days of the date of termination of employment, an amount
equal to 300% of the sum of (a) Employee's then current Base, and (b) any
bonuses paid to Employee during the 12 month period preceding the date of such
termination. In addition, the Company shall maintain the Employee's health
insurance, life insurance and disability insurance at its expense on the same
terms and conditions as existed during the Employee's employment for the
unexpired Term of this Agreement; provided, that such benefits will not be
continued in the event that Employee obtains similar benefits in connection with
any future employment. Moreover, in such event, Employee shall be entitled to
receive all other customary post-termination benefits under the Company's
retirement plans, insurance programs, and other benefit plans, and Employee
shall be entitled to acceleration of any vesting under any long-term incentive
plans, including the vesting of any unvested stock options or stock warrants.
9. CHANGE OF CONTROL.
a. For purposes of this Agreement, the term "Change in Control" means the
occurrence during the Term of any of the following events:
(i) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of
the combined voting power of the then outstanding voting stock of the Company;
provided, however, that for purposes of this Section 9(a)(i), the following
acquisitions of voting stock of the Company shall not constitute a Change in
Control:
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(A) any issuance of voting stock of the Company directly from the Company that
is approved by the Incumbent Board (as defined below), the consideration for
which consists principally of property other than cash, (B) any acquisition by
the Company of voting stock of the Company, (C) any acquisition of voting stock
of the Company by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary, or (D) any acquisition of voting
stock of the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 9(a)(iii) below; or
(ii) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a Director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least two-thirds of the
Directors then comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination) shall be deemed to
have been a member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation, a
sale or other disposition of all or substantially all of the assets of the
Company, or other transaction (each, a "Business Combination"), unless, in each
case, immediately following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners of voting
stock of the Company immediately prior to such Business Combination beneficially
own, directly or indirectly, more than two-thirds of the combined voting power
of the then outstanding shares of voting stock of the entity resulting from such
Business Combination (including, without limitation, an entity which as a result
of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries), (B) no
Person (other than the Company, such entity resulting from such Business
Combination, or any employee benefit plan (or related trust) sponsored or
maintained by the Company, any subsidiary or such entity resulting from such
Business Combination) beneficially owns, directly or indirectly, 25% or more of
the combined voting power of the then outstanding shares of voting stock of the
entity resulting from such Business Combination, and (C) at least a majority of
the members of the Board of Directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 9(a)(iii).
b. The Company and Employee hereby agree that, if Employee is employed by
the Company on the date on which a Change of Control is agreed upon (the "Change
of Control Date"), the Company or its successor (or, if Employee is employed by
a subsidiary, the subsidiary) will continue to retain Employee and Employee will
remain employed by the Company or its successor (or subsidiary), for the period
commencing on the date the Change of Control occurs and ending on the second
anniversary date thereof (the "Change of Control Period"), to exercise such
authority and perform such executive duties as are commensurate with the
authority being exercised and duties being performed by the Employee immediately
prior to
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the Change of Control Date. During the Change of Control Period, the Company or
its successor (or subsidiary) will (i) continue to pay Employee at not less than
the Base on the Change of Control Date, (ii) pay Employee bonuses in amounts not
less in amount than bonuses paid during the 12 month period preceding the Change
of Control Date, and (iii) continue employee benefit programs as to Employee at
levels in effect on the Change of Control Date (but subject to such reductions
as may be required to maintain such plans in compliance with applicable federal
law regulating employee benefit programs).
c. If during the Change of Control Period (i) Employee's employment is
terminated by the Company or its successor (or any applicable subsidiary)
without cause, or (ii) the Employee shall have terminated this Agreement for
Good Reason, then Employee shall be entitled to receive a lump sum payment equal
to 300% of the sum of (x) the Base, plus (y) any bonuses paid to Employee during
the 12 month period preceding the Change of Control Date. In addition, the
Company shall maintain the Employee's health insurance, life insurance and
disability insurance on the same terms and conditions as existed during his
employment for the next three (3) years. The foregoing amounts will be paid to
Employee within 15 business days after his termination of employment with the
Company. The Company will pay any and all fees, costs, and expenses, including
attorneys' fees (including in any and all appeals) incurred by Employee in
connection with the enforcement of the provisions of this Section 9. In
addition, Employee shall be entitled receive all other customary
post-termination benefits under retirement plans, insurance programs, and other
benefit plans, and Employee shall be entitled to acceleration of any vesting
under any long-term incentive plans, including the vesting of any unvested stock
options or stock warrants.
