VIKING SYSTEMS, INC. EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
99.3
VIKING
SYSTEMS, INC.
This
Employment Agreement (the “Agreement”) is made as of January 4, 2008, by and
between Xxxxxxx X Xxxx, an
individual and a resident of the State of Nevada (the “Executive”) and Viking
Systems, Inc., a Delaware corporation with a principal place of business at
000
Xxxxxxxx Xxxx, Xxxxxxxxxxx , XX 00000, (the “Company”).
RECITALS
WHEREAS
the Company wishes to employ the Executive as Chief Executive Officer of the
Company, and the Executive wishes to be employed as Chief Executive Officer
of
the Company.
WHEREAS
the Company and the Executive wish to set forth in this Agreement the terms
and
conditions under which the Executive is to be employed by the Company.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby mutually acknowledged, the Company and the Executive hereby
agree as follows:
1. Employment
1.1 Term.
The term of the
Executive’s employment under this Agreement shall be for a two (2) year period
commencing on January 4, 2008 (”Commencement Date”) and ending on January 3,
2010 (“Ending Date”), unless terminated earlier in accordance with the terms of
Article 7 of this Agreement (“Termination Date”). The term shall be
automatically extended without further action on the part of either party for
successive one year terms, unless the Executive or the Company notifies the
other of his or its intention not to renew. Any notice of intention
not to renew must be given in writing and must be made no later than ninety
(90)
days before the expiration of the current term. Notwithstanding the
foregoing, the employment relationship between the Company and the Executive
may
be terminated by the Executive or by the Company at any time, with or without
cause, subject to the terms and conditions contained in Article 7 of this
Agreement.
1.2 Title.
From and after
the Commencement Date, the Company shall employ the Executive as Chief Executive
Officer of the Company, and the Executive shall have the duties,
responsibilities and authority consistent with such position as described in
Section 1.3 hereof. It is further agreed that on or after the Commencement
Date,
the Executive may continue to serve as the Chairman
of
the Company’s Board of Directors.
1.3 Duties.
From and
after the Commencement Date and for so long as he is employed hereunder, the
Executive (i) shall devote his full professional time and attention, best
efforts, energy and skills to the services required of him as an employee and
Director of the Company, except for paid time off taken in accordance with
the
Company’s policies and practices. and subject to the Company’s existing policies
pertaining to reasonable periods of absence due to sickness, personal injury
or
other disability; (ii) shall use his best efforts to promote the interests
of
the Company; (iii) shall comply with all applicable governmental laws, rules
and
regulations and with all of the Company’s policies, rules and/or regulations
applicable to the employees of the Company; and (iv) shall discharge his
responsibilities in a diligent and faithful manner, consistent with sound
business practices and in accordance with the directives of the Board of
Directors of the Company. The Executive shall report directly to the
Company’s Board of Directors and shall actively participate in the preparation
and presentation to the Board of Directors of all reports regarding the
business, operations and prospects of the Company. The Executive’s primary
responsibilities during his employment with the Company shall be to (a) oversee
all of the Company’s day-to-day operations; (b) initiate and negotiate
relationships for the Company with strategic business partners; and (c) perform
any other duties assigned to him by the Company’s Board of
Directors.
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1.4 Life
Insurance. If
requested by the Company to do so, the Executive will cooperate with the
Company’s efforts to procure a term life insurance policy on the Executive with
the Company listed as sole beneficiary, at the Company’s expense.
2. Outside
Activities
2.1 Prohibited
Outside
Activities. The Executive agrees and promises that during the Employment
Period, he will not be engaged in any other business or as a consultant to
or
general partner, employee, officer or director of any partnership, firm,
corporation, or other entity, or as an agent for any person, or otherwise,
if
such activity is pursued for gain, profit, or other pecuniary advantage without
the prior written consent of the Board of Directors of the Company.
2.2 Investment.
Nothing
in this Article 2 shall be construed as preventing the Executive from engaging
in the investment of his personal assets so long as such investment activity
does not require: (i) any participation on the Executive’s part in the operation
or the affairs of the enterprise or enterprises in which such investments are
made or (ii) the rendering of any services by the Executive to any such
enterprise.
