1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is made by and between LifeQuest Medical, Inc. (the
"Company"), located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("Employee"), whose address is ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE 1
COMPENSATION AND TERM
1.01 Basic Compensation. As compensation for the services to be
rendered hereunder, the Company shall pay Employee a salary at a rate not less
than $14,583.33 per month ("Base Salary"), subject to standard deductions,
which shall be payable in at least monthly installments during the Initial Term
(as hereinafter defined) and each Extension Term (as hereinafter defined), if
any. Such basic compensation shall be subject to annual review for possible
increase by the Compensation Committee of the Board of Directors of the Company
based upon Employee's performance, as determined at the discretion of the
Company's Compensation Committee based in part upon the achievement of goals
agreed upon by the Board of Directors of the Company and Employee, the
performance of the Company's stock price and the earnings of the Company. In
addition, the Company and the Employee have entered into a Non-Qualified Stock
Option Agreement of even date herewith pursuant to which the Company has
granted to Employee non-qualified stock options to purchase up to 250,000
shares of Common Stock, $.001 par value, of the Company upon the terms and
conditions set forth in such agreement.
1.02 Incentive Compensation. Employee shall be eligible to receive an
annual cash bonus in an amount up to 200% of Employee's Base Salary, the amount
of which shall be determined by the Compensation Committee of the Company in
its sole discretion and shall be based upon Employee's performance, the
achievement of goals agreed upon by the Board of Directors of the Company and
Employee, the performance of the Company's stock price and the earnings of the
Company, all as determined in the sole discretion of the Company's Compensation
Committee. Any such bonus shall be paid by the Company within 90 days after the
end of each calendar year.
1.03 Term. Subject to earlier termination pursuant to Article 5
hereof, the initial term (the "Initial Term") of this Agreement shall be three
(3) years commencing as of the execution date of this Agreement and ending on
May 10, 2001; provided, however, the Initial Term shall be automatically
extended for successive periods of one (1) year each (each such one-year
period, an "Extension Term") unless either party shall have given to the other
party written notice of termination not less than sixty (60) days prior to the
end of the Initial Term or the Extension Term then in effect, as the case may
be.
2
ARTICLE 2
DUTIES OF EMPLOYEE
2.01 Duties. The Company hereby employs Employee to serve as President
and Chief Executive Officer of the Company or in such other capacities as may
be agreed upon by the Board of Directors of the Company and Employee from time
to time, and Employee agrees to perform the customary duties of such offices in
accordance with the bylaws of the Company and as the Board of Directors of the
Company may direct from time to time. Employee will be the chief executive
officer of the Company and, therefore, will report only to the Board of
Directors.
2.02 Other Activities. During the Initial Term and each Extension
Term, if any, Employee shall devote substantially all of his full-time efforts
to his duties hereunder and will not undertake any material business
commitments without obtaining the prior consent of the Board of Directors of
the Company, which consent may be granted or withheld in the sole discretion of
the Board of Directors of the Company.
ARTICLE 3
EMPLOYEE BENEFITS
3.01 Medical and Dental Benefits. The Company agrees to include
Employee in any hospital, surgical, medical, disability and dental benefit
plan(s) that it may adopt for its employees.
3.02 Temporary Housing Arrangements and Living Expenses. The Company
will reimburse Employee for reasonable temporary living arrangements and living
expenses for a period of up to twelve (12) months after the execution date
hereof; provided, however, the amount which shall be reimbursed by the Company
to Employee shall not exceed $2,000 per month. Arrangements for temporary
living accommodations will be made by the Company through its administrative
staff.
3.03 Attorneys' Fees. The Company will reimburse Employee for
reasonable attorneys' fees charged to Employee by the firm of Saul, Ewing,
▇▇▇▇▇▇ & ▇▇▇▇ in connection with the negotiation of this Agreement.
3.04 Other Benefits. Employee shall be entitled to reasonable and
customary holidays and other benefits that are available to senior management
or key employees, including three weeks paid vacation.
ARTICLE 4
OBLIGATIONS OF THE COMPANY
4.01 Office and Support Staff. The Company shall provide Employee with
such support services as are reasonable to Employee's position or required for
the performance of his duties.
-2-
3
ARTICLE 5
TERMINATION OF EMPLOYMENT
5.01 Termination by the Company for Cause. The Company may at its
option terminate this Agreement for Cause (as hereinafter defined) by giving 10
days written notice of termination to Employee. Any such notice shall specify
with particularity the events or circumstances which the Board of Directors of
the Company has determined constituted such Cause.
