Exhibit 10.3
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT is effective as of this 6th day of February,
2000, by and between Meditech Pharmaceuticals, Inc. (the "Company"), and Xxxxxx
Xxxx, an individual ("Executive"). In consideration of the mutual covenants,
terms and conditions hereinafter contained, and for other good and valuable
consideration, the parties hereby agree as follows:
1. Term of Employment. The Company hereby employs Executive and Executive
hereby accepts such employment commencing on March 15, 2000, and terminating on
March 15, 2002 (the "Term"), unless (a) terminated as provided herein in Section
5, or (b) renewed pursuant to the terms of Section 9 hereof.
2. Duties. Executive shall serve as Chief Operations Officer and Chief
Financial Officer of the Company, with the powers and duties consistent with
each position. Executive shall report to the Board of the Company.
3. Appointment to Board of Directors. During Executive's employment by the
Company, Executive shall be nominated to serve as a member of the Board of
Directors of the Company.
4. Compensation.
4.1. Base Salary. The Company shall pay Executive a base salary of One
Hundred Twenty Thousand Dollars ($120,000) per year (the "Base Salary"). The
Board of Directors shall review the Base Salary annually and shall increase the
Base Salary each calendar year beginning January 1, 2001, by the greater of (i)
a percentage equal to the Consumer Price Index for the prior year, or (ii) such
percentage as determined by the Company's Board of Directors. The Base Salary
shall be payable in equal installments twice monthly consistent with the
Company's regular business practice. Salary shall be accrued until such time
that the company has sufficient funding to support said salary.
4.2. Annual Bonus. The Company shall pay Executive an annual bonus (the
"Annual Bonus") of up to one hundred twenty-five percent (125%) of Executive's
Base Salary for each calendar year during the Term and any renewals thereof,
beginning with the 2000 calendar year. The Annual Bonus shall be based partially
upon the attainment of performance goals established by the Board of Directors
of the Company in consultation with the Executive and partially upon Executive's
individual performance. Any Annual Bonus payment shall be paid as soon as
practicable following the end of the applicable calendar year, but in any event
no later than January 31 following the applicable calendar year. Any Annual
Bonus shall be deemed fully earned if the Executive is employed by the Company
on the last day of the applicable calendar year, or earned on a pro-rata basis
for any partial calendar year worked.
4.3. Options. The Company shall grant to Executive options to purchase
shares of the Company's stock pursuant to the terms and conditions of the Stock
Option Agreement attached hereto as Exhibit "A."
4.4. Expense Reimbursement. The Company shall reimburse Executive for
reasonable and necessary business and entertainment expenses incurred by him in
connection with the performance of his duties hereunder. The Company shall
reimburse Executive for all such expenses upon presentation by the Executive,
from time to time, of an itemized written accounting of such expenditures.
4.5. Benefits. The Company shall provide Executive with the following
benefits during the Term and any renewals thereof:
(a) Participation in Benefit Plans and Policies. Executive shall
be entitled to participate in all insurance and other benefit plans and
policies maintained for senior executives of the Company, including, but
not limited to, all group health, life and retirement plans.
(b) D&O Coverage. Executive shall, in addition to any other legal
or contractual rights to indemnification provided by the Company, be
provided coverage under a director and officer liability policy. In
addition, for a period of two (2) years following the termination of
Executive's employment with the Company, the Company shall maintain
liability insurance for Executive with coverage for claims incurred during
or arising from Executive's term of employment, which coverage shall be
consistent with coverage existing for Executive at the date of termination.
(c) Vacation. Executive shall be entitled to five (5) weeks paid
vacation time each year. Executive's vacation shall be under the Company's
usual policies applicable to senior executives.
(d) Automobile Allowance. Executive shall be entitled to an
automobile allowance of $1,000.00 per month.
(e) Disability Benefits. During the Term, the Company agrees to
provide Executive long-term disability insurance under a standard
disability policy.
5. Termination
5.1. Termination Events. Executive's employment shall terminate prior to
the expiration of the Term (and any renewals thereof) upon the happening of any
of the following events:
(a) Voluntary. Voluntary termination by Executive;
(b) Death. The death of Executive;
(c) For Cause. For "cause" by the Company, defined as any of the
following:
(i) Executive is convicted of, or pleads nolo
contendere to, a felony;
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(ii) Executive has engaged in habitual neglect in the
performance of his duties under this Agreement; or
(iii)Executive has committed an act of fraud or willful
misconduct against the Company resulting in a substantial economic or
financial harm to the Company.
