Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made effective as of the fourth day of March, 2005,
entered into by and between ProUroCare Medical Inc., a Nevada corporation (the
"Company") and Xxxxxxx X. Xxxxxxxx (the "Employee").
WHEREAS, the Company desires to employ the Employee as its President
and Chief Operating Officer (COO) in accordance with the following terms,
conditions and provisions; and
WHEREAS, the Employee desires to perform such services for the Company,
all in accordance with the following terms, conditions and provisions;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. Employment and Duties.
The Company hereby commences Employee's employment, and Employee hereby
accepts and agrees to serve the Company as the Company's President and Chief
Operating Officer, and with duties as described in the Company by-laws and
subject to review and modification from time to time at the direction of the
Company's Board of Directors. The Employee shall apply his best efforts and
devote substantially all of his time and attention to the Company's affairs.
2. Term.
The term of this Agreement and Employee's employment under this
Agreement shall commence on March 4, 2005, and shall continue thereafter until
January 31, 2007. Upon the expiration of the original term of this Agreement,
this Agreement shall automatically renew for successive two-year terms, subject
to termination as provided in Section 7.
3. Compensation.
The Company shall compensate the Employee for his services at the
following salary, bonus, and benefits:
A. Base Salary
The Employee shall be paid a base salary of $175,000
per year, payable on the Company's normal payroll cycle. This
base salary is the minimum salary during the term of this
Agreement, and may be increased from time to time at the
discretion of the Board of Directors. Employee shall receive
an annual performance review, and, contingent upon
satisfactory review results shall be eligible for increase of
such base salary at the direction of the Board of Directors.
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B. Bonus.
The Employee shall continue to participate in a
Company Management Incentive Plan, as approved and amended by
the Board of Directors from time to time, and which is
designed to deliver an annual bonus consistent with current
levels established for this position by the Board of
Directors. The Employee shall periodically meet with the Board
of Directors, to establish quantitative and qualitative
initiatives and objectives for the purpose of assessing the
amount of bonus to be paid to the Employee at the end of the
associated bonus period. The Compensation Committee of the
Board of Directors has established a 50% of base compensation
potential bonus for each calendar year based on specific
milestones. The Employee's bonus, if any, shall be paid in the
cash unless the Parties agree to pay the Employee in the cash
equivalent of unregistered common stock of the Company.
C. Stock Options.
The Employee shall be eligible to participate in the
annual grant of the Company's Stock Option Plan, consistent
with its terms and conditions, and with amounts of options,
including exercise price and vesting provisions determined by
the Board of Directors from time to time. Provisions under
this item 3C, stock options, are also subject to the
provisions found in Section 7, under termination of Agreement.
Stock Options shall be issued to Xx. Xxxxxxxx in accordance
with the Company's stock option plan.
D. Employee Benefits Plans.
The Employee shall be entitled to participate in any
and all Company employee benefit plans, in accordance with the
eligibility requirements and other terms and provisions of
such plan or plans.
E. Insurance.
The Employee agrees that the Company, at the
discretion of its Board of Directors, may apply for and
procure on its own behalf, life insurance on the life of the
Employee, for the purpose of protecting the Company against
loss caused by the death of the Employee (commonly referred to
as "Key" insurance). Employee agrees to cooperate and submit
to medical examination, and to execute or deliver any
documentation reasonably required by the Company's insurer in
order to effectuate such insurance. In addition, the Company
shall secure and pay the premium for a Term Life insurance
policy assignable to Xx. Xxxxxxxx in the amount of three times
Xx. Xxxxxxxx'x annual compensation.
4. Vacation and Time Off.
The Employee shall be entitled to four weeks of paid vacation in each
year of employment under the terms of this Agreement, without reduction of
salary. Unused vacation time may be carried over to future years of employment,
consistent with Company policy affecting use of employee vacation time. In
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addition, Employee shall be entitled to such additional time off from work,
without loss of compensation, for attendance at professional meetings,
conventions, approved "other business activities", as per Section 10, and
educational courses in accordance with the Company's general policies in this
regard, and as from time to time determined by its Board of Directors.
5. Expenses.
The Company will reimburse Employee for reasonable expenses incurred by
the Employee in connection with the business of the Company, according to
policies promulgated from time to time by the Board of Directors, and upon
presentation by Employee of appropriate substantiation for such expenses.
6. Disability.
Not withstanding any other provision of this Agreement, if employee is
totally disabled, as defined below, for an aggregate of 180 calendar days in any
one calendar year of employment, the Company shall not be obligated to pay
employee the compensation provided in this contract for any period of total
disability during such year in excess of 120 days. In such event, Employee's
salary under Section 3 shall be prorated for such year of employment in the same
manner as if this Agreement has been terminated at the end of such 120th day.