3. Wage
Compensation
3.1 Amount.
From and
after the Commencement Date, the Company shall pay the Executive an annual
base
salary of thirty nine thousand dollars ($39,000.00), less applicable
withholding taxes (“Base Salary”).
3.2 Payment.
Base Salary
payments will normally be made to the Executive biweekly or otherwise, in
accordance with the Company’s pay period practices.
3.3 Adjustment.
The
Executive’s Base Salary may be subject to annual adjustments during the
Employment Period on or about the anniversary of his Commencement Date.
Adjustments, if any, shall be at the sole discretion of the Board of Directors
of the Company.
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3.4 Stock
Options. The
Executive shall be granted under the Company’s 2007 Equity Incentive Plan a
stock option to purchase 2,240,000 shares of the Company’s common stock with a
ten year life and at an exercise price equal to the fair market value of the
Company’s common stock on the date of grant. The option will vest 25%
immediately and 25% on each of the subsequent anniversary dates of the
grant. Vesting will be subject to continuing service with the
Company.
3.5 No
Limitation on Termination
Rights. Nothing in this Article 3 shall be construed to limit either
party’s right to terminate this Agreement in accordance with
the terms hereof.
4. Bonus
Compensation
4.1 Nature.
During the
Employment Period, the Executive may be eligible to receive bonus compensation
(“Bonus Compensation”), in the sole discretion of the Company’s Board of
Directors. None is currently contemplated.
4.2 No
Limitation on Termination
Rights. Nothing in this Article 4 shall be construed to limit either
party’s right to terminate this Agreement in accordance with the terms
hereof.
5. Benefits
From
and
after the Commencement Date, the Executive shall be entitled to reasonable
and
customary group health and life insurance benefits. The Executive shall be
entitled to participate in the Company’s 40 1(k) plan and other benefit programs
of the Company under the terms and conditions of such plan or programs.
6. Business
Expenses
Upon
presentation of appropriate documentation, the Company shall reimburse the
Executive for reasonable, out-of-pocket business expenses incurred by the
Executive in the course of his performance of his duties hereunder. The
Executive will submit monthly expense reports for approval by the Board of
Directors or Chief Financial Officer of the Company.
7. Termination
of
Employment
The
Executive’s employment may be
terminated at any time during or after the employment term in accordance with
the following provisions and if the Executive’s employment is so terminated,
then, except as specifically stated in this Article 7, all of the compensation
and benefits to which he was entitled shall cease upon the effective date of
such termination (the “Termination Date”). The Executive agrees that
if his employment is terminated by the Company and if he is asked by the Company
to do so, he shall resign from his position as Chairman of the Board of
Directors.
7.1 At
the Election of the
Company With Cause. The Company may, immediately and unilaterally,
terminate the Executive’s employment and this Agreement “with cause” at any time
during or after the employment term upon written notice to the Executive setting
forth the reason(s) for such immediate termination. Notwithstanding the
foregoing, if the Company elects to terminate the Executive’s employment due to
a material breach by the Executive of this Agreement, the Company shall first
provide the Executive with written notice stating the nature of the breach
by
the Executive and giving the Executive fifteen (15)
days
in which to cure such
breach, provided that such breach is curable. For purposes of this Agreement,
the term “cause” shall mean any and all of the following:
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a. the
Executive’s willful and repeated failure to comply with the lawful written
directions of the Company’s Board of Directors.
b. the
Executive’s gross negligence or willful misconduct in the performance of duties
to the Company.
c. the
Executive’s commission of any act of fraud with respect to the Company or the
Company’s business.
d. the
Executive’s conviction of or being formally charged with the commission of any
felony.
e. the
Executive’s conviction of or being formally charged with the commission of any
crime which, in the good faith judgement of the Company’s Board of Directors,
involved moral turpitude and has caused or will cause material harm to the
standing and/or reputation of the Company.
f. the
Executive’s violation of any of the terms of his Proprietary Information and
Inventions Agreement, or any misappropriation and/or intentional and
unauthorized disclosure of the Company’s confidential and/or proprietary
information.
g. the
Executive’s use of drugs or any illegal substance, or his use of alcohol in any
manner that interferes with the performance of his duties under this
Agreement.
h. the
Executive’s chronic absence from work for reasons other than illness.