The term "Cause" shall be limited to the occurrence of the following
events, as determined by the Board of Directors of the Company in its sole
judgment: (i) Employee breaches any of the material terms of this Agreement and
fails to remedy such breach within 10 days following written notice by the
Company to Employee of such breach; (ii) Employee is convicted of a felony;
(iii) Employee fails, after at least one written warning from the Company, to
perform duties assigned under this Agreement (other than a failure due to death
or physical or mental disability); (iv) Employee intentionally engages in
conduct which is demonstrably and materially injurious to the Company; (v)
Employee commits fraud or theft of personal or Company property from Company
premises; (vi) Employee falsifies Company documents or records; (vii) Employee
engages in acts of gross carelessness or willful negligence to endanger life or
property on Company premises; (viii) Employee engages in sexual harassment
involving employees of the Company or on premises of the Company or with
respect to business of the Company; (ix) Employee uses, distributes, possesses
or is under the influence of illegal drugs, alcohol or any other intoxicant on
Company premises; or (x) Employee intentionally violates state, federal or
local laws and regulations relating to the business of the Company. Any notice
referred to in the preceding sentence shall state with particularity the events
or circumstances which the Board of Directors of the Company has determined
constituted such Cause.
5.02 Option to Terminate if Employee Permanently Disabled, Etc. The
Company shall have the option to terminate this Agreement immediately by giving
written notice of termination to Employee upon the occurrence of any one of the
following events:
(a) Employee becomes permanently disabled because of sickness,
physical or mental disability, or any other reason, so that it reasonably
appears to the Board of Directors of the Company that Employee will be
unable to perform the essential aspects of his duties under this
Agreement;
(b) The death of Employee; or
(c) The continued incapacity on the part of Employee to perform his
duties for a continuous period of 60 days, unless waived by the Company,
and a reasonable determination by the Board of Directors of the Company
that Employee has not performed his duties during such period.
5.03 Effect of Termination on Compensation. In the event of the
termination of this Agreement prior to the expiration of the Initial Term or
the Extension Term then in effect, as the case may be, pursuant to Section 5.01
or Section 5.02, Employee shall be entitled
-3-
4
to Employee's Base Salary (subject to standard deductions) at the rate then in
effect to the date of such termination, computed pro rata up to and including
that date, and Employee shall be entitled to no further compensation after the
date of such termination.
5.04 Company's Option to Terminate. This Agreement may be terminated
by the Company immediately at any time without Cause pursuant to this Section
5.04 upon notice given by the Company to the Employee, after due authorization
by the Board of Directors. Such notice shall specify the date when such
termination shall be effective. A notice given by the Company pursuant to
Section 1.03 to terminate this Agreement at the end of the Initial Term or any
Extension Term, as the case may be, shall be deemed to be a termination without
Cause pursuant to this Section 5.04. In the event of the termination of this
Agreement by the Company without Cause pursuant to this Section 5.04, the
Company shall continue to pay to Employee, not less frequently than monthly,
his Base Salary (subject to standard deductions) at the rate in effect as of
such termination from the date of such termination through the date which is
the latest to occur of the following: (a) the date on which the Initial Term or
Extension Term then in effect, as the case may be, expires, (b) the date which
is twelve (12) months after the date of the Company's termination of this
Agreement without Cause pursuant to this Section 5.04 or (c) the date on which
the Non-Competition Period (as hereinafter defined) expires. As used herein,
the term "Non-Competition Period" shall mean the two-year period after the
termination of this Agreement referred to in Section 6.08; provided, however,
in the event that the Company shall give notice to Employee pursuant to this
Section 5.04 that the Company shall not require Employee to comply with the
provisions of Section 6.08 after a date prior to the expiration of such
two-year period after the termination of this Agreement, the "Non-Competition
Period" shall mean the period commencing on the date of the termination of this
Agreement and ending on the date specified in the Company's notice respecting
the shortening or elimination of the period for compliance with Section 6.08,
as the case may be. The Company shall have no further obligations to Employee
hereunder after the termination of this Agreement pursuant to this Section 5.04
except for the payments of Base Salary as set forth in this Section 5.04.
5.05 Survival of Provisions. The terms and provisions of this Article
5 shall survive the termination of this Agreement and shall be fully
enforceable despite and after any such termination.
ARTICLE 6
PROPRIETARY PROPERTY; CONFIDENTIAL
INFORMATION; NON-COMPETITION
6.01 Duties. Employee understands and agrees that, during the Initial
Term and each Extension Term, if any, Employee's duties will include the
conception of improvements and inventions (whether or not ultimately issuing as
Letters Patent in any country), the creation of confidential information
protected by the Company as trade secrets and the authoring of "works" as
defined under the copyright laws of the United ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Code. Such information is collectively referred to in this
Agreement as "Proprietary Information".
