Exhibit 10.2
EXECUTIVE
EMPLOYMENT AGREEMENT
This Agreement is made to be effective as of the 1st day of April 2005, by
and between Vitro Diagnostics, Inc., a Nevada corporation (the "Company") and
Xxxxx X. Xxxxxxxxx ("Employee").
W I T N E S S E T H:
--------------------
WHEREAS, the Company wishes to engage Employee's services upon the terms
and conditions hereinafter set forth; and
WHEREAS, Employee wishes to be employed by the Company upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual promises set
forth herein, the sufficiency of which is hereby acknowledged, the parties agree
as follows:
1. Employment; Duties. The Company hereby agrees to employ Employee
effective as of the Effective Date as its President and CEO. Employee's
principal area of responsibility, subject to modification by the Company, shall
be to serve as the chief executive officer. His job duties will include
management of all business matters involved in running the Company, including,
but not limited to, business development, commercialization of technology
presently owned by the Company, strategic planning, and outside funding of the
development of the Company. He will also share responsibility with the Chief
Financial Officer for full SEC compliance of the Company. The Employee shall at
all times report to and take direction from, the Board of Directors.
2. Best Efforts. Employee agrees to use his best efforts to promote the
interests of the Company and shall, except for illness, reasonable vacation
periods and leaves of absence, devote his full business time and energies to the
business and affairs of the Company. Employee shall be permitted to perform
outside business endeavors only with the approval of the Board of Directors,
subject to non-competition agreements with the Company and provided that such
outside activities do not interfere with the performance of Employee's duties.
Employee may also engage in work for charitable, benevolent, civic or
educational purposes so long as such endeavors do not interfere with Employee's
duties hereunder.
3. Term of Agreement. The term of this Agreement shall commence on the date
first above written (the "Effective Date") and shall continue, unless earlier
terminated in accordance with the terms of Paragraph 5, for a period of three
years (the "Original Term"). The Original Term shall be extended automatically
for an additional three-year period (a "Renewal Term") unless either party gives
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Xxxxx X. Xxxxxxxxx Employment Contract with Vitro Diagnostics, Inc.
notice to the other that this Agreement will not be extended at least 90 days
prior to the expiration of the Original Term or any Renewal Term. The period of
employment of Employee by the Company, commencing with the Effective Date and
continuing until termination of the employment by notice hereunder, in
accordance with Paragraph 5 or otherwise shall be known as the "Term of
Employment."
4. Compensation.
4.1 Base Salary. The following table sets forth the compensation to the
employee during the initial three years of the employment contracts:
Year Base Salary
---- -----------
1 $180,000
2 $250,000
3 $300,000
In the event that the Company raises $3 million or more during the first two
years of this contract, then the base salary would become $300,000/year,
effective as of the closing date of the financing. Payment of the base salary to
the employee is to be according to current Company policy, which includes
deferral and an option to convert salary to common stock under certain terms and
conditions.
4.2 Stock Options.
(i) On the Effective Date of this Agreement, the Employee shall receive a
fully vested option to purchase up to Two Hundred and Fifty Thousand (250,000)
shares of the Company's common stock, par value $0.001 at an exercise price of
$0.17 per share. This Stock Option shall be exercisable beginning with the date
of the signing of this agreement and for a period of 10 years from the Effective
Date. However, should the employment of the Employee with the Company terminate
without cause according to the provisions herein, the option to purchase Company
common stock described here shall terminate 90 days following the date of
termination of employment, otherwise the right terminates immediately.
(ii) An additional stock option shall be granted to the employee at the
effective date of this agreement to purchase up to five hundred thousand
(500,000) shares of the Company's common stock, par value $0.001 at an exercise
price of $0.17 per share. This option would fully vest, i.e., be exercisable,
upon the achievement of a strategic alliance to commercialize the fertility drug
technology by a third party, the successful financing of at least $3 million to
drive the commercialization of VITROPIN(TM) internally, or the sale or
out-license of the Company's drug/technology to another party on mutually
agreeable terms. It is agreed by the Company and the employee that satisfaction
of the vesting condition of this option is primarily the closing of a
transaction as described. The Company is obligated to provide this option to the
employee based on a duly approved resolution of the Board of Directors of the
Company. This Stock Option shall be exercisable beginning with the date of
vesting for a period of 10 years from the vesting date. However, should the
employment of the Employee with the Company terminate according to the
provisions herein, the option to purchase Company common stock described here
shall terminate 90 days following the date of termination of employment.