If
the
Company elects to terminate the Executive’s employment for cause, as defined
above, the Executive shall not be entitled to any further compensation or
benefits, all unvested Options granted to the Executive shall be forfeited,
and
the expiration date for exercise of all vested Options granted to the Executive
shall be determined in accordance with the terms of the Company’s 2007 Equity
Incentive Plan. Termination of the Executive’s employment for cause
pursuant to this Section 7.1 shall be in addition to and without prejudice
to
any other right or remedy to which the Company may be entitled at law, in equity
or under this Agreement.
7.2 At
the Election of the
Company Without Cause. The Company may, immediately and unilaterally,
terminate the Executive’s employment and this Agreement at any time for any
reason upon written notification to the Executive. If the Company so terminates
pursuant to this Section 7.2 (i.e., none of the matters specified in Section
7.1
has occurred), all unvested Options granted to the Executive shall be forfeited
and the expiration date for exercise of all vested Options granted to the
Executive shall be
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determined
in accordance with the terms of the Company’s 2007 Equity Incentive Plan. In the event of a
termination without cause initiated by the Company, the Company shall pay to
the
Executive severance payments (“Severance Payments”) consisting of the amount of
Base Salary that would have been paid to the Executive had his employment
continued through the end of the current term, less applicable withholding
taxes. The Executive’s receipt of Severance Payments shall be
contingent upon his execution of a full and complete general release of all
claims in favor of the Company and his willingness to serve as a consultant
to
the Company for the duration of the severance period, without additional
compensation, except that any health-related benefits, including, but not
limited to health insurance, will continue for the duration of the severance
period at the Company’s expense to the extent such was the case prior to
termination. The Executive’s receipt of Severance Payments (and
health-related benefits) shall also be subject to Executive’s continued
compliance with the obligations imposed upon him by Section 9 of this Agreement.
Any fringe benefits (other than health-related benefits) provided to the
Executive during his employment pursuant to this Agreement may be continued,
if
permitted by law, by the Executive at his own expense. Except as
described in Section 7.2 of this Agreement, the Company shall have no other
obligations to the Executive in the event that the Executive’s employment is
terminated pursuant to this Section 7.2. Termination of the Executive’s
employment without cause pursuant to this Section 7.2 shall be in addition
to
and without prejudice to any other right or remedy to which the Company may
be
entitled at law, in equity, or under this Agreement.
7.3 Termination
Upon Death or
Disability. The Executive’s employment hereunder shall terminate upon his
death, and may be terminated by the Company if the Executive becomes permanently
disabled or incapacitated, as defined below. If the Executive’s employment is
terminated pursuant to this Section 7.3, neither the Executive nor his heirs
shall be entitled to any Severance Payment or other termination benefits; all
unvested Options granted to the Executive will be forfeited, and the expiration
date by which all vested Options granted to the Executive must be exercised
shall be determined in accordance with the terms of the Company’s 2007 Equity
Incentive Plan. For the
purposes of this Agreement, the phrase “permanently disabled or incapacitated”
shall mean that:
7.3.1 The
Executive shall have been adjudged incompetent by a court having jurisdiction
over the matter; or
7.3.2 The
Executive shall have become physically or mentally incapable of performing,
with
or without reasonable accommodation, the essential functions of his job for
a
period of more than ninety (90) days in any 120-day period, in the opinion
of a
licensed medical doctor selected by the Company; or
7.3.3 The
Executive shall have been certified as permanently disabled under the provisions
of the Social Security Act, as amended from time to time.
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7.3.4 Termination
of the Executive’s employment pursuant to this Section 7.3 shall be in addition
to and without prejudice to any other right or remedy to which the Company
may
be entitled at law, in equity, or under this Agreement.
