Document:

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

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

 

A.                                   The
Company is engaged in the business of creation, production and distribution of
medical devices and desires to retain an individual for the position of Chief
Executive Officer.

 

B.                                     Executive
represents that he is well qualified to perform the duties of Chief Executive
Officer, and will devote the necessary time, effort and energy to perform those
duties.

 

C.                                     Based
on these representations, the Company desires to hire Executive as its Chief
Executive Officer.

 

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

 

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

 

2.                                      Term
of Employment.  Unless
terminated at an earlier date in accordance with Section 5 below, the term
of Executive’s employment with Company (“Term of Employment”) shall commence on
the date first set forth above and shall continue for a period initially ending
on September 30, 2005 (“Initial Term”). 
The Term of Employment shall automatically be renewed at the end of the
12th month prior to the end of the Initial Term for an additional
12-month period and shall be extended at the end of each succeeding month by an
additional month such that the Term of Employment shall extend each month until
the end of succeeding 12th month (each such rolling 12-month period,
a “Subsequent Term”) unless either party provides written notice of their
intention not to renew this Agreement to the other in advance of then
applicable termination date of the Term of Employment.

 

3.                                      Positions
and Duties.

 

a.                                       Employment
with Company.  Executive shall
perform for the Company the duties and responsibilities of a chief executive
officer of a corporation and such other duties and responsibilities as the
Company shall reasonably assign to Executive from time to time generally
consistent with Executive’s position as Chief Executive Officer, as determined
in the sole discretion of the Company. 
Executive shall report to the Chairman. 
In addition, Executive shall be appointed and serve as a member of the
Company’s Executive Committee which shall contain four or fewer members of
senior management.

 

 

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

 

4.                                      Compensation.

 

a.                                       Salary.  The Company shall pay Executive as
compensation for his services a base salary at the annualized rate of
$480,000.  Such salary shall be subject
to applicable tax withholding and shall be paid periodically in accordance with
the Company’s normal payroll practices. 
Such annual compensation shall be reviewed annually for increase (but
not decrease) in the discretion of the Board. 
In conducting any such annual review, the Board shall take into account
any increase in Executive’s responsibilities, increases in the compensation of
other executives of the Company or any Affiliate (or any competitor(s) of
either or both), the performance of Executive and/or other pertinent
factors.  The annual compensation
specified in this Section 4.a, together with any increases in such annual
compensation that the Company may grant from time to time, is referred to in
this Agreement as “Base Compensation.”

 

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

 

c.                                       Executive
Benefits.  While Executive is
employed by the Company hereunder, Executive shall be entitled to participate
in all employee benefit, pension and welfare plans and programs of Company for
executive employees, including any group medical, dental, life insurance and
disability insurance plans, or similar benefit plans of the Company, to the
extent that Executive meets the eligibility requirements for each individual
plan or program.  Participation in any
such benefits and plans shall be consistent with Executive’s rate of
compensation to the extent that compensation is a determinative factor with
respect to participation and/or coverage under any such benefit or plan.  The Company provides no assurance as to the
adoption or continuance of any particular employee benefit plan or program, and
Executive’s participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.

 

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

 

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thereunder on each of the first
through fourth anniversaries of the date of grant, provided Executive remains
employed by the Company on each such date. 
Unless specifically provided in this Agreement, vesting and exercise
provisions and all other terms and conditions governing the Options shall be as
set forth in the plan documents and such option agreements as may be entered
into with Executive.

 

e.                                       Salary
Continuation.  Executive shall be
entitled to receive his Base Compensation for all periods during which he is
unable to perform his duties hereunder by reason of a mental or physical
incapacity, whether resulting from illness, accident or otherwise, prior to
being determined to be suffering from a Disability.

 

f.                                         Expenses.  While Executive
is employed by the Company hereunder, Company shall reimburse Executive for all
reasonable out-of-pocket business, travel and entertainment expenses incurred
by Executive in the performance of Executive’s duties and responsibilities
hereunder, subject to the Company’s normal policies and procedures for expense
verification and documentation as in effect from time to time.  The Company shall pay the actual and
reasonable moving expenses of Executive’s move to the location of the principal
executive offices of the Company.