Notwithstanding the foregoing, no termination of Executive by the Company
pursuant to clauses (ii) or (iii) above shall be valid unless and until the
following procedures have been complied with by the Company: (a) no more than
thirty (30) days after the Chairperson of the Board of the Company has obtained
knowledge of "cause" to terminate Executive pursuant to any of clauses (ii) or
(iii) above, he/she shall provide Executive with written notice of the Company's
intent to terminate this Agreement pursuant to this Section 5.1(c), including in
reasonable detail the reasons therefor (the "Termination Notice"); (b) at a
mutually agreed upon time and place, but in any event no more than ten (10) days
following receipt by Executive of the Termination Notice, the Company's Board of
Directors shall provide Executive the opportunity to participate in a meeting of
the Board of Directors regarding the Termination Notice; (c) if the matter
cannot be resolved by mutual agreement of the Company and Executive at such
meeting, Executive shall thereafter be given thirty (30) days to cure such
"cause" as detailed in the Termination Notice (the "Cure Period"); and (d) if
Executive does not cure such "cause" within the Cure Period, the Company shall
thereafter terminate Executive's employment hereunder in writing within thirty
(30) days of the end of the Cure Period. Any determination of "cause" as used in
this Section 5.1(c) shall be made only in good faith by an affirmative majority
vote of the Board of Directors (not counting Executive) of the Company.
(d) Disability. Upon the good faith determination of the Board of
Directors of the Company that Executive has become so physically or
mentally incapacitated or disabled as to be unable to satisfactorily
perform his duties hereunder for a period of one hundred fifty (150)
consecutive calendar days or for one-hundred eighty (180) days in any
three-hundred sixty (360) day period, such determination based upon a
certificate as to such physical or mental disability issued by a licensed
physician and/or psychiatrist (as the case may be) mutually agreed upon by
Executive and the Company;
(e) Without Cause. Without cause by the Company; or
(f) By Executive For Good Reason. If the Company takes any of the
actions described in this subsection (f), Executive may terminate
employment for "good reason" at any time upon written notice to the
Company. For purposes of this Agreement, Executive may terminate this
Agreement pursuant to this subsection (f) for "good reason" upon the
occurrence of any of the following events without the express written
consent of Executive:
(i) a material breach of this Agreement by Company, which breach
is not cured by the Company within fifteen (15) days following written
notice thereof from Executive; provided, however, that the Company may
only utilize its cure right two times hereunder;
(ii) the relocation of the Company's headquarters to a location
more than twenty (20) miles from the Company's current headquarters in
Los Angeles, California;
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(iii) a reduction in Executive's Base Salary or the benefits set
forth above;
(iv) the assignment to Executive of a lower position in the
organization in terms of his title, responsibility, authority or
status;
(v) Executive ceasing to be a member of the Company's Board of
Directors for any reason other than Executive's death, total
disability, termination for Cause hereunder, resignation or refusal to
stand for re-election to the Board of Directors;
(vi) a Change of Control of the Company, as defined in Exhibit B
attached hereto.
5.2. Obligations After Voluntary Termination; Death; Disability; For
Cause Termination. Except as set forth in Sections 6 through 9 herein and in
this Section 5.2, in the event that Executive's employment is terminated
pursuant to Sections 5.1(a), (b), (c) or (d) herein, neither the Company nor
Executive shall have any remaining duties or obligations hereunder, except that
on the date of termination of employment ("Termination Date"), the Company shall
pay to Executive or his representatives:
(a) all Base Salary compensation as is due pursuant to Section 4.1
herein, prorated through the Termination Date;
(b) all Annual Bonus compensation as is due pursuant to Section 4.2
herein, prorated through the Termination Date;
(c) all expense reimbursements due and owing Executive through the
Termination Date under Section 4.4 herein, including reimbursements for
reasonable and necessary business expenses incurred prior to the
Termination Date, as long as Executive submits a written accounting of such
expenses in accordance with Section 4.4 herein within forty-five (45) days
of the Termination Date; and
(d) all benefits due Executive, including benefits under insurance,
group health and retirement benefit plans pursuant to Section 4 hereof, and
vacation cash-out, if any, in accordance with the Company's standard
policy, through the Termination Date.
