Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is made and entered into as of the
1st day of May, 2006 by and between CAVIT SCIENCES, INC., a Florida corporation
(the "Company"), and COLM J. KING , an individual residing in Florida (the
"Executive").
PRELIMINARY STATEMENTS
A. The Company is located within the state of Florida and is presently
engaged in the business of testing immunostimulants and marketing it's patent
application rights to major drug companies (the "Business");
B. The Executive has had many years of experience in the affairs of
business organizations; and is currently the sole Officer and a Director of the
Company; and
C. The Company is desirous of employing the Executive and benefiting from
his contributions to the Company.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to employ the Executive
and the Executive hereby agrees to serve the Company, on the terms and
conditions set forth herein, for a period of three (3) years commencing on the
date hereof and expiring on the first anniversary hereof (the "Initial Term")
unless sooner terminated as hereinafter set forth; provided, however, that
commencing on the first and each anniversary of the date of this Agreement, the
Initial Term of this Agreement shall automatically be extended for one
additional year unless at least ninety (90) days prior to such date, the Company
shall have delivered to the Executive or the Executive shall have delivered to
the Company written notice that the term of the Executive's employment hereunder
will not be extended. (The Initial Term and any extensions shall be hereinafter
referred to as the "Employment Period").
1.2 Duties of the Executive. During the Employment Period, the Executive
shall serve as President and CEO of the Company and shall have powers and
authority superior to any other officer or employee of the Company or of any
subsidiary of the Company. The Executive shall be required to report solely to,
and shall be subject solely to the supervision and direction of, the Board at
duly called meetings thereof and no other person or group shall be given
authority to supervise or direct the Executive in the performance of his duties.
During the Employment Period, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to devote a
majority of his attention and business time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder as a senior executive
officer involved with the general management of the Company, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or charitable
boards or committees; (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions; or (iii) manage personal investments and
engage in other business activities, so long as such activities do not
significantly interfere with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the date hereof, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
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thereto) subsequent to the date hereof shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
1.3 Place of Performance. The Executive shall be based at the Company's
principal executive offices located in Delray Beach, Florida, except for
required travel relating to the Company's Businesses to an extent substantially
consistent with the Executive's present travel obligations.
2. BASE COMPENSATION & INCENTIVE BONUS.
2.1 Base Salary. Commencing on the date hereof, the Executive shall receive
a base salary at the annual rate of not less than One Hundred and Eighty
Thousand and No/100 Dollars ($180,000.00) (the "Base Salary") during the term of
this Agreement, with such Base Salary payable in installments consistent with
the Company's normal payroll schedule, subject to required applicable
withholding for taxes. On April 30th of each calendar year during the Employment
Period (the "Salary Adjustment Date") commencing on April 30, 2007, the
Executive's then Base Salary shall be increased by an amount equal to the
previous year's Base Salary multiplied by ten percent (10%), except that in the
event that Pre-Tax Consolidated Net Income (defined in Section 2.4(c) below) is
equal to zero for the Company's fiscal year immediately preceding the Salary
Adjustment Date, then the Base Salary shall not be increased pursuant to this
sentence on such Salary Adjustment Date. The Base Salary shall also be reviewed,
at least annually, for merit increases and may, by action and in the discretion
of the Board, be increased at any time or from time to time. The Base Salary, if
so increased, shall not thereafter be decreased for any reason.
2.2 Incentive Bonus. Subject to Section 2.3 below, the Executive shall be
entitled to an incentive bonus for each of the Company's fiscal years during the
Employment Period (the "Incentive Bonus"), commencing with an Incentive Bonus
for the Company's fiscal year ending 2006. The Incentive Bonus shall be equal to
five (5%) percent of the Company's Pre-Tax Consolidated Net Income (defined in
Section 2.4(c) below); provided, however, that the Executive's Incentive Bonus
for any fiscal year shall not exceed ninety (90%) percent of the Executive's
Base Salary for such fiscal year. The Company shall pay the Executive the
Incentive Bonuses due hereunder as soon as reasonably possible after the end of
the Company's fiscal year, but in no event later than the 91st day after the
last day of the Company's fiscal year for which the Incentive Bonus is due to
the Executive. Except as otherwise provided in Section 4. 1, if the Executive's
employment is terminated for cause pursuant to Section 4. 1 or by notice of
non-renewal as provided in Section 1. 1, then the Executive shall be entitled to
an Incentive Bonus equal to the total Incentive Bonus that would have been
payable to the Executive for the fiscal year if the Executive's employment had
not been terminated, multiplied by the number of days in the fiscal prior to and
including the date of termination and divided by 365.
