Document:

Exhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

 

This
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of October 1,
2003, by and between Medicor Ltd., a Delaware corporation (the “Company”), and
Jim J. McGhan (“Executive”).

 

A.                                   The
Company is engaged in the business of creation, production and distribution of
medical devices and desires to retain an individual for the position of Chief
Operating Officer.

 

B.                                     Executive
represents that he is well qualified to perform the duties of Chief Operating
Officer, and will devote the necessary time, effort and energy to perform those
duties.

 

C.                                     Based
on these representations, the Company desires to hire Executive as its Chief
Operating Officer.

 

NOW,
THEREFORE, in consideration of the above recitals and the respective agreements
of Company and Executive set forth below, the Company and Executive, intending
to be legally bound, agree as follows:

 

1.                                      Employment.  The Company shall employ Executive as its
Chief Operating Officer, and Executive shall accept such employment and perform
the services herein described for Company, upon the terms and conditions set
forth in this Agreement.  The Executive
shall continue as a Member of the Board of Directors of the Company, a position
he was appointed to on February 12, 2003 for an initial term of two (2) years.

 

2.                                      Term
of Employment.  Unless
terminated at an earlier date in accordance with Section 5 below, the term
of Executive’s employment with Company (“Term of Employment”) shall commence on
the date first set forth above and shall continue for a period initially ending
on October 31, 2005 (“Initial Term”). 
The Term of Employment shall automatically be renewed at the end of the
12th month prior to the end of the Initial Term for an additional
12-month period and shall be extended at the end of each succeeding month by an
additional month such that the Term of Employment shall extend each month until
the end of succeeding 12th month (each such rolling 12-month period,
a “Subsequent Term”) unless either party provides written notice of their
intention not to renew this Agreement to the other in advance of then
applicable termination date of the Term of Employment.

 

3.                                      Positions
and Duties.

 

a.                                       Employment
with Company.  Executive shall
perform for the Company the duties and responsibilities of a chief operating
officer of a corporation and such other duties and responsibilities as the
Company shall reasonably assign to Executive from time to time generally
consistent with Executive’s position as Chief Operating Officer, as determined
in the sole discretion of the Company. 
Executive shall report to the Chairman. 
In addition, Executive shall be appointed and serve as a member of the
Company’s Executive Committee which shall contain four or fewer members of
senior management.

 

 

b.                                      Place
of Employment.  Executive’s
principal place of employment shall be at the Company’s Principal Executive
Offices; provided however, that (i) for an initial period, not to exceed 12
months (the “Transition Period”), the Company will establish an office on a
month-to-month basis in or reasonably near Santa Barbara, CA from which
Executive may work a material portion of time, it being understood that
Executive will be required to be present at all necessary and appropriate times
at the Company’s Principal Executive Offices and (ii) Executive will be
expected to engage in travel within and outside the State of Nevada as Company
may reasonably request of Executive.

 

4.                                      Compensation.

 

a.                                       Salary.  The Company shall pay Executive as
compensation for his services a base salary at the annualized rate of
$360,000.  Such salary shall be subject
to applicable tax withholding and shall be paid periodically in accordance with
the Company’s normal payroll practices. 
Such annual compensation shall be reviewed annually for increase (but
not decrease) in the discretion of the Board. 
In conducting any such annual review, the Board shall take into account
any increase in Executive’s responsibilities, increases in the compensation of
other executives of the Company or any Affiliate (or any competitor(s) of
either or both), the performance of Executive and/or other pertinent
factors.  The annual compensation
specified in this Section 4.a, together with any increases in such annual compensation
that the Company may grant from time to time, is referred to in this Agreement
as “Base Compensation.”

 

b.                                      Bonuses.  The Company may pay to Executive periodic or
annual discretionary bonuses for any period ending prior to the end of the Term
of Employment in an amount that will be determined by the Compensation
Committee based on such factors as Executive’s performance and the performance
of the Company.

 

c.                                       Executive
Benefits.  While Executive is
employed by the Company hereunder, Executive shall be entitled to participate
in all employee benefit, pension and welfare plans and programs of Company for
executive employees, including any group medical, dental, life insurance and
disability insurance plans, or similar benefit plans of the Company, to the
extent that Executive meets the eligibility requirements for each individual
plan or program.  Participation in any
such benefits and plans shall be consistent with Executive’s rate of
compensation to the extent that compensation is a determinative factor with
respect to participation and/or coverage under any such benefit or plan.  The Company provides no assurance as to the
adoption or continuance of any particular employee benefit plan or program, and
Executive’s participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.

