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MEDICAL DISCOVERIES INC | Global Clean Energy Holdings LLC | Mobius Risk Group, LLC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10.3
EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (this “
Agreement ”)
is entered into as of the 1
st day
of September, 2007 (the “
Effective Date ”),
by and between Medical Discoveries, Inc., a
Utah
corporation (the “
Company ”),
and Richard Palmer (hereinafter, “
Executive ,”
and collectively with the Company, the “
Parties ”).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS,
the Company desires to change its business from being a
biopharmaceutical company engaged in the development of drug
candidates to becoming a company engaged in the production and
distribution of renewable energy products; and
WHEREAS,
Executive and Mobius Risk Group, LLC; a Texas Limited
Liability Company (“
Mobius ”),
are the owners of all of the outstanding membership interest of
Global Clean Energy Holdings LLC (“
Global ”),
a Delaware limited liability company that owns certain rights and
intellectual properties related to the production and distribution
of renewable energy products; and
WHEREAS,
concurrently with the execution of this Agreement, the
Company, Executive and Mobius are completing the purchase by
the Company of all of the equity and ownership interests in
Global from Executive and Mobius (the “
Acquisition ”);
and
WHEREAS,
Executive has expertise in the development of certain
renewable energy products and businesses; and
WHEREAS,
in connection with the Acquisition, the Company desires to
employ Executive, and Executive desires to accept such
employment with the Company.
NOW,
THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
EMPLOYMENT; TERM; DUTIES
1.1
Employment .
Pursuant to the terms and conditions hereinafter set forth, the
Company hereby employs Executive, and Executive hereby accepts
employment, as President and Chief Operating Officer
(“
COO ”)
of the Company. Executive shall initially serve as President and
COO of the Company until the resignation or termination of Judy
Robinette, currently the Company’s Chief Executive Officer
( the
“
Existing CEO ”).
Upon the resignation or termination of the Existing CEO, Executive
shall automatically assu me
the additional position of Chief Executive Officer of the
Company.
1.2
Existing CEO .
The Existing CEO has agreed to continue to serve as the
Company’s Chief Executive Officer until the Company’s
periodic reports related to the Company’s prior
biopharmaceutical operations have been prepared
and filed with the Securities and Exchange Commission
(“
SEC ”),
and has agreed to resign immediately following the filing with the
SEC of the last of the following periodic reports that the Company:
(i) the annual report on Form 10-KSB for the fiscal year ending
December 31, 2006, and (ii) the quarterly reports on Form 10-QSB
for the periods ending March 31, 2007 and June 30, 2007.
Notwithstanding
the foregoing, if the Existing CEO resigns or is terminated at any
time prior to or after the filing of the foregoing periodic reports
with the SEC, Executive shall assume the position of the
Company’s CEO immediately upon such other resignation or
termination.
1
1.3
Term .
Unless otherwise terminated earlier in accordance with the
provisions of this Agreement, Executive’s employment with the
Company shall commence on the Effective Date, and shall continue
for a period of three (3) years from the Effective Date (the
“Initial Employment Term”). Upon expiration of the
Initial Employment Term, the
Term shall automatically renew for successive one-year periods
every year thereafter (“Successive Terms”) on the same
terms and conditions set forth herein unless either Party provides
the other with written notice of its intention not to renew the
Term at least ninety (90) days prior to the end of the then-current
term.
1.4
Duties and Responsibilities .
Executive shall perform such administrative, managerial and
executive duties for the Company (and its subsidiaries if and when
directed by the Board of Directors of the Company (the
“
Board ”))
as are prescribed by applicable job specifications for the
President and COO (and CEO at such time Executive assumes such
position) and the Bylaws of the Company, such tasks and
responsibilities as are customarily vested in and incidental to
such positions, and such other duties, consistent with the
Company’s Bylaws, as may be assigned to him from time to time
by the Board.
1.5
Exclusive Employment .
Executive
agrees to devote the necessary amount of Executive’s business
time, energy and efforts to the business of the Company (and its
subsidiaries if and when directed by the Board), and to use
Executive’s best efforts and abilities faithfully and
diligently to promote the business interests of the Company (and
its subsidiaries if and when directed by the Board).