2.3 Approval of Remuneration. In the event that the Company shall be a
publicly held within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code") and the Executive is a covered employee with
remuneration (within the meaning of such Code section) for the fiscal year of
the Company expected to exceed $1,000,000, then, to the extent that the
incentive bonus anticipated for such fiscal year payable to the Executive
pursuant to Section 2.2 or any additional performance based compensation payable
to the Executive pursuant to Section 2.1 (other than Base Salary and increases
to Base Salary as provided in Section 2.1) (collectively "Performance
Compensation") when added together with the Executive's other remuneration from
the Company for such fiscal year is expected to cause the total remuneration to
the Executive for such fiscal year to exceed $1,000,000 ("Excess Remuneration"),
the Company shall timely cause the procedures set forth below to be observed
with respect to such Performance Compensation under Section 2.1 first and then
with respect to such Performance Compensation under Section 2.2 for such fiscal
year in an amount not to exceed to the lesser of (i) the Excess Remuneration for
such fiscal year or (ii) the aggregate Performance Compensation for such fiscal
year ("Excess Performance Compensation").
(a) The performance goals for such Excess Performance Compensation shall be
determined and approved by a compensation committee of the Board of Directors of
the Company which shall be compromised solely of two or more outside directors.
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(b) The material terms under which the Excess Performance Compensation is
paid, including the performance goals, shall be disclosed to shareholders and
approved by a majority of the vote in a separate shareholder vote before payment
of such Excess Performance Compensation.
(c) Before any payment of such Excess Performance Compensation, the
compensation committee of the Board referred to in the preceding Section 2.3(a)
certifies that the performance goals and any other material terms were in fact
satisfied.
The provisions of this Section 2.3 are intended to comply with and shall be
interpreted in accordance with the requirements of Section 162(m) of the Code,
and accordingly, if the Board and the Company follow the foregoing requirements
and the Excess Performance Compensation shall be disapproved by the Board or the
shareholders in accordance with said requirements, the Executive shall not be
paid the Excess Performance Compensation for the fiscal year at issue. The
compensation committee of the Board and the shareholders may elect to approve
(but not to disapprove) as a plan all Excess Performance Compensation which may
become payable to the Executive under this Agreement in the manner provided in
Sections 2.3(a) and 2.3(b), respectively, for the entire term of this Agreement
in the initial vote of the compensation committee approving this Agreement and
in the next shareholders' meeting following such vote of the compensation
committee. In the event that the Executive's remuneration for such fiscal year
shall not exceed $1,000,000 or the Company and/or the Board fails to observe,
take or cause to take any of the foregoing actions required under this Section
2.3 in a timely manner, then the Executive shall be paid the full amount of
remuneration anticipated to be or actually subject to this Section 2.3,
notwithstanding that all or a portion of such remuneration may not be deductible
by the Company under the Code.
2.4 Definitions. For purpose of this Section 2 the following definitions
shall apply:
(a) "Gross Revenue" shall mean the annual consolidated gross revenues of
the Company as reflected on the Company's audited financial statements,
increased by the gross revenue of any subsidiary, partnership, joint-venture or
other investment in which the Company owns fifty percent (50%) or greater
capital, equity and/or income interest and the gross revenue of which is not
reflected in the Company's gross revenues as shown on the Company's audited
financial statements. The Gross Revenue of the Company hereunder shall be
determined by the Company's independent Auditors in accordance with generally
accepted accounting principles and auditing standards, both applied on a
consistent basis with prior periods, except that, for purposes of this Section
2.4 only, the amount of Gross Revenues for any fiscal year of the Company
consisting of less than twelve (12) full and consecutive calendar months shall
be annualized on the basis of a twelve (12) month year.
(b) "Percentage Increase in Gross Revenue" shall mean the percentage
increase in Gross Revenues for the Company's fiscal year ending on or
immediately preceding the Salary Adjustment Date (defined in Section 2. 1) as
compared to the Gross Revenues for the Company's second (2nd) fiscal year
immediately preceding the Salary Adjustment Date.