The Company agrees that, while on disability leave of absence, and for
the duration of such disability, Employee may continue to receive Employer's
group insurance plan coverage by compliance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), until the end of such
disability leave, or upon attainment of the age of 65, whichever is earlier.
For purposes of this Agreement, Employee shall be considered to be
totally disabled when he is considered to be as such by any insurance company
used by the Company to provide disability benefits for the Employee, and
Employee shall continue to be considered totally disabled until such insurance
company ceases to recognize him as totally disabled for purposes of disability
benefits. If no such disability policies are in effect for the benefit of the
Employee or for any reason an insurance company fails to make a determination of
the question of whether Employee is totally disabled, Employee shall be
considered to be totally disabled if, because of mental or physical illness or
other cause, he is unable to perform the majority of his usual duties on behalf
of the Company. The existence of a total disability of the Employee, the date it
commenced, and the date it ceases, shall be determined by the Board of Directors
and the Employee, under these circumstances. If the parties cannot agree on the
foregoing questions of disability, then any such determination shall be made
after examination of Employee by medical doctor selected by the Board of
Directors, and a medical doctor selected by the Employee. If the medical doctor
so selected cannot agree on the foregoing questions of disability, a third
medical doctor shall be selected by the two and the opinion of a majority of all
three shall be binding.
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7. Termination.
This Agreement shall terminate upon the occurrence of any of the
following:
A. Mutual agreement, in writing, of the parties to terminate;
B. Employee's death. Under circumstances of Employee's death,
Company agrees to make termination payments to Employee's designated
beneficiaries, in the amount of one year of base salary, and annual
bonus payment for bonus payable in the fiscal year in which Employee's
death occurred. Additionally, any unexercised, vested stock options
which were available to Employee immediately prior to date of death
shall be exercisable by beneficiaries in accordance with the Company's
stock option plan. In addition, Employee's designated beneficiaries
may, at their option, continue to pay and to receive insurance coverage
under the COBRA provisions, and beyond, for the period allowed under
Minnesota Statute, or upon attainment of age 65 of beneficiary,
whichever is earlier.
C. Upon the expiration of the initial or any renewal term of this
Agreement, following 120 days of written notice by one party to the
other indicating the party's intention not to renew;
D. At the Company's option, if Employee shall be totally disabled,
as defined above for a continuous period in excess of one hundred
eighty (180) days. The Company's option to terminate in such event
shall be exercised upon at least 30 days written notice to Employee;
E. Termination by the Company for cause.
For purposes of this provision of this Agreement, cause shall
be defined as:
1. Failure of the Employee to substantially perform
any duties reasonably required by the Company that
are consistent with Employee's position (except as a
result of any disabling injury for which Employee has
been receiving benefits under a short term or long
term disability program); and
2. The commission by Employee of any criminal act, or
act of fraud or dishonesty by Employee related to or
in connection with his Employment by the Company; or
3. If Employee materially breaches Employee's other
covenants contained in this Agreement.
F. Change of employment or termination without cause by the Company.
A Change in Employment shall be deemed to have occurred if,
without Employee's consent,
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1. Employee's position, duties, or title are
materially or adversely changed without cause: or
2. Employee's salary or benefits are reduced without
cause, or
3. The location of performance of most of Employee's
duties is moved from the general geographic location
in which Employee performed such duties prior to the
move.
The effective date of a change in employment shall be
the date Employee elects, by written notice to the Company, to
treat such action as termination due to change in employment,
provided it occurs within 90 days of the date Employee is
notified of the change in employment. Failure to treat a
particular change in employment as a termination of employment
shall not preclude Employee from treating a subsequent change
of employment as a termination of employment.
G. Termination Payments.
In the event Employee's employment with the Company is
terminated without cause, or a change in employment occurs and
employee elects to treat the change in employment as a
termination of employment and so notifies the Company of such
election within 90 days following the change of employment
(with a date of notice to be deemed the effective date of
termination) or the geographic location changes as defined
above, or upon non-renewal of this agreement by the Company,
then:
(a) Employee shall receive payment equal to 6 months
severance plus additionally that portion of four
months additional severance for each year of service
to the Company with a maximum accumulated severance
of 24 months total, of Employee's then current
annualized salary; plus the average of any bonus or
incentive compensation paid or payable for the most
recent two fiscal years, or other period generally
used by the Company to determine such bonus or
incentive compensation, and at Employee's election,
may pay out such salary and bonus or incentives over
a period of one year consistent with the Company's
routine employee payment schedules, or in a lump
sump; and all unvested stock options held by Employee
shall immediately vest and employee shall have one
year which to exercise said options before
expiration.