6.02 Ownership. Employee understands and agrees that for all
Proprietary Information created within the scope of Employee's employment, the
Company shall own all
-4-
5
right, title and interest thereto. In the case of works authored or created by
Employee, such works are considered a "work made for hire" under ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Code Section 101 - the copyright laws. All Proprietary Information, if
any, created by Employee prior to his employment with the Company, and in which
Employee claims ownership, is shown in Schedule 6.02 attached hereto.
6.03 Notice and Assistance. Employee shall give adequate written
notice to the Company as soon as practicable of all Proprietary Information
created by Employee during Employee's employment with the Company, assist the
Company in evaluating the Proprietary Information for patent, trade secret and
copyright protection and sign all documents and do all things necessary at the
expense of the Company to assist the Company in the protection, development,
marketing or transfer of such Proprietary Information.
6.04 Assignment. Employee hereby assigns and agrees to assign all
right, title and interest into such Proprietary Information to the Company or
its nominee. At the request of the Company, whether during or after the
termination of Employee's employment, Employee shall timely execute or join in
executing all papers or documents required for the filing of patent
applications and copyright registrations in the United States of America and
such foreign countries as the Company may in its sole discretion select, and
shall assign all such patent applications and copyrights to the Company or its
nominee, and shall provide the Company or its agent or attorneys with all
reasonable assistance in the preparation and prosecution of patent application
and copyright registrations, including drawings, specifications, and the like,
all at the expense of the Company, and shall do all that may be necessary to
establish, protect or maintain the rights of the Company or its nominee in the
inventions, patent applications, Letters Patent and copyrights in accordance
with the spirit of this Agreement.
6.05 Confidential Information. Employee agrees to keep confidential
all information protected by the Company as trade secrets during the Initial
Term and each Extension Term, if any, (including any leaves of absence) and
will neither use nor disclose the confidential information without written
authorization by the Company for ten years thereafter. For the purposes of this
Agreement, such confidential information shall include information set forth in
any application for Letters Patent unless and until such information is
ultimately published. The Company and Employee mutually agree that the
following types of information shall not be protected by this Agreement:
(a) Information already in the public domain at the time Employee
received it;
(b) Information which although disclosed in confidence to Employee is
later disseminated by the Company into the public domain;
(c) Information which although received in confidence by Employee is
subsequently disseminated into public domain by a third party who has not
breached any duty to any other party in disseminating such information;
and
-5-
6
(d) Information given by the Company in confidence to Employee which
Employee is expressly authorized in writing by the Company to use or
disclose thereafter.
Employee also understands and agrees that he will maintain in confidence all
information known to him by reason of his employment even if such information
is included in a redacted deposit of a work filed with an application for
copyright registration, if such deposit has been abridged in order to protect
the confidentiality of the information deposited with the Copyright Office. For
purposes of this Agreement, a trade secret "...may consist of any formula,
pattern, device or compilation of information which is used in one's business,
and which gives him an opportunity to obtain an advantage over competitors who
do not know or use it. It may be a formula for a chemical compound, a process
of manufacturing, trading or preserving materials, a pattern for machine or
other device, or a list of customers..." as commonly interpreted by the courts
of the State of Texas. Upon the termination of this Agreement, regardless of
how such termination may be brought about, Employee shall deliver to the
Company any and all documents, instruments, notes, papers or other expressions
or embodiments of Proprietary Property or confidential information which are in
Employee's possession or control.
6.06 Publicity. During the Initial Term and each Extension Term, if
any, and for a period of ten years thereafter, Employee shall not, directly or
indirectly, originate or participate in the origination of any publicity, news
release or other public announcements, written or oral, whether to the public
press or otherwise, relating to this Agreement, to any amendment hereto, to
Employee's employment hereunder or to the Company, without the prior written
approval of the Company.
6.07 Fiduciary Relationship. Notwithstanding any provision of Section
2.02 which may permit Employee to engage in business activities other than
Employee's duties hereunder, Employee, by virtue of his high position of trust
and reliance on him by the Company, understands that Employee enjoys a
fiduciary relationship with the Company in carrying out his obligations under
this Agreement. Accordingly, Employee agrees to honor his obligations under
this Agreement by conducting himself with the highest degree of fairness and
trust toward the Company.
