EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made and entered into
effective as of the thirteenth day of September, 2007, by and between STEM CELL
THERAPY INTERNATIONAL, INC., a corporation organized under the laws of Nevada
(the "Company"), and Xxxxxx X. Xxxxxxxx, an individual ("Executive"), residing
in Tampa, Florida.
W I T N E S S E T H:
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WHEREAS, the Company a leading research and development company in the
regenerative medicine field (such activities, together with all other activities
of the Company and its subsidiaries, as conducted at or prior to the termination
of this Agreement, and any future activities reasonably related thereto which
are contemplated by the Company and/or its subsidiaries at the termination of
this Agreement identified in writing by the Company to Executive at the date of
such termination, are hereinafter referred to as the "Business Activities");
WHEREAS, the Company desires to employ Executive upon the terms and subject
to the terms and conditions set forth in this Agreement; and,
WHEREAS, Executive desires to be employed by the Company upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
Section 1. Employment. The Company hereby employs Executive, and
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Executive hereby accepts employment with the Company, all upon the terms and
subject to the conditions set forth in this Agreement.
Section 2. Capacity and Duties. Executive is and shall be employed in
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the capacity of Chief Financial Officer of the Company and shall have such
duties, responsibilities and authorities as are assigned to him by the Board of
Directors and the Chief Executive Officer of the Company (the "Board"). Subject
to the control and general directions of, and the general policies and
guidelines established, by the Board and except as otherwise herein provided,
Executive shall devote such of his business time, best efforts and attention as
necessary to promote and advance the business of the Company and its
subsidiaries and to perform diligently and faithfully all the duties,
responsibilities and obligations of Executive to be performed by him under this
Agreement. Time required for this position is expected to be limited.
Section 3. Term of Employment. The initial term of employment of
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Executive by the Company pursuant to this Agreement shall be for the period (the
"Initial Term") commencing on September 13, 2007, and terminating on September
13, 2009, or such earlier date that Executive's employment is terminated in
accordance with the provisions of this Agreement. The Initial Term
automatically shall be extended for successive additional one year periods
(each, an "Extended Term") unless written notice is given by either party to the
other party no later than 30 days prior to the expiration of the Initial Term or
any Extended Term. (The Initial Term, together with each and any Extended Term,
is sometimes hereinafter called the "Employment Period").
Section 4. Place of Employment. Executive's principal place of work
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shall be located at the principal offices of the Company in Tampa, Florida.
Section 5. Compensation. During the Employment Period, subject to all
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the terms and conditions of this Agreement and as compensation for all services
to be rendered by Executive under this Agreement, the Company shall pay to or
provide Executive with the following:
5.01 Base Salary. The Company shall compensate Executive during
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the Initial Term for his services hereunder with a base monthly salary of Five
Thousand (5,000.00), the payment of this base salary shall accrue but not be
paid in cash until either the Company is cash flow positive from operations, the
Company raises more than $3,000,000 in equity or the Company desires to hire the
Executive on a full time basis.
5.02 Bonus. The Company may pay to Executive additional cash or
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other bonuses on an annual or other basis in the sole discretion of the
Compensation Committee of the Board and Executive shall become a participant in
any incentive compensation or bonus plan adopted by the Board for any highly
compensated officers or other significant employees of the Company on such terms
as shall be determined by the Compensation Committee of the Board. Any amounts
paid or payable to or on behalf of Employee shall be prorated through the Date
of Termination.
5.03 Other Compensation. The Company shall grant the Executive Four
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Hundred Thousand (400,000) options on the last day of the Third quarter of 2007.
The options will be priced at the closing price of that date or the earlier
trading date if the last day of the quarter falls on a day that the markets are
closed. These options will be exercisable for a ten year period on a cashless
basis.
Section 6. Adherence to Standards; Review of Performance. Executive
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shall comply with the written policies, standards, rules and regulations of the
Company from time to time established for all executive officers of the Company.
The Board and/or the Chief Executive Officer of the Company shall periodically
review and evaluate the performance of Executive under this Agreement with
Executive.
Section 7. Expenses. The Company shall reimburse Executive for all
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reasonable, ordinary and necessary expenses (including, but not limited to,
automobile and other business travel and customer entertainment expenses)
incurred by him in connection with his employment hereunder in accordance with
Company policy; provided, however, Executive shall render to the Company a
complete and accurate accounting of all such expenses in accordance with the
substantiation requirements of Section 274 of the Internal Revenue Code of 1986,
as amended (the "Code"), as a condition precedent to such reimbursement.