 

g.                                      Paid Leave.  Executive
shall be entitled to paid leave in accordance with Company’s practices and
policies for executive employees.

 

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

 

i.                                          Professional License. 
The Company recognizes that Executive is licensed to practice law in the
State of California and that such Executive benefits the Company.  In recognition of such benefit, the Company
shall pay during the Term of Employment all fees necessary to maintain such
license in effect or and to pay or reimburse all expenses, including tuition,
admission, travel and other fees related to or incurred in connection with
satisfying applicable mandatory continuing legal education requirements.  Time spent in satisfying such requirements
shall be deemed time spent in performance of Executive’s duties hereunder and not
paid leave.

 

5.                                      Termination
of Employment.

 

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

 

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

 

(2)                                  any bonus awarded but not yet paid;

 

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

 

(4)                                  reimbursement for expenses incurred, but
not paid prior to such termination of employment;

 

(5)                                  such rights to other compensation and
benefits 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 as
of the effective date of termination of employment.

 

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

 

Anything herein to the contrary notwithstanding, if,
following a termination of Executive’s employment for Cause due to any
conviction of Executive for any crime, such conviction is overturned on appeal,
Executive shall be entitled to the payments and the economic equivalent of the
benefits he would have received if his employment had been terminated without
Cause.

 

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

 

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

 

(2)                                  any bonus awarded but not yet paid;

 

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

 

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

 

(5)                                  reimbursement for expenses incurred, but
not paid prior to such termination of employment;

 

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

 

(7)                                  any equity compensation that is vested as
of the effective date of termination of employment or would otherwise vest
within 24 months of the effective date of termination of employment, which
shall be deemed to have vested immediately prior to the effective date of
termination of employment.

 

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

 

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

 

(1)                                  Base Compensation at the rate in effect
at the time of his termination, through (x) in the case of death, for a period
of 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 by
which the Company’s long-term disability plan have commenced paying its
benefits;

 

(2)                                  any bonus awarded but not yet paid;

 

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

 

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

 

(5)                                  reimbursement for expenses incurred but
not paid prior to such termination of employment;

 

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

 

(7)                                  in the case of Disability, the Company
shall continue Executive’s health and welfare benefits at the level in effect
on the date of termination at least through the end of the sixth month
following the termination of Executive’s employment or provide the economic
equivalent thereof, and Executive’s rights to other compensation and benefits
as may be provided in applicable plans and programs of the Company shall be
determined according to the terms and provisions of such plans and programs;
and

 

(8)                                  any equity compensation that is vested as
of 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 shall
be no offset against amounts due Executive under this Agreement on account of
any remuneration attributable to any subsequent employment that Executive may
obtain.  Any amounts due under this
Section 5 are in the nature of severance payments, or liquidated damages, or
both, and are not in the nature of a penalty.

 

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

 

7.                                      Confidential Information.  Executive shall maintain the confidentiality
of all confidential and proprietary information of the Company, and shall
execute and deliver to the Company its standard Proprietary Information and
Invention Agreement in the form attached hereto as Schedule I (the “Confidentiality
Agreement”).  Such obligations shall
survive any termination of Executive’s employment relationship or of this
Agreement.

 

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

 

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

 

9.                                      Return of Property.  Upon termination of Executive’s employment
with the  Company, Executive shall
deliver promptly to the Company all of the following things which are in
Executive’s custody or control:  (1) all
records, files, manuals, books, forms, documents, letters, memoranda, data,
customer lists, tables, photographs, video tapes, audio tapes, computer disks
and other computer storage media and copies thereof, whether or not containing
confidential or proprietary information, that are the property of the Company
or that relate in any way to the business, products, services, personnel,
customers, prospective customers, suppliers, practices, or techniques of the
Company; and (2) all other property of the Company, including but not limited
to computers, personal digital assistants, cellular telephones, pagers, credit
cards, and keys.

 

10.                               Prohibited Post-Termination Activities.

 

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

 

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

 

11.                               Definitions. 
As used herein, the following terms shall have the respective meanings
set forth below.

