**Exhibit 10.3**

 

**EMPLOYMENT AGREEMENT**

 

ThisEMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of September 1,2003, by and between Medicor Ltd., a Delaware corporation (the “Company”), andTheodore R. Maloney (“Executive”).

 

A.                                   TheCompany is engaged in the business of creation, production and distribution ofmedical devices and desires to retain an individual for the position of ChiefExecutive Officer.

 

B.                                     Executiverepresents that he is well qualified to perform the duties of Chief ExecutiveOfficer, and will devote the necessary time, effort and energy to perform thoseduties.

 

C.                                     Basedon these representations, the Company desires to hire Executive as its ChiefExecutive Officer.

 

NOW,THEREFORE, in consideration of the above recitals and the respective agreementsof Company and Executive set forth below, the Company and Executive, intendingto be legally bound, agree as follows:

 

**1.****                                      Employment.**  The Company shall employ Executive as itsChief Executive Officer, and Executive shall accept such employment and performthe services herein described for Company, upon the terms and conditions setforth in this Agreement.  The Executiveshall also be appointed to the Board of Directors for an initial term of three(3) years upon the execution of this Agreement.

 

**2.****                                      Termof Employment.**  Unlessterminated at an earlier date in accordance with Section 5 below, the termof Executive’s employment with Company (“Term of Employment”) shall commence onthe date first set forth above and shall continue for a period initially endingon September 30, 2005 (“Initial Term”). The Term of Employment shall automatically be renewed at the end of the12th month prior to the end of the Initial Term for an additional12-month period and shall be extended at the end of each succeeding month by anadditional month such that the Term of Employment shall extend each month untilthe end of succeeding 12th month (each such rolling 12-month period,a “Subsequent Term”) unless either party provides written notice of theirintention not to renew this Agreement to the other in advance of thenapplicable termination date of the Term of Employment.

 

**3.****                                      Positionsand Duties.**

 

a.                                       Employmentwith Company.  Executive shallperform for the Company the duties and responsibilities of a chief executiveofficer of a corporation and such other duties and responsibilities as theCompany shall reasonably assign to Executive from time to time generallyconsistent with Executive’s position as Chief Executive Officer, as determinedin the sole discretion of the Company. Executive shall report to the Chairman. In addition, Executive shall be appointed and serve as a member of theCompany’s Executive Committee which shall contain four or fewer members ofsenior management.

 

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b.                                      Placeof Employment.  Executive’sprincipal place of employment shall be at the Company’s Principal ExecutiveOffices; provided however, that (i) for an initial period, not to exceed 12months (the “Transition Period”), the Company will establish an office on amonth-to-month basis in or reasonably near Santa Barbara, CA from whichExecutive may work a material portion of time, it being understood thatExecutive will be required to be present at all necessary and appropriate timesat the Company’s Principal Executive Offices and (ii) Executive will beexpected to engage in travel within and outside the State of Nevada as Companymay reasonably request of Executive.

 

**4.****                                      Compensation.**

 

a.                                       Salary.  The Company shall pay Executive ascompensation for his services a base salary at the annualized rate of$480,000.  Such salary shall be subjectto applicable tax withholding and shall be paid periodically in accordance withthe Company’s normal payroll practices. Such annual compensation shall be reviewed annually for increase (butnot decrease) in the discretion of the Board. In conducting any such annual review, the Board shall take into accountany increase in Executive’s responsibilities, increases in the compensation ofother executives of the Company or any Affiliate (or any competitor(s) ofeither or both), the performance of Executive and/or other pertinentfactors.  The annual compensationspecified in this Section 4.a, together with any increases in such annualcompensation that the Company may grant from time to time, is referred to inthis Agreement as “Base Compensation.”

 

b.                                      Bonuses.  The Company may pay to Executive periodic orannual discretionary bonuses for any period ending prior to the end of the Termof Employment in an amount that will be determined by the CompensationCommittee based on such factors as Executive’s performance and the performanceof the Company.

