Exhibit 10.1

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT, dated as of February 21, 2013 (this “Agreement”) is
made by and between SANUWAVE HEALTH, INC., (the “Company”) a Nevada corporation
with a principal place of business at 11475 Great Oaks Way, Suite 150,
Alpharetta, Georgia 30022, and JOSEPH CHIARELLI, an individual resident of the
State of New Jersey residing at ____________________(the “Employee”).

 

INTRODUCTION

 

The Employee and the Company desire to set forth in this Agreement the terms
upon which the Employee will be employed by the Company.

NOW THEREFORE, the parties hereby agree as follows:

1.     Definitions. For the purposes of this Agreement, the following terms
shall have the following definitions:

(a)     “Board” means the board of directors of the Company.

(b)     “Cause” means (i) the conviction of the Employee of a felony or of any
criminal act involving moral turpitude, (ii) the continuous deliberate or
recurrent refusal to perform employment duties reasonably requested by the Board
(other than as a result of a Disability), (iii) intentional fraud or
embezzlement, (iv) material violation of the Federal securities laws, (v)
continuous gross misconduct or gross negligence in connection with the
performance of the Employee’s duties, (vi) a material breach of any term or
condition of this Agreement and the Employee’s failure to cure any such breach
within 15 days after receipt of written notice from the Board of the occurrence
of such breach, describing such breach in reasonable detail and identifying such
occurrence or circumstance as Cause under this Agreement or (vi) failure by the
Company to consummate an equity financing prior to June 30, 2013 resulting in
gross proceeds to the Company of no less than $5.0 million.

(c)     “Commencement Date” means February 25, 2013.

(d)     “Disability” means the inability of the Employee to perform a
substantial portion of his duties pursuant to this Agreement (i) and the Board’s
reasonable determination that such circumstances will continue for at least 90
days following consideration of the Employee’s physical or mental condition or
(ii) because of illness, incapacity or physical or mental disability continuing
for a period of 90 consecutive days during any 12-month period during the term
of this Agreement.

(e)     “Good Reason” means the termination of this Agreement by the Employee
following (i) any involuntary reduction in the Salary or Annual Bonus
opportunity; (ii) any involuntary material diminution in the responsibilities,
authority or duties of the Employee except in the event of a termination for
Cause or due to death, Disability or resignation without Good Reason; (iii) any
non-consensual required relocation of Employee’s principal place of employment
beyond a fifteen (15) mile radius of Employee’s then principal place of
employment (which, for purposes of clarification, is a material change in the
geographic location of which the Employee must provide services); or (iv) a
Substantial Breach if such Substantial Breach shall not have been cured by the
Company within 15 days of receipt by the Board of written notice from the
Employee of the occurrence of such Substantial Breach, describing such
Substantial Breach in reasonable detail and identifying such occurrence or
circumstance as a Substantial Breach under this Agreement.

 

 
 

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(f)     “Holder” means any holder or owner (legal or beneficial) of any
membership interests, including, without limitation, the Employee, his legal
representatives (including trustees, executors and guardians), and any
transferees thereof, regardless of whether the Interests are transferred by
agreement or by operation of law.

(g)     “Stock” and/or “Shares” refer to those securities registered within the
Corporate Registration.

(h)     “Substantial Breach” means any material breach by the Company of its
obligations to compensate the Employee pursuant to the terms and conditions of
this Agreement; provided, however, that Substantial Breach shall not include a
termination of the Employee’s employment for Cause or due to death or
Disability; and provided, further, that no Substantial Breach shall be deemed to
exist at any time that a basis for termination for Cause exists.

(i)     “Term” means the period commencing on the Commencement Date and
terminating on the second anniversary of the Commencement Date or such later
date determined in accordance herewith, unless earlier terminated pursuant to
Section 6 hereof.

2.             Working Relationship.

2.1.     Employment. Commencing on the Commencement Date and terminating at the
conclusion of the Term, the Company shall employ the Employee, and the Employee
shall serve the Company, as Chief Executive Officer. In his capacity as Chief
Executive Officer, (a) the Employee shall report to, and follow the directions
of the Board, and (b) perform and discharge the duties and responsibilities as
may be determined from time to time by the Board consistent with such position,
provided that such duties shall not be inconsistent with the title, tenure, and
seniority of the Employee within the Company.

