Exhibit 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
April 4, 2000 ("Effective Date"), by and between Worldwide Medical Corporation,
a Delaware corporation (the "Company"), with its principal place of business
located at 000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, and Xxxxxx
X. XxXxxxx, an individual whose address is ____________________________________
("Executive"). The parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES. The Company shall employ Executive in
the position of President. Executive shall report directly to the Board of
Directors of the Company, or such other persons designated by the Board of
Directors. Executive shall perform all duties and obligations of the position of
President, including, but not limited to, those related to general and active
direction of the management and supervision of the business operations of the
Company, subject to any limitations imposed, from time to time, by the Board of
Directors. Executive shall devote his full time, attention, and energies
exclusively to the business and interests of the Company, and to the performance
of his duties and obligations under this Agreement. At all times, Executive
shall follow and abide by all directions, including legal instructions, and
rules, policies and procedures of the Company in force during the course of
Executive's employment with the Company.
2. TERM OF AGREEMENT. The term of this Agreement shall commence
on the date hereof and shall continue through and including October 4, 2000,
subject to the earlier termination provisions set forth in Section 6, below, and
to the extension provisions set forth hereinbelow (the "Employment Term"). In
the event that Executive is employed by the Company as of October 4, 2000, and
such employment has not been terminated by either Executive or the Company as of
that date, the term of this Agreement shall automatically, and without any
action on the part of either the Company or Executive, be extended through and
including April 4, 2001. During each of the seventh through and including
twelfth months of this Agreement, the Base Salary obligations of the Company
shall be extended for an additional two months, such that in the event that the
Company shall terminate Executive for any reason other than for Cause, the
Company shall be obligated to tender to Executive an additional twelve months of
Base Salary, payable in semi--monthly installments. If Executive continues in
the employ of the Company from and after the thirteenth month after the
commencement of the Employment Term, such obligation shall be reduced by one
month for each month of continued employment until the twenty--fourth month
after the commencement of the Employment Term, at which time such obligation
shall be fully extinguished. There is no obligation on the part of the Company
to continue the employment relationship with Executive following the expiration
of the Employment Term.
3. COMPENSATION. The Company shall provide the following
compensation to Executive during the Employment Term as consideration for
Executive's performance of all his duties and obligations under this Agreement.
a. BASE SALARY. The Company shall pay to Executive an
annual base salary of $125,000.00, payable semi-monthly, during each contract
year of the Employment Term (the "Base Salary"). The Base Salary shall be
payable in accordance with the Company's ordinary payroll practices in effect
during the Employment Term, subject to the usual and required payroll deductions
and withholdings.
b. BONUS. Not later than ninety (90) days after the close
of a fiscal year during which Executive was employed by the Company in
accordance with the terms of this Agreement, the Board of Directors of the
Company shall declare a cash bonus (the "Bonus") in favor of Executive, which
shall be based on the Company's performance and shall be in an amount to be
determined by the application of the formula set forth in Schedule 3b, attached
hereto. The Bonus shall be paid annually not later than ninety (90) days after
the close of each fiscal year of the Company and, subject to the provisions of
Section 6, below, shall not be annualized, but shall be proportionately adjusted
in the event that the term of Executive's employment hereunder shall not be for
a period that is co-extensive with any relevant fiscal year of the Company.
4. FRINGE BENEFITS; EXPENSE REIMBURSEMENT.
a. FRINGE BENEFITS. As additional compensation under this
Agreement, Executive shall be entitled to receive the following benefits (the
"Fringe Benefits"):
(1) HEALTH AND DISABILITY INSURANCE. During the
Employment Term, Executive and his family shall be entitled to participate in
any group health insurance plan, and, in respect of Executive, any disability
plan, maintained from time to time by the Company for the benefit of its
executive officers, subject to and in accordance with the terms of the
applicable plan.