 

c.                                       ExecutiveBenefits.  While Executive isemployed by the Company hereunder, Executive shall be entitled to participatein all employee benefit, pension and welfare plans and programs of Company forexecutive employees, including any group medical, dental, life insurance anddisability insurance plans, or similar benefit plans of the Company, to theextent that Executive meets the eligibility requirements for each individualplan or program.  Participation in anysuch benefits and plans shall be consistent with Executive’s rate ofcompensation to the extent that compensation is a determinative factor withrespect to participation and/or coverage under any such benefit or plan.  The Company provides no assurance as to theadoption or continuance of any particular employee benefit plan or program, andExecutive’s participation in any such plan or program shall be subject to theprovisions, rules and regulations applicable thereto.

 

d.                                      Stock Options.  The Company will, within ten (10) days ofExecutive’s signature on this Agreement, grant to Executive an option topurchase 200,000 shares of the Company’s common stock (the “Option”) at theexercise price equal to the fair market value of the Company’s common stock onthe date of grant, in accordance with and subject to the Company’s 2003 Amendedand Restated Stock Compensation Program. Subject to the terms of the Option (including partial acceleration inthe event of a termination of this Agreement by the Company without Cause or bythe Executive for Good Reason), the Option granted pursuant to this Agreementwill vest with respect to 25% of the shares of common stock purchasable

 

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thereunder on each of the firstthrough fourth anniversaries of the date of grant, provided Executive remainsemployed by the Company on each such date. Unless specifically provided in this Agreement, vesting and exerciseprovisions and all other terms and conditions governing the Options shall be asset forth in the plan documents and such option agreements as may be enteredinto with Executive.

 

e.                                       SalaryContinuation.  Executive shall beentitled to receive his Base Compensation for all periods during which he isunable to perform his duties hereunder by reason of a mental or physicalincapacity, whether resulting from illness, accident or otherwise, prior tobeing determined to be suffering from a Disability.

 

f.                                         Expenses.  While Executiveis employed by the Company hereunder, Company shall reimburse Executive for allreasonable out-of-pocket business, travel and entertainment expenses incurredby Executive in the performance of Executive’s duties and responsibilitieshereunder, subject to the Company’s normal policies and procedures for expenseverification and documentation as in effect from time to time.  The Company shall pay the actual andreasonable moving expenses of Executive’s move to the location of the principalexecutive offices of the Company.

 

g.                                      Paid Leave.  Executiveshall be entitled to paid leave in accordance with Company’s practices andpolicies for executive employees.

 

h.                                      Transition Housing Assistance. During the Transition Period, the Company shall provide Executivereasonable housing accommodation in Las Vegas, Nevada for use duringExecutive’s performance of his Company duties in Las Vegas.

 

i.                                          Professional License. The Company recognizes that Executive is licensed to practice law in theState of California and that such Executive benefits the Company.  In recognition of such benefit, the Companyshall pay during the Term of Employment all fees necessary to maintain suchlicense in effect or and to pay or reimburse all expenses, including tuition,admission, travel and other fees related to or incurred in connection withsatisfying applicable mandatory continuing legal education requirements.  Time spent in satisfying such requirementsshall be deemed time spent in performance of Executive’s duties hereunder and notpaid leave.

 

**5.****                                      Terminationof Employment.**

 

a.                                       Voluntary Termination; Termination forCause.  The Company may terminate Executive’semployment at any time for Cause and Executive may terminate his employment forany reason.  If Executive’s employmentterminates by reason of Executive’s voluntary resignation without Good Reason,or if Executive is terminated for Cause (each as defined herein), Executiveshall be entitled to:

 

(1)                                  Base Compensation at the rate in effectat the time of his termination through the effective date of termination ofemployment;

 

(2)                                  any bonus awarded but not yet paid;

 

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(3)                                  any deferred bonus, including interest orother credits on the deferred amounts;

 

(4)                                  reimbursement for expenses incurred, butnot paid prior to such termination of employment;

 

(5)                                  such rights to other compensation andbenefits as may be provided in applicable plans and programs of the Company,including, without limitation, applicable employee benefit plans and programs,according to the terms and conditions of such plans and programs; and

 

(6)                                  any equity compensation that is vested asof the effective date of termination of employment.

