February 1, 2009 EMPLOYMENT AGREEMENT
CONFIDENTIAL
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February
1, 2009
This
Agreement made and entered into effective the 1st of February, 2009 by and
between Xxxxxxx Xxxxxxxx, an individual residing at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000 (“Employee”), and BioDrain Medical Incorporated,
0000 Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0, Xxxxxxx Xxxxxxx, Xxxxxxxxx 00000, a
Minnesota corporation (“Company”).
WITNESSETH:
WHEREAS, the Company desires
to employ the Employee to render services for the Company as its Vice President,
Sales and Marketing on the terms and conditions hereinafter set forth, and the
Employee desires to be employed by the Company on such terms and
conditions;
NOW, THEREFORE, in
consideration of the promises and of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:
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1.
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Employment. The
Company agrees to employ the Employee for a period of two (2) years,
commencing on February 1, 2009, unless Employee violates the terms set
forth in Paragraph 6: Termination by the Company for Cause, or the
Employee voluntarily resigns. The Agreement shall be
automatically renew annually except by action of the President & CEO
or the Board of Directors.
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2.
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Duties. The Employee
will hold the title of Vice President, Sales and Marketing and shall
report to the President & CEO of the Company. The general
scope of the Employee’s duties shall include but not be limited to
responsibility for developing and implementing the overall sales and
marketing strategy and tactical plans to grow sales revenue and account
penetration supporting the overall business strategy. Sales
channel identification and establishment are key priorities including the
advancement of the Company website and development of Company marketing
collateral. The Employee will be decisive, driven,
hands-on and results-oriented. Market segmentation,
positioning, branding, and business development will be additional
responsibilities for the Employee. The Vice President, Sales
and Marketing will play a significant role in establishing and managing
beta sites for the Company’s product(s). Additionally, the
Employee will drive securing initial purchase orders and obtaining initial
sales and sustaining growth in revenues from the Company’s
product(s).
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The
Employee’s duties may be modified from time to time by mutual agreement between
the Employee and the President & CEO as they deem to be in the best
interests of the Company.
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3.
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Extent of Services. The
Employee shall devote her full attention, energy and skills to the
business of the Company and use her best efforts to fully and competently
perform the duties of her office.
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4.
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Compensation.
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a.
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Base Salary. $135,000
annual base salary to be
paid through 3 months after both the product’s receipt of FDA approval and
the product being commercially ready and available for sale. At the 3 month timeframe after
both FDA approval and commercially ready and available product has been
secured, annual base salary will move to
$125,000. Payment will be monthly and will be according
to the Company’s salary schedule. Employee will receive annual
salary reviews and potential increases, based on Employee’s
performance.
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CONFIDENTIAL
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b.
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Commission. Commissions of 7.5% of total
worldwide sales will be paid for sales made in the first 12 months after
both FDA approval and product being commercially ready and available.
Commissions of 5% of total worldwide sales will be paid for sales made in
the second 12 months after both FDA approval and product being
commercially ready and available. Commission to be paid on a monthly basis
in conjunction with scheduled payroll. For purposes of this
Paragraph, “sales made” shall mean sales for which revenues are
booked. Commissions shall be deemed earned, and paid, on booked
revenues with subsequent adjustments made for uncollectible
balances.
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c.
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Stock
Options/Warrants. The Employee will receive total stock
options to purchase 100,000 shares of the Company’s common stock at $.35
per share. In addition, Employee will receive 15,000 warrants
to purchase Company stock at $.46 per share. The 15,000
warrants will vest as of February 1, 2009 and will have a five-year
term. The options will vest as follows: 20,000 upon
execution of this Agreement, 20,000 upon securing four Beta
sites/POs/testimonials/Letters of Intent, 20,000 upon FDA approval, 20,000
upon sale of the first FMS unit, and 20,000 upon sale of the 50th
FMS unit.
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The total
of these options plus warrants, assuming all milestones are achieved, will be
115,000, as described above. Employee and Company will cooperate in
drafting and executing such additional documents as may be necessary to
effectuate the grants, vesting schedule and pricing arrangements detailed in
this Paragraph.
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5.
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Additional
Benefits.
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a.
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Automobile. The
Company shall reimburse the Employee for deductible automobile mileage
according to its Expense Reporting
Procedures.