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(iii) An additional stock option shall be granted to the employee at the
effective date of this agreement to purchase up to five hundred thousand
(500,000) shares of the Company's common stock, par value $0.001 at an exercise
price of $0.17 per share. This option would fully vest, i.e., be exercisable,
upon the achievement of a strategic alliance to commercialize Vitro's beta islet
technology by a third party, the successful financing to drive the
commercialization internally, or the sale or out-license of the technology to
another party on mutually agreeable terms. It is agreed that the satisfaction of
the conditions to vest this option is primarily the closing of a transaction as
described. This Stock Option shall be exercisable beginning with the date of
vesting for a period of 10 years from the vesting date. However, should the
employment of the Employee with the Company terminate according to the
provisions herein, the option to purchase Company common stock described here
shall terminate 90 days following the date of termination of employment.
(iv) An additional stock option shall be granted to the employee at the
effective date of this agreement to purchase up to one hundred and fifty
thousand (150,000) shares of the Company's common stock, par value $0.001 at an
exercise price of $0.17 per share. This later option would fully vest at a
future time when the Company reports product sales of $125,000 through a
financial statement filed with the SEC on form 10QSB or 10KSB and this may be
cumulative for a fiscal reporting period not to exceed one year. This Stock
Option shall be exercisable beginning with the date of vesting for a period of
10 years from the vesting date. However, should the employment of the Employee
with the Company terminate according to the provisions herein, the option to
purchase Company common stock described here shall terminate 90 days following
the date of termination of employment.
(v) An additional stock option shall be granted to the employee to purchase
up to one hundred and fifty thousand (150,000) shares of the Company's common
stock, par value $0.001 at an exercise price equal to the market price of the
Company's common stock on the date the Company first reports product sales of
$250,000 through a financial statement filed with the SEC on form 10QSB or 10KSB
during a cumulative fiscal reporting period not to exceed one year. This Stock
Option shall be exercisable beginning with the date of vesting for a period of
10 years from the vesting date. However, should the employment of the Employee
with the Company terminate according to the provisions herein, the option to
purchase Company common stock described here shall terminate 90 days following
the date of termination of employment.
(vi) An additional incentive stock option is to be provided to the employee
to encourage the expansion of the business opportunities available to the
Company including the in-licensing of complementary technologies, the expansion
of the strategic plan of the Company or other new business development as may be
appropriate. The Company agrees to consider appropriate stock option incentives
to the employee for initiating transactions related to such acquisitions under
terms and conditions that will be defined in the future, but essentially
appropriate to the achievement and according to industry standards when such
transactions with the Company are closed.
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The Company will draft such appropriate stock option agreements pursuant to
the above options and further agrees to grant these options as incentive options
through the Company's Equity Incentive Plan of 2000 in as much as possible,
i.e., according to the number of shares available in the Plan or through another
such plan as may be approved by the Company and a majority of its shareholders.
The Plan permits the grant of incentive options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended. All options would be
granted with a provision for cashless exercise whereby a portion of the option
shares could be redeemed at market price at the time of exercise (closing bid)
to satisfy the cost of exercising the option. The Company also agrees that all
incentive stock options as provided herein shall immediately vest to the
employee upon the acquisition of the Company or substantially all of its assets
by a third party.
4.4 Benefits. Employee shall be entitled to participate in all benefit
programs established by the Company and generally applicable to the Company's
executive employees. Employee shall also be reimbursed for reasonable and
necessary business expenses incurred in the course of his employment with the
Company pursuant to Company policies as established from time to time.
5. Termination of Employment Relationship.
5.1 Death or Incapacity. This Agreement shall terminate immediately upon
the death or Total Disability of Employee, and in such event, the Employee shall
have no further claim against the Company for compensation or benefits
hereunder. The Board of Directors shall make a determination of the Total
Disability of the Employee based upon the definition of disability and terms
contained in the Company's disability insurance policy, or if none, based upon
the inability of the Employee to perform the material functions of his job. Any
such determination by the Board shall be evidenced by its written opinion
delivered to the Employee. Such written opinion shall specify with particularity
the reasons supporting such opinion and be manually signed by at least a
majority of the Board.