 

No termination for Cause shall be effective unlessExecutive is given at least thirty (30) days prior written notice authorized bya vote of at least a majority of the members of the Executive Committee of theBoard that the Company intends to terminate his employment for Cause exceptunder the provisions of Section 11(c)(i) or (iv).  Such written notice shall specify the particular act or acts, orfailure to act, which is or are the basis for the decision to so terminateExecutive’s employment for Cause. Executive shall be given the opportunity within fifteen (15) days of thereceipt of such notice to meet with the Board to defend such act or acts, orfailure to act, and if, thereafter, the Board, by majority vote, continues tomaintain that Cause for termination exists, Executive shall be given fifteen(15) days after such determination to correct such act or failure to act (ifsuch act or failure to act is reasonably susceptible of correction or curewithin such time).  Upon failure ofExecutive, within fifteen (15) days, to correct such act or failure to act,Executive’s employment by the Company shall be terminated under this subsectionfor Cause.

 

Anything herein to the contrary notwithstanding, if,following a termination of Executive’s employment for Cause due to anyconviction of Executive for any crime, such conviction is overturned on appeal,Executive shall be entitled to the payments and the economic equivalent of thebenefits he would have received if his employment had been terminated withoutCause.

 

b.                                      Termination Without Cause or for GoodReason.  The Company may terminate Executive’semployment at any time without Cause upon sixty (60) days advance writtennotice to Executive, and Executive may terminate his employment for GoodReason.  If the Company terminatesExecutive’s employment without Cause, other than due to Disability, orExecutive terminates his employment for Good Reason, then, subject toExecutive’s continuing obligations under Section 7, Executive shall thereuponbe entitled to:

 

(1)                                  a lump sum payment equal to the BaseCompensation for the remainder of the Term of Employment (subject to applicabletax withholdings), unless such termination is within 24 months of a Change inControl, in which event such lump sum shall be equal to Base Compensation for24 months;

 

(2)                                  any bonus awarded but not yet paid;

 

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(3)                                  any deferred bonus, including interest orother credits on the deferred amounts;

 

(4)                                  a Pro Rata Bonus for the fiscal year inwhich termination of employment occurs;

 

(5)                                  reimbursement for expenses incurred, butnot paid prior to such termination of employment;

 

(6)                                  continuation of the health and welfarebenefits of Executive, including, without limitation, any group healthinsurance and long-term disability insurance generally provided to senior executivesof the Company other than life insurance or accidental death and dismembermentinsurance, at the level in effect at the time of his termination of employmentthrough the end of the twelfth (12th) month following such termination ofemployment or the economic equivalent thereof; and

 

(7)                                  any equity compensation that is vested asof the effective date of termination of employment or would otherwise vestwithin 24 months of the effective date of termination of employment, whichshall be deemed to have vested immediately prior to the effective date oftermination of employment.

 

Any payments to which Executive shall be entitledunder this Subsection 5.b, including any economic equivalent of any benefit,shall be made as promptly as possible following the termination of Executive’semployment hereunder and in no event later than thirty (30) days following suchtermination of employment.

 

c.                                       Death or Disability. In the event of Executive’s death or a termination of Executive’semployment due to Executive’s Disability, Executive or his legalrepresentative, as the case may be, shall be entitled to:

 

(1)                                  Base Compensation at the rate in effectat the time of his termination, through (x) in the case of death, for a periodof three (3) months following termination, and (y) in the case of Disability,for the period, if any, between the date of his termination and the date bywhich the Company’s long-term disability plan have commenced paying itsbenefits;

 

(2)                                  any bonus awarded but not yet paid;

 

(3)                                  a Pro Rata Bonus for the fiscal year inwhich death or disability occurs;

 

(4)                                  any deferred bonuses including interestor other credits on the deferred amounts;

 

(5)                                  reimbursement for expenses incurred butnot paid prior to such termination of employment;

 

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(6)                                  in the case of death, Executive’s rightsto other compensation and benefits as may be provided in applicable plans andprograms of the Company shall be determined according to the terms andprovisions of such plans and programs;

 

(7)                                  in the case of Disability, the Companyshall continue Executive’s health and welfare benefits at the level in effecton the date of termination at least through the end of the sixth monthfollowing the termination of Executive’s employment or provide the economicequivalent thereof, and Executive’s rights to other compensation and benefitsas may be provided in applicable plans and programs of the Company shall bedetermined according to the terms and provisions of such plans and programs;and

 

(8)                                  any equity compensation that is vested asof the effective date of termination of employment.