2.2.     Full Time. Commencing on the Commencement Date, the Employee shall
devote his full and exclusive business time and energies to the performance of
his duties to the Company pursuant to this Agreement, which duties shall be
performed diligently and in a professional manner. Nothing in this Agreement
shall prevent the Employee from (i) devoting reasonable time and attention to
personal, public and charitable affairs, or (ii) serving on other boards of
directors, as long as such activities do not interfere with the effective
performance of his duties hereunder.

2.3.     Assignment Location; Working Period. It is currently expected that the
Employee will fulfill his assignment in the New York, New York metropolitan area
from Monday morning through the close of business on Friday. It is contemplated
that, should such relocation be required by the Company, Employee shall be
entitled to recover all documented fair and reasonable costs and expenses
relative to such relocation, including, without limitation, relocation of all
household goods, transportation of family, costs associated with the sale of
Employee’s current residence, and any and all costs associated with the purchase
of a new residence within one year following such relocation. The additional
terms and conditions relating to such relocation shall be set forth in a written
agreement supplemental hereto.

 

 
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2.4.     Extended Term. Unless the Company or Employee shall give notice to the
other within sixty (60) days prior to the final day of the Term, this Agreement
shall be deemed extended by an additional one year period. The extended term
compensation and conditions mutually agreeable to the Company and Employee must
be evidenced in an addendum hereto, provided, however, that such compensation
terms shall not be less favorable to Employee than those set forth herein.

3.             Salary and Bonus.

3.1.     Salary. The Company shall pay a salary to the Employee at a rate of US
$200,000 per year (pro-rated for periods of less than a full calendar year) for
the period ending one year from the date hereof, and $225,000 thereafter,
payable to the Employee in equal installments in accordance with the Company’s
standard salary payment policies. The Employee also agrees to serve as a member
of the Board without additional consideration.

3.2.     Annual Bonus.

(a)      In the event of the satisfaction of the milestones set forth in
Schedule 3.2(a) attached hereto, the Company shall award and pay to the Employee
the cash bonus set forth opposite such milestone in such schedule within thirty
(30) days following the satisfaction of such milestone.

(b)     Following each anniversary of the Commencement Date during the Term,
wholly subject to the discretion of the Board based upon the Employee’s and the
Company’s performance during such year, the Board may award the Employee a cash
bonus. Notwithstanding anything to the contrary in this Section 3.2 or Section
6.4, no annual discretionary bonus shall be deemed to have accrued or otherwise
to have become payable for the purposes of this Agreement unless this Agreement
shall not have been terminated prior to the end of the year in respect of which
such bonus was awarded.

3.3.     Stock Options. Upon the execution and delivery hereof, the Company
shall grant to Employee incentive stock options (the “Options”) under the
Company’s Amended and Restated 2006 Stock Incentive Plan (The “Stock Option
Plan”) to acquire an aggregate of 2,250,000 shares of common stock of the
Company (the “Common Stock”), exercisable, subject to vesting, for five years
from the Commencement Date at an exercise price of the greater of (i) $0.35 per
share or (ii) the closing price of the Common stock on the date of grant,
subject to adjustment for stock splits, stock dividends, reverse stock splits,
and recapitalizations, which Options shall vest in accordance with Schedule 3.3
hereto. Additional stock options or shares of common stock of the Company may be
awarded to the Employee during the Term at the discretion of the Board or the
relevant committee thereof. The Employee shall be entitled to participate in all
stock option, restricted share, and incentive compensation plans and programs
adopted or maintained by the Company, subject to the terms of such plans and
programs and, in the case of incentive plans pursuant to which the grant or
award of any benefit is at the discretion of the Board or other person, to the
discretion of the Board or such other person.

 

 
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4.             Expenses; Benefits.

4.1.     Expenses. The Employee shall be entitled to reimbursement by the
Company for all reasonable communications, travel, lodging and other expenses
actually incurred by the Employee in connection with the performance of his
duties, against receipts or other appropriate written evidence of such
expenditures as required by the appropriate Internal Revenue Service regulations
or by the Company, or by the relevant taxing authorities in any country, state,
or other jurisdiction in which Employee shall be performing his duties at the
request of the Company’s Board.