5.2 Termination by the Company. This Agreement may be terminated by the
Company for "Cause" and, in such event, the term of employment shall terminate
at the termination date designated by the Company. For the purpose of this
paragraph, "Termination for Cause" or "Cause" shall include the following:
(a) Breach of fiduciary duty or criminal conduct by the Employee
having the effect of materially adversely affecting the Company and/or its
reputation;
(b) Willful failure by the Employee to substantially perform his
duties hereunder;
(c) Engagement by the Employee in the use of narcotics or alcohol to
the extent that the performance of his duties is materially impaired;
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(d) Material breach of the terms of this Agreement by the Employee or
failure to substantially comply with proper instructions of the Company's Board
of Directors;
(e) Misconduct by the Employee which is materially injurious to the
Company; or
(f) Any act or omission on the part of the Employee not described
above, but which constitutes material and willful misfeasance, malfeasance, or
gross negligence in the performance of his duties to the Company.
Determination of any event or events and circumstances constituting "Cause"
shall be at the sole discretion of the Board of Directors. In the event that a
dispute arises between the board members and an impasse results that cannot be
resolved through standard measures, Xx. Xxxx Xxx Xxxx who is presently Vice
President of Research, will provide arbitration and tie breaking of deadlocked
voting.
5.3 Termination by Employee. Employee may terminate this Agreement for
"Good Reason"; provided, however, that Employee's obligations under Paragraph 6
shall survive any termination of this Agreement by Employee, by the Company or
otherwise. For purposes of this paragraph, Good Reason shall mean:
(a) Any assignment to the Employee of any duties materially
inconsistent with the position described in Section 1 hereof,
(b) Any material diminution of the duties of the Employee
then-existing without the written consent of the Employee,
(c) Any removal of the Employee from or failure to re-elect the
Employee to the positions described in Section 1 hereof, except in connection
with termination of the Employee pursuant to Section 5.1 or 5.2 hereof,
(d) A reduction in the Employee's rate of compensation, or a reduction
in the Employee's fringe benefits or any other failure of the Company to comply
with Section 4 hereof,
(e) Other material breach of this Agreement by the Company, or
(f) Following a "Change in Control," defined below.
A "Change of Control" shall be deemed to have occurred if (i) a tender
offer shall be made and consummated for the ownership of 50% or more of the
outstanding voting securities of the Company, (ii) the Company shall be merged
or consolidated with another corporation and as a result of such merger or
consolidation less than 50% of the outstanding securities of the surviving or
resulting corporation shall be owned in the aggregate by the former stockholders
of the Company, as the same shall have existed immediately prior to such merger
or consolidation, (iii) the Company shall sell more than 75% of its assets to
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another corporation which is not a wholly owned subsidiary, or (iv) within any
period of six consecutive months, individuals who at the beginning of the period
constituted the Board of the Company cease for any reason other than increase by
voluntary consent to constitute a majority of the Board of the Company then in
office.
Any termination by the Board of Directors pursuant to Section 5.2 or by the
Employee pursuant to section 5.3 shall be communicated by written Notice of
Termination to the other party hereto. Notice of Termination shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated.
5.4 Payment Upon Termination.
(a) If this Agreement is terminated by the Company for Cause prior to
the completion of the Original Term or an ongoing Renewal Term, Employee shall
not be entitled to severance pay of any kind but shall be entitled to all
reasonable reimbursable business expenses incurred by Employee and the Base
Salary earned by Employee prior to the date of termination, and all obligations
of the Company under Paragraph 4 hereof shall terminate upon the termination
date designated by the Company, except to the extent otherwise required by law.
(b) In the event that Employee is terminated without Cause or the
Employee resigns with Good Reason, the Company shall pay Employee one (1) year's
Base Salary at the rate prevailing for Employee immediately prior to such
termination as severance pay, payable in accordance with Company's policy.
Employee shall also be entitled to receive benefits to which he was entitled
immediately preceding the date of termination for a period of twelve (12) months
from date of termination.
