EXHIBIT 10.3

EMPLOYMENT AGREEMENT

          AGREEMENT (the “Agreement”) dated as of December 29, 2009, between
VYCOR MEDICAL, INC., a Delaware corporation (“Company”), and KENNETH T.
COVIELLO, an individual (“Executive”).

          This Agreement replaces and supersedes in all respects all prior
employment agreements and arrangements between the Company and the Executive,
including but not limited to that certain Employment Agreement between the
parties dated as of January 1, 2008.

          Company desires to employ Executive, and Executive desires to be
employed, as Chief Executive Officer (“CEO”) of Company, in each case, on the
terms and subject to the conditions set forth in this Agreement.

          This Agreement is entered into by the parties as part and parcel of a
restructuring arrangement (the “Restructuring”) by and between the Company and
Fountainhead Capital Management Limited (“Fountainhead”). This Agreement shall
take effect concurrent with the closing of the Restructuring and will be of no
force and effect unless and until the closing of the restructuring.

          Accordingly, each party hereto hereby agrees as follows:

1. TERM OF AGREEMENT

          The term of this Agreement will commence on the date first set forth
above and will continue until a date which is ninety (90) days thereafter (the
“Initial Term”). At the conclusion of the Initial Term, and each successive term
thereafter, this Agreement will be automatically renewed for an additional
thirty (30) day term, unless either party hereto gives written notice to the
other party of its intention to terminate this Agreement at least 30 days prior
to the automatic renewal date.

2. EMPLOYMENT

          2.1 Position and Duties. Executive will serve as Company’s President,
reporting directly to Company’s Board of Directors (the “Board”), and will have
the general powers, duties and responsibilities of management usually vested in
that office in a corporation and such additional powers and duties as may be
prescribed from time to time by the Board, which may include services for one or
more subsidiaries or affiliates of Company. Executive’s responsibilities are
detailed in Exhibit A attached hereto and incorporated by reference, with the
understanding that such description is not intended to be exclusive, and will
receive performance appraisals on or about each anniversary of this Agreement by
the compensation committee of the Board.

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          2.2 Other Services. Company acknowledges that Executive may do
educational and charity work and conduct personal business as long as such
activities do not interfere with Executive’s duties hereunder.

3. COMPENSATION

          3.1 Compensation. During the term of this Agreement, Company will pay
the amounts and provide the benefits described in this Section 3, and Executive
agrees to accept such amounts and benefits in full payment for Executive’s
services under this Agreement.

          3.2 Base Salary. Commencing the date of this Agreement, the Company
will pay to Executive a base salary of $8,500.00 per month, payable in bi-weekly
instalments in accordance with Company’s standard payroll practices, less
applicable withholding. On the earlier to occur of (i) the closing of a Company
fundraising of more than $1.5 million, or (ii) the Company’s achievement of
positive cash flow (based upon financial statements prepared in accordance with
US GAAP) for at least three consecutive months, the base salary shall increase
effective the beginning of the immediately succeeding fiscal quarter to the
equivalent of $165,000 per annum. Notwithstanding the foregoing, if the
Company’s cash flow calculated on the same basis for any of the succeeding three
months is negative, Executive agrees to discuss an adjustment of such increased
base salary until the Company again achieves positive cash flow for a period of
three consecutive months. In addition, any increase in salary shall also be
subject to the agreement of any new investors in the Company who make their
investment following the date of this Agreement. Other than the foregoing, no
increase in base salary shall be approved by the Company without the expressed
consent of Fountainhead Capital Management Limited.

          3.3 Cash Bonus. In addition to Base Salary, Executive shall be paid an
incremental cash bonus, payable monthly in arrears, equivalent to 5% per month
of the Company’s gross profit (sales, less commission, less Cost of Goods Sold)
over $7,155 per month. Incremental sales must be on normal payment terms.