4.2.     Benefits.

(a)     The Employee shall be entitled to participate in all health insurance
and other benefit plans maintained by the Company for its employees, subject to
applicable eligibility requirements and, in the case of benefit or incentive
plans pursuant to which the grant or award of any benefit is at the discretion
of the Board or other person, to the discretion of the Board or such other
person. Nothing in the foregoing shall limit or restrict the Company’s
discretion to amend, revise or terminate any benefit or plan without notice to
or consent of the Employee. In the event that Employee shall determine not to
participate in the health plan offered by the Company, the Company shall
reimburse Employee in the amount of $200 per month therefor.

(b)     The Employee shall be entitled to participate in the Company 401k plan
(if available), social security, and comparable benefits. The Company will
provide the Employee not less than $500,000 of term life insurance during the
term of this Agreement.

(c)     During the term of this Agreement, the Board shall consist of five (5)
members, and the Employee shall be entitled to nominate one (1) member of the
Board. The Employee may nominate one (1) member of the board. The Company and
the Board agree to take all steps necessary to cause the nomination and election
to the Board of Employee or the Employee’s nominee, as applicable.

5.             Vacation. The Employee shall, upon reasonable notice to the
Company, be entitled to up to three (3) weeks of paid vacation time during each
year under this Agreement, pro rated for periods of less than a full year
hereunder; provided, that the timing and duration of any particular vacation
shall not unduly interfere with the business of the Company or the effective
performance of the Employee’s duties hereunder, as reasonably determined in good
faith by the Board. Vacation is provided on a use-it-or-lose-it basis for each
Company fiscal year.

 

 
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6.             Termination.

6.1.     Termination for Death. This Agreement shall terminate automatically,
without requirement of further action by the Company or the Employee, upon the
death of the Employee.

6.2.     Termination by the Company. The Company may terminate this Agreement at
any time with Cause after delivering written notice of such termination to the
Employee.

6.3.     Termination by Employee.

(a)     The Employee may terminate this Agreement without Good Reason thirty
(30) days after delivering written notice of such termination to the Company.

(b)     The Employee may terminate this Agreement for Good Reason five (5)
business days after delivering written notice of such termination to the
Company.

6.4.     Termination of Compensation. Except as otherwise required by
non-waivable provisions of applicable law, in the event that either Employee’s
employment is terminated by the Board without Cause or by Employee with Good
Reason (in each case excluding such Employee’s death or Disability), the Company
shall upon such termination be required to continue to pay to Employee his
salary, bonus pursuant to Section 3.2(a) hereof and all other benefits and
perquisites hereunder and to accelerate all unvested Options to vest. In the
event the Employee’s Employment is terminated by the Board with Cause or by
Employee without Good Reason, the Company shall not be required to continue to
pay Employee Employee’s Salary, any bonus not theretofore awarded shall be
deemed forfeited by Employee, and all unvested Options shall immediately
terminate, be deemed forfeited by Employee and be of no further force or effect.
In the event that the Term shall conclude but either party shall elect not to
extend the Term as provided herein, the Options shall continue to vest for the
following eighteen (18) months as provided in, and subject to Schedule 3.3

6.5.     Termination of Employment. The Employee’s employment by the Company
shall terminate simultaneously with the termination of this Agreement for any
reason. Except as otherwise provided herein, as required by applicable law, or
pursuant to any Company employee benefit plans, the Employee shall only be
entitled to receive and the Company shall only be obligated to pay any amounts
to the Employee earned and payable prior to the date of such termination

6.6.     Return of Property. Promptly following the termination of this
Agreement by any party for any reason, the Employee and his legal or personal
representatives shall promptly return to the Company at its principal offices
any and all information, documents and other materials relating to or containing
confidential information which are, and any and all other property of the
Company which is, in the Employee’s possession, care or control, regardless of
whether such materials were created or prepared by the Employee and regardless
of the form of, or medium containing, such property, information, documents or
other materials.

 

 
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7.             Non-Competition.