 

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

 

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

 

c.                                       “Cause” shall mean (i) Executive is
convicted of a felony involving moral turpitude, (ii) Executive, in carrying
out his duties under this Agreement, is guilty of a willful act by Executive
which constitutes gross misconduct and which is materially and demonstrably
injurious to the Company, (iii) Executive, in carrying out his duties under
this Agreement, is guilty of a willful violation of a written Company policy
generally applicable to all employees, the violation of which is stated in such
policy to be grounds for termination, (iv) an act of fraud against, or the
misappropriation of property belonging to, the Company or its Affiliates
resulting in material economic harm to the Company, (v) except as otherwise
specified in this clause c, the breach in any material respect of this
Agreement or any confidentiality or proprietary information agreement between
Executive and the Company or its Affiliates, or (vi) the

 

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commission of a willful act which induces any customer
of the Company to break a contract with the Company resulting in material
economic harm to the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

(6)  all or substantially all of the business of
the Company and its consolidated subsidiaries is disposed of pursuant to a
merger, consolidation, asset sale or other transaction in which the Company is
not the surviving corporation or the Company (on a consolidated basis) is
materially or completely liquidated or in which all or substantially all of the
Company’s consolidated assets are sold; or

 

(7)  the Company or a subsidiary combines with
another company and, immediately after the combination, the stockholders of the
Company immediately prior to the combination hold, directly or indirectly, less
than 51% of the Voting Stock of the resulting company (viewed on a consolidated
basis).

 

Notwithstanding
the foregoing, a transaction or event shall not constitute a Change in Control
if such transaction or event results from a transaction that is approved in
advance unanimously by the Executive Committee.

 

8

 

e.                                       “Disability” shall mean Executive’s
inability to render, for a period of three consecutive months, full and
effective services hereunder by reason of permanent mental or physical
disability, whether resulting from illness, accident or otherwise; provided,
however, that in no event will Executive be considered disabled for the
purposes of this Agreement unless he is deemed disabled pursuant to the
Company’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 events
occurs:

 

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

 

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

 

(3)                                  Executive suffers a material reduction,
when taken as a whole, in the authorities, duties or responsibilities
associated with his office or position as described in Section 1 or Section 3.a
above, on the basis of which he makes a determination in good faith that he can
no longer carry out such office or position in the manner contemplated at the
time this Agreement was entered into;

 

(4)                                  Executive’s Base Compensation is
decreased by the Company, or his benefits or opportunities under any employee
benefit or incentive plan or program of the Company is or are materially
reduced, with the result that Executive’s overall benefits package is
materially 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 Principal
Executive Offices;

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

h.                                      “Principal Executive Offices” of the
Company shall mean for purposes of this Agreement only the offices of the
Company where the principal executive functions are performed, (i) currently
located in Clark County, Nevada, (ii) in the future at such location as is
determined by the Company’s Executive Committee, and (iii) in the future if not
so determined, as elected by Executive.

 

i.                                          “Private Company” shall mean an entity
that 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 amount
equal to the annual bonus otherwise payable with respect to the year in
question, calculated as if Executive had been employed by the Company for the
full year, multiplied by a fraction, the numerator of which is the number of
days in such year during which Executive is actually employed by the Company
and the denominator of which is 365.

 

k.                                       “Public Company” shall mean an entity
that has one or more classes of its Voting Stock registered pursuant to Section
12(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 under
ordinary circumstances, in the absence of contingencies, to elect the directors
of a corporation or similar managers of another entity.

 

12.                               Miscellaneous.

 

a.                                       Amendments.  No amendment
or modification of this Agreement shall be deemed effective unless made in writing and
signed by the parties hereto.

 

b.                                      No Waiver.  No term or
condition of this Agreement shall be deemed to have been waived, except by a
statement in writing signed by the party against whom enforcement of the waiver
is sought.  Any written waiver shall not
be deemed a continuing waiver unless specifically stated, shall operate only as
to the specific term or condition waived

 

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and shall not constitute a waiver of such term or
condition 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 such
counterparts executed and delivered, each as an original, shall constitute but one
and the same instrument.

 

d.                                      Severability. 
To the extent that any portion of any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of
this 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 for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.

