EMPLOYMENT AGREEMENT

 

 

AGREEMENT (the “Agreement”) dated as of July 2, 2012, between VYCOR MEDICAL,
INC., a Delaware corporation (“Company”), and RICHARD P. DENNESS, an individual
(“Executive”).

 

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.

 

Accordingly, each party hereto hereby agrees as follows:

 

1.

TERM OF AGREEMENT

 

The term of this Agreement will commence on the July 9, 2012 (“Start Date”) and
will continue until the first anniversary of the Start Date (the “Initial
Term”). At the conclusion of the Initial Term, and each successive term
thereafter, this Agreement will be automatically renewed for an additional
twelve (12) month term.

 

2.

EMPLOYMENT

 

2.1 Position and Duties. Executive will serve as an Officer of the Company, and
will have the general powers, duties and responsibilities of management usually
vested in such position of a corporation and such additional roles, 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 the Company. Initially,
Executive will serve as Chief Executive Officer (“CEO”) Designate until the
departure of the current CEO. It is currently envisaged that the Executive will
initially be heavily involved with and responsible for the Company’s planned
listing on Nasdaq and contemporaneous funding (the “Funding”).  As such, the
Executive will be responsible for all interactions with the prospective
investors, be it the underwriter/bank, institutional investors and /or private
investors, including but not limited to attending and presenting the Company on
any “road show” or investor meetings during the offering period. The Executive
will also be appointed to Vycor’s Board of Directors, however, should the
Executive cease to be employed by the Company for whatever reason, unless
otherwise agreed with the board of directors, he will immediately submit his
resignation from the Company’s board of directors.    

 

2.2 Other Services. While in the employment of the Company, the Executive will
not be permitted to perform other work with third parties without the prior
written agreement of the Company. Executive will disclose in full prior to
entering into Employment contract any current positions, roles or obligations he
currently has. 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.

 

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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.

(a) Prior to Completion of the Funding. Commencing the Start Date, Executive
will receive a monthly salary of $10,000 payable in bi-weekly installments in
accordance with the Company’s standard payroll practice, less any applicable
withholding deductions and the Company will provide the Executive the benefits
outlined below. In addition the Company will pay for the Executive’s flights
between Boca Raton and Atlanta (economy class) and provide a $1,000 a month
contribution towards his accommodation expenses in Boca Raton be it rental or
hotels evidenced by receipts. The Company will also cover any travel costs
incurred by the Executive relating to the fund raising process.

(b) Post Completion of the Funding. Upon the successful completion of the
Funding with net proceeds to the Company of not less than $8,000,000 and upon
the acceptance of the Company’s application for listing on the NASDAQ Capital
Market (collectively, “Funding Completion”), the Executive will receive an
annual salary of $250,000, payable in bi-weekly installments in accordance with
the Company’s standard payroll practices less any applicable withholding
deductions. There shall be no further increase in Executive’s salary without the
express consent and approval of the Company’s Compensation Committee and Board
of Directors.

 

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

 

3.4 Automobile Allowance. None.

 

3.5 Paid Vacation. Executive will accrue, on a daily basis, a total of twenty
(20) workdays of paid vacation (“Vacation”) per calendar year. 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.

 

3.6 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.

 

3.7 Stock Options. Following the completion of the Funding Completion (as
defined above) the Company will grant to the Executive a number of Stock Options
(“Options”) equal to

 

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6% of its issued and outstanding common stock immediately prior to the Start
Date (inclusive of those shares of common stock issuable upon the conversion of
issued and outstanding shares of Series C Preferred Stock).  The Options shall
be exercisable for a period of three (3) years from the date of grant at an
exercise price of $0.03 per share.  1% of the 6% of the Options will become
exercisable upon Funding Completion. The balance of the Options (i.e. 5% or the
“Remaining Options”) will be subject to a vesting schedule whereby equal
tranches of one-third (1/3) of the remaining Options shall become exercisable
when and only if the following events occur: 

 

·      1/3 of the Remaining Options will become exercisable when the Company
achieves profitability on a consolidated Net Income basis (before any dividends
but after any interest payments) as reported in its audited financial statements
in any given calendar year

·      A further 1/3 of the Remaining Options will become exercisable when the
Company achieves a consolidated annual EBITDA of $3,000,000 or more as reported
in its audited financial statements in any given calendar year

·      The final 1/3 of the Remaining Options will become exercisable should the
Executive remain in the employment of the Company for a period of 3 years from
Start Date.

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. Notwithstanding, commencing
from the Funding Completion the Company will not reimburse any cost associated
with the Executive’s accommodation in Boca Raton or any travel-related expenses
for travel between Atlanta, GA and Boca Raton, FL.

 

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 applicable 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

 

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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 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 Without Good Cause; Resignation. 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, at any
time, with 60 days’ notice. If Company terminates Executive’s employment without
Good Cause, or Executive resigns, the Company will pay Executive his salary
through the end of the 60 days’ notice period, together with any benefits
accrued through the last date of the notice period. Company will have no further
obligations to Executive under this Agreement or any other agreement, and all
unvested options will terminate.

 

5.2 Termination With Good Cause. Company may terminate Executive’s employment at
any time, with or without notice, with Good Cause (as defined below). If Company
terminates Executive’s employment with Good Cause, 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

 

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obligations to Executive under this Agreement or any other agreement, and all
unvested options will terminate.

 

 

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 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 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 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 90 days from Executive’s termination
date, and Executive (or his legal representative) will have until the end of the
option term to exercise all vested 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.

 

5.5 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

 

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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, as amended from time to time by the Board of Directors.

 

7.

CONFIDENTIAL INFORMATION

 

7.1 Trade Secrets of Company. Executive, by reason of his 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 confidential financial,
accounting, statistical and personal data of customers of Company and of its and
their affiliates. All confidential data will not be disclosed, directly or
indirectly, or used by Executive in any way unless directed by a federal or
state agency, either during the term of this Agreement (except as required in
the course of Executive’s employment or as 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

 

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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 Florida. The federal and
state courts located in Palm Beach, Florida 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 Florida,
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

 

(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 any 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.

 

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8.10 Amendment and Waiver. This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties hereto. 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. 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.

 

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

 

VYCOR MEDICAL, INC.

 

 

 

By: /s/ David Marc Cantor       

Name: David Marc Cantor

Title:   President

 

 

 

/s/ Richard P. Denness             

Richard P. Denness

 

 

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