 

d.                                      Stock Options.  The Company will, within thirty (30) days of
Executive’s signature on this Agreement, grant to Executive an option to
purchase 120,000 shares of the Company’s common stock (the “Option”) at the exercise
price equal to the fair market value of the Company’s common stock on the date
of grant, in accordance with and subject to the Company’s 2003 Amended and
Restated Stock Compensation Program. 
Subject to the terms of the Option (including partial acceleration in
the event of a termination of this Agreement by the Company without Cause or by
the Executive for Good Reason), the Option granted pursuant to this Agreement
will vest with respect to 25% of the shares of common stock purchasable

 

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thereunder on
each of the first through fourth anniversaries of the date of grant, provided
Executive remains employed by the Company on each such date.  Unless specifically provided in this
Agreement, vesting and exercise provisions and all other terms and conditions
governing the Options shall be as set forth in the plan documents and such
option agreements as may be entered into with Executive.

 

e.                                       Salary
Continuation.  Executive shall be
entitled to receive his Base Compensation for all periods during which he is
unable to perform his duties hereunder by reason of a mental or physical
incapacity, whether resulting from illness, accident or otherwise, prior to
being determined to be suffering from a Disability.

 

f.                                         Expenses.  While Executive is employed by the Company
hereunder, Company shall reimburse Executive for all reasonable out-of-pocket
business, travel and entertainment expenses incurred by Executive in the
performance of Executive’s duties and responsibilities hereunder, subject to
the Company’s normal policies and procedures for expense verification and
documentation as in effect from time to time. 
The Company shall pay the actual and reasonable moving expenses of
Executive’s move to the location of the principal executive offices of the
Company.

 

g.                                      Paid
Leave.  Executive shall be entitled
to paid leave in accordance with Company’s practices and policies for executive
employees.

 

h.                                      Transition
Housing Assistance.  During the
Transition Period, the Company shall provide Executive reasonable housing
accommodation in Las Vegas, Nevada for use during Executive’s performance of
his Company duties in Las Vegas.

 

5.                                      Termination
of Employment.

 

a.                                       Voluntary
Termination; Termination for Cause. 
The Company may terminate Executive’s employment at any time for Cause
and Executive may terminate his employment for any reason.  If Executive’s employment terminates by
reason of Executive’s voluntary resignation without Good Reason, or if
Executive is terminated for Cause (each as defined herein), Executive shall be
entitled to:

 

(1)                                  Base
Compensation at the rate in effect at the time of his termination through the
effective date of termination of employment;

 

(2)                                  any
bonus awarded but not yet paid;

 

(3)                                  any
deferred bonus, including interest or other credits on the deferred amounts;

 

(4)                                  reimbursement
for expenses incurred, but not paid prior to such termination of employment;

 

(5)                                  such
rights to other compensation and benefits as may be provided in applicable
plans and programs of the Company, including, without limitation, applicable

 

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employee benefit plans and
programs, according to the terms and conditions of such plans and programs; and

 

(6)                                  any
equity compensation that is vested as of the effective date of termination of
employment.

 

No termination
for Cause shall be effective unless Executive is given at least thirty (30)
days prior written notice authorized by a vote of at least a majority of the
members of the Executive Committee of the Board that the Company intends to
terminate his employment for Cause except under the provisions of Section
11(c)(i) or (iv).  Such written notice
shall specify the particular act or acts, or failure to act, which is or are
the basis for the decision to so terminate Executive’s employment for
Cause.  Executive shall be given the
opportunity within fifteen (15) days of the receipt of such notice to meet with
the Board to defend such act or acts, or failure to act, and if, thereafter,
the Board, by majority vote, continues to maintain that Cause for termination
exists, Executive shall be given fifteen (15) days after such determination to
correct such act or failure to act (if such act or failure to act is reasonably
susceptible of correction or cure within such time).  Upon failure of Executive, within fifteen (15) days, to correct
such act or failure to act, Executive’s employment by the Company shall be
terminated under this subsection for Cause.