7.4 At
the Election of the
Executive The Executive may terminate his employment and this Agreement
at any time for any reason or for no reason during or after the employment
term
upon written notice to the Company of his election to terminate. If the
Executive’s employment is terminated pursuant to this Section 7.4, the Executive
shall not be entitled to any Severance Payment or other termination benefit,
all
unvested Options granted to the Executive will be forfeited, and the expiration
date by which all vested Options granted to the Executive must be exercised
shall be determined in accordance with the terms of the Company’s 2007 Equity
Incentive Plan.
8. Former
Employment
8.1 No
Conflict. The
Executive represents and warrants that the execution and delivery by him of
this
Agreement, his employment by the Company and his performance of duties under
this Agreement will not conflict with and will not be constrained by any prior
employment or consulting Agreement or relationship, or any other contractual
obligations.
8.2 No
Use of Prior Confidential
Information. The Executive will not intentionally disclose to the Company
or use on its behalf any confidential information belonging to any of his former
employers, but during his employment by the Company he will use in the
performance of his duties all information (but only such information) which
is
generally known and used by persons with training and experience comparable
to
his own or is common knowledge in the industry or otherwise legally in the
public domain.
9. Non-Solicitation;
Confidentiality; Remedies
9.1 No
Solicitation.
During the Restricted Period (as defined below), neither the Executive nor
any
Executive-Controlled Person (as defined below) will, without the prior written
consent of the Company’s Board of Directors, directly or indirectly solicit for
employment, employ in any capacity, or make an unsolicited recommendation to
any
other person that it employs or solicit for employment any person who is or
was,
at any time during the Restricted Period, an officer, executive, employee,
agent
or representative of the Company or of any affiliate of the Company. As used
in
this Agreement, the term “Executive-Controlled Person” shall mean any company,
partnership, firm or other entity as to which the Executive possesses, directly
or indirectly, the power to direct or cause the direction of the management
and
policies of such entity, whether through the ownership of voting securities,
by
contract or otherwise.
9.2 Confidentiality.
9.2.1 The
Executive acknowledges that, as a result of his status as a Director of and
Chief Executive Officer of the Company, he has, or will have, access to and
possession of important. confidential information and knowledge as to the
business of the Company and its affiliates, including, but not limited to,
knowledge of products of the Company and its affiliates, patents, technology,
know-how, marketing and operating strategies, licensing and other Agreements,
financial results and projections, future plans, the provisions of other
important contracts entered into by the Company and its affiliates, possible
acquisitions and similar information. The Executive agrees that such knowledge
and
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information
constitutes a vital part of the business of the Company and are by their nature
trade secrets and confidential information proprietary to the Company
(collectively, “Confidential Information”). The Executive agrees that he shall
not divulge, communicate, furnish or make accessible (whether orally or in
writing or in books, articles or any other medium) to any individual, firm,
partnership or corporation, any Confidential Information without the consent
of
the Company’s Board of Directors. As used in this Agreement, the
term, “Confidential Information” shall not include any knowledge or information
that the Executive can demonstrate: (i) is or becomes available to others,
other
than as a result of breach by the Executive of this Article 9; (ii) was
available to the Executive on a nonconfidential basis prior to its disclosure
to
the Executive through his status as an officer or employee of the Company;
or
(iii) becomes available to the Executive on a nonconfidential basis from a
third
party (other than the Company, its affiliates and any of their representatives)
who is not bound by any confidentiality obligations to the Company or any of
its
affiliates. The Executive understands and agrees that he must also execute
and
fully comply with the Company’s Proprietary Information and Inventions Agreement
as a condition of his employment.
9.2.2 All
memoranda, notes, lists, records and other documents or papers (and all copies
thereof), including such items stored in computer memories, on microfiche or
by
any other means, made or compiled by or on behalf of the Executive or made
available to him relating to the Company or any of its affiliates are and shall
remain the Company’s property, and shall be delivered to the Company promptly
upon any termination of the Executive’s employment with the Company, or at any
other time on request, and such information shall be held confidential by the
Executive after any termination of’ his employment with the
Company.