1.6
Other Obligations -
The Company and Executive acknowledge that Executive is currently a
shareholder and/or Director and/or Officer of several other
businesses, including Mobius, JTBH Investments, Inc., a California
corporation and Creative Lighting, LLC a Florida LLC. It is also
understood and agreed that Executive may be retained from time to
time on a limited basis to render an opinion or provide other
strategic advice for other companies which will not conflict with
his duties as Executive of the Company (hereinafter “Other
Positions”). Executive represents that his obligations to the
Other Positions will not impinge on his duties and obligations to
Company under this Employment Agreement.
1.7
Board of Directors .
As of the Effective Date of this Agreement, Executive is hereby
appointed as a member of the Board, to serve until the next
election of directors by the Company’s shareholders.
Thereafter, provided that Executive is still employed hereunder,
the Board shall nominate Executive to be elected to serve on the
Board at each meeting of the Company’s shareholders held
during the Term to elect directors, consistent with the provisions
of Bylaws and Articles of Incorporation of the Company, as amended
and in effect from time to time.
1.8
Indemnification and Insurance .
The Company agrees to maintain directors’ and officers’
liability insurance covering the Executive for services rendered to
the Company (and its subsidiaries if and when directed by the
Board) while Executive is a director or officer of the
Company. The
Company will procure a Directors and Officers Insurance Tail Policy
in the amount of no less than Five Million Dollars ($5,000,000)
insuring past actions of the Company’s director and officers
through the Effective Date, and a Product Liability Insurance Tail
in the amount of no less than Five Million Dollars ($5,000,000) for
any past product development through the Effective Date for any
legal claims that may arise.
1.9
Covenants of Executive
1.9.1
Best Efforts .
Executive
shall report directly to the Board and shall devote his best
efforts to the business and affairs of the Company (and its
subsidiaries if and when directed by the Board). Executive shall
perform his duties, responsibilities and functions to the Company
hereunder to the best of his abilities in a diligent, trustworthy,
professional and efficient manner and shall comply, in all material
respects, with all
rules, regulations of the Company (and special instructions of the
Board, if any) and all other rules, regulations, guides, handbooks,
procedures and policies applicable to the Company and its business
in connection with his duties hereunder .
2
1.9.2
Records .
Executive shall use his best efforts and skills to truthfully,
accurately, and promptly prepare, maintain, and preserve all
records and reports that the Company may, from time to time,
request or require, fully account for all money, records,
equipment, materials, or other property belonging to the Company of
which he may have custody, and promptly pay and deliver the same
whenever he may be directed to do so by the Board.
1.9.3
Compliance .
Executive shall use his best efforts to maintain
the Company’s compliance with all SEC rules, regulations and
reporting requirements for publicly traded companies, including,
without limitation, overseeing, and preparing and filing with the
SEC all
periodic reports the Company is required to file under the Act and
the Exchange Act of 1934 (as amended, the “
Exchange Act ”).
Executive shall at
all times comply, and cause the Company to comply, with the
then-current good corporate governance standards and practices as
prescribed by the SEC, any exchange on which the Company’s
capital stock or other securities may be traded and any other
applicable governmental entity, agency or
organization.
1.9.4
Code of Conduct .
For such period as when Executive is employed hereunder, Executive
shall at all times conduct himself with the highest ethical
standards, and shall at all times adhere to Code of Conduct
attached hereto as
Exhibit A or
such other code of ethics that the Company may, from time to time,
adopt.
1.9.5
Opportunities .
The Executive shall make available to the Company and present to
the Board all business opportunities of which he becomes aware,
which are relevant to the business of the Company (and its
subsidiaries), and to no other person or entity or to himself
individually, including, without limitation, Mobius or any
affiliate thereof.
ARTICLE II
COMPENSATION AND OTHER BENEFITS
2.1
Base Salary .
For the duration of the Term, for all services rendered by
Executive hereunder and all covenants and conditions undertaken by
the Parties pursuant to this Agreement, the Company shall pay, and
Executive shall accept, as compensation, an annual base salary
(“
Base Salary ”)
of $250,000. The Base Salary shall be payable in regular
installments in accordance with the normal payroll practices of the
Company, in effect from time to time, but in any event no less
frequently than on a monthly basis. Beginning on the first
anniversary of the commencement of Executive’s employment
with the Company, and on each anniversary thereafter during the
Term, the Base Salary shall be increased by the amount of the
Consumer Price Index (“
CPI ”),
for the immediately prior 12-month period, as published in the Wall
Street Journal.