 

Anything
herein to the contrary notwithstanding, if, following a termination of
Executive’s employment for Cause due to any conviction of Executive for any
crime, such conviction is overturned on appeal, Executive shall be entitled to
the payments and the economic equivalent of the benefits he would have received
if his employment had been terminated without Cause.

 

b.                                      Termination
Without Cause or for Good Reason. 
The Company may terminate Executive’s employment at any time without
Cause upon sixty (60) days advance written notice to Executive, and Executive
may terminate his employment for Good Reason. 
If the Company terminates Executive’s employment without Cause, other
than due to Disability, or Executive terminates his employment for Good Reason,
then, subject to Executive’s continuing obligations under Section 7, Executive
shall thereupon be entitled to:

 

(1)                                  a
lump sum payment equal to the Base Compensation for the remainder of the Term
of Employment (subject to applicable tax withholdings), unless such termination
is within 24 months of a Change in Control, in which event such lump sum shall
be equal to Base Compensation for 24 months;

 

(2)                                  any
bonus awarded but not yet paid;

 

(3)                                  any
deferred bonus, including interest or other credits on the deferred amounts;

 

(4)                                  a
Pro Rata Bonus for the fiscal year in which termination of employment occurs;

 

(5)                                  reimbursement
for expenses incurred, but not paid prior to such termination of employment;

 

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(6)                                  continuation
of the health and welfare benefits of Executive, including, without limitation,
any group health insurance and long-term disability insurance generally
provided to senior executives of the Company other than life insurance or
accidental death and dismemberment insurance, at the level in effect at the
time of his termination of employment through the end of the twelfth (12th)
month following such termination of employment or the economic equivalent
thereof; and

 

(7)                                  any
equity compensation that is vested as of the effective date of termination of
employment or would otherwise vest within 24 months of the effective date of
termination of employment, which shall be deemed to have vested immediately
prior to the effective date of termination of employment.

 

Any payments
to which Executive shall be entitled under this Subsection 5.b, including any
economic equivalent of any benefit, shall be made as promptly as possible
following the termination of Executive’s employment hereunder and in no event
later than thirty (30) days following such termination of employment.

 

c.                                       Death
or Disability.  In the event of
Executive’s death or a termination of Executive’s employment due to Executive’s
Disability, Executive or his legal representative, as the case may be, shall be
entitled to:

 

(1)                                  Base
Compensation at the rate in effect at the time of his termination, through (x)
in the case of death, for a period of three (3) months following termination,
and (y) in the case of Disability, for the period, if any, between the date of
his termination and the date by which the Company’s long-term disability plan
have commenced paying its benefits;

 

(2)                                  any
bonus awarded but not yet paid;

 

(3)                                  a
Pro Rata Bonus for the fiscal year in which death or disability occurs;

 

(4)                                  any
deferred bonuses including interest or other credits on the deferred amounts;

 

(5)                                  reimbursement
for expenses incurred but not paid prior to such termination of employment;

 

(6)                                  in
the case of death, Executive’s rights to other compensation and benefits as may
be provided in applicable plans and programs of the Company shall be determined
according to the terms and provisions of such plans and programs;

 

(7)                                  in
the case of Disability, the Company shall continue Executive’s health and
welfare benefits at the level in effect on the date of termination at least
through the end of the sixth month following the termination of Executive’s
employment or provide the economic equivalent thereof, and Executive’s rights
to other compensation and benefits as may be provided in applicable plans and
programs of the Company shall be determined according to the terms and
provisions of such plans and programs; and

 

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(8)                                  any
equity compensation that is vested as of the effective date of termination of
employment.

 

d.                                      No
Mitigation; No Offset.  In the event
of any termination of employment under this Section 5, Executive shall be under
no obligation to seek other employment and there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that Executive may obtain.  Any amounts due under this Section 5 are in
the nature of severance payments, or liquidated damages, or both, and are not
in the nature of a penalty.

 

6.                                      Duty
of Loyalty. As an employee of Company, Executive will devote his best
efforts to the interests of the Company. 
Executive agrees to devote all of his working time and attention to his
duties hereunder, except for such reasonable amounts of time for personal,
charitable, investment and professional activities that do not interfere with
the service to be rendered by Executive hereunder.  During Executive’s employment with the Company, Executive will
not, except with the written consent of the Board, engage in any activity,
investment, interest or association (1) which is hostile or adverse to or
competitive with the Company, or (2) which so occupies Executive’s attention as
to interfere with the proper and efficient performance of his duties at the
Company, or (3) which interferes with the independent exercise of Executive’s
judgment in the Company’s best interests.