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b.
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Business
Expense. The Company will reimburse the Employee for all
reasonable, deductible and substantiated business expenses per its Expense
Reporting Procedures. This includes, but is not limited to such
expenses as cell phones, and business meetings,
etc.
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c.
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Benefits. The
Employee will be eligible for the Company’s benefits package effective on
February 1, 2009.
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d.
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Vacation. The
Employee will receive a minimum of three (3) weeks of paid vacation per
year.
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e.
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Education. The Company
will support the Employee in her pursuit of continuing education provided
sufficient cash flows support tuition reimbursement and she meets the
conditions and terms of the tuition reimbursement guidelines as outlined
in the Employee Manual when written. Company and Employee will
annually discuss and mutually determine the affordability to Company of
tuition reimbursement for Employee.
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CONFIDENTIAL
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6.
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Non-Compete. Throughout
the period of Employee’s employment with the Company, and thereafter for a
period of two (2) years, Employee shall not, for any reason whatsoever,
directly or indirectly, plan, organize, advise, own, manage, operate,
control, be employed by, participate in or be connected in any manner with
the ownership, management, operation or control of any business of the
following type: the development, marketing and sales of medical devises
dedicated or designed to safely manage and dispose of contaminated fluids
generated in the operating room and other similar medical locations, or
any business relating to cleaning, disinfecting or sterilizing of medical
instruments or products using fluids similar to those utilized by the
Company. For purposes of this Agreement, indirect competition
shall be deemed to include any activity by Employee in aid of a competing
Business, including but not limited to, being a partner, shareholder,
officer, director, member, owner, manager, governor, agent, employee,
advisor, consultant or independent contractor of any competing Business,
except that the foregoing will not prevent Employee from holding less than
five percent (5%) of the outstanding capital stock of any publicly traded
company.
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7.
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Intellectual
Property. Employee agrees that all right,
title and interest of every kind and nature whatsoever, whether now known
or unknown, in and to any “Intellectual Property,” defined to include, but
not be limited to, any patent rights, trademarks, copyrights, ideas,
creations and properties invented, created, written, developed, furnished,
produced or disclosed by Employee in the course of rendering her services
to Company (both before the execution of this Agreement and
thereafter) shall, as between the parties, be and remain the sole and
exclusive property of Company for any and all purposes and uses
whatsoever, and Employee shall have no right, title or interest of any
kind or nature therein or thereto, or in and to any results and proceeds
there from. Employee agrees to assign, and hereby expressly and
irrevocably assigns, to Company all worldwide rights, title and interest,
in perpetuity, in respect of any and all rights Employee may have or
acquire in the Intellectual Property. The assignment of the rights
as above shall not lapse if Company has not exercised its rights under the
assignment for any period of time or in any jurisdiction or
territory. Pursuant to Section 181.78 of the Minnesota
Statutes, the preceding sentence does not apply to an invention for which
no equipment, supplies, facility or trade secret information of Company
was used and which was developed entirely on the Employee's own time,
and (1) which does not relate (a) directly to the business of Company
or (b) to Company's actual or demonstrably anticipated research or
development, or (2) which does not result from any work performed
by Employee for Company. To the extent any of the
rights, title, and interest in and to the Intellectual Property cannot be
assigned to Company (and to the extent any of Employee’s retained
rights under Section 181.78 were incorporated by Employee (directly or
indirectly) in any of Company's past, current or future products or
services), Employee hereby grants to Company an exclusive,
royalty-free, transferable, perpetual, irrevocable, unrestricted,
worldwide license (with rights to sublicense through one or more tiers of
sublicensees) to such non-assignable (or non-assigned)
rights. To the extent any rights, title and interest in and to
Intellectual Property rights can be neither assigned nor so licensed by
Employee to Company, Employee hereby irrevocably waives and agrees
never to assert such non-assignable and non-licensable rights, title and
interest against Company, any of Company's successors in
interest, and the customers and licensees of either. Further,
Employee agrees to waive, and hereby waives, any "moral rights" Employee
may have or may obtain in the Intellectual Property. Employee
further agrees to assist Company in every proper way to apply for,
obtain, perfect and enforce rights in the Intellectual Property in any and
all countries, and to that end Employee will execute all documents for use
in applying for, obtaining and perfecting such rights and enforcing same,
as Company may desire, together with any assignments thereof
to Company or persons designated by it. Employee
appoints Company as its attorney in fact to execute any documents
necessary to achieve such results. To the maximum extent
possible, Company shall be shown in all documentation as the owner of
all rights in the Intellectual
Property
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8.
