EXHIBIT 10.18
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into effective June 15, 2001, by and between MEDICALCV, INC., a corporation duly
organized and existing under the laws of the State of Minnesota, with a place of
business at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxx 00000,
hereinafter referred to as "MCV", and XXXXX X. XXXXXX, residing at 0000 Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, hereinafter referred to as
"EXECUTIVE".
ARTICLE 1
EMPLOYMENT
1.01 Executive is currently employed by MCV without a written contract
of employment. MCV hereby agrees to employ Executive as President and Chief
Executive Officer and Executive hereby accepts and agrees to such employment
from and after the date of this agreement, on the terms and conditions of this
agreement.
1.02 Executive shall generally have the authority, responsibilities,
and perform such duties as are customarily performed by the president and chief
executive officer in other or similar businesses as that engaged in by MCV.
Executive shall also render such additional services and duties as may be
reasonably requested of him from time to time by MCV's Board of Directors.
1.03 Executive shall report to the Board of Directors of MCV or any
committee thereof as the Board shall direct, and shall generally be subject to
direction, orders and advice of the Board. MCV retains the discretion to
transfer or reassign Executive to another executive position or to other
executive duties and any such transfer or reassignment shall not affect the
enforcement of this Agreement.
ARTICLE 2
BEST EFFORTS OF EXECUTIVE
2.01 Executive agrees that he will at all times faithfully,
industriously, and to the best of his ability, experience, and talents, perform
all of the duties that may be required of and from him pursuant to the express
and implicit terms of this Agreement, to the reasonable satisfaction of MCV.
ARTICLE 3
TERM OF EMPLOYMENT AND AGREEMENT
3.01 The Term of Executive's employment with MCV pursuant to this
Agreement shall be two (2) years from the effective date of this Agreement,
subject to the provisions set forth in Article 6 of this Agreement. Upon the
expiration of this initial two-year Term, this Agreement shall continue on an
employment at-will basis; provided that following the expiration of the initial
term, each party must give the other not less than thirty (30) days prior
written notice to terminate Executive's employment hereunder.
ARTICLE 4
COMPENSATION AND BENEFITS
4.01 Executive will be paid an annualized base salary of One Hundred
Sixty-Five Thousand Dollars ($165,000). Executive's base salary shall be payable
in equal installments pursuant to MCV's normal payroll procedures and dates.
MCV's Board of Directors shall review Executive's base salary compensation
annually at the conclusion of MCV's fiscal year. Any increase in Executive's
base salary shall be made within MCV's sole judgment and discretion. Such base
compensation shall not be subject to decrease unless the Board of Directors
takes action to effect a uniform percentage decrease in compensation for all
executive officers of MCV and its major subsidiaries.
4.02 Executive shall be eligible to receive such fringe benefits as
are, and may be, made available to other executive employees of MCV from time to
time in the exclusive discretion of MCV's Board of Directors. Such benefits may
include, but are not limited to, a medical and dental plan, short term
disability plan, long term disability plan, and a life insurance plan. MCV is
not obligated to provide or continue any of these benefits and may, without any
prior notice, discontinue any benefit already provided or as may be provided in
the future, within the exclusive discretion of MCV's Board of Directors.
4.03 Executive shall be eligible to receive annual discretionary
incentive bonus compensation upon achievement of personal and overall company
goals as are determined and approved by MCV's Board of Directors or compensation
committee with input from Executive. The amount of such bonus for Executive's
services for fiscal year 2002, if earned, shall be $50,000. Any bonus payments
shall be made within ninety (90) days following the completion of each fiscal
year. Any dispute between Executive and MCV as to the amount of, or entitlement
to, any bonus shall be promptly addressed by the Board of Directors'
Compensation Committee. Unresolved disputes shall be submitted to arbitration in
Minneapolis, Minnesota, in accordance with the applicable rules of the American
Arbitration Association.
4.04 Executive is directed to use his personal automobile for business
purposes and is hereby granted an automobile allowance of $550.00 per month.
