EMPLOYMENT AGREEMENT, dated as of the 6th day of February, 2003, by
and between CORNICHE GROUP INCORPORATED, a Delaware corporation (the "Company"),
and XXXX XXXXXXX (the "Employee").
RECITALS
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WHEREAS, the Company and the Employee desire to enter into an
employment agreement which will set forth the terms and conditions upon which
the Employee shall be employed by the Company and upon which the Company shall
compensate the Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereto have agreed, and do hereby
agree, as follows:
1. EMPLOYMENT; TERM; SEVERANCE
1.1 The Company will employ the Employee in its business, and
the Employee will work for the Company therein, as its Chief Executive Officer
and President for a term commencing as of the date hereof and terminating on the
third anniversary of the date hereof (the "Initial Term"). The term shall be
extended for additional one (1) year periods (the "Extended Period") unless
either party gives ninety (90) days prior written notice to the other of its
desire to terminate this Agreement as of the end of the initial term or any
successive term. The term of this Agreement, as may be extended, is hereinafter
referred to as the "Term." Each twelve (12) month period of the Term is referred
to herein as a "Contract Year." Except as provided for herein, the provisions of
this Agreement shall apply during the Extended Period.
1.2 The Employee's employment may be terminated by the Company
at any time for "cause". As used in this Agreement, "cause" shall mean the
following: (i) the Employee's commission of any act in the performance of his
duties constituting common law fraud; (ii) the Employee's conviction of, or plea
of guilty or nolo contendre to, any felony; or (iii) any embezzlement or
misappropriation by the Employee of the Company's assets, properties or rights.
1.3 The Company may also terminate the Employee's employment
without cause at any time. In the event of termination without cause (other than
pursuant to Paragraph 6.1 hereof), as liquidated damages and as the sole and
exclusive remedy of the Employee, the Employee shall be entitled to (a) (i) a
lump sum payment equal to the greater of (A) his then Base Salary and Automobile
Allowance (each as hereinafter defined) for the remainder of the Term or (B) his
then Base Salary and Automobile Allowance for a period of nine (9) months and
(ii) a lump sum payment equal to the Employee's Bonus (as hereinafter defined)
for the remainder of the Term, and (b) be reimbursed for the remainder of the
Term pursuant to Paragraphs 9.2 and 9.3 hereof.
2. DUTIES
2.1 During the Term, the Employee shall serve as the Company's
Chief Executive Officer. In such capacity, he shall perform duties of an
executive character consisting of administrative and managerial responsibilities
on behalf of the Company, and he shall have such further duties of an executive
character as shall, from time to time, be delegated or assigned to him by the
Board of Directors of the Company (the "Board") consistent with the Employee's
position. The Company acknowledges and agrees that, in his capacity as Chief
Executive Officer of the Company, the Employee shall have the power and
authority to cause the Company to establish and/or move its principal executive
offices and/or its operations to the New York metropolitan area.
3. DEVOTION OF TIME
3.1 During the Term, the Employee shall (i) devote his full-
time efforts in discharging his duties hereunder; (ii) devote his best efforts,
energy and skill to the services of the Company and the promotion of its
interests; and (iii) not take part in activities detrimental to the best
interests of the Company.
4. COMPENSATION; STOCK OPTIONS
4.1 For all services to be rendered by the Employee during the
Term, the Employee shall be entitled to the compensation set forth in Paragraphs
4.2, 4.3 and 4.4 hereof.
4.2 The Employee shall be entitled to receive from the Company
minimum compensation at the following rates per annum ("Base Salary"):
Year Base Salary
---- -----------
1 $180,000
2 198,000
3 217,800
In the event the Term of this Agreement is extended beyond the Initial Term, the
Base Salary payable hereunder shall be increased by ten percent (10%) per annum.
The Employee shall be entitled to such additional compensation as may be
determined from time to time by the Board of Directors of the Company in its
sole discretion. All amounts due hereunder shall be payable in accordance with
the Company's standard payroll practices.
4.3 The Employee shall be entitled to an annual bonus amount
("Bonus") in the amount of $20,000. The Bonus for the initial Contract Year
shall be payable in the event, and concurrently on the date, that the Company
shall have received debt and/or equity financing in the aggregate amount of at
least $1,000,000 since the date hereof. The Bonus for each subsequent Contract
Year shall be payable on August 1 and shall not be subject to any condition. In
the sole discretion of the Board, any Bonus payment may be made sooner than the
times provided for above.
4.4 (a) Concurrently with the execution hereof, pursuant to
the Company's 2003 Equity Participation Plan (the "Equity Participation Plan")
and a Stock Option Agreement of even date (the "Initial Option Agreement"), the
Company is granting to the Employee the right and option to purchase up to
2,500,000 Common Shares of the Company at an exercise price of $.03 per share
and otherwise upon the terms set forth in the Stock Option Agreement (the
"Initial Option").