          3.4 Accrual of Past Salary. Executive acknowledges that the Company
has accrued past, but unpaid, salaries payable to the Executive in the amount of
$70,643 (the “Accrued Salary”). Executive waives any claim to any amount of
additional unpaid salary through the date of this Agreement. The Accrued Salary
is hereby converted into a contingent retention bonus payable (assuming that the
Executive continues to be in the employ of the Company at the time) either on
the closing of a Company fundraising of more than $1.5 million or on the sale of
the Company (or substantially all of its assets) at a value above $3 million.
Should the Executive be Terminated Without Cause or Resign With Good Reason
within a period of six months prior to either of these two events occurring, the
retention bonus will be payable

          3.5 Equity Incentive Plan. Prior to March 31, 2010, the Company’s
Board of Directors, subject to the approval of Fountainhead, shall develop an
incentive plan for Management which will provide incentive compensation for
Management and key employees consistent with industry standards based on the
achievement of pre-determined financial milestones.

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          3.6 Fringe Benefits. Company will provide to Executive health care
insurance, insurance and other employee benefits which have been provided by the
Company consistent with past practices and the Company’s Employee Manual

          3.7 Automobile Allowance. None.

          3.8 Paid Vacation. Executive will accrue, on a daily basis, a total of
three workweeks of paid vacation (“Vacation”) per year following the date of
this Agreement. This Vacation will be in addition to normal Company holidays,
which will be determined at the discretion of Company from time to time. Any
accrued but unused Vacation (up to such limits as Company may establish) will be
paid to Executive, on a pro rata basis, at the time that his employment is
terminated.

          3.9 Deductions from Compensation. Company will deduct and withhold
from all compensation payable to Executive all amounts required to be deducted
or withheld pursuant to any present or future law, ordinance, regulation, order,
writ, judgment, or decree requiring such deduction and withholding.

4. REIMBURSEMENT OF CERTAIN EXPENSES

          4.1 Travel and Other Expenses. Company will pay to or reimburse
Executive for reasonable and necessary business, travel, promotional,
professional continuing education and licensing costs (to the extent required),
professional society membership fees, seminars and similar expenditures incurred
by Executive for which Executive submits appropriate receipts and indicates the
amount, date, location and business character in a timely manner.

          4.2 Liability Insurance. Company will add Executive to the coverage of
Company’s officers and directors’ insurance and other liability insurance
policies, consistent with usual and reasonable business practices, to cover
Executive against insurable events related to his employment with Company.

          4.3 Indemnification. The Company shall indemnify the Executive, and
hold him harmless, to the maximum extent permitted under law, if he is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Company or its
affiliates, by reason of the fact that the Executive is or was a director,
officer, employee or agent of the Company or its affiliates, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against all expenses, including attorneys’ fees, judgments, fines and amounts
paid in settlement. Expenses incurred by the Executive in defending a civil or
criminal action, suit or proceeding referenced herein shall be promptly and
timely paid by the Company in advance of the final disposition of such action,
suit or proceeding at the written request of the Executive, provided the
Executive agrees to repay such amount to the extent that it is ultimately
determined that the Executive is not entitled to indemnification. The right to
indemnification or advances as

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provided by this Agreement shall be enforceable by the Executive in any court of
competent jurisdiction. The Executive’s expenses incurred in connection with
successfully establishing the Executive’s right to indemnification or advances,
in whole or in part, in any civil or criminal action, suit or proceeding shall
also be indemnified by the Company. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Executive to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the Company’s
Certificate of Incorporation, the Bylaws or by statute. In the event of any
changes, after the date of this Agreement, in any applicable law, statute or
rule which expand the right of a Delaware corporation to indemnify an officer,
supervisor or employee of the Company, such changes shall be within the purview
of the Executive’s rights, and the Company’s obligations, under this Agreement.
In the event of any changes in any applicable law, statute or rule which narrows
the right of a Delaware corporation to indemnify such changes, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement
shall have no effect on this Agreement or the parties’ rights and obligations
hereunder. The indemnification provided by this Agreement shall not be deemed
exclusive of any rights to which the Executive may be entitled under the
Company’s Certificate of Incorporation, the Bylaws, any agreement, any vote of
stockholders or disinterested directors, the Delaware General Corporation Law,
or otherwise. The indemnification provided under this Agreement shall continue
to remain valid and enforceable by the Executive even though the Executive may
have ceased to be an officer, supervisor, director, or employee of the Company
or Executive’s employment with the Company under this Agreement has ceased.