(a)        Employee acknowledges and recognizes the highly competitive nature of
the businesses of the Company and its affiliates and accordingly agrees as
follows:

 

(i)

During the Term and, for a period of two years following the date Employee
ceases to be employed by the Company (the “Restricted Period”), Employee will
not, whether on Employee’s own behalf or on behalf of or in conjunction with any
person, firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise whatsoever (“Person”), directly or
indirectly solicit or assist in soliciting in competition with the Company the
business of any client or prospective client for the purpose of selling or
providing a Competitive Product or Service.

 

(ii)

During the Restricted Period, Employee will not directly or indirectly:

 

(A)

engage in any business that competes with the business of the Company or its
affiliates in selling or providing a Competitive Product or Service (including,
without limitation, businesses which the Company or its affiliates have specific
plans to conduct in the future and as to which Employee is aware of such
planning) in any geographical area that is within 100 miles of any geographical
area where the Company or its affiliates manufactures, produces, sells, leases,
rents, licenses or otherwise provides its products or services (a “Competitive
Business”);

 

(B)

enter the employ of, or render any services to, any Person who or which (or any
division or controlled or controlling affiliate of such Person) engages in a
Competitive Business; provided, however, that Employee shall be permitted to
become an employee of, or render services to, a Person that engages in a
Competitive Business (or that is a controlled or controlling affiliate of any
Person that engages in a Competitive Business) if Employee’s employment or
provision of services is limited to a line of business of such Person that does
not constitute a Competitive Business, Employee does not sell or provide a
Competitive Product or Service, and Employee does not otherwise indirectly
violate the restrictive covenants set forth herein;

 

(C)

acquire a financial interest in, or otherwise become actively involved with, any
Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant; or

 

(D)

interfere with, or attempt to interfere with, business relationships (whether
formed before, on or after the date of this Agreement) between the Company or
any of its affiliates and customers, clients, suppliers partners, members or
investors of the Company or its affiliates with respect to a Competitive Product
or Service.

 

 
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(iii)

Notwithstanding anything to the contrary in this Agreement, Employee may,
directly or indirectly own, solely as an investment, securities of any Person
engaged in the business of the Company or its affiliates which are publicly
traded on a national or regional stock exchange or on the over-the-counter
market if Employee (A) is not a controlling person of, or a member of a group
which controls, such person and (B) does not, directly or indirectly, own 5% or
more of any class of securities of such Person.

 

(iv)

During the Restricted Period, Employee will not, whether on Employee’s own
behalf or on behalf of or in conjunction with any Person, directly or
indirectly:

 

(A)

solicit or encourage any employee of the Company or its affiliates to leave the
employment of the Company or its affiliates; or

 

(B)

hire any such employee who is at the time employed by the Company or its
affiliates; provided, however, that nothing herein shall prevent Employee,
whether on Employee’s own behalf or on behalf of or in conjunction with any
Person, from hiring any such employee if such employee initially contacted
Employee and initially solicited an offer of employment from Employee.

 

(v)

During the Restricted Period, Employee will not, directly or indirectly, solicit
or encourage to cease to work with the Company or its affiliates any consultant
then under contract with the Company or its affiliates.

 

(vi)

For purposes of this Agreement, the term “Competitive Product or Service” means
the products that use or incorporate Extracorporeal Shock Wave Technology, and
any services related to such products.

(b)     It is expressly understood and agreed that although Employee and the
Company consider the restrictions contained in this Section 7 to be reasonable,
if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction against Employee, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

 
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8.             Confidentiality; Intellectual Property.

(a)     Confidentiality.

 

(i)

Employee will not at any time (whether during or after Employee’s employment
with the Company) (A) retain or use for the benefit, purposes or account of
Employee or any other Person; or (B) disclose, divulge, reveal, communicate,
share, transfer or provide access to any Person outside the Company (other than
its professional advisers who are bound by confidentiality obligations), any
non-public, proprietary or confidential information -- including without
limitation trade secrets, know-how, research and development, software,
databases, inventions, processes, formulae, technology, designs and other
intellectual property, information concerning finances, investments, profits,
pricing, costs, products, services, vendors, customers, clients, partners,
investors, personnel, compensation, recruiting, training, advertising, sales,
marketing, promotions, government and regulatory activities and approvals --
concerning the past, current or future business, activities and operations of
the Company, its subsidiaries or affiliates and/or any third party that has
disclosed or provided any of same to the Company on a confidential basis
(“Confidential Information”) without the prior written authorization of the
Board.

