EMPLOYMENT AGREEMENT
Exhibit
10.1
Agreement
made and effective this 27th
day of
August, 2008, between VirtualScopics, Inc., a Delaware corporation (the
“Company”), and L. Xxxxxxx Xxxxxx, Executive Officer, (“Executive
Officer”).
WITNESSETH
WHEREAS,
Executive Officer has been employed by the Company as its President and Chief
Executive Officer (“CEO”) since August 2006;
WHEREAS,
the Company believes and recognizes that Executive Officer’s contributions to
the Company’s improvement and success have been substantial;
WHEREAS,
the Company desires to continue to employ Executive Officer as its CEO and
to be
assured of Executive Officer’s services on the terms and conditions set forth in
this Agreement;
WHEREAS,
Executive Officer desires to be employed by the Company as its CEO;
and
WHEREAS,
the Company and Executive Officer intend and desire to be legally bound by
this
Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants and conditions
contained in this Agreement, the Company and Executive Officer agree as
follows:
1. Employment.
The
Company hereby employs Executive Officer as its CEO for the term of employment
as defined in paragraph 2 of this Agreement. Executive Officer shall be
responsible for the management of the operations of the Company, subject to
the
supervision and direction of the Board of Directors of the Company (the
“Board”). Executive Officer shall report directly to the Board.
2. Term
of Employment.
Executive Officer’s “Term of Employment” under this Agreement shall commence as
of the effective date hereof and shall end one year following the effective
date
hereof, except as the term may be extended in a writing executed by the Company
and Executive Officer.
3. Performance.
Executive Officer shall devote his full working time, attention, skills and
energies to the performance of his duties as CEO of the
Company.
4. Salary,
Bonus and Benefits.
(a) Salary.
As
basic compensation for his services under this Agreement, and effective as
of
the effective date hereof, the Company shall pay to Executive Officer a gross
salary of $265,000 per year. Executive Officer’s salary shall be paid in
accordance with the customary payroll practices of the Company.
(b)
Bonus. In
addition to his Salary, and as incentive bonus for his services under this
Agreement, the Company shall establish an annual incentive bonus plan for
Executive tied to the achievement of certain Company Annual Plan goals, with
a
targeted maximum payout of 30% of Executive's base salary in effect at the
end
of each fiscal year. The bonus will be paid to Executive on a timely basis
upon
official close of the fiscal year. The committee reserves the right, at its
sole
discretion, to exceed the maximum payout for exceptional
performance.
(c) Benefits.
Executive Officer shall participate in all benefit plans, option plans,
retirement plans, vacation plans, and other plans, arrangements, policies and
perquisites as are afforded from time to time to other executive officers of
the
Company, including, but not limited to, all health, medical and dental
(“health”) insurance plans, disability insurance plans and all other insurance
plans.
Executive
Officer also shall be entitled to reimbursement of all reasonable expenses
which
are incurred by Executive Officer in the performance of his duties with the
Company and which are documented in accordance with procedures approved by
the
Company for all executive officers of the Company.
5. Other
Activities.
(a) Executive
Officer may serve from time to time as an advisor, director or trustee of
outside organizations (e.g., for-profit organizations, not-for-profit
organizations, professional organizations), provided that such service does
not
conflict with (i) the business or reputation of the Company, or (ii) Executive
Officer’s performance of his duties with the Company.
(b) Executive
Officer shall consult with, and obtain the consent of, the Chairman, which
consent shall not be unreasonably withheld, with respect to his service as
an
advisor, director or trustee of any outside organization.
(c) The
Chairman shall have the sole discretion, to be exercised reasonably, in
determining whether or not Executive Officer’s service as an advisor, director
or trustee of any outside organization conflicts with (i) the business or
reputation of the Company, or (ii) Executive Officer’s performance of his duties
with the Company.
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6. Membership
on the Company’s Board of Directors
It
is the
intention and expectation of the Company and Executive Officer that Executive
Officer shall serve as a member of the Board during the Term of Employment.
The
Company shall use its best efforts, as customary for any proposed nominee,
to
cause Executive Officer’s re-election to the Board, and Executive Officer agrees
to serve in such capacity without compensation in addition to the compensation
he receives as CEO.
7. Termination
of Employment.
(a)
Voluntary termination by Executive Officer
Executive
Officer may voluntarily terminate his employment under this Agreement by
delivering written notice to the Board of Directors of his decision to terminate
his employment.