6. Non-Competition Agreement.
6.1 Competition; Confidential Information. The Employee and the Company
recognize that due to the nature of his engagements hereunder, and the
relationship of the Employee to the Company, the Employee has had access to and
has acquired, will have access to and will acquire, and has assisted in and may
assist in developing, confidential and proprietary information relating to the
business and operations of the Company and its affiliates, including, without
limiting the generality of the foregoing, information with respect to their
present and prospective products, systems, customers, agents, processes, and
sales and marketing methods. The Employee acknowledges that such information has
been and will continue to be of central importance to the business of the
Company and its affiliates and that disclosure of it to or its use by others
could cause substantial loss to the Company. The Employee and the Company also
recognize that an important part of the Employee's duties will be to develop
good will for the Company and its affiliates through his personal contact with
customers, agents and others having business relationships with the Company and
its affiliates, and that there is a danger that this good will, a proprietary
asset of the Company and its affiliates, may follow the Employee if and when his
relationship with the Company is terminated. Employee acknowledges that his
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services to be rendered hereunder have a unique value to the Company, for the
loss of which the Company cannot be adequately compensated by damages in an
action at law. In view of the unique value to the Company of the services of
Employee, and because of the Confidential Information to be obtained by or
disclosed to Employee, and as a material inducement to the Company to enter into
this Employment Agreement and to pay to Employee the compensation referred to in
Paragraph 4 hereof, Employee covenants and agrees that:
6.2 Non-Competition.
(a) While Employee is employed by the Company, Employee will not,
either personally, whether as an officer, director, owner, manager, principal,
partner, employee, agent, distributor, representative, stockholder, consultant
or otherwise, or with or through any other person or entity operate or
participate in any other business which competes with the Company as of the date
of Employee's termination date (for purposes of Paragraph 6 hereof, the Company
shall be deemed to include all subsidiaries and joint ventures of the Company
whether now or hereafter affiliated with the Company) nor will Employee, while
Employee is employed by the Company, and for a period of one (1) year
thereafter, directly or indirectly solicit any person who has been an employee,
supplier or customer of the Company during the period of one (1) year prior to
the termination of employment. This non-competition clause shall apply in the
geographic territory comprised of the entire United States and any other
geographic area in which the Company is engaged in business. Employee
acknowledges that this non-competition/non-solicitation agreement is reasonable
in terms of its scope and duration.
(b) Nothing in this Section 6.2 shall be construed to prevent the
Employee from owning, as an investment, not more than 1% of a class of equity
securities issued by any competitor of the Company or its affiliates and
publicly traded and registered under Section 12 of the Securities Exchange Act
of 1934.
6.3 Trade Secrets. The Employee will keep confidential any trade secrets or
confidential or proprietary information of the Company and its affiliates which
are now known to him or which hereafter may become known to him as a result of
his employment or association with the Company and shall not at any time
directly or indirectly disclose any such information to any person, firm or
corporation, or use the same in any way other than in connection with the
business of the Company or its affiliates during and at all times after the
expiration of the Term of Employment. For purposes of this Agreement, "trade
secrets or confidential or proprietary information" means information unique to
the Company or any of its affiliates which has a significant business purpose
and is not known or generally available from sources outside the Company or any
of its affiliates or typical of industry practice. Trade secrets or confidential
or proprietary information may include information with respect to the Company's
personnel records, present and prospective products, systems, customers, agents,
processes, and sales and marketing methods.
6.4 Patents. The Employee will assign permanently to the Company exclusive
rights to any patents awarded to him on the basis of ideas developed by the
Employee for the Company during or prior to the Term of Employment and its
affiliates and ideas developed by the Employee within one year following the
termination of his employment from the Company which are related to such
employment and/or the business of the Company.
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6.5 It is agreed that Employee's services are unique, and that any breach
or threatened breach by Employee of any provisions of this Paragraph 6 may not
be remedied solely by damages. Accordingly, in the event of a breach or
threatened breach by Employee of any of the provisions of this Paragraph 6, the
Company shall be entitled to injunctive relief, restraining Employee and any
business, firm, partnership, individual, corporation, or entity participating in
such breach or attempted breach, from engaging in any activity which would
constitute a breach of this Paragraph 6. Nothing herein, however, shall be
construed as prohibiting the Company from pursuing any other remedies available
at law or in equity for such breach or threatened breach, including the recovery
of damages.
6.6 The provisions of this Paragraph 6 shall survive the termination of
this Agreement and the termination of Employee's employment.