(c) "Pre-Tax Consolidated Net Income" shall mean the Company's annual net
income before extraordinary items and income taxes as reflected in the Company's
audited financial statements for the relevant fiscal period. For purposes of
this Agreement, the Company's Pre-Tax Consolidated Net Income for any complete
fiscal year shall not be less than zero. The Pre-Tax Consolidated Net Income of
the Company hereunder shall be as determined by the Company's independent
auditors in accordance with generally accepted accounting principles and
auditing standards, both applied on a consistent basis with prior periods,
except that, for purposes of this Section 2.4 only, the amount of Pre-Tax
Consolidated Net Income for any fiscal year of the Company consisting of less
than twelve (12) full and consecutive calendar months shall be annualized on the
basis of a twelve (12) month year.
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3. OTHER BENEFITS.
3.1 Expense Reimbursement. The Company shall promptly reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive
in the course of and pursuant to the Businesses of the Company, including
expenses for travel and entertainment. The Executive shall account and submit
reasonably supporting documentation to the Company in connection with any
expense reimbursement hereunder in accordance with the Company's policies.
3.2 Other Benefits. During the Employment Period, the Company shall
continue in force all existing comprehensive major medical and hospitalization
insurance coverages, including dental coverages, either group or individual for
the Executive and his dependents; shall continue in force all existing life
insurance for the Executive; and shall continue in force all existing disability
insurance for the Executive (collectively, the "Policies"), which Policies the
Company shall keep in effect at its sole expense throughout the term of this
Agreement. The Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits under all
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
senior executive officers or other peer executives of the Company. The Executive
shall also be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs and such other perquisites as applicable
generally to senior executive officers or other peer executives of the Company.
Nothing paid to the Executive under any plan or arrangement presently in effect
or made available in the future shall be deemed to be in lieu of the Base Salary
payable to the Executive pursuant to this Agreement.
3.3 Working Facilities. The Company shall furnish the Executive with an
office, a secretary and such other facilities and services suitable to his
position and adequate for the performance of his duties hereunder.
3.4 Vacation. The Executive shall be entitled to such number of paid
vacation days in each calendar year as determined by the Board from time to time
for its senior executive officers, but in no event less than six (6) weeks of
paid vacation during each calendar year. Unused vacation days may be carried
forward from year to year at the option of the Executive.
3.5 Automobile. The Company shall pay the Executive, on a monthly basis,
one hundred (100%) percent of the Executive's monthly Automobile Expenses.
"Automobile Expenses" shall mean all automobile loan (including principal and
interest), automobile lease or similar payments for an automobile designated by
the Executive and all fuel, insurance, repairs and maintenance expenses with
respect to such automobile.
3.6 Stock Bonus. The company shall issue to the executive, Colm J. King, a
bonus of Fifty Thousand (50,000) Shares of Restricted Common Stock annually, at
the beginning of each fiscal year.
4. TERMINATION.
4.1 Termination for Cause.
(a) The Company may terminate this Agreement for Cause (as defined below)
in strict accordance with the following procedure: Upon a determination by not
less than three-quarters (3/4) of the entire membership of the Board that Cause
may exist under Section 4.1(b)(i) or 4.1(b)(ii) below, the Company shall cause a
special meeting of the Board (the "Special Board Meeting") to be called and held
at a time mutually convenient to the Board and the Executive, but in no event
later than ten (10) business days after the Executive's receipt of a copy of the
resolution of the Board stating that (i) in the Board's good faith opinion,
Cause may exist to terminate the Executive's employment with the Company in
accordance with this Agreement; and (ii) specifying the particulars of the
alleged conduct giving rise to such Cause in detail. The Executive shall have
the right to appear before the Special Board Meeting with legal counsel of his
choosing to refute any determination of Cause specified in such notice. The
Executive shall also have the right to have a recorded or stenographic
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transcription made of the Special Board Meeting. Any termination of the
Executive's employment by reason of such Cause determination shall not be
effective unless and until (i) the Executive is afforded such opportunity to
appear before the Board as provided herein and (ii) there shall have been
delivered to the Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board, adopting the Board's final determination, after the appearance of
the Executive as provided herein, stating that in the good faith opinion of the
Board, the Board finds Cause for the termination of this Agreement and the
Executive's employment with the Company and specifying the particulars of acts
or omissions upon which the Company is relying for such termination.