(b) In addition, in the event that the closing price of
the Company's Common Shares equals or exceeds $.50 per share for any five (5)
consecutive trading days during the Term, the Company shall grant to the
Employee, on the day immediately following the end of the five (5) day period,
pursuant to the Equity Participation Plan and a Stock Option Agreement, an
option for the purchase of an additional 2,500,000 Common Shares substantially
upon the terms of the Initial Option and in the form of the Initial Option
Agreement, except that the exercise price shall be $.50 per share and the option
shall be treated as an "incentive stock option" for tax purposes only to the
maximum extent permitted by law (the "Additional Option").
(c) The Employee agrees that he will not resell publicly
any Common Shares obtained upon exercise of the Initial Option and/or Additional
Option prior to the first anniversary of the date of this Agreement.
5. REIMBURSEMENT OF EXPENSES; AUTOMOBILE ALLOWANCE
5.1 The Company shall pay directly, or reimburse the Employee
for, all reasonable expenses and disbursements incurred by the Employee for and
on behalf of the Company in the performance of his duties during and prior to
the Term, including, without limitation, all reasonable expenses incurred by the
Employee for food, lodging and transportation, if he is required to perform any
of his duties away from his primary place of residence. For such purposes, the
Employee shall submit to the Company, not less than once in each calendar month,
reports of such expenses and other disbursements in the form normally used by
the Company.
5.2 The Employee shall be entitled to receive an automobile
allowance for the use of his automobile in the amount of one thousand dollars
($1,000) per month (the "Automobile Allowance").
5.3 The Company shall also pay directly, or shall reimburse
the Employee for, all wired and wireless telephone expenses, all other
reasonable home office expenses incurred in the performance of his duties during
the Term, including installation and monthly charges in connection with
broad-band service, and all expenses incurred by the Employee for legal fees and
disbursements in connection with this Agreement and the Initial Option
Agreement.
5.4 The Employee shall be given, and shall be entitled to use,
a Company credit card and telephone card in connection with the performance of
his duties.
6. DISABILITY
6.1 If, during the Term, the Employee shall, in the opinion
of a majority of the members of the Board, as confirmed by competent medical
evidence, become physically or mentally incapacitated to perform his duties for
the Company hereunder for a continuous period, then for the first three (3)
months of such period he shall receive his full Base Salary and for the second
three (3) months of such period, in lieu of full Base Salary, he shall receive
one-half (1/2) of his Base Salary. In no event shall the Employee be entitled to
receive any payments under this Paragraph 6.1 beyond the expiration or
termination date of this Agreement. Effective with the date of his resumption of
full employment, the Employee shall be re-entitled to receive his full Base
Salary. If such illness or other incapacity shall endure for a continuous period
of at least six (6) months, the Company shall have the right, by written notice,
to terminate the Employee's employment hereunder as of a date (not less than
five (5) days after the date of the sending of such notice of termination of
employment) to be specified in such notice. The Employee agrees to submit
himself for appropriate medical examination to a physician of the Company's
designation as necessary for purposes of this Paragraph 6.1. The provisions
hereof are not intended to limit the Employee's right to receive other amounts
payable to him pursuant to the provisions of this Agreement.
6.2 The obligations of the Company under this Paragraph 6 may
be satisfied, in whole or in part, by payments to the Employee under disability
insurance provided by the Company.
7. RESTRICTIVE COVENANT; CONFIDENTIAL INFORMATION
7.1 The Employee agrees that, if the term of his employment
hereunder shall expire or his employment shall at any time terminate voluntary
by the Employee (other than for Good Reason (as hereinafter defined)) or by the
Company for cause, the Employee will not at any time within one (1) year after
such expiration or termination, without the prior written approval of the
Company, anywhere in the United States of America, whether individually or as a
principal, officer, employee, partner, member, director or agent of, or
consultant for, any person or other entity ("Person"), engage or participate in
a business which, as of such expiration or termination date, is competitive with
that of the Company, and shall not make any investments in any such similar or
competitive entity, except that the Employee may acquire up to one percent (1%)
of the outstanding voting stock of any entity whose securities are listed on a
stock exchange or Nasdaq. As used herein, "Good Reason" shall mean the failure
of the Company to obtain Stockholder Approval (as hereinafter defined) and/or
file the Registration Statement (as hereinafter defined) by June 30, 2003 or a
breach by the Company of any of its obligations set forth in this Agreement.
7.2 (a) The Employee represents that he has been informed
that it is the policy of the Company to maintain as secret all Confidential
Information (as hereinafter defined) and further acknowledges that such
Confidential Information is of great value to the Company. The Employee
recognizes that, by reason of his employment with the Company, he will acquire
Confidential Information. The Employee confirms that it is necessary to protect
the Company's goodwill, and, accordingly, hereby agrees that he will not (except
where reasonably necessary in the performance of his duties, or where authorized
by the Board or as required by law, rule or regulation or applicable regulatory
or administrative process or by a court of competent jurisdiction), at any time
during the Term or thereafter, divulge to any Person, or use, any such
Confidential Information.