(2) VACATIONS, HOLIDAYS AND SICK TIME. Executive
shall be entitled to one weeks' vacation time, effective as of October 4, 2000,
with an additional two weeks' vacation time, effective as of April 4, 2001,
during all of which vacation time his Base Salary shall accrue in full, and
which may be taken when Executive's absence shall not be harmful to the Company,
as determined by the Board of Directors in its sole discretion. During each year
of the Employment Term thereafter, Executive shall be entitled to three weeks'
vacation time, subject to the limitations on accrual of vacation time set forth
at the end of this Subsection. Executive shall promptly inform the Company of
any time used as vacation time during the Employment Term. Executive shall be
entitled to holidays and sick time without reduction in his Base Salary in
accordance with the policies and practices established from time to time by the
Company for its employees in the Company's sole discretion. The maximum amount
of vacation time that may be accrued in favor of Executive shall be three weeks.
In the event that Executive has accrued three weeks vacation time, Executive
shall not accrue any additional vacation time unless and until Executive shall
have utilized some of his accrued vacation time. In such event, vacation time
shall commence to accrue until Executive shall have once again accrued three
weeks of unused vacation time.
(3) 401(k) PLAN. Executive understands that the
Company currently has no 401(k) plan. If one is established, during the
Employment Term, the Company shall provide Executive with the opportunity to
participate in the Company's 401(k) plan, subject to and in accordance with the
terms of the plan as established from time to time by the Company for its
employees in the Company's sole discretion.
(4) AUTOMOBILE ALLOWANCE. During Executive's
employment with the Company under this Agreement, the Company shall provide
Executive with an automobile allowance in the amount of $600.00 per month. Such
allowance shall be in respect of all automobile expenses, including lease or
purchase payments, insurance payments, and the costs of gasoline, maintenance
and repair expenses based on mileage incurred for business purposes.
(5) COMPANY PROPERTY. During the Employment Term,
Company shall provided executive with an office, desktop computer, and related
equipment reasonably necessary for the performance by the Executive of his
duties and obligations hereunder. Upon termination of Executive's employment
with the Company at any time for any reason, or upon the Company's request at
any time for any reason, Executive shall promptly return to the Company all of
the foregoing and all other Company Property. "Company Property" shall include,
without limitation, access cards; keys; credit cards; rolodexes; manuals; lists
of prices, personnel, addresses, vendors, suppliers, existing or potential
customers; all records, papers, documents, materials, all data kept, made or
received by Executive in the performance of his duties while employed by the
Company, and any copies or duplicates of any Company Property.
b. EXPENSE REIMBURSEMENT. Upon presentment to the Company
of appropriate receipts and other necessary documentation, Executive shall be
reimbursed for all reasonable and appropriate out-of-pocket business expenses
incurred by Executive in accordance with the Company's expense reimbursement
policies as the same may be in effect from time to time.
5. TAXES. In the event that Executive owes any taxes by virtue of
any payments made or benefits conferred by the Company, the Company shall not be
liable to pay or obligated to reimburse Executive for any such taxes or to make
any adjustment of Executive's compensation under this Agreement. Any
compensation paid to Executive under this Agreement, including but not limited
to, the Base Salary, Bonus and any taxable Fringe Benefit, shall be reported as
required on all earnings statements and shall be reduced by any required
withholding for federal, state and local taxes and other appropriate payroll
deductions.
6. TERMINATION OF EMPLOYMENT; EXTENSION OF TERM. Subject to
Section 2, above, the Company shall have the right to terminate Executive's
employment prior to the expiration of the Employment Term for Cause, in the
event of Executive's death or Disability, or without Cause, and Executive shall
have the right to resign for Good Reason after a Change in Control, as set forth
below.