(b)
Voluntary termination by Executive Officer following change in
control
Within
180 days following a “change in control” of the Company (as defined below), and
either i) following a decision or implementation of a decision by the Company
to
materially change the title, status, responsibilities, location of employment,
benefits or privileges to which the Executive Officer was entitled immediately
prior to the “change in control”, or ii) this Agreement is not extended or
renewed, or replaced with a fully executed substantially equivalent agreement,
prior to 14 days before it is scheduled to expire, the Executive Officer may
elect to terminate his employment upon thirty (30) days’ written notice to the
Board of Directors or the appropriate governing organization in the event the
Board of Directors as it is currently constituted is no longer in place.
Executive Officer’s termination of his employment shall be effective on the
thirty-first day after the date on which the written notice is
delivered.
In
the
event that Executive Officer shall elect to terminate his employment pursuant
to
this paragraph 7(b), the Company shall pay him, as separation pay, one year’s
worth of his gross annual salary, as defined in 4(a) herein, as of the date
upon
which his termination becomes effective plus twelve (12) months worth of
benefits Executive Officer is then currently receiving. The gross salary and
benefits shall be payable within thirty (30) days following the effective date
of the termination.
For
purposes of this Agreement, a “change in control” shall be deemed to have
occurred if (A) a majority of the Board is replaced in a 12 month period by
directors whose appointment or election was not endorsed by a majority of the
Board before their appointment or election; or (B) substantially all the assets
of the Company are disposed of by the Company pursuant to a merger,
consolidation, partial or complete liquidation, a sale of assets (including
stock of a subsidiary) or otherwise, but not including a reincorporation or
similar transaction resulting in a change only in the form of ownership of
such
assets.
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In
the
event that the payments to Executive Officer pursuant to this paragraph 7(b)
constitute parachute payments (as defined in Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the “Code”)), and if the sum of these payments
and all other parachute payments received or to be received by Executive Officer
in connection with the change in control equal or exceed three (3) times his
base amount (as defined in Section 280G(b)(3) of the Code) for the calendar
year
in which the change in control occurs, then the payments to Executive Officer
pursuant to this paragraph 7(b) shall be reduced to the extent necessary to
ensure that the sum of all parachute payments is one dollar ($1.00) less than
three (3) times such base amount.
(c)
Voluntary termination by Executive Officer not following a change in control
If
Executive Officer voluntarily terminates his employment under this Agreement,
other than pursuant to paragraph 7(b), then Executive Officer’s rights and
duties under this Agreement shall terminate as of the effective date of such
termination; provided, however, that Executive Officer shall not be deprived,
by
reason of such termination, of any rights, payments, options or benefits which
have vested or have been earned or to which Executive Officer is otherwise
entitled as of the effective date of such termination, and no such right,
payment, option or benefit will be reduced or otherwise affected by reason
of
such termination.
(d)
Involuntary termination for cause
The
employment of Executive Officer under this Agreement shall terminate for cause
upon delivery to Executive Officer of notice in writing from the Chairman of
the
Board of Directors (acting pursuant to a duly adopted resolution of the Board)
of the termination of his employment for cause. “Cause” shall mean:
(i) any
willful act or failure to act by Executive Officer that causes material harm
to
the Company; any fraud by Executive Officer upon the Company; the conviction
of
Executive Officer, or the plea of nolo contendere
by
Executive Officer, with respect to any felony; for the purposes of this
subparagraph 7(d), any act or failure to act by Executive Officer which was
done
or omitted to be done by Executive Officer in good faith and for a purpose
which
he reasonably believed to be in the best interests of the Company shall not
be
considered to have been willful; or
(ii) Executive
Officer’s chronic alcoholism or other form of chemical addiction that is not
cured by Executive Officer within 90 days after receipt by him of written notice
from the Board of its determination that a condition exists which must be cured;
or
(iii) any
material breach by Executive Officer of his obligations under this Agreement
that is not cured by Executive Officer within 30 days after receipt by him
of
written notice from the Board of its determination that a material breach has
occurred; or
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(iv) Executive
Officer’s unethical behavior, dishonesty, moral turpitudes which has caused a
material harm or injury to the business, operations or financial condition
of
the Company.
In
the
event that Executive Officer is terminated for cause, then Executive Officer’s
rights and duties under this Agreement shall terminate as of the effective
date
of such termination. Notwithstanding anything to the contrary contained in
this
Agreement, it is the intention and agreement of the Company and Executive
Officer that Executive Officer shall not be deprived, by reason of termination
for cause, of any rights, payments, options or benefits which have vested or
have been earned or to which Executive Officer is otherwise entitled as of
the
effective date of such termination, and it is also the intention and agreement
of the Company and Executive Officer that no such right, payment, option or
benefit will be reduced or otherwise affected by reason of such
termination.