 

7.                                      Confidential
Information.  Executive shall
maintain the confidentiality of all confidential and proprietary information of
the Company, and shall execute and deliver to the Company its standard
Proprietary Information and Invention Agreement in the form attached hereto as
Schedule I (the “Confidentiality Agreement”). 
Such obligations shall survive any termination of Executive’s employment
relationship or of this Agreement.

 

8.                                      Third-Party
Trade Secrets.  Executive will
not, during his employment with Company, improperly use or disclose any
proprietary information or trade secrets of any third party, including the
Company’s customers and suppliers, or of any of Executive’s former or
concurrent employers or companies, if any. 
Executive shall not bring to the premises of the Company any unpublished
documents or any property belonging to such third parties, unless consented to
in writing by such third party.  Executive’s
employment with the Company does not and will not breach any agreement or duty
which Executive has concerning confidential information belonging to
others.  If Executive is asked to work
on any project for the Company which raises a concern regarding third-party
confidential information, Executive will, as soon as this is apparent to
Executive, discuss the situation with the Chief Executive Officer of Company
without disclosing any confidences.

 

9.                                      Return
of Property.  Upon termination
of Executive’s employment with the 
Company, Executive shall deliver promptly to the Company all of the
following things which are in Executive’s custody or control:  (1) all records, files, manuals, books,
forms, documents, letters, memoranda, data, customer lists, tables,
photographs, video tapes, audio tapes, computer disks and other computer
storage media and copies thereof, whether or not containing confidential or
proprietary information, that are the property of the Company or that relate in
any way to the business, products, services, personnel, customers, prospective
customers, suppliers, practices, or techniques of the Company; and (2) all
other property of the Company, including

 

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but not
limited to computers, personal digital assistants, cellular telephones, pagers,
credit cards, and keys.

 

10.                               Prohibited
Post-Termination Activities.

 

a.                                       No
Solicitation.  For a period of one
year following the termination of Executive’s employment, Executive will not
induce any employee of, or consultant to, the Company to engage in any business
in which the Company is engaged or contemplates engaging, or solicit any
employee to leave the employment of the Company.

 

b.                                      Noncompetition.  For a period of one year following the termination
of Executive’s employment with the Company, Executive will not accept
employment with, engage in or render advice or assistance to any business
within any market in which the Company conducts business or effects sales which
competes with or contemplates competition with the Company in any capacity in
which the employment or rendering of advice, assistance or other services to
such business by Executive would be substantially similar to the services
provided by Executive to the Company during the term of Executive’s employment
with Company or would result in a competitive advantage to such subsequent
employer.

 

11.                               Definitions.  As used herein, the following terms shall
have the respective meanings set forth below.

 

a.                                       “Affiliate”
shall mean any person or entity controlling, controlled by or under common
control with the Company.

 

b.                                      “Board”
shall mean the board of directors of the Company.

 

c.                                       “Cause”
shall mean (i) Executive is convicted of a felony involving moral turpitude,
(ii) Executive, in carrying out his duties under this Agreement, is guilty of a
willful act by Executive which constitutes gross misconduct and which is
materially and demonstrably injurious to the Company, (iii) Executive, in
carrying out his duties under this Agreement, is guilty of a willful violation
of a written Company policy generally applicable to all employees, the
violation of which is stated in such policy to be grounds for termination, (iv)
an act of fraud against, or the misappropriation of property belonging to, the
Company or its Affiliates resulting in material economic harm to the Company,
(v) except as otherwise specified in this clause c, the breach in any material
respect of this Agreement or any confidentiality or proprietary information
agreement between Executive and the Company or its Affiliates, or (vi) the
commission of a willful act which induces any customer of the Company to break
a contract with the Company resulting in material economic harm to the Company.