4.05 Upon execution of this Agreement, Executive shall be granted,
effective June 15, 2001, a non-qualified stock option under the terms of 1997
Stock Option Plan, exercisable at $4.50 per share. Such option shall be fully
vested as of the date of grant.
ARTICLE 5
VACATION AND LEAVE OF ABSENCE
5.01 Executive is entitled to twenty-one (21) days of paid vacation per
year, in addition to MCV's normal holidays. Vacation time will be scheduled
taking into account the Executive's duties and obligations at MCV. Sick leave,
holiday pay and all other leaves of absence will be in accordance with MCV's
stated personnel policies. Vacation days not used in any year may be carried
over to the following year only.
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ARTICLE 6
TERMINATION
6.01 Executive may resign his position and terminate his employment by
giving MCV six (6) months written notice of his intention to resign. If
requested by MCV, Executive agrees to cooperate in training his successor until
his actual termination. In the event of such resignation, Executive shall
receive only that compensation earned through his last day of employment;
provided, however, that Executive shall be entitled to all or a portion of any
bonus due Executive pursuant to any bonus plan or arrangement established prior
to termination, to the extent earned or performed based upon the requirements or
criteria of such plan or arrangement, as the Board shall in good faith
determine.
6.02 MCV may, subject to applicable law, terminate this Agreement by
giving Executive two (2) months notice if Executive, due to sickness or injury,
is prevented from carrying out his essential job functions for a period of six
(6) months or longer. In the event of such termination, Executive shall receive
only that compensation earned through the date of termination; provided,
however, that Executive shall be entitled to all or a portion of any bonus due
Executive pursuant to any bonus plan or arrangement established prior to
termination, to the extent earned or performed based upon the requirements or
criteria of such plan or arrangement, as the Board shall in good faith
determine.
6.03 Executive's employment and this Agreement will be deemed
terminated upon the death of the Executive. In the event of such termination,
Executive shall receive only compensation earned through the date of termination
provided, however, that Executive shall be entitled to all or a portion of any
bonus due Executive pursuant to any bonus plan or arrangement established prior
to termination, to the extent earned or performed based upon the requirements or
criteria of such plan or arrangement, as the Board shall in good faith
determine.
6.04 Any other provision of this Agreement notwithstanding, MCV may
terminate Executive's employment without notice if the termination is based on
any of the following events that constitute Cause:
(a) Any conviction or nolo contendere plea by Executive to a
felony, gross misdemeanor or misdemeanor involving moral
turpitude, or any public conduct by Executive that has or can
reasonably be expected to have a detrimental effect on MCV; or
(b) Any fraud, misappropriations or embezzlement by Executive or
intentional material damage to the property or business of
MCV; or
(c) Executive's failure to perform his duties and responsibilities
in accordance with the provisions of this Agreement, or
Executive's violation of specific written lawful directions of
the Board of MCV.
In the event of such termination, and not withstanding any contrary provision
otherwise stated, Executive shall receive only his base salary earned through
the date of termination.
6.05 The employment of the Executive shall in no event be considered to
have been terminated for Cause if the termination of his employment took place:
(a) as a result of an act or omission which occurred more than 360
days prior to the Executive's having been given notice of the
termination of his employment for such act or omission, unless
the commission of such act or such omission could not at the
time of
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such commission or omission have been known to a member of
the Board of Directors of MCV (other than the Executive, if
he is then a member of the Board of Directors), in which case
more than 360 days from the date that the commission of such
act or such omission was or could reasonably have been so
known; or
(b) as a result of the continuing course of action which commenced
and was or reasonably could have been known to a member of the
Board of Directors of MCV (other than the Executive) more than
360 days prior to notice having been given to the Executive of
the termination of his employment.