7. Miscellaneous.
7.1 Assignability. Employee may not assign his rights and obligations under
this Agreement without the prior written consent of the Company, which consent
may be withheld for any reason or for no reason.
7.2 Severability. In the event that any of the provisions of this Agreement
shall be held to be invalid or unenforceable, the remaining provisions shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. Without limiting the
generality of the foregoing, in the event that any provision of Paragraph 6
relating to time period and/or areas of restriction shall be declared by a court
of competent jurisdiction to exceed the maximum time period or areas(s) such
court deems enforceable, said time period and/or area(s) of restriction shall be
deemed to become, and thereafter be, the maximum time period and/or area for
which such are enforceable.
7.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to the subject matter hereof and supersedes all
prior agreements or understandings among the parties hereto with respect to the
subject matter hereof.
7.4 Amendments. This Agreement shall not be amended or modified except by a
writing signed by both parties hereto.
7.5 Waiver. The failure of either party at any time to require performance
of the other party of any provision of this Agreement shall in no way affect the
right of such party thereafter to enforce the same provision, nor shall the
waiver by either party of any breach of any provision hereof be taken or held to
be a waiver of any other or subsequent breach, or as a waiver of the provision
itself. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Colorado without regard to the conflict of laws of such
State. The benefits of this Agreement may not be assigned nor any duties under
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this Agreement be delegated by Employee without the prior written consent of the
Company, except as contemplated in this Agreement. This Agreement and all of its
rights, privileges, and obligations will be binding upon the parties and all
successors and agreed to assigns thereof.
7.6 Binding Agreement. This Agreement shall be effective as of the date
hereof and shall be binding upon and inure to the benefit of the Employee, his
heirs, personal and legal representatives, guardians and permitted assigns. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and shall be binding upon any successor or assignee of the Company.
7.7 Headings. The headings or titles in this Agreement are for the purpose
of reference only and shall not in any way affect the interpretation or
construction of this Agreement.
7.8 Arbitration. Any dispute between the Company and the Employee with
respect to this Agreement shall be submitted to binding arbitration in Jefferson
County, Colorado pursuant to the rules of the American Arbitration Association
then in effect and before an arbitrator fully licensed and authorized by any and
all applicable rules, statutes, regulations or the like to hear such cases in
the State of Colorado. The arbitrators shall have the power to award any legal
or equitable remedies that would be available in proceedings conducted before a
state or federal court of competent jurisdiction in Colorado. Judgment on the
award of the arbitrators may be entered in any court of competent jurisdiction.
All arbitration proceedings and the results thereof shall be confidential,
except to the extent that any party is required to make disclosure concerning
such proceedings under applicable law.
7.9 No Conflict. The Employee represents and warrants that he is not
subject to any agreement, order, judgment or decree of any kind which would
prevent him from entering into this Agreement or performing fully his
obligations hereunder.
7.10 Survival. The rights and obligations of the parties shall survive the
Term of Employment to the extent that any performance is required under this
Agreement after the expiration or termination of such Term of Employment.
7.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same document.
7.12 Notices. Any notice to be given hereunder by either party to the other
may be effected in writing by personal delivery, or by mail, certified with
postage prepaid, or by overnight delivery service. Notices sent by mail or by an
overnight delivery service shall be addressed to the parties at the addresses
appearing following their signatures below, or upon the employment records of
the Company but either party may change its or his address by written notice in
accordance with this paragraph.
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7.13 Opportunity to Consult Counsel. The Parties hereto represent and agree
that, prior to executing this Agreement, each has had the opportunity to consult
with independent counsel concerning the terms of this Agreement.
7.14 Attorney Fees. In the event of any dispute, arbitration, litigation
between the Parties or proceeding before any court of competent jurisdiction,
the prevailing party shall be entitled to reasonable attorney fee, costs and
expenses.
IN WITNESS WHEREOF, the parties hereto have properly and duly executed this
Agreement as of the date first written above.
THE COMPANY:
Vitro Diagnostics, Inc.
By:
------------------------------------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
00000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
EMPLOYEE:
------------------------------------------------------
Xxxxx X. Xxxxxxxxx
0 Xxxxxxx Xxx
Xxxxxxx, Xxx Xxxxxx 00000
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