 

d.                                      A
“Change in Control” shall be deemed to have occurred if:

 

(1)  an event occurs of a nature
that would be required to be reported in response to Item 14 of Schedule 14A of
Regulation 14A promulgated under Section 14 of the Securities Exchange Act of
1934 (the “1934 Act”);

 

(2)  any “person,” as such term
is used in Sections 13(d) and 14(d)(2) of the 1934 Act, other than Donald K.
McGhan or entities related to, controlled by,

 

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or owned by
Donald K. McGhan or his immediate family (collectively, the “McGhan Entities”)
(or with respect to Affiliates, the Company), becomes a “beneficial owner,” as
such term is used in Rule 13d-3 promulgated under the 1934 Act, at any time
that the Company or any Affiliate is a Private Company, of more than 51% of the
Voting Stock of the Company or such Affiliate;

 

(3)  any “person,” as such term
is used in Sections 13(d) and 14(d)(2) of the 1934 Act, other than the McGhan
Entities (or with respect to Affiliates, the Company), becomes a “beneficial
owner,” as such term is used in Rule 13d-3 promulgated under the 1934 Act,
while the Company or any Affiliate is a Public Company, of 20% or more of the
Voting Stock of the Company or such Affiliate;

 

(4)  any “person” as such term
is used in Sections 13(d) and 14(d)(2) of the 1934 Act, is the “beneficial
owner,” as such term is used in Rule 13d-3 promulgated under the 1934 Act, of a
greater percentage of the Voting Stock of the Company than the percentage of
such Voting Stock held, directly or indirectly, by the McGhan Entities;

 

(5)  a majority of the Board
consists of individuals who are not members of the Incumbent Board;

 

(6)  all or substantially all of
the business of the Company and its consolidated subsidiaries is disposed of
pursuant to a merger, consolidation, asset sale or other transaction in which
the Company is not the surviving corporation or the Company (on a consolidated
basis) is materially or completely liquidated or in which all or substantially
all of the Company’s consolidated assets are sold; or

 

(7)  the Company or a subsidiary
combines with another company and, immediately after the combination, the
stockholders of the Company immediately prior to the combination hold, directly
or indirectly, less than 51% of the Voting Stock of the resulting company (viewed
on a consolidated basis).

 

Notwithstanding the foregoing,
a transaction or event shall not constitute a Change in Control if such
transaction or event results from a transaction that is approved in advance
unanimously by the Executive Committee.

 

e.                                       “Disability”
shall mean Executive’s inability to render, for a period of three consecutive
months, full and effective services hereunder by reason of permanent mental or
physical disability, whether resulting from illness, accident or otherwise;
provided, however, that in no event will Executive be considered disabled for
the purposes of this Agreement unless he is deemed disabled pursuant to the
Company’s long-term disability plan.

 

f.                                         “Good
Reason” shall mean and exist if, without Executive’s prior written consent, one
or more of the following events occurs:

 

(1)                                  Executive
is not appointed to or is otherwise removed from any office or position
provided for in Section 1 or Section 3.a above, for any reason other than the
termination of his employment or transfer to a substantially equivalent or
superior office or

 

8

 

position within the Company
(such determination to be made on the overall responsibilities of Executive
within the Company);

 

(2)                                  Executive
is assigned duties or responsibilities that are, when taken as a whole,
inconsistent, in any significant respect, with the scope of duties and
responsibilities associated with Executive’s office or position as described in
Section 1 or Section 3.a above;

 

(3)                                  Executive
suffers a material reduction, when taken as a whole, in the authorities, duties
or responsibilities associated with his office or position as described in
Section 1 or Section 3.a above, on the basis of which he makes a determination
in good faith that he can no longer carry out such office or position in the
manner contemplated at the time this Agreement was entered into;

 

(4)                                  Executive’s
Base Compensation is decreased by the Company, or his benefits or opportunities
under any employee benefit or incentive plan or program of the Company is or
are materially reduced, with the result that Executive’s overall benefits
package is materially reduced;

 

(5)                                  There
occurs a Change in Control;

 

(6)                                  Except
as provided in Section 3.b above, Executive’s work location is relocated to a
location other than the Principal Executive Offices;

 

(7)                                  the
Company fails to pay Executive any deferred payments under any bonus or
incentive plans which are due to him at that time;

 

(8)                                  the
Company fails to reimburse Executive within a reasonable time for business
expenses in accordance with this Agreement or the Company’s policies,
procedures or practices;

 

(9)                                  if
and to the extent applicable, the Company fails to agree to or actually
indemnify Executive for his actions and/or inactions, as either a director or
executive officer of the Company, to the fullest extent permitted by Delaware
law, and/or the Company fails to maintain satisfactory levels of directors and
officers liability insurance coverage for Executive when such insurance is
available;

 

(10)                            the
Company fails to obtain a written agreement reasonably satisfactory to
Executive from any successor or assign of the Company to assume and perform
this Agreement; or

 

(11)                            the
Company purports to terminate Executive’s employment for Cause and such
purported termination of employment is not effected in accordance with the
procedures required by this Agreement, and for purposes of this Agreement, such
purported termination of employment shall be invalid and of no force and effect.