(ii)     “Confidential Information” shall not include any information that is
(A) generally known to the industry or the public other than as a result of
Employee’s breach of this covenant; (B) made legitimately available to Employee
by a third party without breach of any confidentiality obligation; (C) required
by law to be disclosed; or (D) relates to a Competitive Product or Service;
provided that Employee shall give prompt written notice to the Company of such
requirement, disclose no more information than is so required, and cooperate
with any attempts by the Company to obtain a protective order or similar
treatment.

(iii)     Upon termination of Employee’s employment with the Company for any
reason, Employee shall (A) cease and not thereafter commence use of any
Confidential Information or intellectual property (including without limitation,
any patent, invention, copyright, trade secret, trademark, trade name, logo,
domain name or other source indicator) owned or used by the Company, its
subsidiaries or affiliates; (B) immediately destroy, delete, or return to the
Company, at the Company’s option, all originals and copies in any form or medium
(including memoranda, books, papers, plans, computer files, letters and other
data) in Employee’s possession or control (including any of the foregoing stored
or located in Employee’s office, home, laptop or other computer, whether or not
Company property) that contain Confidential Information or otherwise relate to
the business of the Company, its affiliates and subsidiaries, except that
Employee may retain only those portions of any personal notes, notebooks and
diaries that do not contain any Confidential Information and copies of any
agreements to which Employee is a party; and (C) notify and fully cooperate with
the Company regarding the delivery or destruction of any other Confidential
Information of which Employee is or becomes aware.

 

 
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(b)     Intellectual Property.

(i)      If Employee creates, invents, designs, develops, contributes to or
improves any Company products, either alone or with third parties, during
Employee’s employment by the Company and within the scope of such employment
and/or with the use of any the Company resources , Employee shall irrevocably
assign, transfer and convey all rights and intellectual property rights therein
(including rights under patent, industrial property, copyright, trademark, trade
secret, unfair competition and related laws) to the Company to the extent
ownership of any such rights does not vest originally in the Company.

 

(ii)     Employee shall take all requested actions and execute all requested
documents (including any licenses or assignments required by a government
contract) at the Company’s expense (but without further remuneration) to assist
the Company in validating, maintaining, protecting, enforcing, perfecting,
recording, patenting or registering any of the Company’s rights in the Company
products. If the Company makes a reasonable effort to contact the Employee but
is unable to do so with thirty (30) days notice to the Employee in order to
secure Employee’s signature on any document for this purpose, then Employee
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as Employee’s agent and attorney in fact, to act for and in
Employee’s behalf and stead to execute any required documents.

9.             Miscellaneous.

9.1.     Entire Agreement. This Agreement contains the entire agreement among
the parties with respect to the matters set forth herein, and supersedes all
prior agreements or understandings among the parties with respect to such
matters.

9.2.     Descriptive Headings. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.

9.3.     Notices. All notices, requests and other communications to any party
hereunder shall be in writing, and shall be sufficient if delivered personally
or sent by telecopy (with confirmation of receipt) or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:

 

 
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If to the Employee: 

Joseph Chiarelli

______________

______________

Facsimile:

Email:_________

 

 

 

 

If to the Company:

SANUWAVE Health, Inc.

11475 Great Oaks Way, Suite 150

Alpharetta, Georgia 30022

Attention:   _________    

Facsimile: _________

Email: ____________

 

or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Each such notice, request or communication shall be effective when received or,
if given by mail, when delivered at the address specified in this Section 7.3 or
on the fifth business day following the date on which such communication is
posted, whichever occurs first.

9.4.     Counterparts. This Agreement may be executed in one or more
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

9.5.     Benefits of Agreement. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. This Agreement is for the
sole benefit of the parties hereto and not for the benefit of any third party.

9.6.     Amendments and Waivers. No modification, amendment or waiver of any
provision of, or consent required by, this Agreement, nor any consent to any
departure herefrom, shall be effective unless it is in writing and signed by the
parties hereto. Such modification, amendment, waiver or consent shall be
effective only in the specific instance and for the purpose for which given.

9.7.     Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable without the prior written consent of the
Company. Any instrument purporting to make an assignment in violation of this
Section 9.7 shall be void and of no effect.