a. TERMINATION FOR CAUSE. For the purposes of this
Agreement, "Cause" shall be defined as a determination by the Board of Directors
of the Company, based upon its good faith judgment, that any of the following
has occurred: (1) the failure or refusal of Executive to adequately perform his
duties under this Agreement (whether intentional, reckless or negligent) or
Executive's breach of any other term under this Agreement; (2) fraudulent
conduct by Executive in connection with the Company's business; (3) the
commission by Executive of a felony or any act involving dishonesty or moral
turpitude; (4) conduct by Executive that could harm the Company's reputation or
goodwill or otherwise could be detrimental to the Company's best interests; or
(5) violation by Executive of any Company policy or rule. In the event of a
violation by Executive of any Company policy or rule, such an occurrence shall
not be a basis for termination for cause if such a violation is not intentional,
and if Executive shall forthwith upon receipt of notice of occurrence of such a
violation initiate reasonable action to correct the violation. In the event of a
termination for Cause, Executive shall be entitled to receive payment of his
Base Salary and any accrued, unused vacation time earned through the date of
termination. Each such payment shall be made upon the sooner of any requirements
of California or the ordinary payment periods of the Company. Except as
expressly set forth in this Section 6a, Executive shall not be entitled to
receive any Base Salary, Fringe Benefit, or Bonus in the event of a termination
for Cause.
b. DEATH. If Executive dies prior to the expiration of the
Employment Term, his beneficiary or estate shall be entitled to receive payment
of the Base Salary, any accrued, unused vacation time through the date of death,
and such Bonus as would have been paid to Executive had the reason for the
Termination of Employment been the expiration of the Employment Term. Each such
payment shall be made upon the sooner of any requirements of California or the
ordinary payment periods of the Company. Except as expressly set forth in this
Section 6(b), Executive shall not be entitled to receive any Base Salary, Fringe
Benefit, or Bonus in the event of a termination upon death.
c. DISABILITY. For the purposes of this Agreement,
"Disability" shall be defined as the incapacity of Executive, whether total or
partial, mental or physical, due to illness, injury, or other reason, to perform
his duties for a period of ninety (90) days, whether or not consecutive, in any
twelve (12)--month period during the Employment Term, all as determined by the
Board of Directors of the Company. Determinations as to the date and extent of
incapacity of Executive shall be made by the Board of Directors of the Company,
upon the basis of such evidence, including independent medical reports and data,
that the Board of Directors of the Company deems necessary and desirable. All
such determinations by the Board of Directors of the Company shall be final. In
the event that the Company terminates Executive's employment because of
Executive's Disability, Executive shall be entitled to receive payment of his
Base Salary, any accrued, unused vacation time through the date of termination,
and such Bonus as would have been paid to Executive had the reason for the
Termination of Employment been the expiration of the Employment Term. In the
event that Executive has not become eligible to receive disability benefits as
of the date of termination, the Company may, in its sole discretion, continue to
pay to Executive his Base Salary until the date upon which Executive becomes
eligible to receive disability benefits, but, in any event, no longer than
thirty (30) days after the date of termination. Each such payment shall be made
upon the sooner of any requirements of California or the ordinary payment
periods of the Company. Except as expressly
set forth in this Section 6(c), Executive shall not be entitled to receive any
Base Salary, Fringe Benefit, or Bonus in the event of Executive's Disability.
d. TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON.
In the event that the Company terminates Executive's employment without Cause as
defined in Section 6(a), or Executive resigns upon written notice to the Company
for Good Reason after a Change in Control as defined in this Section 6(d),
Executive shall be entitled to receive payment of his Base Salary for a period
equal to twelve (12) months, in accordance with the Company's regular payroll
practices, any accrued, unused vacation time through the date of termination,
and such Bonus as would have been paid to Executive had the reason for the
Termination of Employment been the expiration of the Employment Term. Each such
payment for accrued, unused vacation time and the Bonus shall be made upon the
sooner of any requirements of California or the ordinary payment periods of the
Company. Such payment shall be in full and complete satisfaction of any rights
or obligations under this Agreement or any other applicable law. Except as
expressly set forth in this Section 6(d), Executive shall not be entitled to
receive any Base Salary, Fringe Benefit, or Bonus in the event of a termination
without Cause or resignation for Good Reason after a Change in Control.
