EMPLOYMENT AGREEMENT
This Employment Agreement (the
“Agreement” ) by and between Power 3 Medical
Products, Inc., a New York corporation (the
“Company” ), and John P. Ginzler, (the
“Officer” ) is executed this 1 day of June, 2009
and shall be effective for all purposes as of April 29, 2009 (the
“Effective Date” ).
RECITALS
WHEREAS, the Officer commenced
employment with the Company on April 29, 2009;
WHEREAS, Company and the Officer
desire to continue the Officer’s employment and enter into
the Agreement to reflect the parties’ mutual understanding
and intent, in its entirety.
NOW, THEREFORE, in consideration of
the premises and of the covenants and agreements herein provided,
the parties hereto agree as follows:
1.1
Term . The Company hereby employs the Officer,
and the Officer hereby accepts employment with the Company, all in
accordance with the terms and conditions hereof, for a term
commencing on April 29, 2009 and terminating on December 31,
2012. However, the Officer shall be considered to be
employed by the Company beyond the Termination Date for purposes of
receiving certain benefits conferred under this Agreement, as
described in Paragraph 3.1 hereof.
(a) The
Company hereby employs the Officer, and the Officer agrees to serve
the Company, as an Officer of the Company pursuant to the terms of
this Agreement. The Company has by action of its Board
of Directors appointed the Officer to the position of Chief
Financial Officer, however it may, in the sole and unfettered
discretion of the Board of Directors, amend the Officer’s
title and/or duties and responsibilities, provided that the Officer
remains an officer of the Company pursuant to the terms of this
Agreement.
(b) The
Officer shall be responsible for such duties as are commensurate
with the office in which he serves and as may from time to time be
assigned to the Officer by the Company’s Board of
Directors.
(a) At
all times prior to the Termination Date, the Officer (i) shall
devote his full business time, energies, best efforts, and
attention to the business of the Company, (ii) shall faithfully and
diligently perform the duties of his employment with the Company,
(iii) shall do all reasonably in his power to promote, develop, and
extend the business of the Company, and (iv) shall not enter into
the service of, or be employed in any capacity or for any purpose
whatsoever by, any person, firm or corporation other than the
Company without the prior written consent of the Board of Directors
of the Company.
(b) The
Officer shall perform his duties in accordance with all applicable
laws, rules, or regulations that apply to the Company and/or its
business, assets (real or personal), or employees.
(a) For
so long as Officer is employed by the Company, the Company agrees
to pay to the Officer, and the Officer shall accept from the
Company, for all of his services rendered pursuant to this
Agreement, a salary of One Hundred Twenty Thousand
Dollars ($120,000) per annum, payable semimonthly for the period
beginning May 1, 2009.
(b) The
Company’s Board of Directors, or compensation committee of
the Board of Directors (the “Compensation
Committee” ), shall review the Officer’s salary
annually and merit increases thereon shall be considered and may be
approved, in the sole and unlimited discretion of the
Company’s Board of Directors, depending in part on the
profits and cash flow of the Company. If the
Company’s Board of Directors elects in its discretion to
increase the salary of the Officer at any time or from time to
time, the new salary rate shall, without further action by the
Officer or the Company, be deemed substituted for the amount set
forth above. At such time, this Agreement shall be
deemed amended accordingly (notwithstanding the provisions of
Paragraph 7.8 below), and, as so amended, shall remain in full
force and effect.
2.2
Bonuses . The Company, in the sole and unfettered discretion
of its Board of Directors or Compensation Committee, may from time
to time award additional cash bonuses to the Officer based upon its
measure of Officer’s performance. Such bonuses may
be awarded in a lump sum or may be conditioned upon the future
performance or employment of Officer, in the sole and unfettered
discretion of the Board of Directors of the Company.
2.3
Expenses . Upon submission of appropriate invoices or
vouchers, the Company shall pay or reimburse the Officer for all
reasonable expenses incurred by the Officer in the performance of
his duties hereunder in furtherance of the business of the
Company.
(a) The
Company extends to the Officer the right to participate in whatever
employee benefit plans (excluding any employee benefit plan covered
separately in this Agreement) may be in effect from time to time,
to the extent the Officer is eligible under the terms of the
plans. However, no employee benefits other than those
specifically conferred by the terms of this Agreement have been
promised to the Officer in connection with this
employment. The adoption of one or more employee benefit
plans, the terms of the plans, and the Officer’s
participation in the plans, if any, are in the sole discretion of
the Company and may be changed by the Company at any time and from
time to time.
(i) The
Officer has elected to participate in his former company’s
COBRA plan for medical and dental benefits, effective May 1,
2009.
(ii) For
so long as Officer is employed by the Company, and for so long as
the Company does not extend company-sponsored medical and dental
benefits to the employee as part of an employee benefit plan, the
Company agrees to pay to the Officer, and the Officer shall accept
from the Company, a monthly amount consistent with the
Officer’s monthly Cobra premium paid by the Officer to his
former employer beginning May 1, 2009. The Company
understands that the Officer’s former company may adjust the
Officer’s Cobra rates in subsequent years, and the Company
agrees to pay to the Officer, and the Officer shall accept from the
Company, an amount consistent with revised premium
amounts.
(iii) The
Officer agrees that he will reimburse the Company for any tax
credits or subsidies available to him through the COBRA Premium
Subsidy in conjunction with the enactment of The American Recovery
and Reinvestment Act of 2009 (the “ Stimulus
Bill” ). The Company understands and agrees that such
credit available through the Stimulus Bill to the Officer is highly
unlikely due to the income limitations established in the Stimulus
Bill, and the Officer did not elect to receive the premium
reduction subsidy due to his projected income levels.