ARTICLE 7
SEVERANCE
7.01 If either (a) MCV, its successors or assigns, terminates
Executive's employment for any reason other than those listed in Sections 6.02,
6.03, and 6.04 above or (b) Executive resigns his employment pursuant to Section
6.01, MCV, its successors or assigns, shall:
(a) pay Executive as severance pay each month for eighteen (18)
consecutive months following his termination or resignation
his monthly base salary in effect at the time of separation,
less customary withholdings, beginning one (1) month after
termination;
(b) if Executive timely elects to continue his group health and
dental insurance coverage pursuant to applicable
COBRA/continuation law and the terms of the respective benefit
plans, pay on Executive's behalf the premiums for such
coverage for the lesser of twelve (12) months or such time as
Executive's COBRA/continuation rights expire;
(c) cause the immediate vesting of any unvested stock options then
held by Executive; and
(d) provide or reimburse Executive for outplacement services and
related benefits for a period of twelve (12) months in an
aggregate amount not to exceed $20,000.00.
ARTICLE 8
NONDISCLOSURE
8.01 Except as permitted or directed by MCV or as may be required in
the proper discharge of Executive's employment hereunder, Executive shall not,
during the Term or at any time thereafter, divulge, furnish or make accessible
to anyone or use in any way any confidential, trade secret or proprietary
information of MCV, including without limitation, whether or not reduced to
writing, customer lists, customer files or information, planning and financial
information, contracts, sales and marketing information, business strategy or
opportunities for new or developing business, which Executive has prepared,
acquired or become acquainted with during his employment by MCV. Executive
acknowledges that the above-described knowledge or information is the property
of MCV that constitutes a unique and valuable asset and represents a substantial
investment by MCV, and that any disclosure or other use of such knowledge or
information, other than for the sole benefit of MCV, would be wrongful and would
cause irreparable harm to MCV. Executive agrees to at all times maintain the
confidentiality of such knowledge or information, to refrain from any acts or
omissions that would reduce its value to MCV, and to take and comply with
reasonable security measures to prevent any accidental or intentional disclosure
or misappropriation. Upon termination of Executive's employment for any reason,
Executive shall promptly return to MCV all such confidential, trade secret and
proprietary information, including all
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copies thereof, then in Executive's possession, control or influence, whether
prepared by Executive or others.
8.02 The foregoing obligations of confidentiality shall not apply to
any knowledge or information the entirety of which is now published or
subsequently becomes generally publicly known, other than as a direct or
indirect result of the breach of this Agreement by Executive or a breach of a
confidentiality obligation owed to MCV by any third party.
8.03 In the event of a breach or threatened breach by Executive of the
provisions of this Article 8, MCV shall be entitled to an injunction restraining
Executive from directly or indirectly disclosing, disseminating, lecturing upon,
publishing or using such confidential, trade secret or proprietary information
(whether in whole or in part) and restraining Executive from rendering any
services or participating with any person, firm, corporation, association or
other entity to whom such knowledge or information (whether in whole or in part)
has been disclosed, without the posting of a bond or other security. Nothing
herein shall be construed as prohibiting MCV from pursuing any other equitable
or legal remedies available to it for such breach or threatened breach,
including the recovery of damages from Executive. Executive agrees that MCV
shall be entitled to recover its costs of litigation, expenses and attorney fees
incurred in enforcing this Agreement.
8.04 The Executive understands and agrees that any violation of this
Article 8 while employed by MCV may result in immediate disciplinary action by
MCV, including termination of employment pursuant to Section 6.04 hereof.
8.05 The provisions of this Article 8 shall survive termination of this
Agreement indefinitely.
ARTICLE 9
NONCOMPETITION AND NON-RECRUITMENT
9.01 MCV and Executive recognize and agree that: (i) Executive has
received, and will in the future receive, substantial amounts of highly
confidential and proprietary information concerning MCV, its business, customers
and employees; (ii) as a consequence of using or associating himself with MCV's
name, goodwill, and reputation, Executive will develop personal and professional
relationships with MCV's current and prospective customers and clients; and
(iii) provision for non-competition and non-recruitment obligations by Executive
is critical to MCV's continued economic well-being and protection of MCV's
confidential and proprietary business information. In light of these
considerations, this Article 9 sets forth the terms and conditions of
Executive's obligations of non-competition and non-recruitment during the Term
of and subsequent to the termination of this Agreement and/or Executive's
employment for any reason.