(1) "Change in Control" means the first of the
following to occur after the date of this Agreement: (A) the liquidation,
dissolution, merger, consolidation, or reorganization of the Company, or any
transaction in which securities possessing more than 50 percent of the total
combined voting power of the Company's outstanding voting securities are
transferred or issued to persons different from the persons holding those
securities immediately prior to such transaction, or the sale, transfer, or
other disposition of all or a significant portion of the Company's business or
assets; or (B) the individuals who constitute the Board of Directors on the date
of this Agreement (or their approved replacements as defined in the next
sentence) cease for any reason to constitute a majority of the Board of
Directors. A new Director shall be considered an "approved replacement" if his
or her election (or nomination for election) was approved by a vote of at least
two--thirds of the then--current Directors who were either Directors on the date
of this Agreement or were themselves approved replacement Directors.
(2) "Good Reason" means the occurrence of any of
the following without Executive's express written consent: (A) the failure of
the Company to honor any of its material obligations under this Agreement; (B) a
significant adverse change in the nature or scope of the authorities, powers,
functions, responsibilities, or duties with respect to the Company that
Executive possessed or performed at the commencement of the Employment Term; (C)
a reduction in the Base Salary, or the termination of Executive's rights to any
continuing employee benefit to which he was entitled to at the commencement of
the Employment Term, or a reduction in scope or value of such benefit; (D)
Executive's principal office is transferred to another location which increases
Executive's one-way commuting time by more than 60 minutes based on Executive's
residence at the time of the transfer, or the Company requires Executive to
travel away from his office in the course of discharging his responsibilities or
duties hereunder more than 14 consecutive calendar days or an aggregate of more
than 45 calendar days in any consecutive 90-calendar-day period. However, an
event that is or would constitute Good Reason shall cease to be Good Reason if:
(AA) Executive does not terminate employment within 60 days after the event
occurs; or (BB) the Company reverses the action or cures the
default that constitutes Good Reason within ten (10) calendar days after receipt
by the Company of written notice from Executive of Executive's intent to resign
for Good Reason. If Executive has Good Reason to terminate employment, Executive
may do so even if Executive is on a leave of absence due to physical or mental
illness or any other reason.
e. BONUS AND BENEFITS. Upon termination of this Agreement
for any reason or for no reason, Executive shall not be eligible to receive any
Fringe Benefit or Bonus, except to the extent that, on or before the termination
date, Executive's right to receive a benefit has vested in accordance with the
express terms and conditions of any benefit plan or program in which Executive
participates, or by the express terms and conditions of this Agreement.
7. NON-COMPETITION AND NON-DISCLOSURE.
a. ASSISTANCE TO COMPETITORS. During the Employment Term,
Executive shall not own a material interest in, render financial services to, or
offer personal services to (whether for compensation or otherwise) any entity or
individual that competes with the business activities of the Company ("Company
Business"). "Company Business" shall mean the Company's business as it is
currently conducted by the Company or by any of its affiliates (collectively
referred to in this Section 7 as the "Company"), and any other business activity
in which the Company is, has been, or becomes engaged in at any time during the
Employment Term.
b. CONFIDENTIAL INFORMATION. Executive acknowledges and
agrees that the Company is engaged in business activities in which it is or may
be crucial to develop and retain proprietary, trade secret, or confidential
information for the benefit of the Company (collectively, "Confidential
Information"). Accordingly, Executive shall not at any time during or after the
Term, either directly or indirectly, (i) divulge or convey any Confidential
Information to any entity or individual, except as may be expressly authorized
in writing by the Board of Directors of the Company, or required by its best
interests in the course of Executive's performance of his duties hereunder, or
(ii) use any Confidential Information for Executive's own benefit or the benefit
of any entity or individual except the Company. The Confidential Information to
which Executive may have access may include, but is not limited to, matters of a
technical or intellectual nature, such as inventions, software, designs,
improvements, processes of discovery, techniques, methods, ideas, discoveries,
developments, know-how, formulae, compounds, compositions, specifications, trade
secrets, specialized knowledge, or matters of a business nature, such as
information about costs and profits, records, customer lists, customer data, or
sales data.
8. NOTICES. All notices or other communications made pursuant to
this Agreement shall be made in writing and shall be deemed delivered when (a)
delivered personally, (b) sent by first--class mail, postage prepaid, to
Executive or the Company, as applicable, at the addresses indicated above (or to
such other addresses as such party may designate in writing), or (c) sent by
facsimile with electronic confirmation of receipt.
9. APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with and subject to the laws of the State
of California.
10. ARBITRATION.
a. EXCLUSIVE REMEDY. Except as set forth in Subsection c,
below, arbitration shall be the sole and exclusive remedy for any dispute,
claim, or controversy of any kind or nature (a "Claim") arising out of, related
to, or connected with Employee's employment relationship with the Company, or
the termination of Employee's employment relationship with the Company,
including any Claim against any parent, subsidiary, or affiliated entity of the
Company, or any director, officer, general or limited partner, employee or agent
of the Company or of any such parent, subsidiary, or affiliated entity.
b. CLAIMS SUBJECT TO ARBITRATION. This Agreement to
arbitrate specifically includes (without limitation) all claims under or
relating to any federal, state, or local law or regulation prohibiting
discrimination, harassment, or retaliation based on race, color, religion,
national origin, sex, age, disability, or any other condition or characteristic
protected by law; demotion, discipline, termination, or other adverse action in
violation of any contract, law, or public policy; entitlement to wages or other
economic compensation; and any claim for personal, emotional, physical,
economic, or other injury.
c. CLAIMS NOT SUBJECT TO ARBITRATION. This Agreement does
not apply to any legal action by the Company seeking injunctive relief for
breach or enforcement of Sections 4a(6) or 7 of the Agreement. This Agreement
also does not apply to any claims by Employee: (1) for workers' compensation
benefits; (2) for unemployment insurance benefits; (3) under a benefit plan
where the plan specifies a separate arbitration procedure; (4) filed with an
administrative agency that are not legally subject to arbitration under this
Agreement; or (5) that are otherwise expressly prohibited by law from being
subject to arbitration under this Agreement.
d. PROCEDURE. Any Claim submitted to arbitration shall be
decided by a single, neutral arbitrator (the "Arbitrator"). The parties to the
arbitration shall mutually select the Arbitrator not later than 45 days after
service of the demand for arbitration. If the parties for any reason do not
mutually select the Arbitrator within the 45-day period, then either party may
apply to any court of competent jurisdiction to appoint a retired judge as the
Arbitrator. The parties agree that arbitration shall be conducted in accordance
with California Code of Civil Procedure Sections 1280, et seq. except as
modified in this policy. The Arbitrator shall apply the substantive federal,
state, or local law and statute of limitations governing any Claim submitted to
arbitration. In ruling on any Claim submitted to arbitration, the Arbitrator
shall have the authority to award only such remedies or forms of relief as are
provided for under the substantive law governing such Claim. Judgment on the
Arbitrator's decision may be entered in any court of competent jurisdiction.
e. COSTS. Any fees and costs incurred in the arbitration
(e.g., filing fees, transcript costs and Arbitrator's fees) will be shared
equally by Employee and the Company, except that the Arbitrator may reallocate
such fees among the parties if the Arbitrator determines that an equal
allocation would impose an unreasonable financial burden on Employee. The
parties shall be responsible for their own attorneys' fees and costs, except
that
the Arbitrator shall have the authority to award attorneys' fees and costs to
the prevailing party in accordance with the applicable law governing the
dispute.
f. INTERPRETATION OF ARBITRABILITY. The Arbitrator, and
not any federal or state court, shall have the exclusive authority to resolve
any issue relating to the interpretation, formation, or enforceability of this
Agreement, or any issue relating to whether a Claim is subject to arbitration
under this Agreement, except that any party may bring an action in any court of
competent jurisdiction to compel arbitration in accordance with the terms of
this Agreement.
11. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is declared invalid by any tribunal, then such provision shall be
deemed automatically adjusted to the minimum extent necessary to conform to the
requirements for validity as declared at such time and, as so adjusted, shall be
deemed a provision of this Agreement as though originally included herein. In
the event that the provision invalidated cannot be so adjusted, the provision
shall be deemed deleted from this Agreement as though such provision had never
been included herein. In either case, the remaining provisions of this Agreement
shall remain in full force and effect.
