EMPLOYMENT AGREEMENT
EXHIBIT
10.17
Agreement made and effective this
24th
day of February, 2009, 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
automatically be extended for additional one-year periods so long as the
Executive remains fully employed by the Company or until this Agreement is
amended or superseded by a new agreement.
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 $280,000 per year, which may be further increased as determined by the
Compensation Committee of the Board of Directors. Any increases in the gross
salary made after the effective date of this Agreement shall be considered to be
the gross salary for purposes of this Agreement. Executive Officer’s
salary shall be paid in accordance with the customary payroll practices of the
Company.
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(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 in the normal course for the twelve (12) months 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 Chairman of his determination that a material breach has
occurred; or
(iv) Executive
Officer’s unethical behavior, dishonesty, moral turpitudes which has caused harm
or injury to the business, operations or financial condition of the
Company.
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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.
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.
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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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February 27, 2009
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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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