Section 8. Termination Following a Change in Control.
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8.01 In the event that a "Change in Control" of the Company shall occur
at any time during the Term hereof, Executive shall have the right to terminate
his employment under this Agreement upon thirty (30) days written notice given
at any time within twelve (12) months after the occurrence of such event. In
such event, or if the Company terminates Executive's employment at any time
other than for Cause within twelve (12) months following a Change in Control,
then in either such event, Executive shall be entitled to (a) vesting of all
options; and (b) continuation of his base salary plus any bonus or incentive
compensation which has been earned or has become payable pursuant to the terms
of any compensation or benefit plan as of such date but which has not yet been
paid, and all benefits pursuant to Section 5 of this Agreement, for the greater
of the then current term of the Employment Period, or twelve (12) months.
8.02 For purposes of this Agreement, a "Change in Control" shall
include any of the events described below:
(a) Any one person, or more than one person acting as a group (as
determined under Subsection (d) below), acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) ownership of Common Stock of the Company possessing 35 percent or
more of the total voting power of the outstanding equity securities of the
Company; or
(b) a majority of members of the Board of Directors is replaced during
any 12-month period by members whose appointment or election is not endorsed by
a majority of the members of the Company's Board of Directors prior to the date
of the appointment or election; or
(c) any one person, or more than one person acting as a group (as
determined in Subsection (e) below), acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the Company that have a total gross fair market value
equal to or more than 40 percent of the total gross fair market value of all of
the assets of the Company immediately prior to such acquisition or acquisitions.
For this purpose, gross fair market value means the value of the assets of the
Company, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets.
8.03 Anything herein to the contrary notwithstanding, Section 8.01 will
not apply where Executive gives his explicit written waiver stating that for the
purposes of Section 8.01 a Change in Control shall not be deemed to have
occurred. Executive's participation in any negotiations or other matters in
relation to a Change in Control shall in no way constitute such a waiver which
can only be given by an explicit written waiver as provided in the preceding
sentence.
Notwithstanding the foregoing, no Change in Control shall be considered to have
occurred for purposes of this Agreement by reason of any issuance of Common
Stock or other equity securities of the Company in any public offering or
private placement approved by the Board of Directors, by reason of the issuance
of Common Stock upon the exercise of warrants or any convertible securities
which were approved by the Board of Directors, or by reason of a change in the
composition of the Board of Directors resulting from the appointment of one or
more directors pursuant to Board representation rights granted to a venture
capital fund or similar investor. Further, no Change in Control shall be
considered to have occurred by reason of a transfer of Common Stock or assets of
the Company to the members of the Company or to another entity that is
controlled by the members of the Company immediately after the transfer.
For purposes of this Section 8, persons will not be considered to be acting
as a group solely because they purchase assets or purchase or own equity
securities of the same firm at the same time, or as a result of the same public
offering. However, persons will be considered to be acting as a group if they
are owners of a corporation or limited liability company that enters into a
merger, consolidation, purchase or acquisition of stock, purchase or acquisition
of assets, or similar business transaction with the Company.
Section 9. Termination with Cause by the Company. This Agreement may
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be terminated with Cause (as hereinafter defined) by the Company provided that
the Company shall (i) give Executive the Notice of Termination (as hereinafter
defined), and (ii) pay Executive his base salary through the Termination Date
(as hereinafter defined) at the rate in effect at the time the Notice of
Termination is given, plus any bonus or incentive compensation which has been
earned or has become payable pursuant to the terms of any compensation or
benefit plan as of the Termination Date, but which has not yet been paid.
Notwithstanding the foregoing, if Executive is terminated with Cause pursuant to
Section 11.02(ii) and, subsequently, charges are dropped, Executive is found not
guilty or otherwise cleared of wrongdoing, before or after trial or following
appeal, then in such event, the Company shall promptly thereupon recommence
payments to Executive (or to his estate in the event of Executive's death) in
the amount of the compensation and other benefits described in Section 5 of this
Agreement for a period of twelve (12) months, increased by such amount as may be
necessary to make Executive whole for any incremental taxes due as a result of
such continuance of payments.
