Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made _________ 1999 by and between UTEK
Corporation, a Delaware corporation, having an office at 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx Xxxx, Xxxxxxx 00000 (hereinafter referred to as "Employer") and
Xxxxxxxx X. Xxxxx, Ph.D.,c/o Utek Corporation,(hereinafter referred an
individual "Employee"):
WHEREAS, Employer employs, and desires to continue to employ, Employee
as the Chief Executive Officer (CEO) of Employer, and
WHEREAS, Employee is willing to continue to be employed as the CEO in
the manner provided for herein, and to perform the duties of the Employer upon
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows;
1. Employment of Employee: Employer hereby employs Employee as
Chief Executive Officer.
2. Term.
a. Subject to Section 10 below and further subject to Section 2(b)
below, the term of this Agreement shall commence on the first day of September
1999 and expire five years from such date. Each 12 month period from the
commencement date forward during the term hereof shall be referred to as an
"Annual Period." During the term hereof, Employee shall devote substantially all
of his business time and efforts to Employer and its subsidiaries and
affiliates.
b. Subject to Section 10 below, unless the Board of Directors of this
Company (the "Board") of Employer shall determine to the contrary and shall so
notify Employee in writing on or before the end of any Annual Period or unless
the Employee notifies Employer in writing on or before the end of the final
Annual Period of his desire not to renew this Agreement, then at the end of each
Annual Period, the term of this Agreement shall be automatically extended for
one (1) additional Annual Period to be added at the end of the then current term
of this Agreement.
3. Duties The Employee shall perform those functions generally
performed by persons of such title and position, shall attend all meetings of
the stockholders and the Board, shall perform any and all related duties and
shall have any and all powers as may be prescribed by resolution of the Board,
and shall be available to confer
and consult with and advise the officers and directors of Employer at such times
that may be required by Employer. Employee shall report directly and solely to
the Board.
4. Compensation
a. (i) Employee shall be paid a salary of $150,000. Employee
shall be paid periodically in accordance with the policies of the Employer
during the term of this Agreement, but not less than monthly. The basic
compensation provided in this Agreement shall be adjusted annually to reflect
the increase, if any, in the cost of living by adding to such basic salary an
amount obtained by multiplying the basic salary by the percentage by which the
level of the Consumer Price Index for al urban consumers for the United States,
as reported by the Bureau of Labor Statistics of the United States Department of
Labor has increased over its level as of the date of the commencement of this
Agreement. The adjustment shall take place on September 1, of each year and the
Employer shall begin paying the adjusted salary on September 15, of each year.
The Employee shall be paid such additional compensation from the Employer for
the services rendered under this Agreement as may be determined, from xxx to
time, in the sole discretion of the Board of Directors.
b. (ii) Company shall grant to the employee 100,000 incentive
stock options (ISO's)to purchase UTEK shares at 110% of the IPO price. These
options will vest the sooner of either pro rata, quarterly, over 36 months or
upon the bid price of UTEK being > or = to $10 for 15 consecutive trading days.
c. (iii) A reasonable automobile allowance to cover the cost of
leasing, insuring and maintaining a vehicle for the duration of this employment
agreement.
d. (iv) In the event of a "Change of Control:
(A) A person (other than a person who is an officer or a
Director of Employer on the effective date hereof), including a "group" as
defined in Section 13(d)(3) of the securities Exchange Act of 1934, becomes, or
obtains the right to become, the beneficial owner of Employer securities having
30% or more of the combined voting power of then outstanding securities of the
Employer that may be cast for the election of directors of the Employer;
(B) At any time, the Board-nominated slate of candidates
for the Board is not elected;
(C) Employer consummates a merger in which it is not the
surviving entity;
(D) Substantially all of Employer's assets are sold; or
Employer's stockholders approve the dissolution or liquidation of Employer; then
(v) (A) Employee shall be eligible to receive a one-time
bonus, equal on an after-tax basis to two times his then current annual base
salary. To effectuate this provision, the bonus shall be "grossed-up"
to include the amount necessary to reimburse Employee for his federal, state and
local income tax liability on the bonus and on the "gross-up" at the respective
effective marginal tax rates. In no event shall this bonus exceed three times
Employee's then current base salary. Said bonus shall be paid within thirty (30)
days of the Change of Control.