9.3 No
Competition During
Employment. During the Employment Period and any period during which the
Executive may receive Severance Payments pursuant to Section 9.2 of this
Agreement, neither the Executive nor any Executive-Controlled Person will,
without the prior written consent of the Company’s Board of Directors, render
any services, directly or indirectly, as an employee, officer, consultant or
in
any other capacity, to any individual, firm, corporation or partnership engaged
in any business or activity which directly competes with the business activities
of the Company.
9.4 Restricted
Period. As
used in this Agreement, “Restricted Period” shall mean any period during which
the Executive is employed by the Company and a period of two (2) years after
the
Termination Date.
9.5 Remedies.
The
Executive agrees that the provisions of’ this Article 9 are reasonable and
necessary for the protection of the Company and that they may not be adequately
enforced by an action for damages. Therefore, in the event of a breach or
threatened breach of this Article 9 by the Executive or any Executive-Controlled
Person, the Company shall be entitled, in addition to all other remedies, to
an
injunction and/or restraining order enjoining the breach or threatened breach
of
the provisions of Article 9 or otherwise to enforce specifically such provisions
against violation, without the necessity of posting any bond or other security
by the Company. The Executive further agrees that if he shall violate any of
the
covenants and Agreements under this Article, the Company shall be entitled
to an
accounting and repayment of all profits, commissions or other benefits which
the
Executive has realized and/or may realize as a result of or arising our of
any
such violation. Such remedy shall be cumulative and not exclusive and in
addition to any injunctive relief or other legal or equitable remedy to which
the Company is or may be entitled. In addition, the prevailing party shall
also
be entitled to its reasonable attorneys’ fees and costs incurred in any action
in which it is successful in establishing or defending against an alleged
violation of Article 9.
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9.6 Severability.
The
provisions contained in this Article 9 as to the time periods, scope of
activities and persons or entities affected shall be deemed severable so that,
if any provision contained in this Article 9 is determined to be invalid or
unenforceable, such provisions shall be deemed modified so as to be valid and
enforceable to the full extent permitted by law.
10. General
Provisions
10.1 Governing
Law. This
Agreement and the rights of the parties thereunder shall be governed by and
interpreted under Nevada law.
10.2 Assignment.
The
Executive may not delegate, assign, pledge or encumber his rights or obligations
under this Agreement or any part thereof.
10.3 Notice.
Any notice
required or permitted to be given under this Agreement shall be sufficient
if it
is in writing and is sent by registered or certified mail, postage prepaid,
or
personally delivered, to the following addresses, or to such other addresses
as
either party shall specify by giving notice under this Article:
| To the Company: |
Xxxxxx
Xxxxxxx
Executive
Vice President and
Chief
Financial Officer
000
Xxxxxxxx Xxxx,
Xxxxxxxxxxx,
XX 00000
|
|
| With a copy to: |
P.
Xxxxx
Xxxxx, Esq.
Xxxxx
Xxxxxx LLP
000
X. Xxxxxxxx, Xxx 000
Xxx
Xxxxx, XX 00000-0000
|
|
| To the Executive: | Xxxxxxx X. Xxxx | |
| With a copy to: |
Xxxxxxx
X. Xxxxx, Esq.
Xxxxxxxx
Xxxxxx Xxxxxxx & Xxxxxxx LLP
00000
Xx Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
|
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10.4 Amendment.
This
Agreement may be waived, amended or supplemented only by a writing signed by
both of the parties hereto. To be valid, the Company’s signature must be by a
person specially authorized by the Company’s Board of Directors to sign such
particular document.
10.5 Waiver.
No waiver of
any provision of’ this Agreement shall be binding unless and until set forth
expressly in writing and signed by the waiving party. To be valid, the Company’s
signature must he by a person specially authorized by the Company’s Board of
Directors to sign such particular document. The waiver by either party of’ a
breach of’ any provision of this Agreement shall not operate or be construed as
a waiver of any preceding or succeeding breach of the same or any other term
or
provision, or a waiver of any contemporaneous breach of any other term or
provision, or a continuing waiver of’ the same or any other term or provision.