Section 10. Termination without Cause by the Company; Termination by
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Executive; Non-Renewal. This Agreement may be terminated by (i) the Company by
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reason of the death or Disability (as hereinafter defined) of Executive or for
no reason at all. If this Agreement is terminated pursuant to either of
subsections the Company shall continue to pay to Executive (or to his estate in
the event of termination due to Executive's death) the compensation and other
benefits described in Section 5 of this Agreement for the greater of through the
last day of the then current term of the Employment Period or twelve (12)
months, plus any bonus or incentive compensation which has been earned or has
become payable pursuant to the terms of any compensation or benefit plan as of
such date but which has not yet been paid.
Section 11. Definitions. In addition to the words and terms elsewhere
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defined in this Agreement, certain capitalized words and terms used in this
Agreement shall have the meanings given to them by the definitions and
descriptions in this Section 11 unless the context or use indicates another or
different meaning or intent, and such definition shall be equally applicable to
both the singular and plural forms of any of the capitalized words and terms
herein defined. The following words and terms are defined terms under this
Agreement:
11.01 "Disability" shall mean a physical or mental illness which,
in the judgment of the Company after consultation with the licensed physician
attending Executive, impairs Executive's ability to substantially perform his
duties under this Agreement as an employee and as a result of which he shall
have been absent from his duties with the Company on a full-time basis for six
consecutive months.
11.02 A termination with "Cause" shall mean a termination of this
Agreement by reason of (i) Executive's conviction of a felony or a crime
involving moral turpitude or any other crime involving dishonesty, disloyalty or
fraud with respect to the Company; (ii) Executive's arrest or indictment of any
lesser crime or offense committed in connection with the performance of
Executive's duties hereunder; or (iii) a good faith determination by the Board
that Executive (a) failed or refused to substantially perform his duties with
the Company (other than a failure resulting from his incapacity due to physical
or mental illness) after a written demand for substantial performance has been
delivered to him by the Board, which demand specifically identifies the manner
in which the Board believes he has not substantially performed his duties and
provides a ten (10) day cure period, and Executive continues to refuse or fail
to substantially perform as directed by the Board through the duration of the
cure period; or (b) Executive's breach of any of the covenants set forth in
Sections 15, 16 or 18 hereof. No act, or failure to act, on Executive's part
shall be grounds for termination with Cause unless he has acted or failed to act
with an absence of good faith or without a reasonable belief that his action or
failure to act was in or at least not opposed to the best interests of the
Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated with Cause unless there shall have been delivered to him a copy
of a resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board (exclusive of Executive) at a meeting of
the Board called and held for the purpose of terminating Executive (after
reasonable notice to Executive and opportunity for him, together with his
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive failed to perform his duties or engaged in conduct in
the manner or of the type set forth above in the first sentence of this Section
11.02 and specifying the particulars thereof in detail.
11.04 Notice of Termination. "Notice of Termination" shall mean a
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written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated; provided, however, no such
purported termination shall be effective without such Notice of Termination;
provided further, however, any purported termination by the Company or by
Executive shall be communicated by a Notice of Termination to the other party
hereto in accordance with Section 4 of this Agreement.
11.05 Termination Date. "Termination Date" shall mean the date
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specified in the Notice of Termination (which, in the case of a termination
pursuant to Section 9 of this Agreement shall not be less than 60 days, and in
the case of a termination pursuant to Section 10 of this Agreement shall not be
more than 60 days, from the date such Notice of Termination is given); provided,
however, that if within 30 days after any Notice of Termination is given the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Termination Date shall be the
date finally determined by either mutual written agreement of the parties or by
the final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been taken).
Section 12. Fees and Expenses. The Company shall pay all legal fees and
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related expenses (including the costs of experts, evidence and counsel) incurred
by Executive as a result of a contest or dispute over Executive's termination of
employment if such contest or dispute is resolved in Executive's favor.
Section 13. Notices. For the purposes of this Agreement, notices and
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all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid, or by expedited
(overnight) courier with established national reputation, shipping prepaid or
billed to sender, in either case addressed to the respective addresses last
given by each party to the other (provided that all notices to the Company shall
be directed to the attention of the Board with a copy to the Secretary of the
Company) or to such other address as either party may have furnished to the
other in writing in accordance herewith. All notices and communication shall be
deemed to have been received on the date of delivery thereof, on the third
business day after the mailing thereof, or on the second day after deposit
thereof with an expedited courier service, except that notice of change of
address shall be effective only upon receipt.