(b) The Employee agrees that, upon the expiration or
termination of this Agreement for any reason whatsoever, he shall deliver to the
Company any material relating to any Confidential Information received by the
Employee during the Term arising out of, in connection with, or related to any
activity or business of the Company.
(c) For purposes hereof, the term "Confidential
Information" shall mean all proprietary and confidential information obtained by
or given to the Employee during the course of his employment. Confidential
Information shall not include information which (i) was in the public domain at
the time furnished to, or acquired by, the Employee, or (ii) thereafter enters
the public domain other than through disclosure, directly or indirectly, by the
Employee or others in violation of an agreement of confidentiality or
nondisclosure.
8. VACATIONS
8.1 The Employee shall be entitled to five (5) weeks vacation
during each Contract Year of the Term, the time and duration of any particular
vacation period to be determined by mutual agreement between the Employee and
the Company. The Employee shall be paid for up to two (2) weeks unused vacation
time in any Contract Year. Any other vacation time not used by the end of a
Contract Year will be forfeited without compensation.
9. PARTICIPATION IN EMPLOYEE BENEFIT PLANS; OTHER INSURANCE
9.1 The Employee and any beneficiary of the Employee shall be
accorded the right to participate in and receive benefits under and in
accordance with the provisions of any pension, profit sharing, medical, dental,
life insurance and disability insurance benefits and plans of the Company either
in existence as of the date hereof or hereafter adopted for the benefit of its
executive employees.
9.2 Until such time as a medical and dental insurance plan of
the Company is established, the Company shall reimburse the Employee for all
medical and dental insurance premiums paid by him for himself and his family
covering the year 2003 and through the Term.
9.3 The Company shall reimburse the Employee for all premiums
paid by him for disability insurance. Such reimbursement obligation shall relate
to premiums covering the year 2003 and through the Term.
9.4 In the event of termination without cause, the Employee
shall be entitled to be reimbursed for comparable medical and dental insurance
premiums incurred until the earlier of (a) the end of the Term or (b) the date
on which comparable medical and dental coverage is obtained from another
employer.
10. OFFICER AND DIRECTOR LIABILITY INSURANCE
10.1 The Company shall obtain and maintain throughout the
Term officer and director liability insurance from an insurer reasonably
acceptable to the Employee in the amount of at least two million dollars
($2,000,000) or such lesser amount as shall be agreed to by the Employee. In the
event a "claims made" policy is obtained, the Company shall continue to cover
the Employee thereunder as a named issued following termination of employment
and until the expiration of all applicable statutes of limitation.
11. EARLIER TERMINATION
11.1 The Employee's employment hereunder shall automatically
terminate upon his death and may terminate at the option of the Company upon:
(a) the Employee's incapacity in accordance with the
provisions set forth in Paragraph 6.l hereof; or
(b) written notice to the Employee in the event the
Company terminates his employment hereunder for cause or without cause as set
forth in Paragraph 1.2 or 1.3 hereof, respectively.
11.2 The Employee may terminate this Agreement at any time
upon written notice to the Company for Good Reason.
12. REPRESENTATIONS AND WARRANTIES
12.1 The Company has the power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board and no other proceedings on the part of
the Company are necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes the valid and binding obligation of the Company and is
enforceable in accordance with its terms. The Option Plan and the grant of the
Initial Option and the Additional Option have been duly authorized by the Board
and no other proceedings on the part of the Company are necessary in connection
therewith.
12.2 Neither the execution and delivery of this Agreement by
the Company nor compliance by the Company with any of the provisions hereof nor
the consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the
Certificate of Incorporation or By-laws of the Company;
(b) violate or, alone or with notice or the passage of
time, result in the breach or termination of, or otherwise give any contracting
party the right to terminate, or declare a default under, the terms of any
contract, agreement, understanding or commitment to which the Company is a party
or by which it may be bound;
(c) violate any order, judgment, injunction, award or
decree against, or binding upon, the Company; or
(d) violate any law or regulation of any jurisdiction
relating to the Company.
12.3 Attached hereto as Exhibit 12.3 is a true and complete
copy of the Option Plan.
13. COVENANTS
13.1 The Company agrees that, promptly following the execution
of this Agreement, it shall prepare the necessary materials for, and shall call,
a meeting of stockholders pursuant to which the following matters shall be
submitted for stockholder approval: (a) election of five (5) directors
(including the Employee and, at the request of the Employee, a person designated
by the Employee), (b) approval of the Equity Participation Plan pursuant to
which 15,000,000 Common Shares are authorized to be issued thereunder, (c)
approval of an amendment to the Company's Certificate of Incorporation pursuant
to which the number of authorized Common Shares is increased to 250,000,000 and
(d) approval of a change in the name of the Company to "Phase III Medical, Inc."