6.08 Non-Competition. Notwithstanding any provision of Section 2.02
which may permit Employee to engage in business activities other than
Employee's duties hereunder, in consideration of the benefits of this
Agreement, including Employee's access to and limited use of proprietary and
confidential information of the Company, as well as training, education and
experience provided to Employee by the Company directly and/or as a result of
work projects assigned by the Company with respect thereto, Employee hereby
covenants and agrees that during the Initial Term and each Extension Term, if
any, and for a period of two years following termination of this Agreement,
Employee shall not, directly or indirectly, as proprietor, partner,
stockholder, director, officer, employee, consultant, joint venturer, investor
or in any other capacity, engage in, or own, manage, operate or control, or
participate in the ownership, management, operation or control, of any entity
which engages, in the United States or Canada, in any business activity in
which the Company participates during Employee's employment with the Company;
provided, however, the foregoing shall not prohibit Employee
-6-
7
from purchasing and holding as an investment not more than 5% of any class of
publicly traded securities, or 10% of any class of other securities, of any
entity which is engaged in the design, manufacturing, marketing, sale or
distribution of minimally invasive surgery products, so long as Employee does
not participate in any way in the management, operation or control of such
entity.
6.09 Judicial Reformation. Employee acknowledges that, given the
nature of the Company's business, the covenants contained in Section 6.08
establish reasonable limitations as to time, geographic area and scope of
activity to be restrained and do not impose a greater restraint than is
reasonably necessary to protect and preserve the goodwill of the Company's
business and to protect its legitimate business interests. If, however, Section
6.08 is determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too long a period of time or over too large a
geographic area or by reason of it being too extensive in any other respect or
for any other reason, it will be interpreted to extend only over the longest
period of time for which it may be enforceable and/or over the largest
geographic area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court.
6.10 Customer Lists; Non-Solicitation. In consideration of the
benefits of this Agreement, including Employee's access to and limited use of
proprietary and confidential information of the Company, as well as training,
education and experience provided to Employee by the Company directly and/or as
a result of work projects assigned by the Company with respect thereto,
Employee hereby further covenants and agrees that, notwithstanding any
provision of Section 2.02 which may permit Employee to engage in business
activities other than Employee's duties hereunder, during the Initial Term and
each Extension Term, if any, and for a period of one year following the
termination of this Agreement, Employee shall not, directly or indirectly, (a)
use or make known to any person or entity the names or addresses of any clients
or customers of the Company or any other information pertaining to them, (b)
call on, solicit, take away or attempt to call on, solicit or take away any
clients or customers of the Company on whom Employee called or with whom he
became acquainted during his employment with the Company, nor (c) recruit, hire
or attempt to recruit or hire any employees of the Company.
6.11 Equitable Relief. In the event of a breach or a threatened breach
by Employee of any of the provisions contained in Article 6 of this Agreement,
Employee acknowledges that the Company will suffer irreparable injury not fully
compensable by money damages and, therefore, will not have an adequate remedy
available at law. Accordingly, the Company shall be entitled to obtain such
injunctive relief or other equitable remedy from any court of competent
jurisdiction as may be necessary or appropriate to prevent or curtail any such
breach, threatened or actual. The foregoing shall be in addition to and without
prejudice to any other rights that the Company may have under this Agreement,
at law or in equity, including, without limitation, the right to ▇▇▇ for
damages.
6.12 Survival of Provisions. The terms and provisions of this Article
6 shall survive the termination of this Agreement and shall be fully
enforceable despite and after any such termination.
-7-
8
ARTICLE 7
GENERAL PROVISIONS
7.01 Notices. All notices or other communications required under this
Agreement may be effected either by personal delivery in writing or by
certified mail, return receipt requested. Notice shall be deemed to have been
given when delivered or mailed to the parties at their respective addresses as
set forth above or when mailed to the last address provided in writing to the
other party by the addressee.
7.02 Entirety of Agreement. This Agreement supersedes all other
agreements, either oral or in writing, between the parties to this Agreement,
with respect to the employment of the Employee by the Company. This Agreement
contains the entire understanding of the parties and all of the covenants and
agreements between the parties with respect to such employment.
7.03 Governing Law. This Agreement shall be governed by the laws of
the State of Texas and deemed performable in Bexar County, Texas.
7.04 Binding Agreement. This Agreement shall be binding upon all
parties hereto and their respective heirs, legal representatives and
successors.
EXECUTED effective the 11th day of May, 1998.
LIFEQUEST MEDICAL, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-8-
9
SCHEDULE 6.02
-------------
PROPRIETARY PROPERTY CLAIMED BY EMPLOYEE
----------------------------------------
Proprietary Property Claimed:*
--------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
---------------------------------------
* None, if left blank
-9-