d. In the event that any of the amounts required to be paid to Employee by
Company or by its successor are at any time deemed by the Internal Revenue
Service (the "IRS") to be "Parachute Payments" subject to an excise tax for
which Employee will be liable to the IRS, then Company will pay to Employee (i)
any and all amounts required for payment of any such excise taxes, and (ii) the
"grossed-up" amount required such that following the payment by Employee of the
excise taxes and any further excise taxes due as a result of payment by the
Company to Employee of any amounts pursuant to this Section 9(d), Employee shall
have received the same amount of net compensation from Company as if such
payments had not been deemed "Parachute Payments" by the IRS.
10. COVENANT NOT TO COMPETE. During the term of this Agreement, and for two (2)
years after its termination, Employee promises and agrees that he will not enter
into any employment or business relationship (whether as a principal, agent,
partner, employee, investor, owner, consultant, board member or otherwise) with
any company, business organization or individual that is engaged in the same or
substantially similar business as that conducted by the Company; provided,
however this Section 10 shall not apply in the event that Employee is terminated
without cause by the Company or the Employee terminates this Agreement with Good
Reason. This restrictive covenant may be assigned to and enforced by any of the
Company's assignees or successors.
11. AGREEMENT NOT TO USE OR DISCLOSE TRADE SECRETS. During the term of this
Agreement and a period of five (5) years thereafter, Employee promises and
agrees that he will not disclose or utilize any trade secrets acquired during
the course of service with the Company and/or its related business entities. As
used herein, "trade secret" refers to the whole or any portion or
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phase of any formula, pattern, device, combination of devices, or compilation of
information which is for use, or is used, in the operation of the Company's
business and which provides the Company an advantage, or an opportunity to
obtain an advantage, over those who do not know or use it. "Trade secret" also
includes any scientific, technical, or commercial information, including any
design, list of suppliers, list of customers, as well as pricing information or
methodology, contractual arrangements with vendors or suppliers, business
development plans or activities, or Company financial information. This Section
11 is effective regardless of the reason for the termination of the Agreement
and regardless of whether the Agreement is terminated by the Employee, the
Company or by its own terms. This restrictive covenant may be assigned to and
enforced by any of the Company's assignees or successors.
12. AGREEMENT NOT TO USE OR DISCLOSE CONFIDENTIAL OR PROPRIETARY INFORMATION.
During the term of this Agreement and a period of two (2) years thereafter,
Employee promises and agrees that he will not disclose or utilize any
confidential or proprietary information acquired during the course of service
with the Company and/or its related business entities, Employee shall not
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any confidential or
proprietary information pertaining to the business of the Company. Any
confidential or proprietary information or data now or hereafter acquired by
Employee with respect to the business of the Company (which shall include, but
not be limited to, information concerning the Company's financial condition,
prospects, technology, customers, suppliers, methods of doing business and
promotion of the Company's products and services) shall be deemed a valuable,
special and unique asset of the Company that is received by Employee in
confidence and as a fiduciary. For purposes of this Agreement "confidential or
proprietary information" means information disclosed to Employee as a
consequence of or through his/her employment by the Company (including
information conceived, originated, discovered or developed by Employee) prior to
or after the date hereof and not generally known or in the public domain, about
the Company or its business. This Section 12 is effective regardless of the
reason for the termination of the Agreement and regardless of whether the
Agreement is terminated by the Employee, the Company or by its own terms. This
restrictive covenant may be assigned to and enforced by any of the Company's
assignees or successors.