(collectively, "Stockholder Approval"). The Company shall recommend approval of
each of the foregoing proposals. The failure of the Company to obtain
Stockholder Approval shall not affect the Employee's rights under the Initial
Option Agreement or his right to obtain the Additional Option.
13.2 The Company agrees that, promptly following the execution
of this Agreement, it shall file with the Securities and Exchange Commission a
Registration Statement on Form S-8 (the "Registration Statement") pursuant to
which the issuance of the shares covered by the Option Plan, as well as the
resale of the Common Shares issuable upon exercise of the Initial Option, are
registered. Promptly following any grant of the Additional Option, the Company
shall file a post-effective amendment to the Registration Statement pursuant to
which the Common Shares issuable upon the exercise thereof shall be registered
for resale.
14. ARBITRATION
14.1 All disputes between the parties hereto concerning
the performance, breach, construction or interpretation of this Agreement or any
portion thereof, or in any manner arising out of this Agreement or the
performance thereof, shall be submitted to binding arbitration, in accordance
with the rules of the American Arbitration Association, which arbitration
proceeding shall take place at a mutually agreeable location in Nassau County,
New York or such other location as agreed to by the parties. The parties
acknowledge and agree that the foregoing arbitration provision is the exclusive
means for resolving disputes hereunder and neither party shall claim that such
proceeding is in an inconvenient forum.
14.2 The award rendered by the arbitrators shall be final,
binding and conclusive, and judgment may be entered upon it in accordance with
applicable law in the appropriate court in the State of New York, with no right
of appeal therefrom.
14.3 The prevailing party shall be entitled to be reimbursed
by the other party for its or his expenses of arbitration, including, without
limitation, reasonable attorneys' fees and the expenses of the arbitrators and
the arbitration proceeding; provided, however, that, in the event it is not
evident whether a particular party prevailed in the proceeding, each party shall
pay its or his own expenses of arbitration, and the expenses of the arbitrators
and the arbitration proceeding shall be shared equally; provided further that,
in such event, if, in the opinion of the arbitrator, or a majority of the
arbitrators, as the case may be, any claim or defense was unreasonable, the
arbitrator(s) may assess, as part of his/their award, all or any part of the
arbitration expenses of the other party (including reasonable attorneys' fees)
and of the arbitrator(s) and the arbitration proceeding against the party
raising such unreasonable claim or defense.
15. ASSIGNMENT
15.1 This Agreement, as it relates to the employment of the
Employee, is a personal contract and the rights and interests of the Employee
hereunder may not be sold, transferred, assigned, pledged or hypothecated.
16. NOTICES
16.1 Any notice required or permitted to be given pursuant
to this Agreement shall be deemed to have been duly given when delivered by hand
or sent by certified or registered mail, return receipt requested and postage
prepaid, overnight mail or telecopier as follows:
If to the Employee:
c/o Certilman, Balin, Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx
Telecopier Number: (000) 000-0000
If to the Company:
c/o Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
Telecopier Number: (000) 000-0000
or at such other address as any party shall designate by notice to the other
party given in accordance with this Paragraph 16.1.
17. GOVERNING LAW
17.1 This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, excluding choice
of law principles thereof.
18. WAIVER OF BREACH; PARTIAL INVALIDITY
18.1 The waiver by either party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach. If any provision, or part thereof, of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
attach only to such provision and not in any way affect or render invalid or
unenforceable any other provisions of this Agreement, and this Agreement shall
be carried out as if such invalid or unenforceable provision, or part thereof,
had been reformed, and any court of competent jurisdiction or arbiters, as the
case may be, are authorized to so reform such invalid or unenforceable
provision, or part thereof, so that it would be valid, legal and enforceable to
the fullest extent permitted by applicable law.
19. ENTIRE AGREEMENT
19.1 This Agreement constitutes the entire agreement between
the parties and there are no representations, warranties or commitments except
as set forth herein. This Agreement supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, of the
parties hereto relating to the subject matter hereof. This Agreement may be
amended only by a writing executed by the parties hereto.
20. REPRESENTATION BY COUNSEL; INTERPRETATION
20.1 Each party acknowledges that it or he has been represented
by counsel, or has been afforded the opportunity to be represented by counsel,
in connection with this Agreement. Accordingly, any rule or law or any legal
decision that would require the interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived by the parties. The provisions of this Agreement shall be
interpreted in a reasonable manner to give effect to the intent of the parties
hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year above written.
CORNICHE GROUP INCORPORATED
By:_____________________________
Xxxxx Xxxx, Chairman
________________________________
Xxxx Xxxxxxx