5.3. Obligations After Termination Without Cause or Termination by
Executive For Good Reason. Except as set forth in Sections 6 through 9 herein
and as set forth in this Section 5.3, in the event that Executive's employment
is terminated pursuant to Section 5.1(e) or 5.1(f) herein, neither the Company
nor Executive shall have any remaining duties or obligations hereunder, except
that on the Termination Date, the Company shall pay to Executive or his
representatives:
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(a) all Base Salary compensation as is due pursuant to Section 4.1
herein, prorated through the Termination Date;
(b) all Annual Bonus compensation as is due pursuant to Section
4.2 herein, prorated through the Termination Date;
(c) a lump sum payment of an amount equal to the greater of (i)
two (2) years of Executive's then-current Base Salary and two (2) years of
Executive's then-current targeted Annual Bonus, and (ii) Executive's
then-current Base Salary and current targeted Annual Bonus through the
remainder of the Term;
(d) payment of COBRA medical insurance coverage for Executive and
his immediate family for eighteen (18) months following the Termination
Date;
(e) immediate vesting of all of Executive's Stock Options to
purchase equity interests in the Company;
(f) all expense reimbursements due and owing Executive through the
Termination Date under Section 4.4 herein, including reimbursements for
reasonable and necessary business expenses incurred prior to the
Termination Date, as long as Executive submits a written accounting of such
expenses in accordance with Section 4.4 herein within forty-five (45) days
of the Termination Date; and
(g) all benefits due Executive, including benefits under
insurance, group health and retirement benefit plans pursuant to Section 4
hereof, and vacation cash-out, if any, in accordance with the Company's
standard policy, through the Termination Date.
5.4. No Mitigation; No Offset. The parties hereto agree that Executive
shall not be required to mitigate damages in respect of any termination benefit
or payment due under this Agreement or in respect of any damage award as a
result of the Company's breach of this Agreement, nor shall any such benefit or
award be offset by any future compensation or income received by Executive from
any other source.
6. Joining Company Employees. During Executive's employment hereunder, and
for one (1) year following termination of employment, Executive shall not,
directly or indirectly, induce any employee of the Company or any subsidiary or
affiliate of the Company to leave such employment for employment with Executive
or any other entity outside of the Company. Executive shall not be in breach of
this covenant if, following his employment hereunder, he is contacted on an
unsolicited basis by an employee of the Company who desires to leave the
Company.
7. Confidentiality.
7.1. Proprietary Information. For purposes of this Agreement, the term
"Proprietary Information" means and includes: all written, oral and visual
information about the Company's customers, clients, employees, consultants,
designs, products, inventions, business practices, programs, processes,
techniques, know-how, data, management programs, and methodologies, subject to
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the final sentence of this subparagraph. Proprietary Information includes but is
not limited to all of the following insofar as it pertains to the Company:
financial information, trade secrets, designs, customer lists, pricing and fee
information, agreements and arrangements with affiliated companies, employee
files, personnel records, internal corporate records, correspondence, and
memoranda, contacts and relationships, opportunities, telephone logs and
messages, video or audio tapes and/or disks, photographs, film and slides,
computer disks and files, software, information stored on the Company's
computers, addresses and telephone numbers, contracts, releases, other writings
of any kind, and any and all other materials and information pertaining to the
Company or its business to which Executive is exposed or has access solely as a
consequence of his employment by the Company. For purposes hereof, the term
"Proprietary Information" shall not include any information (i) that was known
by the public or outside of this Agreement generally on or prior to the date
hereof, (ii) which becomes known by the public or outside of this Agreement
generally after the date hereof through no fault of Executive, (iii) that was
known to or in the possession of Executive on or prior to the date hereof, (iv)
that was developed by or with the participation of Executive on or prior to the
date hereof, or (v) that is independently developed by or with the participation
of Executive following Executive's employment with the Company.
7.2. Rights to Proprietary Information. All Proprietary Information,
regardless of whether it is in intangible or tangible form, is and shall be the
sole property of the Company, its successors and assigns, and the Company, its
successors and assigns shall be the sole owner of all patents, trademarks,
service marks and copyrights, and other rights (collectively referred to herein
as "Rights") pertaining to the Proprietary Information. Executive hereby assigns
and/or agrees to assign to the Company any rights Executive may have or acquire
in Proprietary Information or Rights pertaining to the Proprietary Information.
Executive further agrees as to all Proprietary Information to assist the Company
or any person designated by it in every necessary or appropriate manner to
obtain, and from time to time enforce, Rights relating to said Proprietary
Information. Executive will execute all documents for use in applying for,
obtaining, and enforcing such Rights on such Proprietary Information as the
Company may desire, together with any assumptions thereof to the Company or
persons designated by it.
7.3. Confidentiality of Proprietary Information. As a material condition
of employment, at all times both during and for two (2) years after the
cessation of his employment with the Company for any reason, Executive will keep
in strictest confidence all Proprietary Information, and Executive will not
disclose, use, or induce or assist in the use or disclosure of any such
Proprietary Information or Rights pertaining thereto, without the prior, express
written consent of the Company, except as may be necessary in the ordinary
course of performing his duties as an employee at the Company, or as may be
required by law.