 

d.                                      No Mitigation; No Offset. In the event of any termination of employment under this Section 5,Executive shall be under no obligation to seek other employment and there shallbe no offset against amounts due Executive under this Agreement on account ofany remuneration attributable to any subsequent employment that Executive mayobtain.  Any amounts due under thisSection 5 are in the nature of severance payments, or liquidated damages, orboth, and are not in the nature of a penalty.

 

**6.****                                     ****Duty of Loyalty**. As an employee of Company, Executive will devote hisbest efforts to the interests of the Company. Executive agrees to devote all of his working time and attention to hisduties hereunder, except for such reasonable amounts of time for personal,charitable, investment and professional activities that do not interfere withthe service to be rendered by Executive hereunder.  During Executive’s employment with the Company, Executive willnot, except with the written consent of the Board, engage in any activity,investment, interest or association (1) which is hostile or adverse to orcompetitive with the Company, or (2) which so occupies Executive’s attention asto interfere with the proper and efficient performance of his duties at theCompany, or (3) which interferes with the independent exercise of Executive’sjudgment in the Company’s best interests.

 

**7.****                                     ****Confidential Information****.**  Executive shall maintain the confidentialityof all confidential and proprietary information of the Company, and shallexecute and deliver to the Company its standard Proprietary Information andInvention Agreement in the form attached hereto as Schedule I (the “ConfidentialityAgreement”).  Such obligations shallsurvive any termination of Executive’s employment relationship or of thisAgreement.

 

**8.****                                     ****Third-Party Trade Secrets****.**  Executive will not, during his employmentwith Company, improperly use or disclose any proprietary information or tradesecrets of any third party, including the Company’s customers and suppliers, orof any of Executive’s former or concurrent employers or companies, if any.  Executive shall not bring to the premises ofthe Company any unpublished documents or any property belonging to such thirdparties, unless consented to in writing by such third party.  Executive’s employment with the Company doesnot and will not breach any agreement or duty which Executive has concerningconfidential information belonging to others. If Executive is asked to work on any project for the Company whichraises a concern regarding third-party confidential information, Executivewill, as soon as

 

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this is apparent to Executive, discuss the situationwith the Chief Executive Officer of Company without disclosing any confidences.

 

**9.****                                     ****Return of Property****.**  Upon termination of Executive’s employmentwith the  Company, Executive shalldeliver promptly to the Company all of the following things which are inExecutive’s custody or control:  (1) allrecords, files, manuals, books, forms, documents, letters, memoranda, data,customer lists, tables, photographs, video tapes, audio tapes, computer disksand other computer storage media and copies thereof, whether or not containingconfidential or proprietary information, that are the property of the Companyor that relate in any way to the business, products, services, personnel,customers, prospective customers, suppliers, practices, or techniques of theCompany; and (2) all other property of the Company, including but not limitedto computers, personal digital assistants, cellular telephones, pagers, creditcards, and keys.

 

**10.****                              ****Prohibited Post-Termination Activities****.**

 

a.                                       No Solicitation. For a period of one year following the termination of Executive’semployment, Executive will not induce any employee of, or consultant to, theCompany to engage in any business in which the Company is engaged or contemplatesengaging, or solicit any employee to leave the employment of the Company.

 

b.                                      Noncompetition. For a period of one year following the termination of Executive’semployment with the Company, Executive will not accept employment with, engagein or render advice or assistance to any business within any market in whichthe Company conducts business or effects sales which competes with orcontemplates competition with the Company in any capacity in which theemployment or rendering of advice, assistance or other services to such businessby Executive would be substantially similar to the services provided byExecutive to the Company during the term of Executive’s employment with Companyor would result in a competitive advantage to such subsequent employer.

 

**11.****                              ****Definitions****.** As used herein, the following terms shall have the respective meaningsset forth below.

 

a.                                       “Affiliate” shall mean any person orentity controlling, controlled by or under common control with the Company.

 

b.                                      “Board” shall mean the board of directorsof the Company.

