EMPLOYMENT AGREEMENT
Exhibit
10.2
This
Employment Agreement (“Agreement”) January 3, 2005 between BioElectronics
Corporation, a Maryland Corporation (the “Company”) located at 0000 Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 and Xxxx X. Xxxxxx (the “Executive”),
residing at 0000 Xxxxxx Xxxxx Xxxxx, Xxxxxx Xxxxx, XX 00000.
WITNESSETH:
WHEREAS.
The Board of Directors (the “Board”) of the Company wishes to employ the
Executive as President, Orthopedics Group of the Company on the terms and
subject to the conditions set forth herein; and
WHEREAS,
the Executive wishes to accept employment with the Company in the position
of
President, Orthopedics Group on the terms and subject to the conditions set
forth herein.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
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1)
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EMPLOYMENT
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The
Executive’s employment under the terms of this Agreement shall commence January
3, 2005 (the “Effective Date”), and shall continue until December 31,2007 unless
terminated earlier pursuant to Section 5. (Such period of employment under
this
Agreement is hereinafter referred to as the “Employment Term.”) The Executive
shall provide services to the Company hereunder as President, Orthopedic Group
of the Company. The Executive will serve the Company subject to the general
supervision, advice and direction of the Chief Executive Officer upon the terms
and conditions set forth in this Agreement.
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2)
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DUTIES
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PERFORMANCE
OF DUTIES.
During
the period of the Executive’s employment with the Company, the Executive
shall:
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a)
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Supply
strategic planning and overall profit/loss management for the Company’s
Orthopedic Group,
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b)
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Provide
overall sales, marketing and product development leadership and management
to Company’s domestic and international activities of the Orthopedic Group
including, but not limited to, developing sales and education programs,
contractual sales and distribution arrangements with medical supply
distributors and resellers, implementation and management of medical
conference and trade show presentations, market assessments and product
development and managing product advertising for the Orthopedic Group.
Executive shall also perform such further duties as are incidental
or
implied from its obligation to provide overall operational management
and
leadership to the Company. Assignment of duties including additions
and
modifications shall be at the discretion of Company President and
CEO.
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c)
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In
all respects use his best efforts to further, enhance, and develop
the
Company’s business, affairs, interests and welfare;
and
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d)
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Not
become directly or indirectly associated with or engaged in any business
which competes with the Company or accept any employment or other
engagement whatsoever from any other person, firm, corporation, or
entity
or do anything inconsistent with its duties to the Company.
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3)
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COMPENSATION
AND BENEFITS
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a)
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BASE
COMPENSATION.
The Company shall pay the Executive a base salary (the “Base Salary”), as
compensation for his employment under this Agreement, in the amount
of
$150,000 a year thereafter within the Employment Term, the Base Salary
shall be as determined by the President and the Board of Directors
but
shall not be less than $150,000. During the Employment Term such
Base
Salary shall be paid in equal installments on at least a monthly
basis, or
on such other basis as is applicable to Executives of the
Company.
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b)
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ANNUAL
BONUS.
For each calendar year ending during the Employment Term for which
the
Executive remains an employee of the Company, the Executive’s bonus
compensation (“Annual Bonus”) shall be up to 50% of base compensation for
the year. The 2005 calendar year bonus will be predicated and calculated
on annual net sales as follows:
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(i)
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Sales
under $1.5 million 0.0%
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(ii)
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Sales
over $1.5 million 1.0% of total
sales.
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(iii)
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Sales
over $2.0 million 1.5% of total
sales.
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(iv)
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Sales
over $3.0 million 2.5% of total
sales.
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The
annual bonus formula after the first year will be established annually by the
Compensation Committee of the Board of Directors and may be amended to reflect
sales and overall profitability of the Orthopedic division. The Executive’s
Annual Bonus earned with respect to each year shall be paid on or before March
31st
of the
succeeding year.
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c)
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STOCK
OPTIONS.