5. TERMINATION

          5.1 Termination With Good Cause; Resignation Without Good Reason.
Company may terminate Executive’s employment at any time, with or without notice
or Good Cause (as defined below). If Company terminates Executive’s employment
with Good Cause, or if Executive resigns without Good Reason (as defined below),
Company will pay Executive his salary prorated through the date of termination,
at the rate in effect at the time notice of termination is given, together with
any benefits accrued through the date of termination. Company will have no
further obligations to Executive under this Agreement or any other agreement,
and all unvested options will terminate.

          5.2 Termination Without Good Cause; Resignation with Good Reason.
Company will have the right to terminate Executive’s employment under this
Agreement without Good Cause at any time, and Executive will have the right to
terminate his employment with notice and Good Reason at any time. If Company
terminates Executive’s employment without Good Cause, or Executive resigns for
Good Reason, the Company will pay Executive his salary through the end of the
Term of this Agreement.

          5.3 Good Cause. For purposes of this Agreement, a termination will be
for “Good Cause” if Executive should:

                    (a) commit an act of fraud, moral turpitude or embezzlement
in connection

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with his duties;

                    (b) violate a material provision of Company’s written Codes
of Ethics as adopted by the Board, or any applicable state or federal law or
regulation which failure or refusal remains uncured for a period of fifteen (15)
days after written notice to Executive thereof;

                    (c) violate or breach a material provision of the this
Agreement (other than a breach by reason of an act described in subclauses (a)
above or (e) below), which breach remains uncured for a period of fifteen (15)
days after written notice to Executive of the breach;

                    (d) fail or refuse to comply with a relevant and material
obligation assumable and chargeable to an executive of his corporate rank and
responsibilities under the Sarbanes-Oxley Act and the regulations of the
Securities and Exchange Commission promulgated thereunder which failure or
refusal remains uncured for a period of fifteen (15) days after written notice
to Executive thereof; or

                    (e) be convicted of, or enter a plea of guilty or no contest
to, a felony or a misdemeanor involving fraud or moral turpitude under state or
federal law.

          5.4 Good Reason. For purposes of this Agreement, a resignation will be
with “Good Reason” following:

                    (a) assignment to Executive of duties materially
inconsistent with Executive’s status as President of an emerging company;
provided Executive will give the Company written notice and a reasonable
opportunity to cure prior to termination for this reason,

                    (b) removal of Executive as President,

                    (c) material adverse change in the reporting relationship
set forth in Section 2.1 hereof or a substantial reduction in the nature or
status of Executive’s responsibilities as President provided Executive will give
the Company written notice and a reasonable opportunity to cure prior to
termination for this reason; or

                    (d) material breach of this Agreement by Company, including,
but not limited to, Company’s failure to timely pay to Executive any amount due
under Section 3.2 hereof which continues after written notice and reasonable
opportunity to cure.

Notwithstanding the above, the occurrence of an event specified in Sections
5.4(a), (b) or (c) above shall not give rise to a right of termination by
Executive for Good Reason if any of such events is the result of an action taken
by the Company by reason of the fact that the Company had the right to terminate
the Executive for Good Cause as defined in Section 5.3, but, rather than
terminate Executive, the Company has chosen to retain Executive and reassign
Executive to different duties as a result of the conduct of Executive.