 

f.                                         Notices.  All notices,
requests, demands and other communications required or permitted to be given
hereunder 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 of
receipt, if given by electronic facsimile provided that another copy is sent by
another means
permitted by this subsection within two (2) business days thereafter, and (iii)
on the third business day following mailing, if mailed first-class, postage
prepaid, registered or certified mail from the continental United States as
follows:

 

	
  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 accordance
with this subsection to the other party to designate another address or person
for receipt of notices hereunder.

 

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

 

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

 

i.                                          Arbitration. 
Any controversy or claim arising out of or relating to this Agreement or
the breach thereof (including the arbitrability of any controversy or claim),
shall be settled by arbitration in accordance with the laws of the State of
Delaware by one arbitrator.  If the parties
cannot agree on the appointment of an arbitrator, then the arbitrator shall be
appointed by the American Arbitration Association.  The arbitration shall be conducted in Clark County, Nevada in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of an arbitrator which shall be as provided in this
Section 12.i.  The cost of any
arbitration proceeding hereunder shall be borne by the Company.  The award of the arbitrator shall be binding
upon the parties.  Judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.

 

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

 

j.                                          Guaranty.  The Company
shall cause each of its material Affiliates to execute and deliver to Executive
a Guaranty in the form of Schedule II hereto.

 

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

 

IN WITNESS
WHEREOF, Executive and the Company have executed this Agreement as of the date
first set forth above.

 

	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  MEDICOR LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Donald K. McGhan

  	
   

  
	
   

  	
   

  	
  Its: Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  
	
   

  	
   

  	
    /s/ Theodore R. Maloney

  	
   

  
	
   

  	
   

  	
  Theodore R. Maloney

  
					

 

12Exhibit
10.4

 

EMPLOYMENT
AGREEMENT STOCK OPTION

 

This Employment Agreement
Stock Option (Stock Option #EO28), dated as of September 2, 2003, is by and between MEDICOR LTD.
AND ITS SUBSIDIARIES (collectively, the “Corporation”), and THEODORE R. MALONEY (the “Employee”).

 

Effective as of
September 2, 2003, the Employee will receive an Employment Option (the
“Option”) of TWO HUNDRED THOUSAND
(200,000) shares of the Corporation’s Common Stock, at a composite
price of ONE DOLLAR AND FIFTY CENTS
($1.50) per share to be vested as follows: 25% PER YEAR FOR EACH FULL YEAR OF
EMPLOYMENT FROM THE EMPLOYMENT DATE.

 

The Option will expire seven (7) years from the
Employment Date identified in  the
Employment Agreement, or upon termination of employment (as herein provided),
whichever first occurs.  The Option is
not a part of the Corporation’s Stock Compensation Plan (if any), is not
transferable and may be exercised only by the Employee, the Employee’s executor
or spouse.  Continued employment with
the Corporation is a condition of the vesting of the Options.  The Option may be exercised within six (6)
months of the termination of employment of the Employee, unless the Employee’s
employment is terminated “For Cause” as provided in Section 5 of the
Employment Agreement, in which case the un-vested portion of the Option
terminates at the date of termination of the Employee.  The Employee will execute such other
documents and make such representations as may be required for securities or
other regulatory compliance.

 

The number of shares and
the option price subject to the Option shall be adjusted for any stock
dividend, split-up, combination or exchange of shares, or any other similar
change.

 

In the event of a Change
of Control in ownership of the Corporation (defined for the purpose of this
Agreement as the purchase of more than fifty percent (50%) of the Corporation’s
outstanding shares by a shareholder who, at the date of this Agreement is not a
shareholder of the Corporation), all shares of the Option shall vest and be available
for purchase within thirty (30) days of notification by the Corporation to the
Employee of the Change of Control.

 

IN
WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement Stock Option to be effective as of the 2nd day
of September 2003.

 

	
   

  	
  CORPORATION:

  
	
   

  	
  MEDICOR LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald K. McGhan

  	
   

  
	
   

  	
   

  	
  Donald K. McGhan

  
	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  /s/ Theodore R. Maloney

  	
   

  
	
   

  	
  Theodore R.
  Maloney

  	
   

  
					

 

1

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