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Termination by Company for
Cause. The Company may terminate Employee’s employment for “cause”
at any time during the Term. For purposes of this Paragraph 8.,
the term “cause” shall mean any of the
following:
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CONFIDENTIAL
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The
material non-compliance by the Employee with written instructions,
directions or regulations of the Board of Directors applicable to
Employee, the breach by Employee of any material term of this Agreement,
or the unsatisfactory performance by Employee of Employee’s duties,
obligations, work and production standards, and the failure of Employee to
correct such non-compliance, breach or unsatisfactory performance within
thirty (30) days after receipt by Employee of written notice of the same
by the Company;
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Any
willful or grossly negligent act by the Employee having the effect of
injuring in a material way the Company as determined by the affirmative
vote of the majority of the members of the Board of
Directors;
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The
commission by the Employee of fraud or a criminal act that adversely
affects the business of the Company;
or,
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The
determination by an affirmative vote of the majority of the members of the
Board of Directors, after a reasonable and good faith investigation by the
Company following a written allegation by another employee of the Company,
that Employee engaged in some form of harassment or other improper conduct
prohibited by law, unless such actions were specifically directed by the
Board.
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In the
event of a termination for cause, as defined herein, the Employee shall only be
entitled to receive payment of base salary, adjusted pro-rata to the date of
such termination, along with unused vacation pay and commissions earned to the
date of termination. The Employee shall have absolutely no right to
receive or retain any other payment or compensation whatsoever under this
Agreement, regardless of the term of the employment then elapsed. The
Employee’s rights and obligations regarding stock options and shares of the
Company’s common stock owned by Employee shall be determined in accordance with
and be governed by the Company’s Stock Option Plan as well as Employee’s stock
option agreements. Only options that have vested as of Employee’s
termination date shall be exercisable by Employee.
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9.
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Termination by Company without
Cause. In the event the Employee’s employment is
terminated by the Company without cause, as “cause” is defined in
Paragraph 8 hereof, Employee shall be entitled to receive from the Company
as severance pay an amount equal to twelve (12) months of Employee’s Base
Salary then in effect at the time of termination, payable in twelve (12)
equal monthly installments, in accordance with the Company’s payroll cycle
until paid in full, along with unused vacation pay and commissions earned
to the date of termination. Employee’s vested options shall be
exercisable, and any unvested options shall immediately vest and become
exercisable, upon termination under this Paragraph. The
consideration provided in this section is conditioned upon the Employee’s
return to the Company of any and all property belonging to the Company in
Employee’s possession or control and Employee’s disclosure to the Company
of any information known to Employee and necessary for the Company to
access any computer software or programs of the Company controlled by
Employee.
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CONFIDENTIAL
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10.
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Termination by Employee for
Good Reason. Employee may, at her option, terminate her
employment at any time during the Term for good reason. For
purposes of this Agreement, “good reason” shall mean (i) any material
breach by the Company of this Agreement that is not cured by the Company
within thirty (30) days after receipt of written notice from Employee of
such material breach, (ii) any material diminution or adverse (to
Employee) change in the duties, responsibilities, rights, privileges or
the reporting relationships, which were applicable to and enjoyed by the
Employee at the time of such diminution of change, without the consent of
the Employee, except as a result of the termination of Employee’s
employment by the Company as provided in Paragraph 8 hereof, (iii) any
requirement from the Board of Directors that the Employee must relocate
her office outside the Twin Cities metropolitan area, or (iv) occurrence
of any event described in Paragraph 12. In the event of a termination by
Employee of her employment as provided in this Paragraph 10, Employee
shall be entitled to severance pay and benefits as provided in Paragraph 9
hereof.
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11.
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Termination by
Employee. Employee may terminate employment at any
time during the Term for any reason with one (1) month
notice. In the event of termination under this Paragraph,
Employee shall be paid her base salary, adjusted pro-rata to the date of
such termination, along with unused vacation pay and commissions earned to
the date of termination. Employee agrees to aid in transition
and exit from the Company causing no harm or hardship during such
transition. Employee is bound by Paragraph 6 of this
Agreement. Employee is not eligible for salary continuation or
bonus or additional stock option vesting if she voluntarily resigns for
reasons other than “good reason” as defined in Paragraph
10.