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          5.5 Death or Disability. To the extent consistent with applicable law,
Executive’s salary will terminate on his death or Disability. “Disability” means
any health condition, physical or mental, or other cause beyond Executive’s
control that prevents him from performing his duties, even after reasonable
accommodation is made by Company, for a period of 90 consecutive days within any
365-day period. In the event of termination due to death or Disability, Company
will pay Executive (or his legal representative) his salary prorated through the
date of termination, at the rate in effect at the time of termination and
continue to provide insurance and other fringe benefits to Executive and
Executive’s spouse and dependent children for a period of one year from
Executive’s termination date, and 100% of the options set to vest in the year
that death or disability occurs will vest and Executive (or his legal
representative) will have until the end of the option term to exercise all
options. Company will have no further obligations to Executive (or his legal
representative) under this Agreement, except for any other vested rights under
employee benefit plans and programs and the right to receive reimbursement for
business expenses.

          5.6 Return of Company Property. Within ten days after the effective
date of termination of Executive’s employment with Company, Executive will
return to Company all products, books, records, forms, specifications, formulae,
data processes, designs, papers and writings relating to the business of
Company, including, but not limited to, proprietary or licensed computer
programs, customer lists and customer data, and copies or duplicates thereof in
Executive’s possession or under Executive’s control. Executive will not retain
any copies or duplicates of such property and all licenses granted to him by
Company to use computer programs or software will be revoked on the termination
date.

6. DUTY OF LOYALTY

During the term of this Agreement the executive will follow the Vycor Code of
Ethics.

7. CONFIDENTIAL INFORMATION

          7.1 Trade Secrets of Company. Executive, by reason of his prior
employment with the Company and during the term of this Agreement, has and will
develop, have access to and become acquainted with various trade secrets which
are owned by Company and which are regularly used in the operation of its
business. Executive will not disclose such trade secrets, directly or
indirectly, or use them in any way, either during the term of this Agreement or
at any time thereafter, except as required in the course of his employment by
Company. All files, contracts, manuals, reports, letters, forms, documents,
notes, notebooks, lists, records, documents, customer lists, vendor lists,
purchase information, designs, computer programs and similar items and
information relating to the businesses of such entities, whether prepared by
Executive or otherwise and whether now existing or prepared at a future time,
coming into his possession will remain the exclusive property of Company.

          7.2 Confidential Data of Customers of Company. Executive, in the
course of his duties, will have access to and become acquainted with financial,
accounting, statistical and personal data of customers of Company and of its and
their affiliates. All such data is confidential and will not be disclosed,
directly or indirectly, or used by Executive in any way, either during the term
of this

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Agreement (except as required in the course of Executive’s employment by
Company) or at any time thereafter.

          7.3 Intellectual Properties. Executive will sign a Confidentiality
Agreement (the “Confidentiality Agreement”) with the Company prior to or on his
start date.

          7.4 Continuing Effect. The provisions of this Section 7 will remain in
effect after the effective date of termination of Executive’s employment with
Company

8. OTHER PROVISIONS

          8.1 Compliance with Other Agreements. Executive represents and
warrants to Company that, to his knowledge and belief, the execution, delivery
and performance of this Agreement will not conflict with or result in the
violation or breach of any term or provision of any order, judgment, injunction,
contract, agreement, commitment or other arrangement to which Executive is a
party or by which he is bound.

          8.2 Non-delegable Duties. This Agreement is a contract for Executive’s
personal services. The duties of Executive under this Agreement are personal and
may not be delegated or transferred in any manner whatsoever, and will not be
subject to involuntary alienation, assignment or transfer by Executive during
his life.

          8.3 Governing Law. The validity, construction and performance of this
Agreement will be governed by the internal laws of the State of New York. The
federal and state courts located in New York, New York will have exclusive
jurisdiction over any action to compel performance in accordance with this
Agreement, the Confidentiality Agreement or the Dispute Resolution Agreement (as
defined below) or to enforce any award in any arbitration

          8.4 Severability. The invalidity or unenforceability of any particular
provision of this Agreement will not affect the other provisions, and this
Agreement will be construed in all respects as if any invalid or unenforceable
provision were omitted.

          8.5 Binding Effect. The provisions of this Agreement will bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

          8.6 Notice. Any notices or communications required or permitted by
this Agreement will be deemed sufficiently given if in writing and when
delivered personally or two business days after deposit with the United States
Postal Service as registered or certified mail, postage prepaid and addressed as
follows:

                    (a) if to Company, to the principal office of Company in the
State of New York, marked “Attention: Chairman of the Board”, and to a member of
the Company’s Compensation Committee who also qualifies as an “independent”
member of the board of directors; or

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                    (b) if to Executive, to the most recent address for
Executive appearing in Company’s records.