(B) All stock options, warrants and stock appreciation
rights ("Rights") granted by Employer to Employee under any plan or otherwise
prior to the effective date of the Change of Control, shall become vested,
accelerate and become immediately exercisable. In the event Employee owns or is
entitled to receive any unregistered securities of Employer, then Employer shall
use its best efforts to affect the registration of all such securities as soon
as practicable, but no later than 120 days after the effective date of the
registration statement; provided, however, that such period may be extended or
delayed by Employer for one period of up to 60 days if, upon the advice of
counsel at the time such registration ie required to be filed, or at the time
Employer is required to exercise its best efforts to cause such registration
statement to become effective, such delay is advisable and in the best interests
of Employer because of the existence of non-public material information, o to
allow Employer to complete any pending audit of its financial statements;
e. Employer shall include Employee in its health insurance program
available to Employer's executive officers and shall pay 100% of the premiums
for such program.
f. Employee shall have the right to participate in any other
employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as this Agreement
in effect, Employee will be nominated to the Board as part of management's slate
of Directors.
6. Expenses. Employee shall be reimbursed for all of his actual
out-of-pocket expenses incurred in the performance of his duties hereunder,
provided such expenses are acceptable to Employer, which approval shall not be
unreasonably withheld, for business related travel and entertainment expenses,
and that Employee shall submit to Employer reasonably detailed receipts with
respect thereto.
7. Vacation. Employee shall be entitled to receive four (4) weeks
paid vacation time after each year of employment upon dates agreed upon by
Employer. Upon separation of employment, for any reason, vacation time accrued
and not used shall be paid at the salary rate of Employee in effect at the time
of employment separation.
8. Secrecy. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning internal affairs or proprietary business
operations of Employer.
9. Covenant Not to Compete Subject to, and limited by, section
11(b), Employee will not, at any time, anywhere in the world, during the term of
this Agreement, and for one (1) year thereafter, either directly or indirectly,
engage in, with or for any enterprise, institution, whether or not for profit,
business, or company, competitive with the business of Employer as such business
may be conducted on the date thereof, as a creditor, guarantor, or financial
backer, stockholder, director, officer, consultant, advisor, employee, member,
inventor, producer, director, or otherwise of or through any corporation,
partnership, association, sole proprietorship or other entity; provided, that an
investment by Employee, his spouse or his children is permitted if such
investment is not more than four percent (4%) of the total debt or equity
capital of any such competitive enterprise or business and further provided that
said competitive enterprise or business is a publicly held entity whose stock is
listed and traded on a national stock exchange or through the NASDAQ Stock
Market.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement upon written
notice for Cause. For purposes hereof, "Cause" shall mean (A) engaging by the
Employee in conduct that constitutes activity in competition with Employer; (B)
the conviction of Employee for the commission of a felony; and/or (C) the
habitual abuse of alcohol or controlled substances. Notwithstanding anything to
the contrary in this Section 10(a)(i), Employer may not terminate Employee's
employment under this Agreement for Cause unless Employee shall have first
received notice from the Board advising Employee of the specific acts or
omissions alleged to constitute cause, and such acts or omissions continue after
Employee shall have had a reasonable opportunity (At least 10 days from the date
Employee receives the notice from the Board) to correct the acts or omissions so
complained of. In no event shall alleged incompetence of Employee in the
performance of Employees duties be deemed grounds for termination for Cause.