On the Effective Date of this Agreement, (the “Grant Date”), the Company
shall in consideration of the Covenants in paragraph 5 grant to the
Executive a Grant of 500,000 thousand shares of restricted common
stock of
the Company and an option (the “Option”) to purchase 2.1 million shares of
common stock of the Company, $.01 par value per share (the “Stock”). The
Option shall be granted subject to the following terms: (i) the exercise
price with respect to the initial 700,000 shares under the Option
shall be
$.30 per share (ii) an additional 700,000 shares at a xxxxx xxxxx
of $.40
per share; (iii) an additional 700,000 shares at a xxxxx xxxxx of
$.50 per
share; (iv) the Option and Grant shall fully vest over a three-year
period
based on continuous employment of the Executive and the Options are
exercisable as follows: 33.3% shall be exercisable on each of the
first
year, second year and third year anniversaries of the Grant Date;
and v)
the Option shall be exercisable by Executive or his estate for a
period of
five years. The Executive shall immediately become 100% vested in,
and
eligible to exercise, the Option, in the event of (a) his termination
without Cause (as defined in Section 4, (b) a dissolution or liquidation
of the Company, (c) a sale of all or substantially all of the Company’s
assets, (d) a merger or consolidation involving the Company in which
the
Company is not the surviving corporation, (e) a merger or consolidation
involving the Company in which the Company is the surviving corporation
but the holders of shares of common stock receive securities of another
corporation and/or other property, including cash, or (f) a tender
offer
for at least a majority of the outstanding stock of the Company.
If
immediate vesting occurs because of a termination without Cause,
the
Option shall be exercisable for thirty-six (36) months following
the
effective date of such termination; in all other events the option
will
remain exercisable under the terms of the grant. In the event of
a
termination of employment for reasons described in Section 4) Termination
below the Executive or his estate will forfeit unvested options.
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d)
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BENEFITS.
During the Employment Term, the Executive shall be entitled to participate
in all pension, profit sharing and other retirement plans, incentive
compensation plans and all group health, hospitalization and disability
insurance plans and other Executive welfare benefit plans in which
other
senior executives of the Company may participate on terms and conditions
no less favorable than those which apply to such other senior executives
of the Company as determined by the Company Compensation committee.
The
Executive shall be entitled to three weeks annual paid vacations;
and to
be reimbursed for any reasonable out-of-pocket expenses incurred
by the
Executive in connection with the performance of his duties, upon
presentation of reasonable evidence satisfactory to the Company of
the
amounts and nature of such expenses.
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4)
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TERMINATION
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EVENTS
OF TERMINATION.
The
Employment Term shall terminate upon the first to occur of the following events:
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a)
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The
close of business on December 31, 2007, unless mutually extended
in
writing by the parties;
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b)
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The
death of the Executive;
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c)
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The
close of business on the 180th
day following the date on which the Company gives the Executive written
notice of the termination of his employment as a result of his Permanent
Disability. Permanent Disability shall mean the Executive’s inability to
perform the material duties contemplated by this Agreement by reason
of a
physical or mental disability or infirmity which has continued for
more
than 30 consecutive days. The Executive agrees to submit such medical
evidence regarding such disability or infirmity as is reasonably
requested
by the Company, including, but not limited to, an examination by
a
physician selected by the Company in its sole
discretion;
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d)
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The
close of business on the date on which the Company gives the Executive
written notice of the Company’s termination of his employment for Cause.
Cause shall mean (A) the Executive’s neglect f his material duties, (B) an
act or acts by the Executive, or any omission by him, constituting
a
felony, and the Executive has entered a guilty plea or confession
to, or
has been convicted of, such felony, (C) the Executive’s failure to follow
any lawful directive of the President consistent with the Executive’s
position and duties, (D) an act or acts of fraud or dishonesty by
the
Executive which results or is intended to result in financial or
economic
harm to the Company, or (E) breach of a material provision of this
Agreement by the Executive; and
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e)
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The
close of business on the effective date of a Voluntary Termination
by the
Executive of his employment with the Company. Voluntary Termination
shall
mean any voluntary termination by the Executive of his employment
with the
Company provided that the Executive shall give the Company at least
30
days’ prior written notice of the effective date of such termination. Such
Voluntary Termination shall cease acceleration of bonus and options
as
defined in Section 3.
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5)
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PROTECTED
INFORMATION; PROHIBITED SOLICITATION AND
COMPETITION
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a)
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The
Executive hereby recognizes and acknowledges that during the course
of his
employment by the Company, the Company will furnish, disclose or
make
available to the Executive confidential or proprietary information
related
to the Company’s business, including, without limitation, customer lists,
ideas, processes, inventions and devices, that such confidential
or
proprietary information has been developed and will be developed
through
the Company’s expenditure of substantial time and money, and that all such
confidential information could be used by the Executive and others
to
compete with the Company. The Executive hereby agrees that all such
confidential or proprietary information shall constitute trade secrets,
and further agrees to use such confidential or proprietary information
only for the purpose of carrying out his duties with the Company
and not
otherwise to disclose such information unless otherwise required
to do so
by subpoena or other legal process. The Executive agrees that all
inventions and discoveries shall be the sole property of the Company,
and
the Company shall be the sole owner of all patents.