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12.
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Sale, Reorganization or
Transfer of Ownership. In the event the Company (or
substantially all of its assets) is sold, or if majority ownership of the
Company should pass from the majority shareholders existing as of the
effective date of this Agreement to a single party or entity, the terms of
this Agreement shall remain in force. Terms of all executive
employment agreements will identify the specifics for sale, reorganization
or transfer of ownership, to be approved by the Compensation
Committee. All non-vested stock options, whether milestone has
been achieved or not, shall become vested with the completion of the sale
of the Company.
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13.
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Insolvency or Cessation of
Business. In the event the Company becomes insolvent or
ceases business due to lack of funds, this Agreement is immediately null
and void and the terms and conditions are rendered non-enforceable,
specifically those clauses associated with non-disclosure and
non-competition.
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14.
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Governing
Law. This agreement will be governed by and construed in
accordance with the laws of the State of
Minnesota.
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15.
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Notices. Any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given, when received, if
delivered by hand or by fax, or three (3) working days after deposited, if
placed in the mails for delivery by certified mail, return receipt
requested, postage prepaid and addressed to the appropriate party at the
following address:
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Company:
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BioDrain
Medical Inc.
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Attention: Xxxxx
X. Xxxxxxxx, President & CEO
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0000
Xxxxxx Xxxxxx Xxxx., Xxxxx 0
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Xxxxxxx
Xxxxxxx, XX 00000
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Employee:
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Xxxxxxx
Xxxxxxxx
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0000
Xxxxxxxxx Xxxxx
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Xxxxxxxxxxx,
XX 00000
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CONFIDENTIAL
Page 6 of
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Addresses
may be changed by written notice given pursuant to this Section; however any
such notice shall not be effective, if mailed, until three (3) working days
after depositing in the mails or when actually received, whichever occurs
first.
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16.
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Other
Agreements. This Agreement contains the entire agreement
between the parties concerning terms of employment and supersedes at the
effective date hereof any other agreement, written or
oral.
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17.
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Parties and
Interest. This Agreement is personal to Employee, and
Employee may not delegate her duties or assign her rights
hereunder. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted
assigns.
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18.
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Modification and
Waiver. A waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a
waiver of any subsequent breach
thereof.
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19.
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Binding Effect, Assigns,
Successors, Etc. This Agreement shall be binding upon
the parties hereto and their respective heirs, representatives, successors
and assigns, and shall continue in full force unless and until terminated
by the mutual agreement of all parties
hereto.
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20.
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Savings
Clause. If any provision, portion or aspect of this
Agreement is determined to be void, or voidable by any legislative,
judicial or administrative action as properly applied to this Agreement,
then this Agreement shall be construed to so limit such provision, portion
or aspect thereof to render same enforceable to the greatest extent
permitted by or in the relevant
jurisdiction.
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21.
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Headings. The
headings of this Agreement are intended solely for convenience and
reference, and shall give no effect in the construction or interpretation
of this Agreement.
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22.
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Survival. Employee
understands and agrees that portions of the provisions of this Agreement
extend beyond termination of the Employee’s employment and shall continue
in full force and effect after such termination of employment or
termination of this
Agreement.
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23.
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Execution. This
Agreement may be executed in two (2) or more counterparts, and each such
counterpart deemed an original. Original signatures on copies
of the Agreement transmitted by facsimile will be deemed originals for all
purposes hereunder.
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24.
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Confidential. Company
and Employee agree to keep the terms and conditions of this Agreement
confidential during the terms of the Agreement and for one (1) year after
termination of Agreement, except to the extent that Employee may be
required to disclose the Agreement or its terms by force of law or in
connection with a prospective employment
search.
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IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed effective as of the day
and year first written above.
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By:
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/s/ Xxxxx X. Xxxxxxxx |
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Xxxxx
X. Xxxxxxxx, President & CEO
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By:
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/s/ Xxxxxxx Xxxxxxxx |
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Xxxxxxx
Xxxxxxxx,
Employee
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