(ii) Employer may terminate Employee's employment under
this Agreement if, as a result of any physical or mental disability, Employee
shall fail or be unable to perform his duties under this Agreement for any
consecutive period of 90 days during any twelve-month period. If Employees
employment is terminated under this Section 10(a)(ii): (A) for the first six
months after termination, Employee shall be paid 100% of his full compensation
under Section 4(a) of this Agreement at the rate in affect on the date of
termination, and in each successive 12 month period thereafter Employee shall be
paid an amount equal to 67% of his compensation under Section 4(a) of this
agreement at the rate in effect on the date of termination and (B) Employee
shall continue to be entitled, insofar as is permitted under applicable
insurance policies or plans, to such general medical and employee benefit plans
(including profit sharing or pension plans) as Employee had been entitled to on
the date of termination. Any amounts payable by Employer to Employee under this
paragraph shall be reduced by the amount of any disability payments payable by
or pursuant to plans provided by Employer and actually paid to Employee.
(iii) This agreement automatically shall terminate upon the
death of Employee, except that Employee's estate shall be entitled to receive
any amount accrued under Section 4(a) and any other amount to which Employee was
entitled of the time of his death.
b. Termination by Employee
Employee shall have the right to terminate his employment under
this Agreement upon 30 days' notice to Employer given within 90 days following
the occurrence of any of the following events (A) through (F):
(A) Employee is not elected or retained as CEO.
(B) Employer acts to materially reduce Employee's duties and
responsibilities hereunder. Employee's duties and responsibilities shall not be
deemed materially reduced for purposes hereof solely by virtue of the fact that
Employer is (or substantially all of its assets are) sold to, or is combined
with, another entity, provided that Employee shall continue to have the same
duties and responsibilities with respect to Employer's business, and Employee
shall report directly to the chief executive officer and/or board of directors
of the entity (or individual) that acquires Employer or its assets.
(C) A Material Reduction (as hereinafter defined) in Employees
rate of base compensation, or Employee's other benefits. "Material Reduction"
shall mean a ten percent (10%) differential;
(D) A failure by Employer to obtain the assumption of this
Agreement by any successor;
(E) A material breach of this Agreement by Employer, which is
not cured within thirty (30) days of written notice of such breach by Employer;
(F) A Change of Control,
c. If Employer shall terminate Employee's employment other than
due to his death or disability or for Cause (as defined in Section 10(a)(i) of
this Agreement), or if Employee shall terminate this Agreement under Section
10(b)(i), Employer's obligations under Section 4 shall be absolute and
unconditional and not subject to any offset or counterclaim and Employee shall
continue to be entitled to receive all amounts provided for by Section 4 and all
additional employee benefits under Section 4 regardless of the amount of
compensation he may earn with respect to any other employment he may obtain.
11. Consequences of Breach by Employment Termination.
a. If this Agreement is terminated pursuant to Section 1D(b)(i)
hereof, or if Employer shall terminate Employee's employment under this
Agreement in any way that is a breach of this Agreement by Employer, the
following shall apply:
(i) Employee shall receive as a bonus, and in
addition to his salary continuation pursuant to Section 10 (b)(8)above, a cash
payment equal to the Employee's total base salary as of the date of termination
hereunder for the remainder of the term plus an additional amount to pay all
federal, state and local income taxes thereon on a grossed-up basis as
heretofore provided, payable within 30 days of the date of such termination.
(ii) Employee shall be entitled to payment of any previously
declared bonus and additional compensation as provided in Section 4(a) and (b)
above.
b. In the event of termination of Employees employment pursuant to
Section 10(b)(i) of this Agreement, the provisions of Section 9 shall not apply
to Employee.
