SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.53
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
Second Amendment to the Employment Agreement dated as of November 15, 2006 (“Employment
Agreement”) by and between CYTOCORE, INC. (“Company”) and XX. XXXXXXX XXXXX (“Xxxxx”). The
parties thereto agree as follows:
1. Commencing on December 1, 2007 Xxxxx shall be employed by the Company as its President of
International Operations. Xxxxx shall devote a substantial amount of his time and effort to develop
a distribution system for the Company’s products in Europe, Latin America and Asia.. Xxxxx shall
identify reputable and experienced European, Latin American and Asian distributors and upon
authorization by the Company negotiate the terms of distribution agreements with them, subject to
the Company’s approval and execution of such agreements (“Xxxxx Distributors”). The Xxxxx
Distributors shall be assigned exclusive ‘Areas’ so that the major markets in Europe, Latin America
and Asia will be adequately served. The Company shall determine the Areas, transfer pricing and
minimum quantities acceptable to the Company to enter into any distribution agreements. Upon
execution of the distribution agreements, Xxxxx shall work with the Xxxxx Distributors on the
Company’s behalf to implement said agreements.
2. In that capacity, Xxxxx shall receive the following compensation:
(a) a commission of 3% of gross revenue received from the Xxxxx Distributors for
Company products sold to them. The Company may terminate any or all of the Xxxxx Distributors upon
the Company’s determination that such Distributor(s) are not producing sufficient sales in its
Area, exhibiting poor payment history with the Company or failing to maintain a 35% or greater
profit margin on the Company’s sale of its products to such
1
Distributor(s). In addition, gross sales shall be reduced by refunds, returns or allowances, taxes
and bad debts.
(b) The commission due on the sale of Company products to the Xxxxx Distributors
shall be paid to Xxxxx during the term of this Agreement including any renewals thereof. Upon
the expiration or earlier termination of this Agreement, Xxxxx shall receive 3% of gross
revenue during the 12 months after the expiration or earlier termination date; 2% of gross revenues
during the following 12 months after the expiration or earlier termination date of this Agreement and
1% during the third year after the expiration or earlier termination date of this Agreement.
35% of the commissions due Xxxxx shall be paid upon delivery of products to each Xxxxx
Distributor; the balance shall be paid within 10 days after payment by the Xxxxx Distributor has cleared.
Payment of commissions shall be paid in U.S. Dollars.
The Company will provide Xxxxx with the basis upon which the Company has determined his
commissions. Xxxxx may request an audit of such calculation. The Company shall perform such audit,
but Xxxxx will be charged for such expense if the audit determines that the commission paid to
Xxxxx is not less than 95% of the correct commission amount.
(c) Xxxxx will work with the Company’s management to identify and appoint distributors of the Company’s products in the United States. Xxxxx shall receive a commission
of 1 and l/2% of gross revenue (as defined above) from the sale of the Company’s products to such
distributors for a period of 2 years, commencing on the first sale of the Company’s products
to each such United States distributor. Such commission shall be earned upon the reasonable
determination of the President of the Company that Xxxxx’x assistance materially aided in
securing the distributor. The United States shall be deemed to be the 50 states, Puerto Rico
and U.S. Territories.
2
(d) a salary of $10,000 per month, commencing on December 1, 2007. Salary paid
hereunder shall be subject to all appropriate federal and state withholding practices of the
Company.
Draws received by Xxxxx under the Amendment to Employment Agreement dated July 2007 shall
continue to be treated as offsets against commissions earned by Xxxxx from the Xxxxx Distributors
until repaid in full.
(e) Xxxxx will participate in any medical, dental, disability, life insurance and other
Executive benefit plans of the Company which are made available to other executives of the Company;
provided, however, that any such benefits for Company executives as a group may be changed,
modified or revoked at the discretion of the Company on not less than 90 days prior written notice.
(f) Xxxxx is authorized to incur reasonable, ordinary and necessary business expenses in the
performance of his duties hereunder and the Company shall reimburse him, or pay the expenses, in
accordance with the policies established by the Company within 30 days of submission of adequate
substantiation of such expenses. During the term of this Agreement and any renewal thereof Xxxxx
shall receive an automobile allowance of $550.00 per month.