Section 14. Life Insurance. The Company may, at any time after the
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execution of this Agreement, apply for and procure as owner and for its own
benefit, life insurance on Executive, in such amounts and in such form or forms
as the Company may determine. Executive shall, at the request of the Company,
submit to such medical examinations, supply such information, and execute such
documents as may be required by the insurance company or companies to whom the
Company has applied for such insurance. Executive hereby represents that to his
knowledge he is in excellent physical and mental condition and is not under the
influence of alcohol, drugs or similar substance.
Section 15. Proprietary Information and Inventions. Executive
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understands and acknowledges that:
15.01 Trust. Executive's employment creates a relationship of
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confidence and trust between Executive and the Company with respect to certain
information applicable to the business of the Company and its subsidiaries
(collectively, the "Group") or applicable to the business of any vendor or
customer of any of the Group, which may be made known to Executive by the Group
or by any vendor or customer of any of the Group or learned by Executive during
the Employment Period.
15.02 Proprietary Information. The Group possesses and will
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continue to possess information that has been created, discovered, or developed
by, or otherwise become known to, the Group (including, without limitation,
information created, discovered, developed or made known to by Executive during
the period of or arising out of my employment by the Company) or in which
property rights have been or may be assigned or otherwise conveyed to the Group,
which information has commercial value in the business in which the Group is
engaged and is treated by the Group as confidential. Except as otherwise herein
provided, all such information is hereinafter called "Proprietary Information,"
which term, as used herein, shall also include, but shall not be limited to,
data, functional specifications, computer programs, know-how, research,
technology, improvements, developments, designs, marketing plans, strategies,
forecasts, new products, unpublished financial statements, budgets, projections,
licenses, franchises, prices, costs, and customer, supplier and potential
acquisition candidates lists. Notwithstanding anything contained in this
Agreement to the contrary, the term "Proprietary Information" shall not include
(i) information which is in the public domain, (ii) information which is
published or otherwise becomes part of the public domain through no fault of
Executive, (iii) information which Executive can demonstrate was in Executive's
possession at the time of disclosure and was not acquired by Executive directly
or indirectly from any of the Group on a confidential basis, (iv) information
which becomes available to Executive on a non-confidential basis from a source
other than any of the Group and which source, to the best of Executive's
knowledge, did not acquire the information on a confidential basis, or (v)
information required to be disclosed by any federal or state law, rule or
regulation or by any applicable judgment, order or decree or any court or
governmental body or agency having jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Group and their
respective assigns. Executive assigns to the Company any rights Executive may
have or acquire in such Proprietary Information. At all times, both during
Executive's employment by the Company and after its termination, Executive shall
keep in strictest confidence and trust all Proprietary Information, and
Executive shall not use or disclose any Proprietary Information without the
written consent of the Group, except as may be necessary in the ordinary course
of performing Executive's duties as an Executive of the Company.
Section 16. Surrender of Documents; No Disparagement. Executive shall,
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at the request of the Company, promptly surrender to the Company or its nominee
any Proprietary Information or document, memorandum, record, letter or other
paper in his possession or under his control relating to the operation, business
or affairs of the Group. The Company and Executive further agree that neither
during the Employment Period or at any time thereafter, neither the Company or
Executive will in any way disparage the other.
Section 17. Other Agreements. Executive represents and warrants that
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Executive's performance of all the terms of this Agreement and as an Executive
of the Company does not, and will not, breach any agreement to keep in
confidence proprietary information acquired by Executive in confidence or in
trust prior to Executive's employment by the Company. Executive has not entered
into, and shall not enter into, any agreement, either written or oral, which is
in conflict with this Agreement or which would be violated by Executive entering
into, or carrying out his obligations under, this Agreement.
Section 18. Restrictive Covenant. Executive acknowledges and
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recognizes Executive's possession of Proprietary Information and the highly
competitive nature of the business of the Group and, accordingly, agrees that in
consideration of the premises contained herein Executive will not, during the
period of Executive's employment by the Company and for the period ending on the
second anniversary of the Termination Date, anywhere in the United States,
directly or indirectly (i) engage in any competitive Business Activities,
whether such engagement shall be as an employer, officer, director, owner,
employee, consultant, stockholder, partner or other participant in any
competitive Business Activities; (ii) assist others in engaging in any
competitive Business Activities in the manner described in the foregoing clause
(i); (iii) solicit, induce or influence any employee of the Company to terminate
his or her employment with the Company or engage in any competitive Business
Activities on behalf of a person other than the Company; or (iv) solicit, induce
or influence any consultant, customer or vendor of the Company to terminate,
discontinue, reduce or limit its business with the Company; provided, however,
that the ownership of no more than two percent of the outstanding capital stock
of a corporation whose shares are traded on a national securities exchange or on
the over-the-counter market shall not be deemed engaging in any competitive
Business Activities. For purposes of this Section 18, a person shall be deemed
to be an "employee," "consultant," "customer" or "vendor" of the Company, if
such person had an employment, consulting or business relationship, as
applicable, with the Company during the Initial Term or any Extended Term of
this Agreement.