12. Remedies
Employer recognizes that because of Employee's special talents,
stature and opportunities in the technology acquisition industry, and because of
the special creative nature of and compensation practices of said industry and
the material impact that individual projects can have on company's results of
operations, in the event of termination by Employer hereunder (except under
Section 10(a)(i) or (iii), or in the event of termination by Employee under
Section 10(b)(i) before the end of the agreed term, the Employer acknowledges
and agrees that the provisions of this Agreement regarding further payments of
base salary, bonuses and the exercisability of Rights Constitute fair and
reasonable provisions for the consequences of such termination, do not
constitute a penalty, and such payments and benefits shall not be limited or
reduced by amounts' Employee might earn or be able to earn from any other
employment or ventures during the remainder of the agreed term of this
Agreement.
13. Excise Tax. In the event that any payment or benefit received or to be
received by Employee in connection with a termination of his employment with
Employer would constitute a "parachute payment" within the meaning of Code
Section 28OG or any similar or successor provision to 28OG and/or would be
subject to any excise tax imposed by Code Section 4999 or any similar or
successor provision then Employer shall assume all liability for the payment of
any such tax and Employer shall immediately reimburse Employee on a "grossed-up"
basis for any income taxes attributable to Employee by reason of such Employer
payment and reimbursements.
14. Arbitration Any controversies between Employer and Employee involving
the construction or application of any of the terms, provisions or conditions of
this Agreement, save and except for any breaches arising out of Sections 8 and 9
hereof, shall on the written request of either party served on the other be
submitted to arbitration. Such arbitration shall comply with and be governed by
the rules of the American Arbitration Association. An arbitration demand must be
made within one (1) year of the date on which the party demanding arbitration
first had notice of the existence of the claim to be arbitrated, or the right to
arbitration along with such claim shall be considered to have
been waived. An arbitrator shall be selected according to the procedures of the
American Arbitration Association. The cost of arbitration shall be born by the
losing party or in such proportions as the arbitrator shall decide. The
arbitrator shall have no authority to add to, subtract from or otherwise modify
the provisions of this Agreement, or to award punitive damages to either party.
15. Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.
16. Entire Agreement; Survival. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this Agreement
shall not effect the enforceability of any other Provision. This Agreement may
not be amended except by an agreement in writing signed by the Employee and the
Employer, or any waiver, change, discharge or modification as sought. Waiver of
or failure to exercise any rights provided by this Agreement and in any respect
shall not be deemed a waiver of any further or future rights.
The provisions of Sections 4, 8, 9,10(a)(ii) 10(a)(iii), 10(c), 11,
12, 13, 14, 19, and 20 shall survive the termination of this Agreement.
17. Assignment. This Agreement shall not be assigned to other parties.
18. Governing Law. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto shall be governed by the internal laws
of the State of Florida, without regard to the conflicts of laws principles
thereof.
19. Notice. All notices, responses, demands or other communications under
this Agreement shall be in writing and shall be deemed to have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt confirmed), provided that
a copy Is mailed by registered or certified mail, return receipt requested; or
c. received by the addressee as sent be express delivery service
(receipt requested) in each case to the appropriate addresses, telex numbers and
telefax numbers as
the party may designate to itself by notice to the other parties:
(i) If to the Employer:
UTEK Corporation
000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx Xxxx, Xx 00000
Telefax: 000-000-0000
Telephone: 000-000-0000
(ii) If to the Employee:
Xx. Xxxxxxxx X. Xxxxx
0000 Xxxx Xxxxx
Xxxxx Xxxx, Xx 00000
Telefax 000-000-0000
Telephone 000-000-0000
20. Severability Should any part of this Agreement for any reason be
declared invalid by a court of competent jurisdiction, such decision shall not
affect the validity of any remaining portion, which remaining provisions shall
remain in full force and effect as if this Agreement had been executed with the
invalid portion thereof eliminated, and it is hereby declared the intention of
the parties that they would have executed the remaining portions of this
Agreement without including any such part, parts or portions which may, for any
reason, be hereafter declared invalid.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of the
day and year first above written.
UTEK, Corporation
By;______________________ ___________________________
Xxxxxxxx X. Xxxxx, Ph.D. Xxx Xxxxxxx, Ph.D., M.D.
Employee President