(g) During the term of this agreement and any renewal thereof, the Company shall reimburse
Xxxxx for his monthly office rent at Carnegie Center.
(h) Xxxxx will be nominated for membership to the Board of Directors of the Company
at its next scheduled meeting.
3. The term of this Agreement shall commence on December 1, 2007 and continue in full
force and effect until November 30, 2008 and may be extended for additional 12 month periods upon
notice no later than September 30 of each year. Notwithstanding the foregoing,
3
either party may terminate this Agreement upon not less than 60 days prior written notice to the
other.
4. Xxxxx shall be eligible to receive the following grants of warrants based on
performance:
(a) a warrant to purchase 15,000 shares of common stock of the Company should sales to Xxxxx
Distributors equal or exceed U.S. $20,000,000 during calendar year 2008.
(b) a warrant to purchase 15,000 shares of common stock of the Company should sales to Xxxxx
Distributors equal or exceed U.S. $40,000,000 during calendar year 2008.
(c) a warrant to purchase 15,000 shares of common stock of the Company should sales to Xxxxx
Distributors equal or exceed U.S. $40,000,000 during calendar year 2009.
(d) a warrant to purchase 15,000 shares of common stock of the Company should sales to Xxxxx
Distributors equal or exceed U.S. $60,000,000 during calendar year 2009.
(e) a warrant to purchase 15,000 shares of common stock of the Company should sales to Xxxxx
Distributors equal or exceed U.S. $60,000,000 during calendar year 2010.
(f) a warrant to purchase 15,000 shares of common stock of the Company should sales to Xxxxx
Distributors equal or exceed U.S. $90,000,000 during calendar year 2010.
(g) a warrant to purchase 20,000 shares of common stock of the Company should the closing
price of the Company’s common stock exceed $5.00 per share during 30 trading days out of any
consecutive 45 trading days.
(h) a warrant to purchase 20,000 shares of common stock of the Company should the closing
price of the Company’s common stock exceed $7.00 per share during 30 trading days out of any
consecutive 45 trading days.
4
(i) a warrant to purchase 20,000 shares of common stock of the Company should the closing
price of the Company’s common stock exceed $10.00 per share during 30 trading days out of any
consecutive 45 trading days.
(j) a warrant to purchase 20,000 shares of common stock of the Company should the closing
price of the Company’s common stock exceed $12.00 per share during 30 trading days out of any
consecutive 45 trading days.
The exercise price for each of the warrants shall be fair market value on the date each such
warrant may be exercised taking into consideration the restriction on transferability of such
shares at the time of exercise.
5. Xxxxx hereby confirms his obligation to comply with Sections 6, 7, 8, 9 and 10 of the
Employment Agreement and be subject to the exercise by the Company of its remedies as set forth in
Section 10 thereof. Notwithstanding the foregoing, the Company will release Xxxxx from his
obligations to comply with the restrictions set forth in Section 7, 8 and 9 of the Employment
Agreement by relinquishing his right to receive commissions from the Xxxxx Distributors, effective
on the date Xxxxx notifies the Company in writing that he elects to be relieved of such compliance
obligations.
6. Any inconsistency between the terms of this Second Amendment and the terms of the
Employment Agreement and Amendment shall be resolved in favor of this Second Amendment. Any
provision in the Employment Agreement and Amendment which is not inconsistent with the terms of
this Second Amendment shall remain in full force and effect. However, Compensation as defined in
the Employment Agreement shall only refer to the consideration set forth in this Amendment.
5
7. Xxxxx has entered into this Second Amendment voluntarily and after receiving the advice of
and consultation with his attorney. He understands the meaning and consequences to him resulting
from his execution of this Second Amendment.
8. The parties hereto shall jointly issue a press release relating to the change of
responsibilities of Xxxxx.
9. This Second Amendment shall be governed by and construed under the laws of the State of
Illinois.
IN WITNESS WHEREOF, the parties hereto
have set their hands as of this
day of November, 2007.
| CYTOCORE, INC. |
||||
| By: | ||||
| Xx. Xxxxxxx Xxxxx | ||||
6