No failure or delay by a party in exercising any right, power, or privilege
hereunder or other conduct by a party shall operate as a waiver thereof in
the
particular case or in any past or future case, and no single or partial exercise
thereof shall preclude the full exercise or further exercise of any right,
power
or privilege. No action taken pursuant to this Agreement shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or Agreements contained
herein.
10.6 Severability.
All
provisions contained herein are severable and in the event that any of them
shall be held to be to any extent invalid or otherwise unenforceable by any
court of competent jurisdiction, such provision shall he construed as if it
were
written so as to effectuate to the greatest possible extent the parties’
expressed intent; and in every case the remainder of this Agreement shall not
he
affected thereby and shall remain valid and enforceable, as if such affected
provision were not contained herein,
10.7 Headings.
Article and
section headings are inserted herein for convenience of reference only and
in no
way are to he construed to define, limit or affect the construction or
interpretation of the terms of this Agreement.
10.8 Drafting
Party. The
provisions of this Agreement have been prepared. examined, negotiated and
revised by each party hereto, and no implication shall be drawn and no provision
shall be construed against either party by virtue of the purported identity
of
the drafter of this Agreement, or any portion thereof.
10.9 Arbitration.
The
parties agree that any and all disputes that they have with one another which
arise out of the Executive’s employment or under the terms of this Agreement
shall be resolved through final and binding arbitration, as specified herein.
This shall include, without limitation, disputes relating to this Agreement,
the
Executive’s employment by the Company or the termination thereof, any issues
relating in any way to the stock options granted to the Executive, claims for
breach of contract or breach of the covenant of good faith and fair dealing,
any
claims of employment discrimination, any claims for disability accommodation,
or
other claims under any federal, state or local law or regulation now in
existence or hereinafter enacted and as amended from time to time concerning
in
any way the subject of the Executive’s employment with the Company or its
termination. The only claims not covered by this Section 10.9 are (i) claims
for
benefits under the workers’ compensation laws or claims for unemployment
insurance benefits, which will be resolved pursuant to those laws, and (ii)
the
Company’s claims for the Executive’s alleged breach of any of the provisions of
Article 9 of this Agreement. Binding arbitration will he conducted in
[Washoe County,
Nevada], before a single neutral arbitrator, in accordance with the American
Arbitration Association’s National Rules for the Resolution of Employment
Disputes then in effect. Each party will bear one half of’ the cost of the
arbitration filing and hearing fees, and the cost of the arbitrator. Each party
will bear its own attorneys’ fees, unless otherwise permitted by law and so
determined by the arbitrator. The Executive understands and agrees that the
arbitration shall be instead of any civil litigation and that the arbitrator’s
decision shall be final and binding to the fullest extent permitted by law
and
enforceable by any court having jurisdiction thereof.
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11. Entire
Agreement
This
Agreement constitutes the entire Agreement between the parties pertaining to
the
subject matter hereof and completely supersedes all prior or contemporaneous
Agreements, understandings, arrangements, commitments, negotiations and
discussions of the parties, whether oral or written (all of which shall have
no
substantive significance or evidentiary effect). The parties specifically
acknowledge and agree that all prior Agreements and understandings between
the
Executive and the Company that pertained to the Executive’s employment with the
Company are completely superseded. The Executive represents and warrants that
as
of the date of the execution of this Agreement, he has no causes of action,
claims, defenses or rights of offset against the Company. The Executive
represents and warrants that all amounts due to him from his employment with
the
Company prior to the date of this Agreement, including but not limited to
accrued and unused vacation days, have been paid to him. Each party
acknowledges, represents and warrants that this Agreement is fully integrated
and not in need of parol evidence in order to reflect the intentions of the
parties.
This
Agreement is executed this 4th day of January, 2008.
| Viking Systems, Inc. | |
|
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
|
/s/ Xxxxxx
Xxxxxxx
By: Xxxxxx Xxxxxxx,
Executive Vice President and Chief
Financial Officer
|
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