2.2
Bonus Compensation .
For each year during the Term, Executive will be eligible to earn
an annual bonus (the “
Bonus ”),
which Bonus shall be based on Executive’s achievement of
certain performance criteria established by the Compensation
Committee of the Board (“
Compensation Committee ”)
and provided to Executive as soon as practicable following the
commencement of each such year. The target amount of the Bonus for
any given employment year, assuming that all of the target
milestones are met, shall be an amount equal to one hundred percent
(100%) of the Base Salary in effect for the applicable year. In
connection with the award of any Bonus pursuant to this Section
2.2, Executive’s performance will be reviewed by the
Compensation Committee on no less than an annual basis.
Notwithstanding anything herein to the contrary, the Parties hereby
acknowledge and agree that the Compensation Committee shall, in
accordance with NASDAQ rules and regulations for publicly traded
companies, comprise independent directors of the Board only.
In
the event that the Company has not established a Compensation
Committee, the independent directors of the Board shall establish
the annual target amount of any Bonus to be awarded hereunder and
shall determine whether the target milestones have been satisfied
(directors appointed by, or affiliated with Mobius shall not be
deemed to be independent for the purposes of this
Agreement).
3
2.3
Incentive Option .
Concurrently
with the execution of this Agreement, the Company shall grant
Executive an option (the “
Incentive Option ”)
to purchase 12,000,000 shares of the Company’s common stock
at an exercise price equal to the fair market price of the
Company’s common stock on the Effective Date. The Incentive
Option shall vest according to the schedule set forth below, and
will expire five (5) years after the date of grant:
2.3.1
When
the Company’s Market Capitalization reaches $75 million,
the Incentive Option shall vest with respect to 6,000,000
shares (such shares, the “
First Tranche ”)
of the Company’s common stock subject thereunder;
and
2.3.2
When
the Company’s Market Capitalization reaches or exceeds
$120 million, the Incentive Option shall vest with respect to
the remaining 6,000,000 (such shares, the “
Second Tranche ”)
shares of the Company’s common stock subject
thereunder.
For
purposes of the Agreement, the term “
Market Capitalization ”
shall mean the product of the number of shares of common stock
issued and outstanding at the time Market Capitalization is
calculated, multiplied by the average closing price of the common
stock for the thirty (30) consecutive trading days prior to the
date of calculation of Market Capitalization as reported on the
principal securities trading system on which the Company’s
common stock is then listed for trading, including the Pink Sheets,
the NASDAQ Stock Market, the OTC Bulletin Board, or any other
applicable stock exchange.
2.4
Business Expenses .
During the Initial Term and all Successive Terms thereafter, the
Company shall reimburse Executive for all reasonable, out-of-pocket
business expenses incurred in the performance of his duties
hereunder consistent with the Company’s policies and
procedures, in effect from time to time, with respect to travel,
entertainment and other business expenses customarily reimbursed to
senior executives of the Company in connection with the performance
of their duties on behalf of the Company. Such reimbursement shall
be made by Company to Executive no later than fifteen (15) days
after submission of written expense reports by Executive to
Company.
2.5
Other Benefits .
During the term of Executive’s employment with the Company,
Executive shall be entitled to the following benefits:
2.5.1
Executive
shall be entitled to participate in the Company’s
employee stock option plan, life, health, accident, disability
insurance plans, pension plans and retirement plans, in effect
from time to time, to the extent and on such terms and
conditions as the Company customarily makes such plans
available to its senior executives; and
2.5.2
Executive
shall be entitled to receive c overage
for services rendered to the Company (and
its subsidiaries if and when directed by the Board)
while
Executive is a director or officer of the Company under any
director and officer liability insurance policy(s) maintained
by the Company from time to time; and
4
2.5.3
Company
shall pay on behalf of Executive the full cost of
Executive’s and Executive’s family health
insurance plan. Until a Company plan is established, or a
replacement plan is put in place, the Company shall pay
Executive’s COBRA policy premium up to $1,000 per month
provided through Mobius.
2.6
Vacation .
Executive shall be entitled to four (4) weeks vacation time each
calendar year with full pay.
2.7
Withholding .
The Company may deduct from any compensation payable to Executive
(including payments made pursuant to this Article II or in
connection with the termination of employment pursuant to Article
III of this Agreement) amounts sufficie
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