 

c.                                       “Cause” shall mean (i) Executive isconvicted of a felony involving moral turpitude, (ii) Executive, in carryingout his duties under this Agreement, is guilty of a willful act by Executivewhich constitutes gross misconduct and which is materially and demonstrablyinjurious to the Company, (iii) Executive, in carrying out his duties underthis Agreement, is guilty of a willful violation of a written Company policygenerally applicable to all employees, the violation of which is stated in suchpolicy to be grounds for termination, (iv) an act of fraud against, or themisappropriation of property belonging to, the Company or its Affiliatesresulting in material economic harm to the Company, (v) except as otherwisespecified in this clause c, the breach in any material respect of thisAgreement or any confidentiality or proprietary information agreement betweenExecutive and the Company or its Affiliates, or (vi) the

 

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commission of a willful act which induces any customerof the Company to break a contract with the Company resulting in materialeconomic harm to the Company.

 

d.                                      A “Change in Control” shall be deemed tohave occurred if:

 

(1)  an event occurs of a nature that would berequired to be reported in response to Item 14 of Schedule 14A of Regulation14A promulgated under Section 14 of the Securities Exchange Act of 1934 (the“1934 Act”);

 

(2)  any “person,” as such term is used inSections 13(d) and 14(d)(2) of the 1934 Act, other than Donald K. McGhan orentities related to, controlled by, or owned by Donald K. McGhan or hisimmediate family (collectively, the “McGhan Entities”) (or with respect toAffiliates, the Company), becomes a “beneficial owner,” as such term is used inRule 13d-3 promulgated under the 1934 Act, at any time that the Company or anyAffiliate is a Private Company, of more than 51% of the Voting Stock of theCompany or such Affiliate;

 

(3)  any “person,” as such term is used inSections 13(d) and 14(d)(2) of the 1934 Act, other than the McGhan Entities (orwith respect to Affiliates, the Company), becomes a “beneficial owner,” as suchterm is used in Rule 13d-3 promulgated under the 1934 Act, while the Company orany Affiliate is a Public Company, of 20% or more of the Voting Stock of theCompany or such Affiliate;

 

(4)  any “person” as such term is used inSections 13(d) and 14(d)(2) of the 1934 Act, is the “beneficial owner,” as suchterm is used in Rule 13d-3 promulgated under the 1934 Act, of a greaterpercentage of the Voting Stock of the Company than the percentage of suchVoting Stock held, directly or indirectly, by the McGhan Entities;

 

(5)  a majority of the Board consists ofindividuals who are not members of the Incumbent Board;

 

(6)  all or substantially all of the business ofthe Company and its consolidated subsidiaries is disposed of pursuant to amerger, consolidation, asset sale or other transaction in which the Company isnot the surviving corporation or the Company (on a consolidated basis) ismaterially or completely liquidated or in which all or substantially all of theCompany’s consolidated assets are sold; or

 

(7)  the Company or a subsidiary combines withanother company and, immediately after the combination, the stockholders of theCompany immediately prior to the combination hold, directly or indirectly, lessthan 51% of the Voting Stock of the resulting company (viewed on a consolidatedbasis).

 

Notwithstandingthe foregoing, a transaction or event shall not constitute a Change in Controlif such transaction or event results from a transaction that is approved inadvance unanimously by the Executive Committee.

 

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e.                                       “Disability” shall mean Executive’sinability to render, for a period of three consecutive months, full andeffective services hereunder by reason of permanent mental or physicaldisability, whether resulting from illness, accident or otherwise; provided,however, that in no event will Executive be considered disabled for thepurposes of this Agreement unless he is deemed disabled pursuant to theCompany’s long-term disability plan.