12. AMENDMENTS AND WAIVER. No supplement, modification, or
amendment of any term, provision, or condition of this Agreement shall be
binding or enforceable unless evidenced in writing executed by Executive and the
Company. No waiver of any term, provision, or condition of this Agreement shall
be deemed to be, or shall constitute, a waiver of any other term, provision, or
condition herein, whether or not similar. No such waiver shall be binding unless
in writing and signed by the waiving party.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement
between Executive and the Company relating to Executive's employment. It
supersedes all prior and contemporaneous agreements, arrangements, negotiations,
and understandings related thereto.
15. HEADINGS. The headings of sections and subsections of this
Agreement are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Company has caused its duly authorized
representative to execute, and Executive has executed, this Agreement as of the
date herein first above written.
WORLDWIDE MEDICAL CORPORATION
By:
--------------------------------------
Xxxx Xxxxxxx, director and
Chairman of Compensation Committee
By:
--------------------------------------
Xxxx Xxxx, director and
Member of Compensation Committee
By:
--------------------------------------
Xxxxx Xxxxxxx, director and
Member of Compensation Committee
-------------------------------------------
XXXXXX X. XX XXXXX
SCHEDULE 3b
In order to qualify for a Bonus, the Net Pre-Tax Profit Margin of the
Company (using the Annual Revenues method of inclusion in EBITDA for
qualification purposes) shall be not less than ten percent in any relevant
fiscal year. If Executive qualifies for a Bonus, the Bonus to be declared by the
Board of Directors of the Company and payable by the Company to Executive shall
be calculated in accordance with the Bonus Matrix attached hereto, using Gross
Sales $ and EBITDA (using Gross Sales $ for calculation purposes).
For purposes of determining qualification for, and calculation of amount
of, a Bonus, the following definitions shall apply:
a) "Gross Sales $" shall mean collections in respect of Annual
Revenues accrued during the relevant fiscal year, plus collections in respect of
Annual Revenues accrued during all prior fiscal years that were collected during
the relevant fiscal year, as derived from the statements of cash flows contained
in financial statements included the Company's Annual Report on Form 10-KSB for
the relevant fiscal year.
b) "Annual Revenues" shall mean all product sales revenues of the
Company accrued during the relevant fiscal year, as reported on financial
statements included in Company's Annual Report on Form 10-KSB for the relevant
fiscal year.
c) "EBITDA" shall mean the Company's earnings (using Annual
Revenues, for qualification purposes, and Gross Sales $, for Bonus calculation
purposes) before interest, taxes, depreciation, and amortization, as derived
from financial statements included in the Company's Annual Report on Form 10-KSB
for the relevant fiscal year.
d) "Net Pre-Tax Profit Margin" shall mean the relevant EBITDA
divided by Gross Sales $.
BONUS MATRIX FOR PRESIDENT/CEO
NET PRE-TAX PROFIT MARGIN
-----------------------------------------------------------------------
GROSS SALES 10% 12.50% 15% 17.50% 20%
----------- ------ ------ ------- ------- -------
2,000,000 24000 30000 36000 52500 60000
2,500,000 30000 37500 56250 65625 75000
3,000,000 36000 56250 67500 78750 90000
3,500,000 52500 65625 78750 91875 105000
4,000,000 60000 75000 90000 105000 120000
4,500,000 67500 84375 101250 118125 144000
5,000,000 75000 93750 112500 140000 160000
5,500,000 82500 103125 123750 154000 176000
6,000,000 90000 112500 144000 168000 204000
6,500,000 97500 121875 156000 193375 221000
7,000,000 105000 140000 168000 208250 238000
7,500,000 112500 150000 191250 223125 270000
8,000,000 120000 160000 204000 238000 288000
8,500,000 136000 170000 216750 267750 308000
9,000,000 144000 191250 229500 283500
9,500,000 152000 201875 242250 299250
10,000,000 160000 212500 270000
10,500,000 168000 223125 289500
11,000,000 176000 233750 297000
[ ] 1.2 x MRG.
[ ] 1.5 x MRG.
[ ] 1.6 x MRG.
[ ] 1.7 x MRG.
[ ] 1.8 x MRG.