(b) As used in this Agreement, the term "Cause" shall only mean:
(i) A material breach by the Executive of the Executive's obligations under
Section 1.2 hereof (other than as a result of incapacity due to physical or
mental illness) which is (a) demonstrably willful and deliberate on the
Executive's part; and (b) which is committed in bad faith and without reasonable
belief that such breach is in the best interests of the Company; and (c) which
is not remedied in a reasonable period of time after receipt of written notice
from the Company specifying such breach; or
(ii) The conviction of the Executive of a felony based upon a violent crime
or a sexual crime involving baseness, vileness or depravity.
(iii) The Termination Date for a termination of this Agreement pursuant to
this Section 4.1 shall be the date specified by the Board in the resolution
finding Cause, which date shall not be earlier than 30 days after the date of
the Special Board Meeting.
(c) Upon any termination of this Agreement pursuant to this Section 4.1,
the Executive shall be entitled to the compensation specified in Section 5.1
hereof.
4.2 Disability. The Company may terminate this Agreement upon the
Disability (as defined below) of the Employee in strict accordance with the
following procedure: Upon a good faith determination by not less than
three-quarters (3/4) of the entire membership of the Board that the Executive
has suffered a Disability, the Company shall give the Executive written notice
of its intention to terminate this Agreement due to such Disability. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 120 consecutive calendar days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to be
withheld unreasonably). The Termination Date for a termination of this Agreement
pursuant to this Section 4.2 shall be the date specified by the Board in the
resolution finding that the Executive has suffered a Disability, which date may
not be any earlier than 30 days after the date of Board's finding. Upon any
termination of this Agreement pursuant to this Section 4.2, the Executive shall
be entitled to the compensation specified in Section 5.2 hereof.
4.3 Death. This Agreement shall terminate automatically upon the death of
the Executive, without any requirement of notice by the Company to the
Executive's estate. The date of the Executive's death shall be the Termination
Date for a termination of this Agreement pursuant to this Section 4.3. Upon any
termination of this Agreement pursuant to this Section 4.3, the Executive shall
be entitled to the compensation specified in Section 5.3 hereof.
4.4 Termination by the Executive for Good Reason or by the Company, Without
Cause. The Executive may terminate his employment under this Agreement for Good
Reason (defined below), or the Company may terminate such employment, without
cause, as provided in this Section 4.4. "Good Reason" shall mean that the
Company (through its Board or otherwise) has (i) assigned the Executive duties
other than those contemplated by Section 1.2 above without the Executive's
consent; (ii) limited the powers of the Executive in any manner not contemplated
by Section 1.2 above; or (iii) materially breached any of its other covenants
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and obligations hereunder. A purported termination of this Agreement by the
Company pursuant to any provision of this Section 4 which is disputed and which
is finally determined not to have been proper shall be deemed a material breach
by the Company of this Agreement. To terminate his employment under this
Agreement for Good Reason, the Executive shall give the Company written notice
of the Executive's intent to terminate his employment with the Company pursuant
to this Section 4.4, which notice shall specify the Executive's reasons
therefore in detail. The Company shall have 30 days from its receipt of such
notice to attempt to cure any such condition giving rise to Good Reason
hereunder. If such cure is acceptable to the Executive, the Executive may accept
such cure and continue this Agreement in full force and effect as if the initial
notice of termination under this Section 4.4 had not been given by the
Executive; provided, however, that acceptance of such cure and the continuation
of the Executive's employment shall not act as a waiver of any rights of the
Executive with respect to such actions or inactions of the Company and/or limit
the Executive's right to terminate this Agreement for the same or similar action
or inaction by the Company following such cure. If the Executive does not accept
such cure, the Termination Date of this Agreement shall be the 30th day after
the Company's receipt of the Executive's termination notice. To terminate the
Executive's employment without cause in accordance with this Section 4.4, the
Company shall give the Executive written notice of such termination. The
Termination Date shall be the date specified by the Company in such notice. Upon
any termination of this Agreement pursuant to this Section 4.4, the Executive
shall be entitled to the compensation specified in Section 5.4 hereof, except
that if such termination by the Company occurs within a period beginning six (6)
months before and ending one (1) year after a Change in Control of the Company
(defined in Section 4.5 below), then such termination shall be deemed to be due
to a Change in Control of the Company and the Executive shall be entitled to the
compensation specified in Section 5.5 hereof and any other compensation and
benefits provided in this Agreement in connection with a Change in Control of
the Company.