(e)
Involuntary termination without cause
The
Company has the right to terminate Executive Officer without cause. In the
event
that the Executive Officer is involuntarily terminated without cause within
one
year following a change in control, as change in control is defined in
subparagraph 7(b), notwithstanding paragraph 2. herein, the Company shall pay
Executive Officer, as separation pay, one year’s worth of his gross annual
salary, as defined in 4(a) herein, as of the date upon which his termination
becomes effective; plus twelve (12) months worth of benefits Executive Officer
is then currently receiving. The base salary and benefits shall be payable
in
the normal course for the twelve (12) month period following the effective
date
of the termination.
In
the
event that Executive Officer is involuntarily terminated without cause not
following a change in control, as change in control is defined in subparagraph
7(b), the Company shall pay Executive Officer, as separation pay, six (6) months
worth of his gross annual salary, as defined in 4(a) herein, as of the date
upon
which his termination becomes effective; plus six (6) months worth of benefits
Executive Officer is then currently receiving. The base salary and benefits
shall be payable in the normal course for the six (6) month period following
the
effective date of the termination.
8. Confidentiality,
Commitments by Executive Officer.
Executive
Officer hereby acknowledges that he has executed, and agrees to be bound by
the
Company agreement or agreements containing confidentiality, non-compete and
restrictive covenant provisions, and this Employment Agreement shall not be
deemed to supersede such agreement or agreements.
9. Arbitration.
Subject
to the provisions of paragraph 10 of this Agreement regarding injunctive relief,
any controversy or claim arising out of or relating to this Agreement, or any
breach thereof, shall be determined and settled by arbitration in Rochester,
New
York administered by the American Arbitration Association under its Commercial
Arbitration Rules then in effect.
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10. Enforceability.
If any
provision of this Agreement shall be found in arbitration or by any court of
competent jurisdiction to be contrary to law or public policy and therefore
unenforceable, the Company and Executive Officer hereby waive such provision
or
part thereof, but only to the extent that such provision or part is found in
arbitration or by such court to be unenforceable. The Company and Executive
Officer agree that such provision should be modified, consistent with the intent
of this Agreement, by the arbitrator or such court so that it becomes
enforceable, and, as modified, will be enforced as any other provision of this
Agreement. The lack of enforceability of any particular provision of this
Agreement shall not affect any other provision of this Agreement.
11. Governing
Law.
This
Agreement and the rights and obligations of Executive Officer and the Company
shall be governed by and construed under the laws of the State of New
York.
12. No
Waiver.
The
failure by either Executive Officer or the Company at any time to require
performance or compliance by the other with any provision of this Agreement
shall in no way affect either party’s full right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of
any
provision of this Agreement shall not be taken or held to be a waiver of any
succeeding breach of such provision or as a waiver of the provision
itself.
13. Binding
Agreement.
This
Agreement shall be binding upon and inure to the benefit of Executive Officer
and his heirs and legal representatives, and shall be binding upon and inure
to
the benefit of the Company and its legal representatives, successors and
assigns.
14. Notice.
Any
notice required or permitted to be given under the Agreement shall be in writing
and shall be deemed to be delivered when delivered personally to Executive
Officer, to the Chairman of the Board of Directors or to an officer of the
Company, or three business days after the date of mailing, if the mailing is
made postage pre-paid, by registered or certified mail, return receipt
requested, to the business address if to the Company, or the residence address
if to Executive Officer or to such other address as the applicable party may
from time to time designate.
15. Entire
Agreement.
Subject
to the agreements acknowledged in paragraph 8 above, this Employment Agreement
constitutes the only agreement and the entire agreement between Executive
Officer and the Company relating to his employment and supersedes and cancels
any and all previous contracts, arrangements or understandings with respect
thereto.
16. Amendment.
This
Agreement may not be amended or modified except in a writing executed by both
Executive Officer and the Company.
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17. Headings.
The
descriptive headings used in this Agreement are for convenience only and shall
not control or affect the meaning or construction of any provision in this
Agreement.
18. Counterparts.
This
Agreement may be executed in separate counterparts, each of which shall be
deemed an original and together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
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By:
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s/o
Xxxxxxx X. Xxxxx
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Xxxxxxx
X. Xxxxx
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Chairman,
Compensation Committee to the Board of Directors
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August
27, 2008
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Date
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s/o
Xxxxxxx Xxxxxx
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Xxxxxxx
Xxxxxx (Executive Officer)
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