(b) Employee shall be entitled to continue
participation in the healthcare coverage, life
insurance and general employee benefit plans of the
Company as provided for by COBRA and specific
insurance policies, at the expense of the employee.
(c) In the event of a termination of employment under
this Section 7G, the Company agrees that in the event
of a dispute by the executive over any terms or
provisions contained in this agreement, or
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interpretation thereof, the Company will pay all
reasonable legal expenses incurred by Employee as a
result of Employee's efforts to resolve the dispute.
H. Termination due to change in control.
For purposes of this provision, a change in control
will be defined as follows:
(a) When any "person" as defined in Section 3(a)(9)
of the Securities Exchange Act as used in sections
13(d) and 14(d) thereof, including a "group" as
defined in Section 13(d) of the Securities Exchange
Act, but excluding the Company or any subsidiary or
parent or any employee benefit plan sponsored or
maintained by the Company or any subsidiary or parent
(including any trustee of such plan acting as
trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Securities Exchange Act, as amended from time to
time), of securities of the Company representing
greater than 50 (fifty) percent of the combined
voting power of the Company's then outstanding
securities; or
(b) When, subsequent to the effective date of this
agreement, the individuals who, at the beginning of
such period, constitute the Board ("Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof; provided
however that a Director who was not a Director at the
beginning of this period will be deemed to have
satisfied the definition of "Incumbent Director" if
such Director was elected by, or with the approval of
at least 60% (sixty percent) of the Directors who
then qualified as Incumbent Directors; or
(c) The approval by the shareholders of any sale,
lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or
substantially all of the assets of the Company or the
adoption of any plan or proposal for the liquidation
or dissolution of the Company.
If during a two year period subsequent to a change in
control, Employee is terminated without cause, or Employee is
asked by the Board to assume a position, duties, or level of
responsibility which are unacceptable to the Employee, or
Employee is asked by the Board to relocate geographically to a
location which is unacceptable to the Employee, the then
controlling Company agrees to pay Employee a payment equal to
6 months severance plus additionally that portion of four
months additional severance for each year of service to the
Company prorated from the date of initial service with a
maximum accumulated severance of 24 months total, of
Employee's then current annualized salary; plus the average of
any bonus or incentive compensation paid or payable for the
most recent two fiscal years, or other period generally used
by the Company to determine such bonus or incentive
compensation, and at Employee's election, may pay out such
salary and bonus or incentives over a period of one year
consistent with the Company's routine employee payment
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schedules, or at the request of the employee in a lump sump;
and all unvested stock options held by Employee shall
immediately vest.
In the event of termination of this Agreement due to
change in control, Company agrees to provide for reasonable
expenses incurred on Employee's behalf in the event of a legal
action or dispute in connection with the change of control, or
termination of employment caused by such change in control.
I. Years of Service
For purposes of this Section 7, Employee's years of service
shall be computed using February 1, 2004 as the date of
initial service.
8. Covenant Not to Compete.
Employee hereby covenants and agrees that during the initial and any
renewal term of this Agreement, and for a period of one year following the
termination of this Agreement, Employee shall not be engaged within the United
States, either directly or indirectly, in any matter or capacity, whether as an
advisor, principal, agent, partner, officer, director, employee, member of an
association, or otherwise, in any business or activity, or own beneficially or
of record, five percent or more of the outstanding stock of any class of equity
securities in any corporation in competition with the business then being
conducted by the Company; furthermore, Employee agrees not to solicit, directly
or indirectly, any current employee of the Company for employment or engagement
in any capacity outside of the Company, its subsidiaries or affiliates. If
Employee should breach the foregoing covenant, the Company will cease making
payments described in the previous section regarding Termination of Agreement,
and any associated payments contained therein; and remaining unexercised stock
options shall immediately be cancelled and benefit plan provisions described in
the Termination Section 7 shall be immediately discontinued.
Additionally, at the option of the Board of Directors, the Company may
chose to extend the covenant not to compete set forth herein for a period of up
to an additional twelve months, beyond the initial twelve month period already
stipulated herein. In consideration for such election, the Company agrees to
make payment to the Employee the annualized salary and bonus equal to that in
effect during the fiscal year at the time of termination.
During this additional period of extension and payment, Employee agrees
not to solicit, directly or indirectly, any current employee of the Company for
employment or engagement in any capacity outside of the Company, its
subsidiaries or affiliates.