4.5 Termination by the Executive Upon a Change in Control of the Company.
The Executive may terminate his employment under this Agreement upon a Change in
Control of the Company. For purposes of this Section 4.5, "Change in Control of
the Company" shall mean (i) the acquisition by a person or an entity or a group
of persons and entities, directly or indirectly, of more than thirty (30%)
percent of the Company's common stock in a single transaction or a series of
transactions (hereinafter referred to as a "30% Change in Control"); (ii) a
merger or other form of corporate reorganization resulting in an actual or de
facto 30 % Change in Control; or (iii) the failure of Applicable Directors
(defined below) to constitute a majority of the Board during any two (2)
consecutive year period after the date of this Agreement (the "Two-Year
Period"). "Applicable Directors" shall mean those individuals who are members of
the Board at the inception of a Two-Year Period and any new director whose
election to the Board or nomination for election to the Board was approved
(prior to any vote thereon by the shareholders) by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the Two-Year Period at issue or whose election or nomination for
election during such Two-Year Period was previously approved as provided in this
sentence. To terminate his employment under this Agreement upon a Change in
Control of the Company, the Executive shall give the Company written termination
notice. The Termination Date shall be the date specified in such notice, which
date may not be earlier than 30 days or later than 90 day from the Company's
receipt of such notice. Upon any termination of this Agreement pursuant to this
Section 4.5, the Executive shall be entitled to the compensation specified in
Section 5.5 hereof and any other compensation and benefits provided in this
Agreement in connection with a Change in Control of the Company.
4.6 Termination by the Executive Due to Poor Health. The Executive may
terminate his employment under this Agreement upon written notice to the Company
if the Executive's health should become impaired to any extent that makes the
continued performance of the Executive's duties under this Agreement hazardous
to the Executive's physical or mental health or his life (regardless of whether
such condition would be deemed a Disability under any other section of this
Agreement), provided that the Executive shall have furnished the Company with a
written statement from a qualified doctor to that effect and provided further
that, at the Company's written request and expense, the Executive shall submit
to a medical examination by a qualified doctor selected by the Company and
acceptable to the Executive (which acceptance shall not be unreasonably
withheld) which doctor shall substantially concur with the conclusions of the
Executive's doctor. The Termination Date shall the date specified in the
Executive's notice to the Company, which date may not be earlier than 30 days
nor later than 90 day from the Company's receipt of such notice. Upon any
termination of this Agreement pursuant to this Section 4.6, the Executive shall
be entitled to the compensation specified in Section 5.6 hereof.
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4.7 Non-renewal. In the event that either party to this Agreement shall
give notice to the other party that this Agreement will not be renewed as
provided in Section 1.1 hereof, then this Agreement shall terminate at the end
of such final term of this Agreement. The last day of such final term shall be
the Termination Date for a termination pursuant to this Section 4.7. Upon any
termination of this Agreement pursuant to this Section 4.7, the Executive shall
be entitled to the compensation specified in Section 5.7.
4.8 Termination by the Executive. The Executive may terminate his
employment under this Agreement for any reason whatsoever upon not less than 30
days prior written notice to the Company. In the event that reference to the
applicable termination section of this Agreement is not made in the Executive's
notice of termination to the Company and the reason for the Executive's
termination can be construed to occur under this Section 4.8 or any of Sections
4.2, 4.4, 4.5, 4.6 or 4.7 above, then the Executive shall have the right to
specify which section of this Section 4 shall control. The Termination Date
under this Section 4.8 shall be the date specified in the Executive's notice to
the Company, which date may not be earlier than 30 days from the Company's
receipt of such notice. Upon any termination of this Agreement pursuant to this
Section 4.8, the Executive shall be entitled to the compensation specified in
Section 5.7 hereof.
5. COMPENSATION AND BENEFITS UPON TERMINATION.
5.1 Cause. If the Executive's employment is terminated for Cause, the
Company shall pay the Executive his full Base Salary through the Termination
Date specified in Section 4.1 at the rate in effect at the Termination Date, and
the Company shall have no further obligation to the Executive under this
Agreement.
5.2 Disability. During any period that the Executive is unable to perform
his duties under this Agreement as a result of incapacity due to physical or
mental illness, the Executive shall continue to receive his full Base Salary
until the Termination Date specified in Section 4.2. After such termination, the
Executive shall receive in equal monthly installments 100% of his Base Salary at
the rate in effect at the Termination Date for one year and thereafter for two
additional years at an annual rate equal to 50% of the Base Salary which would
have been in effect under this Agreement reduced, in each case, for any
disability payments otherwise payable by or pursuant to plans provided by the
Company.