          8.7 Dispute Resolution. The parties agree to submit any disputes
arising from this Employment Agreement to final and binding arbitration under
the applicable Rules of the American Arbitration Association.

          8.8 Attorneys’ Fees. The prevailing party in any suit or other
proceeding brought to enforce, interpret or apply any provisions of this
Agreement will, except as otherwise provided in the Dispute Resolution
Agreement, be entitled to recover all costs and expenses of the proceeding and
investigation (not limited to court costs), including attorneys’ fees.

          8.9 Headings. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.

          8.10 Amendment and Waiver. This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties hereto, and by
Fountainhead, so long as Fountainhead retains an ownership position in the
Company. Either party may in writing waive any provision of this Agreement to
the extent such provision is only for the benefit of the waiving party, and no
other party, including Fountainhead, who shall be deemed a third party
beneficiary for the purposes set forth herein. No waiver by either party of a
breach of any provision of this Agreement will be construed as a waiver of any
subsequent or different breach, and no forbearance by a party to seek a remedy
for noncompliance or breach by the other party will be construed as a waiver of
any right or remedy with respect to such noncompliance or breach.

          8.11 Entire Agreement. This Agreement and all other written agreements
entered into with Executive during his employment with Company, are the only
agreements and understandings between the parties hereto pertaining to the
subject matter hereof, and supersede all prior agreements, summaries of
agreements, descriptions of compensation packages, discussions, negotiations,
understandings, representations or warranties, whether verbal or written,
between the parties pertaining to such subject matter.

          8.12 Authority. Company represents and warrants that the individual
executing this Agreement on its behalf has been duly authorized so to do and
that this Agreement is a valid and enforceable agreement of Company.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

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VYCOR MEDICAL, INC.

 

 

 

 

/s/ Heather Vinas

 

By:

 

 

 

 

 

Name: Heather Vinas

 

Title: President

 

 

/s/ Kenneth T. Coviello

 

 

 

 

 

Kenneth T. Coviello

 

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Exhibit A

Position and Duties.

The Executive shall serve as President of the Company; the Executive’s duties
will be the following:

          (a) Manage the business and affairs of the Company within the
guidelines established by the Board of Directors with primary responsibility for
business development and sales;

          (b) Work with the President to recommend to the Board of Directors
strategic directions for the Company’s business, and when approved by the Board
of Directors, implement the corresponding strategic, business and operational
plans;

          (c) Direct and monitor the activities of the Company in a manner such
that agreed upon targets are met and the assets of the Company are safeguarded
and optimized in the best interests of all the Company’s shareholders;

          (d) Together with the President, develop and implement operational
policies to guide the Company within the parameters set forth in the Company’s
By-Laws and the framework of the strategic directions adopted by the Board of
Directors;

          (e) Develop and recommend top-level organizational structure and
staffing to the Board of Directors and direct the implementation of the Board’s
decisions in this regard;

          (f) Together with the President, develop and seek the Board’s
concurrence for plans for management development and succession in all key
positions and then implement such plans;

          (g) Manage and oversee the interface between the Company and its
shareholders, the investment community, media, governments and their agencies,
employees and the general public;

          (h) Meet regularly and as required with the Chairman and other members
of the Board of Directors to ensure that they are provided in a timely manner
with all information and access to management necessary to permit the Board of
Directors and all Committees thereof to fulfill their statutory and other
obligations;

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          i) Together with the President, develop and recommend to the Board of
Directors the Annual Budget and Plan and provide to the Board of Directors, on
at least an annual basis, a management proposal that outlines the Company’s
budget and plan of operations;

          (j) Such other duties and responsibilities consistent with such
office, as from time to time may be prescribed by the Board of Directors of the
Company (or Committees thereof)

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