9. Confidentiality.
Employee will, in the course of his employment with the Company have
access to confidential and proprietary data or information belonging to the
Company. Employee will not at any time divulge or communicate to any person
(other than to a person bound by confidentiality obligations to the Company
similar to those contained in this Agreement) or use to the detriment of the
Company, or for the benefit of any other person such data or information. The
provisions of this section shall survive Employee's employment hereunder
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regardless of the cause of termination of employment or this Agreement. The
phase "confidential or proprietary date or information" shall mean information
not generally available to the public, including, but not limited to, personnel
information, financial information, customer lists, supplier lists, trade
secrets, secret processes, computer data and programs, pricing, marketing and
advertising data. Employee acknowledges and agrees that any confidential or
proprietary information that Employee has already acquired was in fact received
in confidence in Employee's fiduciary capacity with respect to the Company.
All written materials, records and documents made by Employer or coming
into Employee's possession during the term of employment concerning any product,
processes, information or services used, developed, investigated or considered
by the Company, or otherwise concerning the business or affairs of the Company,
shall be the sole property of the Company and upon termination of Employee's
employment for any reason, or upon request of the Board of Directors during
Employee's employment, Employee shall promptly deliver the same to the Company.
In addition, upon termination of Employee's employment for any reason, or upon
request of the Board of Directors during Employee's employment, Employee shall
deliver to the Company all of the property of the Company in Employee's
possession or under Employee's control, including, but not limited to, financial
statements, marketing and sales data, computers, and Company credit cards.
10. Other Business Activities.
Employee shall not serve as an officer of another company, whether for
compensation or otherwise, requiring more than nominal duties by the Employee,
during the term of this contract without the express prior written consent of
the Company's Board of Directors. Employee may not serve as a Director of any
other organization without express prior written approval by the Company's Board
of Directors.
11. Inventions and Patents.
Employee agrees to assign all rights, ownership and related privileges
and benefits associated with inventions and patents to the Company. Employee
agrees that any inventions or patents obtained in association with ideas or
concepts initiated by Employee related to the Company's business are deemed to
be Company property. This includes but is not limited to product ideas, changes
or improvements; process ideas, changes or improvements; pertinent intellectual
property, or other pertinent information.
12. Arbitration/Dispute Resolution.
The Company and the Employee agree that as a first option prior to any
legal action arising out of the dispute over provisions in this agreement,
parties may seek arbitration, and submit to authority of binding arbitration.
13. Cooperation in Claims.
Both during employment and post employment, Employee agrees that in the
event of a legal action against the Company, or legal action initiated by the
Company against another party, in which Employee is deemed by the Company to be
a material witness or affiant, Employee agrees to make reasonable and best
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efforts to cooperate with the Company in such matters. If Employee is no longer
employed, Company will reimburse Employee for time and expenses incurred as a
result of cooperation for this purpose.
14. Indemnification.
The Company agrees to make its best efforts to indemnify and hold
harmless the Employee from liability incurred as a result of performance of
duties as an Officer and member of the Board of Directors. This includes but is
not limited to applicable statute, as well as efforts to secure coverage under
pertinent insurance policies.
15. Notices.
All notices, requests, demands and other communications provided for by
this Contract shall be in writing and shall be deemed to have been given when
mailed at any general or branch United States Post Office enclosed in a
certified postpaid envelope, return receipt requested, and addressed to the
address of the respective.
If to the Employee:
Xxxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If to the Company:
Chief Executive Officer
ProUroCare Medical Inc.
Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Any notice of change of address shall only be effective, however, when
received.
16. Successors and Assigns.
This contract shall inure to the benefit of, and be binding upon, the
Company, its successors and assigns, including, without limitation, any
corporation which may acquire all or substantially all of the Company's assets
and business or into which the Company may be consolidated or merged, and the
Employee, his heirs, executors, administrators and legal representatives. The
Employee may assign his right to payment, and his obligations, under this
Contract.
17. Applicable Law.
This Contract shall be governed by the laws of the State of Minnesota.
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18. Other Agreements.
This Contract supersedes all prior understandings and agreements
between the parties. It may not be amended orally, but only by a writing signed
by the parties hereto.
19. Non-waiver.
No delay or failure by either party in exercising any right under this
Contract, and no partial or single exercise of that right, shall constitute a
waiver of that or any other right.
20. Headings.
Headings in this Contract are for convenience only and shall not be
used to interpret or construe its provisions.
21. Counterparts.
This Contract may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
ProUroCare Medical Inc.
By /s/ Xxxxxxx X. Xxxxxx XX
----------------------------
Its CEO
AND /s/ Xxxx Xxxxxxxxx
---------------------------
Its Chairman, Compensation Committee
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
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