Section 19. Remedies. Executive acknowledges and agrees that the
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Company's remedy at law for a breach or a threatened breach of the provisions
herein would be inadequate, and in recognition of this fact, in the event of a
breach or threatened breach by Executive of any of Sections 15, 16, 17 or 18 of
this Agreement, it is agreed that the Company shall be entitled to equitable
relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy which may then
be available, without posting bond or other security. Executive acknowledges
that the granting of a temporary injunction, a temporary restraining order or
other permanent injunction merely prohibiting Executive from engaging in any
Business Activities would not be an adequate remedy upon breach or threatened
breach of this Agreement, and consequently agrees upon any such breach or
threatened breach to the granting of injunctive relief prohibiting Executive
from engaging in any activities prohibited by this Agreement. No remedy herein
conferred is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given hereunder now or hereinafter existing at law or in equity or by statute or
otherwise.
Section 20. Successive Employment Notice. Within five business days
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after the Termination Date, Executive shall provide notice to the Company of
Executive's next intended employment. If such employment is not known by
Executive at such date, Executive shall notify the Company immediately upon
determination of such information. Executive shall continue to provide the
Company with notice of Executive's place and nature of employment and any change
in place or nature of employment during the period ending two years after the
Termination Date. Failure of Executive to provide the Company with such
information in an accurate and timely fashion shall be deemed to be a breach of
this Agreement and shall entitle the Company to all remedies provided for in
this Agreement as a result of such breach.
Section 21. Successors. This Agreement shall be binding on the Company
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and any successor to any of its businesses or assets. Without limiting the
effect of the prior sentence, the Company shall use its best efforts to require
any successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement or which is otherwise obligated under this
Agreement by the first sentence of this Section 21, by operation of law or
otherwise.
Section 22. Binding Effect. This Agreement shall inure to the benefit
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of and be enforceable by Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amounts would still be payable to
him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Executive's estate.
Section 23. Modification and Waiver. No provision of this Agreement
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may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and such officer as
may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
Section 24. Headings. Headings used in this Agreement are for
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convenience only and shall not be used to interpret or construe its provisions.
Section 25. Amendments. No amendments or variations of the terms and
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conditions of this Agreement shall be valid unless the same is in writing and
signed by each of the parties hereto.
Section 26. Severability. The invalidity or unenforceability of any
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provision of this Agreement, whether in whole or in part, shall not in any way
affect the validity or enforceability of any other provision herein contained.
Any invalid or unenforceable provision shall be deemed severable to the extent
of any such invalidity or unenforceability. It is expressly understood and
agreed that, while the Company and Executive consider the restrictions contained
in this Agreement reasonable for the purpose of preserving for the Company the
goodwill, other proprietary rights and intangible business value of the Company,
if a final judicial determination is made by a court having jurisdiction that
the time or territory or any other restriction contained in this Agreement is an
unreasonable or otherwise unenforceable restriction against Executive, the
provisions of such clause shall not be rendered void but shall be deemed amended
to apply as to maximum time and territory and to such other extent as such court
may judicially determine or indicate to be reasonable.
Section 27. Governing Law; Venue. This Agreement shall be construed
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and enforced pursuant to the laws of the State of Florida, excluding its choice
of law provisions. Both parties submit to the jurisdiction of the United States
District Court, District of Florida at Tampa, and the Circuit Court in and for
Hillsborough County, Florida, as the exclusive proper forum in which to
adjudicate any case or controversy arising hereunder. The prevailing party
shall be entitled to an award of its reasonable attorneys' fees incurred in
connection with any such judicial proceedings.
Section 28. Counterparts. This Agreement may be executed in more than
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one counterpart and each counterpart shall be considered an original.
Section 29. Exhibits. The Exhibits attached hereto are incorporated
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herein by reference and are an integral part of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Company and Executive in four counterparts as of the date first above written.
STEM CELL THERAPY INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxx
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Xxxxxx Xxx
Chief Executive Officer
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxx
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