5.3 Death. Upon the Executive's death, the Company shall pay to the person
designated by the Executive in a notice filed with the Company or, if no person
is designated, to his estate (i) any unpaid amounts of his Base Salary and
accrued vacation to the date of the Executive's death; and (ii) any payments the
Executive's spouse, beneficiaries or estate may be entitled to receive pursuant
to any pension or employee benefit plan or life insurance policy or similar plan
or policy then maintained by the Company. Upon full payment of all amounts
required to be paid under this Section 5.3, the Company shall have no further
obligation under this Agreement.
5.4 Termination by the Executive for Good Reason. If the Executive
terminates this Agreement for Good Reason or the Company terminates the
Executive's employment without cause in accordance with and subject to Section
4.4, then (i) the Company shall pay the Executive his full Base Salary through
the Termination Date specified in Section 4.4 at the rate in effect at such
Termination Date; and (ii) in lieu of any further salary payments to the
Executive for periods subsequent to the Termination Date and in consideration of
the rights of the Company under Section 8, the Company shall pay as severance
pay to the Executive on the fifth day following the Termination Date, a lump sum
amount equal to two hundred (200%) percent of the sum of (a) the annual Base
Salary at the highest rate in effect during the 12 months immediately preceding
the Termination Date; plus (b) the average of the three annual bonus payments
paid with respect to the preceding three years under this Agreement (or the
number of years the Executive has been employed with the Company under this
Agreement or otherwise if less than three years). In addition, the Company shall
pay, upon demand by the Executive, all other damages to which the Executive may
be entitled as a result of the Company's termination of his employment under
this Agreement, including all reasonable legal fees and expenses incurred by him
in contesting or disputing any such termination or in seeking to obtain or
enforce any right or benefit under this Agreement; provided, however, that the
Executive shall only be entitled to such legal fees and expenses if the
Executive prevails in any arbitration or other proceeding contesting or
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disputing any such termination or seeking to obtain or enforce any right or
benefit under this Agreement or enters into a settlement of any of the foregoing
with the Company.
5.5 Termination by the Executive Upon a Change in Control. If the Executive
terminates this Agreement upon a Change in Control of the Company pursuant to
Section 4.5 or the Company terminates the Executive's employment in accordance
with Section 4.4 during a period beginning six (6) months before and ending one
(1) year after a Change in Control of the Company (defined in Section 4.5), then
(i) the Company shall pay the Executive his full Base Salary through the
Termination Date specified in Section 4.5 or Section 4.4 , as the case may be,
at the rate in effect at such Termination Date; (ii) the Executive shall receive
all other compensation and benefits provided in this Agreement in connection
with a termination of employment due to a Change in Control of the Company; and
(iii) in lieu of any further salary payments to the Executive for periods
subsequent to such Termination Date (but without affecting compensation or
benefits to the Executive in accordance with the preceding clauses 5.50) and
5.500) and in consideration of the rights of the Company under Section 8, the
Company shall pay as severance pay to the Executive on the fifth day following
the Termination Date, a lump sum amount equal to two hundred and ninety nine and
99/100 (299.99%) percent of the average taxable compensation of the Executive
for the 5 taxable years prior to such termination (all as determined to compute
the "base amount" for purposes of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code")), reduced, but not below zero, by the amount of
compensation or benefits from the Company to the Executive which would cause the
severance pay payable pursuant to this Section 5.5 to exceed the excess
parachute payment limitation imposed under Section 280G of the Code.
5.6 Termination by the Executive Due to Poor Health. If the Executive
terminates this Agreement pursuant to Section 4.6 hereof, the Company shall pay
to the Executive any unpaid amounts of his Base Salary and accrued vacation to
the Termination Date specified in Section 4.6 plus any disability payments
otherwise payable by or pursuant to plans provided by the Company.
5.7 Non-renewal or other termination. If this Agreement terminates pursuant
to Section 4.7 or Section 4.8 hereof, the Company shall pay to the Executive any
unpaid amounts of his Base Salary and accrued vacation to the Termination Date
specified in Section 4.7 or Section 4.8, as the case may be.
5.8 Health and Medical Plans. The Executive shall be entitled to all
continuation of health, medical, hospitalization and other programs as provided
by any applicable law and such additional benefits as are provided by the
Company to its employees upon termination of employment with the Company.