13. AGREEMENT NOT TO HIRE COMPANY EMPLOYEES. If Employee leaves the employ of
the Company or terminates this Agreement, Employee promises and agrees that,
during the two (2) years following his departure from the Company, Employee will
not, without the express written permission of the Company, directly or
indirectly employ as a consultant or employee any person who is employed as a
consultant or employee of the Company at the time of Employee's termination, or
any person who was an employee or consultant of the Company during the six
months preceding Employee's termination; provided, however this Section 13 shall
not apply in the event that Employee is terminated without cause by the Company
or the Employee terminates this Agreement with Good Reason. This restrictive
covenant may be assigned to and enforced by any of the Company's assignees or
successors.
14. INJUNCTIVE RELIEF. In recognition of the unique services to be performed by
Employee and the possibility that any violation by Employee of Section 10,
Section 11, Section 12 or Section 13 of this Agreement may cause irreparable or
indeterminate damage or injury to Company, Employee expressly stipulates and
agrees that the Company shall be entitled, upon ten
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(10) days written notice to Employee, to obtain an injunction from any court of
competent jurisdiction restraining any violation or threatened violation of this
Agreement. Such right to an injunction shall be in addition to, and not in
limitation of, any other rights or remedies the Company may have for damages.
15. JUDICIAL MODIFICATION OF AGREEMENT. The Company and Employee specifically
agree that a court of competent jurisdiction (or an arbitrator, as appropriate)
may modify or amend Section 10, Section 11, Section 12 or Section 13 of this
Agreement if absolutely necessary to conform with relevant law or binding
judicial decisions in effect at the time the Company seeks to enforce any or all
of said provisions.
16. RESOLUTION OF DISPUTES BY ARBITRATION. Any claim or controversy that arises
out of or relates to Employee's employment, this Agreement, or the breach of
this Agreement, will be resolved by arbitration in Palm Beach County in
accordance with the rules of the American Arbitration Association. Judgment upon
the award rendered by the arbitrator may be entered in any court possessing
jurisdiction over arbitration awards. This Section shall not limit or restrict
the Company's right to obtain injunctive relief for violations of Section 10,
Section 11, Section 12 or Section 13 of this Agreement directly from a court
under Section 14 of this Agreement.
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17. MISCELLANEOUS.
a. COSTS AND EXPENSES. Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this Agreement and consummating the
transactions described herein. In the event either party is required to seek
legal counsel to enforce the terms and provisions of this Agreement, the
prevailing party in any action (including arbitration) shall be entitled to
recover attorneys fees and costs (including on appeal).
b. CHOICE OF LAW. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Florida and the proper
jurisdiction and venue shall be the Circuit Court in Palm Beach County, Florida.
c. CONSTRUCTION. The parties hereto and their respective legal counsel
participated in the preparation of this Agreement; therefore, this Agreement
shall be construed neither against nor in favor of any of the parties hereto,
but rather in accordance with the fair meaning thereof.
d. EFFECT OF WAIVER. The failure of any party at any time or times to
require performance of any provision of this Agreement will in no manner affect
the right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
e. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
f. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between
the parties, and supersedes any prior agreements or understanding between the
Company and Employee. This Agreement may be amended only in writing, signed by
both parties.
g. SEVERABILITY. If any provision of this Agreement is held invalid for any
reason, such invalidity shall not affect the enforceability of the remainder of
this Agreement.
h. NOTICES. Any notices required or permitted or given pursuant to this
Agreement to the Company or Employee shall be in writing and shall be deemed
given upon delivery in person or three (3) days after deposit of same in the
U.S. certified mail or registered mail, return receipt requested, first class
postage and registration fees prepaid, to the addresses listed below. The
parties hereto shall notify each other whenever their addresses shall change
during the Term.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the date set forth below.
COMPANY EMPLOYEE
/s/ Xxxxx Xxxxxxx /s/ Xxxxx X. Xxxxx
-------------------------------------- --------------------------------------
Name: Xxxxx Xxxxxxx Xxxxx X. Xxxxx
Title: Secretary / Treasurer
Date: 6/25/02 Date: 6/01/02
Vicor Technologies, Inc. 00000 Xxxxx Xxxxx Xxxxx
0000 Xxxxxxxxx Xxxxx XX #000 Xxxxxx Xxxxx, XX 00000
Xxxx Xxxxx, XX 00000 (Address for Notices)
(Address for Notices)
Xxxxx Xxxxxxxx Xxxxxx Xxxx
Witness Witness