9.8.     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAWS PROVISIONS).

9.9.     CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL COURT OR STATE
COURT OF NEW YORK, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL BE LITIGATED EXCLUSIVELY IN SUCH COURTS. EACH OF THE PARTIES HERETO
AGREES NOT TO COMMENCE ANY LEGAL PROCEEDING RELATED HERETO EXCEPT IN SUCH COURT.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING IN ANY SUCH
COURT AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

 
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9.10.     Withholding. The payment of any amount pursuant to this Agreement,
including, without limitation, pursuant to Sections 3, 4 and 6, shall be subject
to any applicable withholding and payroll taxes in effect in any applicable
jurisdiction, which may be deducted by the Company in its sole discretion.

9.11.     Advice of Counsel. The Employee represents and warrants that he has
had full opportunity to seek advice and representation by independent counsel of
his or her own choosing in connection with the interpretation, negotiation and
execution of this Agreement.

9.12.     Enforceability.   It is the desire and intent of the parties hereto
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated to be invalid or unenforceable, then such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.

9.13.     Employment Representations and Warranties. The Employee hereby
represents, warrants and acknowledges to, and agrees with, the Company as
follows: (a) at the Commencement Date, the execution and delivery by the
Employee of, and the Employee’s performance of his obligations under this
Agreement, shall not breach the terms of, or require the giving of notice under,
any other agreement to which the Employee is a party or is bound; (b) Employee
will not violate any non-solicitation or non-disclosure covenant by which the
Employee is bound, or use or disclose any confidential or proprietary
information obtained in connection with the Employee’s employment by any
previous Employer, in connection with his or her employment by the Company, and
(c) Employee has disclosed to the Company in full detail all non-competition,
non-solicitation and non-disclosure covenants by which the Employee is bound as
of the commencement of employment with the Company.

9.14.     Survival of Provisions. Notwithstanding anything to the contrary in
this Agreement, the provisions of Sections 6.4, 6.6,7, 8, 9.6, 9.7, 9.8, 9.9,
9.10, 9.12, 9.13, 9.15 and this Section 9.14 shall survive the termination of
this Agreement (regardless of the manner or basis of termination) in accordance
with their terms.

 

 
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9.15.     Section 409A.

 

(a)     It is intended that this Agreement will either be exempt from or comply
with Section 409A of the Internal Revenue Code of 1986, as amended (and any
regulations and guidelines issued thereunder) (“Section 409A”) to the extent
this Agreement is subject thereto, in both form and operation, and this
Agreement shall be interpreted on a basis consistent with such intent. Any
provision that would cause this Agreement to fail to satisfy Section 409A (if
applicable) or an exemption therefrom shall have no force or effect until
amended to comply with or remain exempt from Section 409A, which amendment may
be retroactive to the extent permitted by Section 409A.

 

(b)     For purposes of this Agreement, a termination of Employee’s employment
shall refer to a “separation from service,” and a termination of Employee’s
employment shall not be considered to have occurred unless such termination
constitutes a “separation from service” (within the meaning of Treas. Reg. §
1.409A-1(h)).

 

(c)     Wherever payments under this Agreement are to be made in installments,
each such installment shall be deemed to be a separate payment for purposes of
Section 409A. For purposes of this Agreement, each payment is intended to be
excepted from Section 409A to the maximum extent provided under Section 409A.

 

(d)     All reimbursements and in kind benefits provided under this Agreement
shall be made or provided in accordance with the requirements of Section 409A,
including, where applicable, the requirements that (i) any reimbursement is for
expenses incurred during the Employee’s lifetime (or during a shorter period of
time specified in this Agreement); (ii) the amount of expenses eligible for
reimbursement, or in kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in kind benefits to be
provided, in any other calendar year; (iii) the reimbursement of an eligible
expense will be made no later than 2 ½ months after the end of the calendar year
in which the expense is incurred; and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit.