5.9 Mitigation. The Executive shall not be required to mitigate the amount
of any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Termination Date.
5.10 Incentive Bonus and Expense Reimbursement. If the Executive's
employment with the Company is terminated for any reason, other than Cause
(defined in Section 4.l (b) above), the Executive shall be paid, solely in
consideration for services rendered by the Executive prior to such termination,
an incentive bonus with respect to the Company's fiscal year in which the
Termination Date occurs, in accordance with Section 2.2 hereof. The Executive
shall be entitled to reimbursement for reasonable business expenses incurred
prior to the Termination Date, subject, however to the provisions of Section
3.1.
5.11 Loans. Except as otherwise provided in this Agreement, the outstanding
balance as of the Termination Date of any demand loan or advance from the
Company to the Executive which has no set term or maturity shall be paid by the
Executive to the Company, with interest at the lowest rate permissible for
federal income tax purposes, in sixty equal and successive monthly installments
of principal and interest beginning on the first day of the month following the
Termination Date.
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6. SUCCESSORS; BINDING AGREEMENT.
6.1 Successors. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) acquiring a majority
of the Company's voting common stock or any other successor to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Such agreement shall be confirmed in a writing in form and
substance satisfactory to the Executive. Failure of the Company to obtain an
assumption of this Agreement prior to or simultaneously with the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as he would be entitled to under this Agreement if the Executive had
terminated his employment for Good Reason, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Termination Date. As used in this Agreement, "Company" shall mean the
Company as previously defined and any successor to its business and/or assets
which executes and delivers the agreement provided for in this Section 6 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
6.2 Benefit. This Agreement and all rights of the Executive under this
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him under this Agreement, including all
payments payable under Section 5, if he had continued to live, all such amounts
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there is no such designee, the
Executive's estate.
7. CONFLICTS WITH PRIOR EMPLOYMENT CONTRACT. Except as otherwise provided in
this Agreement, this Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof, and supersedes and revokes any
and all prior or existing agreements, written or oral, relating to the subject
matter hereof, and this Agreement shall be solely determinative of the subject
matter hereof.
8. NONCOMPETITION; UNAUTHORIZED DISCLOSURE; INJUNCTIVE RELIEF.
8.1 No Material Competition. Except with respect to services performed
under this Agreement on behalf of the Company, and subject to the obligations of
the Executive as an officer of the Company and the employment obligations of the
Executive under this Agreement, the Executive agrees that at no time during the
Employment Period or, for a period of one year immediately following any
termination of this Agreement for any reason, for himself or on behalf of any
other person, persons, firm, partnership, corporation or company:
(a) Solicit or accept business from any customers of the Company or its
affiliates, from any prospective customers whose business the Company or any
affiliate of the Company is in the process of soliciting at the time of the
Executive's termination, or from any former customer which had been doing
business with the Company within one year prior to the Executive's termination;
(b) Solicit any employee of the Company or its affiliates to terminate such
employee's employment with the Company; or
(c) Engage in any business of the type performed by the Company in the
geographical are where the Company is actively doing business or soliciting
business if, within 30 days of the Executive advising the Company in writing of
his proposed business activity, the Board determines in good faith that such
proposed business activity is directly competitive with a material part of the
business of the Company and its subsidiaries (in the aggregate) and such
competitive business activity is reasonably likely to materially affect in an
adverse manner the consolidated sales, profits or financial condition of the
Company. If the Board fails to advise the Executive within said thirty (30) day
period, then the Board shall be deemed to have consented to the Executive's
engaging in such activity.
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8.2 Unauthorized Disclosure. During the Employment Period and for two years
following the termination of this Agreement for any reason, the Executive shall
not, without the written consent of the Board or a person authorized by the
Board or as may otherwise be required by law or court order, disclose to any
person, other than an employee of the Company or person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company, any material
confidential information obtained by him while in the employ of the Company with
respect to any of the company's customer, suppliers, creditors, lenders,
investments bankers or methods of marketing, the disclosure of which the
Executive knows will materially damage the Company; provided, however, that
confidential information shall not include any information generally known to
the public (other than as a result of unauthorized disclosure by the Executive)
or any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company. For the period ending one year following the termination of employment
under this Agreement for any reason, the Executive shall not disclosure any
confidential information of the type described above except as determined by him
to be reasonably necessary in connection with any business or activity in which
he is then engaged or as otherwise required by law or court order.