 

f.                                         “Good Reason” shall mean and exist if,without Executive’s prior written consent, one or more of the following eventsoccurs:

 

(1)                                  Executive is not appointed to or isotherwise removed from any office or position provided for in Section 1 orSection 3.a above, for any reason other than the termination of his employmentor transfer to a substantially equivalent or superior office or position withinthe Company (such determination to be made on the overall responsibilities ofExecutive within the Company);

 

(2)                                  Executive is assigned duties orresponsibilities that are, when taken as a whole, inconsistent, in anysignificant respect, with the scope of duties and responsibilities associatedwith Executive’s office or position as described in Section 1 or Section 3.aabove;

 

(3)                                  Executive suffers a material reduction,when taken as a whole, in the authorities, duties or responsibilitiesassociated with his office or position as described in Section 1 or Section 3.aabove, on the basis of which he makes a determination in good faith that he canno longer carry out such office or position in the manner contemplated at thetime this Agreement was entered into;

 

(4)                                  Executive’s Base Compensation isdecreased by the Company, or his benefits or opportunities under any employeebenefit or incentive plan or program of the Company is or are materiallyreduced, with the result that Executive’s overall benefits package ismaterially reduced;

 

(5)                                  There occurs a Change in Control;

 

(6)                                  Except as provided in Section 3.b above,Executive’s work location is relocated to a location other than the PrincipalExecutive Offices;

 

(7)                                  the Company fails to pay Executive anydeferred payments under any bonus or incentive plans which are due to him atthat time;

 

(8)                                  the Company fails to reimburse Executivewithin a reasonable time for business expenses in accordance with thisAgreement or the Company’s policies, procedures or practices;

 

(9)                                  if and to the extent applicable, theCompany fails to agree to or actually indemnify Executive for his actionsand/or inactions, as either a director or executive officer of the Company, tothe fullest extent permitted by Delaware law, and/or the Company fails tomaintain satisfactory levels of directors and officers liability insurancecoverage for Executive when such insurance is available;

 

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(10)                            the Company fails to obtain a writtenagreement reasonably satisfactory to Executive from any successor or assign ofthe Company to assume and perform this Agreement; or

 

(11)                            the Company purports to terminateExecutive’s employment for Cause and such purported termination of employmentis not effected in accordance with the procedures required by this Agreement,and for purposes of this Agreement, such purported termination of employmentshall be invalid and of no force and effect.

 

g.                                      “Incumbent Board” shall mean the membersof the Board on the date of this Agreement for as long as each serves on theBoard, provided that any person becoming a director subsequent to the date ofthis Agreement whose election or nomination for election was approvedunanimously by the directors then comprising the full membership of the IncumbentBoard shall, for purposes of this Agreement, be considered to be a member ofthe Incumbent Board for as long as such director serves the Board.

 

h.                                      “Principal Executive Offices” of theCompany shall mean for purposes of this Agreement only the offices of theCompany where the principal executive functions are performed, (i) currentlylocated in Clark County, Nevada, (ii) in the future at such location as isdetermined by the Company’s Executive Committee, and (iii) in the future if notso determined, as elected by Executive.

 

i.                                          “Private Company” shall mean an entitythat has no class of its Voting Stock registered pursuant to Section 12(b),12(g) or 15(d) of the 1934 Act.

 

j.                                          “Pro Rata Bonus” shall mean an amountequal to the annual bonus otherwise payable with respect to the year inquestion, calculated as if Executive had been employed by the Company for thefull year, multiplied by a fraction, the numerator of which is the number ofdays in such year during which Executive is actually employed by the Companyand the denominator of which is 365.

 

k.                                       “Public Company” shall mean an entitythat has one or more classes of its Voting Stock registered pursuant to Section12(b), 12(g) or 15(d) of the 1934 Act.

 

l.                                          “Voting Stock” shall mean capital stock(or similar security) of any class or classes having general voting power underordinary circumstances, in the absence of contingencies, to elect the directorsof a corporation or similar managers of another entity.

 

**12.****                               Miscellaneous.**

 

a.                                       Amendments.  No amendmentor modification of this Agreement shall be deemed effective unless made in writing andsigned by the parties hereto.

 

b.                                      No Waiver.  No term orcondition of this Agreement shall be deemed to have been waived, except by astatement in writing signed by the party against whom enforcement of the waiveris sought.  Any written waiver shall notbe deemed a continuing waiver unless specifically stated, shall operate only asto the specific term or condition waived

 

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and shall not constitute a waiver of such term orcondition for the future or as to any act other than that specifically waived.

 

c.                                       Counterparts. This Agreement may be executed in any number of counterparts, and suchcounterparts executed and delivered, each as an original, shall constitute but oneand the same instrument.