7.4. Work for Hire/Assignment of Inventions. Executive agrees that all
designs, products, inventions, materials or other original works written,
created, developed, or acquired by Executive during the term of and in
connection with his employment hereunder (whether alone or in conjunction with
any other person), and all rights of any and every kind whatsoever in and to the
results and proceeds of Executive's services rendered hereunder, whether or not
such rights are now know, recognized or contemplated, and the complete,
unconditional and unencumbered ownership in and to such materials, results and
proceeds for all purposes whatsoever shall be "works for hire," as that term is
defined in the United States Copyright Act (17 U.S.C. Section 101), and shall be
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the sole and absolute property of the Company, its successors and assigns, and
Executive agrees that he shall and does not have and will not claim to have,
either under this Agreement or otherwise, any right, title or interest of any
kind or nature whatsoever in or to said property. Executive hereby assigns
and/or agrees to assign to the Company any and all inventions, designs,
programs, or products that Executive may create during his employment with the
Company; provided, however, that Executive is hereby notified that the foregoing
does not apply to an invention that Executive creates entirely on his own time,
without the use of any equipment, supplies, facilities, Proprietary Information
or copyright of the Company, and that does not relate to the Company's business,
research or development or result from any work performed by Executive for the
Company.
7.5. Trade Secrets of Others. To the best of Executive's knowledge,
Executive's performance of his duties will not violate any agreements with or
trade secrets of any other person or entity.
8. Surrender of Proprietary Information and Other Company Property. In the
event of the termination of his employment for any reason, Executive immediately
will deliver to the Company upon request all devices, records, designs,
sketches, reports, proposals, information, lists, correspondence, equipment,
software, computer disks, documents, photographs, photostats, negatives,
undeveloped film, notes, drawings, specifications, tape recordings or other
electronic recordings, programs, data, Proprietary Information, and other
materials or property of any nature belonging to the Company, and Executive will
not take with Executive, any of the foregoing or any reproduction of any of the
foregoing.
9. Renewal. If this Agreement has not terminated pursuant to the provisions
of Section 5.1, the Term shall be automatically renewed for successive one-year
periods commencing on each anniversary date of the original Term, unless either
party provides the other with written notice of its intent to terminate the
Agreement given not less than one hundred twenty (120) days prior to the end of
the Term, or any renewals thereof as provided for herein.
10. Arbitration. The Company and Executive agree that any controversy,
dispute, or claim between them relating to or arising under this Agreement or
relating to or arising from Executive's hiring, employment, or termination with
the Company (including, without limitation, any claims for harassment,
discrimination, or retaliation under Title VII of the United States Code, 29
U.S.C. ss. 2002e, et. seq., the Americans With Disabilities Act, the Age
Discrimination in Employment Act, or the California Fair Employment and Housing
Act, or any equivalent provision of the statutory or common law of any state),
shall be submitted to final and binding arbitration, to be held in the County of
Los Angeles in accordance with and pursuant to the rules of the American
Arbitration Association ("AAA") then in force or any successor rules except as
set forth below. The award of the arbitrator shall be final and binding upon the
parties and may be entered as a judgment in any California court of competent
jurisdiction, and the parties hereby consent to the jurisdiction of the courts
of the State of California. The prevailing party in any arbitration hereunder
shall be entitled to an award of all reasonable fees and costs of counsel
incurred by such party in connection with such arbitration.
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11. Miscellaneous.
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11.1. Entire Agreement; Modification. This Agreement contains the
entire agreement of the parties relating to the subject matter hereof, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement that are not set forth herein. This
Agreement supersedes any and all prior agreements, written or oral, between
Executive and the Company. No modification of this Agreement shall be valid
unless made in writing and signed by Executive and an authorized representative
of the Board of Directors of the Company.
11.2. Severable Provisions. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions of the
Agreement shall nevertheless be binding and enforceable.
11.3. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, this Employment Agreement is executed as of the day and
year written below.
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By: /s/ Xxxxxx Xxxx By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx Xxxxxx Xxxx
Chairman
Dated: _________________, 2000 Dated: _________________, 2000
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EXHIBIT B
CHANGE OF CONTROL
A "Change of Control" as used in the Employment Agreement of which this
Exhibit is a part shall mean any of the following:
(1) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company or its Affiliate), is or
becomes the "beneficial owner" (as defined in Rule 1 3d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company or
Executive) representing twenty five percent (25%) or more of the
combined voting power of the Company's then outstanding
securities; or
(2) in the event that the individuals who at the beginning of the
Term constitute the Board of Directors, and any new director
whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least a
majority of the Board then still in office who either were
members of the Board at the beginning of the Term or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
or
(3) the stockholders of the Company approve a merger or
consolidation of the Company with or the sale of the Company to
any other entity and, in connection with such merger,
consolidation or sale; individuals who constitute the Board
immediately prior to the time any agreement to effect such merger
or consolidation is entered into fail for any reason to
constitute at least a majority of the board of directors of the
surviving corporation following the consummation of such merger
or consolidation; or
(4) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity not controlled by the Company.