 

(e)     Notwithstanding any other provision of this Agreement, if the Employee
is a "specified employee" as defined in Section 409A(a)(2)(B)(i) of the Internal
Revenue Code at the time of the Employee’s termination of employment, then the
payment of any amount under or pursuant to this Agreement in connection with the
Employee’s termination of employment that is considered deferred compensation
subject to Code Section 409A shall be deferred until six (6) months after the
Employee’s termination of employment or, if earlier, the Employee’s death, (the
“409A Deferral Period”). In the event payments are otherwise due to be made in
installments or periodically during the 409A Deferral Period, the payments that
would otherwise have been made in the 409A Deferral Period shall be accumulated
and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance
of the payments shall be made as otherwise scheduled.

 

 
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[REMAINDER OF THIS PAGE INTENTIONALLY BLANK;

SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 
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IN WITNESS WHEREOF, the parties hereto have executed, or have caused their duly
authorized representative to execute, this Employment Agreement as of the date
first above written.

 

 

SANUWAVE HEALTH, INC.

          By: /s/ Kevin A. Richardson, II       Name: Kevin A. Richardson, II  
    Title: Chairman of the Board of Directors          

EMPLOYEE:

By: /s/ Joseph Chiarelli Name: Joseph Chiarelli

 

 

 
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Schedule 3.2(a)

 

BONUS MILESTONES REFERENCED IN SECTION 3.2(a)

 

Milestone to be Achieved

Cash Bonus

Consummation on or after the Commencement Date of a financing resulting in gross
proceeds to the Company of no less than $5.0 million at a price per share of not
less than $0.35 (subject to adjustment for stock splits, stock dividends,
reverse stock splits and recapitalizations)

$35,000

When the final patient is enrolled in the dermaPACE Phase III clinical trial

$25,000

Upon receipt by the Company of FDA approval for the use of dermaPACE

$25,000

Execution and delivery by the Company on or after the Commencement Date of a
license or distribution agreement from which the Company is entitled to receive
gross proceeds of no less than $1.0 million and the Company has received
payments of at least $250,000.

$25,000

 

 
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Schedule 3.3

 

VESTING OF SHARES REFERENCED IN SECTION 3.3

 

The Options shall vest as follows:

 

 

Milestone to be Achieved

Options

Vested

Execution and delivery by Employee of this Agreement

375,000

Consummation on or after the Commencement Date of a financing resulting in gross
proceeds to the Company of no less than $5.0 million at a price per share of not
less than $0.35 (subject to adjustment for stock splits, stock dividends,
reverse stock splits and recapitalizations)

375,000

Execution and delivery by the Company on or after the Commencement Date of a
license or distribution agreement from which the Company is entitled to receive
gross proceeds of no less than $1.0 million and the Company has received
payments of at least $250,000.

375,000

Approval by the United States Food and Drug Administration for the use of
dermaPACE

375,000

 

In the event the Company achieves the four milestones above during the period
commencing on the Commencement Date through the second anniversary of the
Commencement Date, and the Term is not extended by the Company, the final
tranche of 750,000 0ptions shall vest at the end of the Term and be exercisable
for eighteen (18) months.

Notwithstanding the foregoing, in the event that the United States Food and Drug
Administration shall affirmatively reject results of the Phase III clinical
trial of dermaPACE, all unvested Options shall immediately terminate, be deemed
forfeited by Employee and be of no further force or effect.

In the event of a Change in Control (as defined below), all Options then granted
to Employee which are unvested at the date of the Change in Control will be
immediately vested.

 

As used herein, a “Change of Control” of the Company shall be deemed to have
occurred:

 

(a)     Upon the consummation, in one transaction or a series of related
transactions, of the sale or other transfer of voting power (including voting
power exercisable on a contingent or deferred basis as immediately exercisable
voting power) representing more than 75% of the voting power of the stock of the
Company to a person or group of related persons who, on the date of this
Agreement, is not affiliated (within the meaning of the Securities Act of 1933,
as amended) with the Company, whether such sale or transfer results from a
tender offer or otherwise; or

 

 
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(b)     Upon the consummation of a merger or consolidation in which the Company
is a constituent corporation and in which the Company’s stockholders immediately
prior thereto will beneficially own, immediately thereafter, securities of the
Company or any surviving or new corporation resulting therefrom having less than
a majority of the voting power of the Company or any such surviving or new
corporation; or

 

(c)     Upon the consummation of a sale, lease, exchange, or other transfer or
disposition by the Company of all or substantially all its assets to any person
or group of related persons.

 

 

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