 

d.                                      Severability. To the extent that any portion of any provision of this Agreement shallbe invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and ofthis Agreement shall be unaffected and shall continue in full force and effect.

 

e.                                       Captions and Headings. The captions and paragraph headings used in this Agreement are forconvenience of reference only and shall not affect the construction orinterpretation of this Agreement or any of the provisions hereof.

 

f.                                         Notices.  All notices,requests, demands and other communications required or permitted to be givenhereunder shall be in writing and shall be deemed to have been duly given (i)upon receipt, if delivered personally or via courier, (ii) upon confirmation ofreceipt, if given by electronic facsimile provided that another copy is sent byanother meanspermitted by this subsection within two (2) business days thereafter, and (iii)on the third business day following mailing, if mailed first-class, postageprepaid, registered or certified mail from the continental United States asfollows:

 
| If to  Company to:   |
|----------------------|
|                 |
|                 | MediCor Ltd. |
|                 | 4560 S.  Decatur Blvd., Ste. 300 |
|                 | Las Vegas, Nevada  89103 |
|                 | (702)  932-4563 |
|                 | Attn:  Chairman |
|                 |
| If to  Executive to: |
|                 |
|                 | Theodore R.  Maloney |
|                 | 4560 S.  Decatur Blvd., Ste. 300 |
|                 | Las Vegas,  Nevada  89103 |
|                 | (702)  932-4564 |

 

Any party may by notice given in accordancewith this subsection to the other party to designate another address or personfor receipt of notices hereunder.

 

g.                                      Attorneys’ Fees. If any legal action or other proceeding is brought for the enforcementof this Agreement, or because of an alleged dispute, breach, default ormisrepresentation in connection with any of the provisions of this Agreement,the successful or prevailing party shall be entitled to recover such reasonableattorneys’ fees and other costs incurred in that action or proceeding, inaddition to any other relief to which it may be entitled, as may be awarded bythe court or arbitrator.

 

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h.                                      Governing Law. The parties agree that this Agreement will be governed by the laws ofthe State of Delaware.

 

i.                                          Arbitration. Any controversy or claim arising out of or relating to this Agreement orthe breach thereof (including the arbitrability of any controversy or claim),shall be settled by arbitration in accordance with the laws of the State ofDelaware by one arbitrator.  If the partiescannot agree on the appointment of an arbitrator, then the arbitrator shall beappointed by the American Arbitration Association.  The arbitration shall be conducted in Clark County, Nevada inaccordance with the rules of the American Arbitration Association, except withrespect to the selection of an arbitrator which shall be as provided in thisSection 12.i.  The cost of anyarbitration proceeding hereunder shall be borne by the Company.  The award of the arbitrator shall be bindingupon the parties.  Judgment upon theaward rendered by the arbitrator may be entered in any court havingjurisdiction thereof.

 

If it shall be necessary or desirable for Executive toretain legal counsel and incur other costs and expenses in connection with theenforcement of any or all of his rights under this Agreement, and provided thatExecutive substantially prevails in the enforcement of such rights, the Companyshall pay (or Executive shall be entitled to recover from the Company, as thecase may be) Executive’s reasonable attorneys’ fees and costs and expenses inconnection with the enforcement of his rights including the enforcement of anyarbitration award.

 

j.                                          Guaranty.  The Companyshall cause each of its material Affiliates to execute and deliver to Executivea Guaranty in the form of Schedule II hereto.

 

k.                                       Entire Agreement. This Agreement contains the entire agreement of the parties relating toExecutive’s employment with the Company and supersedes all prior agreements andunderstandings with respect to such subject matter.

 

IN WITNESSWHEREOF, Executive and the Company have executed this Agreement as of the datefirst set forth above.

 
|   | “COMPANY”   |
|--------|-----------------------|
|   |                  |
|   | MEDICOR LTD.          |
|   |                  |
|   |                  |
|   | By:                   |    /s/ Donald K. McGhan |   |
|   |                  | Its: Chairman |
|   |                  |
|   |                  |
|   | “EXECUTIVE” |
|   |                  |
|   |                  |   /s/ Theodore R. Maloney |   |
|   |                  | Theodore R. Maloney |
|        |                       |  |  |  |

 

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