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b)
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The
Executive hereby agrees, in consideration of his employment hereunder
and
in view of the confidential position to be held by the Executive
hereunder, that during the Employment Term and for the period ending
on
the date which is one year after the later of the termination of
the
Employment Term and the Executive shall not, without the written
consent
of the Company, knowingly solicit, entice or persuade any other employee
of the Company or any affiliate of the Company to leave the services
of
the Company or such affiliate for any
reason.
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c)
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The
Executive further agrees that, he shall not during the Employment
Term and
for the period ending on the date which one year after enter into
any
relationship whatsoever, either directly or indirectly, alone or
in
partnership, or as an officer, director, employee or stockholder
(beneficially owning stock or options to acquire stock totaling more
than
five percent of the outstanding shares) of any corporation (other
than the
Company), or otherwise acquire or agree to acquire a significant
present
or future equity or other proprietorship interest, whether as a
stockholder, partner, proprietor or otherwise, with any enterprise,
business or division thereof (other than the Company), which is engaged
in
the development, manufacture or marketing and sales of electromagnetic
or
electro stimulation medical
devices.
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d)
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The
restrictions in this Section 5 shall survive the termination of this
Agreement and shall be in addition to any restrictions imposed upon
the
Executive by statute or at common law. The parties hereby acknowledge
that
the restriction in this Section 5 have been specifically negotiated
and
agreed to by the parties to protect the Company from unfair
competition.
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6)
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INJUNCTIVE
RELIEF
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The
Executive hereby expressly acknowledges that any breach or threatened breach
by
the Executive of any of the terms set forth in Section 5 of this Agreement
may
result in significant and continuing injury to the Company, the monetary value
of which would be impossible to establish. Therefore, the Executive agrees
that
the Company shall be entitled to apply for injunctive relief in court of
appropriate jurisdiction. The provisions of this Section shall survive the
Employment Term.
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7)
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PARTIES
BENEFITED; ASSIGNMENTS
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This
Agreement shall be binding upon the Executive, his heirs and his personal
representative or representatives, and upon the Company and its successors
and
assigns. Neither this Agreement nor any rights or obligations hereunder may
be
assigned by the Executive, other than by will or by the laws of descent and
distribution.
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8)
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NOTICES
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Any
notice required or permitted by this Agreement shall be in writing, sent by
registered or certified mail, return receipt requested, addressed to the
President and the Company at its then principal office, or to the Executive
at
the address set forth in the preamble, as the case may be, or to such other
address or addresses as any party hereto may from time to time specify in
writing for the purpose in a notice given to the other parties in compliance
with this Section. Notices shall be deemed given when received.
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9)
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GOVERNING
LAW
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This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Maryland, without regard to conflict of law
principles.
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10)
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DISPUTES
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Any
dispute or controversy arising under, out of, in connection with or in relation
to this Agreement shall, at the election and upon written demand of either
the
Executive or the Company, be finally determined and settled by arbitration
in
Frederick, Maryland in accordance with the rules and procedures of the American
Arbitration Association, and judgment upon the award may be entered in any
court
having jurisdiction thereof.
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11)
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MISCELLANEOUS
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This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof. This Agreement supersedes any prior written or oral agreements
or
understandings between the parties relating to the subject matter hereof. No
modification or amendment of this Agreement shall be valid unless in writing
and
signed by or on behalf of the parties hereto. A waiver of the breach of any
term
or condition of this Agreement shall not be deemed to constitute a waiver of
any
subsequent breach of the same or any other term or condition. This Agreement
is
intended to be performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. If any provision
of
this Agreement, or the application thereof to any person or circumstance, shall,
for any reason and to any extent, be held in valid or unenforceable, such
invalidity and unenforceability shall not affect the remaining provisions hereof
and the application of such provisions to other persons or circumstances, all
of
which shall be enforced to the greatest extent permitted by law. The
compensation provided to the Executive pursuant to this Agreement shall be
subject to any withholdings and deductions required by any applicable tax laws.
Any amounts payable under this Agreement to the Executive after the death of
the
Executive shall be paid to the Executive’s estate or legal representative. The
headings in this Agreement are inserted for convenience of reference only and
shall not be a part of or control or affect the meaning of any provision
hereof.
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IN
WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as
of the date first written above.
BioElectronics
Corporation:
/s/
Xxxxxx X. Xxxxxx
By:
Xxxxxx X. Xxxxxx, President
Executive
/s/
Xxxx X. Xxxxxx
By:
Xxxx
X. Xxxxxx
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