8.3 Injunction. The Company and the Executive acknowledge that a breach by
the Executive of any of the covenants contained in this Section 8 may cause
irreparable harm or damage to the Company or its subsidiaries, the monetary
amount of which may be virtually impossible to ascertain. As a result, the
Executive agrees that the Company shall be entitled to an injunction issued by
any court of competent jurisdiction enjoining and restraining all violations of
this Section 8 by the Executive or his associates, affiliates, partners or
agents, and that the right to an injunction shall be cumulative and in addition
to all other remedies the Company may possess.
8.4 Certain Provisions. The limitations of this Section 8 shall terminate
immediately upon termination of this Agreement if for any reason the Company
does not fulfill its obligations as required by Sections 4 and 5 of this
Agreement; provided, however, such termination shall not affect the rights of
the Executive to receive all payments he is entitled to receive under Section 5.
The provisions of this Section 8 shall apply during the time the Executive is
receiving Disability payments from the Company as a result of a termination of
this Agreement pursuant to Section 4.2 hereof.
9. ARBITRATION. Any dispute or controversy (except for disputes arising under
Section 8) arising under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect (except to the extent that the procedures
outlined below differ from such rules). Within 7 days after receipt of written
notice from either party that a dispute exists and that arbitration is required,
both parties must within 7 business days agree on an acceptable arbitrator. If
the parties cannot agree on an arbitrator, then the parties shall list the "Big
Six" accounting firms (other than the Company's auditors) in alphabetical order
and the first firm that does not have a conflict of interest and is willing to
serve will be selected as the arbitrator. The parties agree to act as
expeditiously as possible to select an arbitrator and conclude the dispute. The
arbitrator must render his decision in writing within 30 days of his or its
appointment. The cost and expenses of the arbitration and of legal counsel to
the prevailing party shall be borne by the non-prevailing party, except as
otherwise provided in Sections 3.7 and 5.4 hereof. Each party will advance
one-half of the estimated fees and expenses of the arbitrator. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided
that the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any violation
of Section 8 hereof.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its conflict
of laws principles to the extent that such principles would require the
application of laws other than the laws of the State of Florida.
11. NOTICES. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered by
hand or when deposited in the United States mail by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
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If to the Company: If to the Executive:
Cavit Sciences, Inc. Colm J. King
100 E. Linton Blvd., Suite 106 B 606 Eagle Drive
Delray Beach, Florida 33483 Delray Beach, Florida 33444
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
12. BENEFITS: BINDING EFFECT. This Agreement shall be for the benefit of and
binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns. Notwithstanding the foregoing, neither party may assign its rights or
benefits hereunder without the prior written consent of the other party hereto.
13. SEVERABILITY. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.
14. WAIVERS. The waiver by either party hereto of a breach or violation of any
term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
15. DAMAGES. Nothing contained herein shall be construed to prevent the Company
or the Executive from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the party found to be at fault shall pay all reasonable court costs and
attorneys' fees of the other, whether such costs and fees are incurred in a
court of original jurisdiction or one or more courts of appellate jurisdiction.
16. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this Agreement
is intended, or shall be construed, to confer upon or give any person (other
than the parties hereto and, in the case of the Executive, his heirs, personal
representative(s) and/or legal representative) any rights or remedies under or
by reason of this Agreement. No agreements or representations, oral or
otherwise, express or implied, have been made by either party with respect to
the subject matter of this agreement which agreements or representations are not
set forth expressly in this Agreement, and this Agreement supersedes any other
employment agreement between the Company and the Executive.
17. BOARD APPROVAL; AGREEMENT. The Company warrants and represents to the
Executive that this Agreement has been approved and authorized by the Board. No
provisions of this Agreement may be modified, waived or discharged unless such
waiver modification or discharge is agreed to in a writing signed by the
Executive and the officer of the Company which is specifically designated by the
Board.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
CAVIT SCIENCES, INC., a
Florida corporation
By: /s/ Colm J. King
--------------------------------
Name: Colm J. King
Title: Sole Officer and Director
By: /s/ Harvery Judkowitz
--------------------------------
Name: Harvey Judkowitz
Title: Director
By: /s/ Julio De Leon
--------------------------------
Name: Julio De Leon
Title: Director
/s/ Colm J. King
--------------------------------
COLM J. KING, EXECUTIVE
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