(a) To
induce the Officer to accept the position of Chief Financial
Officer, and subject to the terms of this Paragraph 2.5, the
Officer is hereby granted by the Company, effective upon the
Effective Date of this Agreement, Twelve Million (12,000,000)
shares of the Company’s common stock (the
“Restricted Shares” ). The grant of the
Restricted Shares shall be subject to the following terms and
conditions:
(i) The Restricted Shares time vest in 33.33%
increments annually over a three-year total period from the
anniversary of the date of issue of the Restricted
Shares.
(ii) If
the Officer’s employment with the Company shall cease or
terminate for just cause, then the Officer shall forfeit all of
such unvested Restricted Stock to the Company, and the Officer
shall have no claim or right, either express or implied, against
the Company for any compensation, payment or benefit in lieu of the
Restricted Stock so forfeited or otherwise. In addition,
unless and until the Officer’s rights in the foregoing
Restricted Stock become non-forfeitable by virtue of the
satisfaction of the foregoing condition, the Officer shall have no
right to, and the Officer hereby agrees that he shall not, sell,
pledge, assign, hypothecate, encumber, give, grant or otherwise
transfer such Restricted Stock or alienate his then-current or
expected future rights to such Restricted Stock, and the
certificates representing all of such Restricted Stock shall
prominently bear appropriate legends reflecting these restrictions
and the Company’s stock register shall likewise reflect these
restrictions. Furthermore, until such time as the restricted stock
becomes non-forfietable, the Company retains the right, at the
discretion of the Board of Directors, to use any of such shares as
deemed necessary, solely to pledge as collateral to raise funds for
the benefit of the company. In the event that such shares become
forfeit of a pledge, the company may at the discretion of the board
of directors issue replacement shares to the employee under the
restrictions of this agreement. During the course of the pledge,
the voting rights of the pledged shares remain with the
employee.
(iii) Upon
issuance of the Restricted Stock, except for the restrictions set
forth in this Paragraph 2.5, the Officer shall have all rights
of a shareholder of the Company with respect to such Restricted
Stock including the right to vote such Restricted Stock and to
receive all dividends and other distributions paid with respect to
such Restricted Stock; provided, however, dividends, if any, paid
or distributed on the Restricted Stock shall not be paid by the
Company to the Officer unless and until such time as the Restricted
Stock becomes nonforfeitable.
(iv) In
the event of a Change in Control (as herein defined), the Company
will waive in whole any and all remaining restrictions on the
Restricted Stock. For purposes hereof, a Change of
Control shall mean, and shall be deemed to have
occurred:
(A) if
any person, other than any benefit plan of the Company or Ira L.
Goldknopf, as holder of the Series B Preferred Stock, directly
or indirectly, becomes the beneficial owner (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as
amended) of securities representing 51% or more of the combined
voting power of the Company’s then-outstanding securities,
but excluding any such acquisition pursuant to a merger,
consolidation or similar business combination involving the
Company; or
(B) upon
the consummation of a merger, consolidation, or similar business
combination involving the Company, other than any such transaction
which results in at least 75% of the total voting power represented
by the voting securities of the surviving entity (or the parent
entity thereof) outstanding immediately after such transaction
being beneficially owned by at least 75% of the holders of the
outstanding voting securities of the Company immediately prior to
the transaction with the voting power of each such continuing
holder relative to other such continuing holders not being
substantially altered in the transaction; or
(C) upon
the Board of Directors or the shareholders of the Company approving
a plan of complete or substantially complete liquidation of the
Company; or
(D) upon
the consummation of the sale, lease, or disposition by the Company
of 50% or more of the total assets of the Company in one or a
series of related transactions (provided that a license, sublicense
or similar transaction involving the Company’s intellectual
property rights shall not be considered as a Change of Control);
or
(E) upon
the individuals who constitute the Board as of the Effective Date
(the “Incumbent Board” ) ceasing for any reason
to constitute at least a majority of the members of the Board,
provided that any person becoming a director after the Effective
Date whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board
(other than any individual whose initial assumption of office
occurs as a result of either (a) an actual or threatened
election contest or (b) an actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the
Board) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board.
(v) The
Restricted Shares shall have demand registration rights or
piggyback registration rights (neither of which, however, shall be
effective unless and until the Officer’s rights to such
shares have ceased to be subject to the risks of forfeiture as
provided herein).
(vi) The
Officer agrees to pay in a timely manner deemed suitable by the
Company, and to indemnify and hold harmless the Company from, any
and all taxes (including all penalties and interest, if any,
thereon), resulting from the grant and/or transfer of the
above-referenced Restricted Stock for which ultimate responsibility
is assigned to or asserted against the Officer under applicable
law. For purposes of this provision, all withholding
obligations of the Company in respect of the aforementioned taxes
(including any and all taxes, penalties and interest imposed on or
asserted against the Company for failure to properly withhold and
remit any such amounts in a timely manner) shall be considered the
responsibility of the Officer and, accordingly, the Officer agrees
to pay in a timely manner deemed suitable by the Company, and to
indemnify and hold harmless the Company from, any and all of such
obligations.
(b) To
induce the Officer to accept the position of Chief Financial
Officer, and subject to the terms of this Paragraph 2.5, the
Officer is hereby granted by the Company, effective upon the
Effective Date of this Agreement, a warrant to purchase an
additional Ten Million (10,000,000) shares of Common Stock (the
“Warrant” ) at $0.02 per share three years after
the date of this Warrant.
2.6
Vacation; Sick Leave . The Company’s vacation and sick
leave policy has been established by the Company and may be changed
by the Company at any time and from time to time. Said
policy is published in separate data files accessible to the
Officer.&nbs
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