9.02 Unless the obligation is waived or limited by MCV as set forth
herein, Executive agrees that during the term of Executive's employment pursuant
to this Agreement and for a period of twelve (12) months following termination
of Executive's employment for any reason, Executive will not directly or
indirectly (a) solicit or do competitive business with any person or entity that
is or was a customer or vendor of MCV within the twelve (12) months prior to the
date of termination, or (b) engage within the North American markets in which
MCV engages in business at the time of termination, in any similar or related
business activity in competition with MCV's direct line of business as conducted
at the time of Executive's termination. Among all other competitive actions that
are likewise restricted, Executive shall not cause or attempt to cause any
existing or prospective customer, client or account who then has a relationship
with MCV for current or prospective business to divert, terminate, limit or in
any adverse manner modify, or fail to enter into any actual or potential
business with MCV.
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9.03 At its sole option, MCV may, by express written notice to
Executive, waive or limit the time and/or geographic area in which Executive
cannot engage in competitive activity or the scope of such competitive activity.
9.04 For a period of twelve (12) months following termination of
Executive's employment for any reason, Executive will not initiate or actively
participate in any other employer's recruitment or hiring of any of MCV's
employees.
9.05 Executive agrees that breach by him of the provisions of this
Article 9 will cause MCV irreparable harm that is not fully remedied by monetary
damages. In the event of a breach or threatened breach by Executive of the
provisions of this Article 9, MCV shall be entitled to an injunction restraining
Executive from directly or indirectly competing or recruiting as prohibited
herein, without posting a bond or other security. Nothing herein shall be
construed as prohibiting MCV from pursuing any other equitable or legal remedies
available to it for such breach or threatened breach, including the recovery of
damages from Executive. Executive agrees that MCV shall be entitled to recover
its costs of litigation and attorney fees incurred in enforcing this Agreement.
9.06 The Executive understands and agrees that any violation of this
Article 9 while employed by MCV may result in immediate disciplinary action by
MCV, including termination of employment pursuant to Section 6.04 hereof.
9.07 The obligations contained in this Article 9 shall survive the
termination of this Agreement indefinitely.
ARTICLE 10
MISCELLANEOUS
10.01 GOVERNING LAW. This Agreement shall be governed and construed
according to the laws of the State of Minnesota without regard to conflicts of
law provisions.
10.02 SUCCESSORS. This Agreement is personal to Executive and Executive
may not assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person or entity. This Agreement
may be assigned by MCV and MCV may require any successors or assigns to
expressly assume and agree to perform MCV's obligations under this Agreement.
10.03 WAIVER. The waiver by MCV of the breach or nonperformance of any
provision of this Agreement by Executive will not operate or be construed as a
waiver of any future breach or nonperformance under any such provision of this
Agreement or any similar agreement with any other employee.
10.04 MODIFICATION. This Agreement supersedes and replaces any and all
prior oral or written understandings, if any, between the parties relating to
the subject matter of this Agreement, which are hereby revoked. The parties
agree that this Agreement (a) is the entire understanding and agreement between
the parties and (b) is the complete and exclusive statement of the terms and
conditions thereof, and there are no other written or oral agreements in regard
to the subject matter of this Agreement. This Agreement shall not be changed or
modified except by a written document signed by the parties hereto.
10.05 SEVERABILITY AND BLUE PENCILING. To the extent that any provision
of this Agreement shall be determined to be invalid or unenforceable as written,
the validity and enforceability of the remainder of such provision and of this
Agreement shall be unaffected. If any particular provision of this
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Agreement shall be adjudicated to be invalid or unenforceable, MCV and
Executive specifically authorize the tribunal making such determination to
edit the invalid or unenforceable provision to allow this Agreement, and the
provisions thereof, to be valid and enforceable to the fullest extent allowed
by law or public policy.
IN WITNESS WHEREOF the following parties have executed the above
instrument the day and year first above written.
MEDICALCV, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Its Chairman of the Board of Directors'
Compensation Committee
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
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