 

g.                                      “Incumbent
Board” shall mean the members of the Board on the date of this Agreement for as
long as each serves on the Board, provided that any person becoming a director
subsequent to the date of this Agreement whose election or nomination for election
was

 

9

 

approved
unanimously by the directors then comprising the full membership of the
Incumbent Board shall, for purposes of this Agreement, be considered to be a
member of the Incumbent Board for as long as such director serves the Board.

 

h.                                      “Principal
Executive Offices” of the Company shall mean for purposes of this Agreement
only the offices of the Company where the principal executive functions are
performed, (i) currently located in Clark County, Nevada, (ii) in the future at
such location as is determined by the Company’s Executive Committee, and (iii)
in the future if not so determined, as elected by Executive.

 

i.                                          “Private
Company” shall mean an entity that has no class of its Voting Stock registered
pursuant to Section 12(b), 12(g) or 15(d) of the 1934 Act.

 

j.                                          “Pro
Rata Bonus” shall mean an amount equal to the annual bonus otherwise payable
with respect to the year in question, calculated as if Executive had been
employed by the Company for the full year, multiplied by a fraction, the
numerator of which is the number of days in such year during which Executive is
actually employed by the Company and the denominator of which is 365.

 

k.                                       “Public
Company” shall mean an entity that has one or more classes of its Voting Stock
registered pursuant to Section 12(b), 12(g) or 15(d) of the 1934 Act.

 

l.                                          “Voting
Stock” shall mean capital stock (or similar security) of any class or classes
having general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation or similar managers of
another entity.

 

12.                               Miscellaneous.

 

a.                                       Amendments.  No amendment or modification of this
Agreement shall be deemed effective unless made in writing and signed by the parties
hereto.

 

b.                                      No
Waiver.  No term or condition of
this Agreement shall be deemed to have been waived, except by a statement in
writing signed by the party against whom enforcement of the waiver is
sought.  Any written waiver shall not be
deemed a continuing waiver unless specifically stated, shall operate only as to
the specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.

 

c.                                       Counterparts.  This Agreement may be executed in any number
of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.

 

d.                                      Severability.  To the extent that any portion of any
provision of this Agreement shall be invalid or unenforceable, it shall be
considered deleted herefrom and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full force and effect.

 

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e.                                       Captions
and Headings.  The captions and
paragraph headings used in this Agreement are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement or
any of the provisions hereof.

 

f.                                         Notices.  All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given (i) upon receipt, if delivered
personally or via courier, (ii) upon confirmation of receipt, if given by
electronic facsimile provided that another copy is sent by another means
permitted by this subsection within two (2) business days thereafter, and (iii)
on the third business day following mailing, if mailed first-class, postage
prepaid, registered or certified mail from the continental United States as
follows:

 

	
   

  	
  If to
  Company to:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  MediCor Ltd.

  
	
   

  	
   

  	
  4560 S.
  Decatur Blvd., Ste. 300

  
	
   

  	
   

  	
  Las Vegas,
  Nevada 89103

  
	
   

  	
   

  	
  (702)
  932-4563

  
	
   

  	
   

  	
  Attn:
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  If to
  Executive to:

  
	
   

  	
   

  	
  Jim J.
  McGhan

  
	
   

  	
   

  	
  4560 S.
  Decatur Blvd., Ste. 300

  
	
   

  	
   

  	
  Las Vegas,
  NV 89103

  
	
   

  	
   

  	
  (702)
  932-4574

  

 

Any party may by notice given
in accordance with this subsection to the other party to designate another
address or person for receipt of notices hereunder.

 

g.                                      Attorneys’
Fees.  If any legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party shall be entitled
to recover such reasonable attorneys’ fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it may be
entitled, as may be awarded by the court or arbitrator.

 

h.                                      Governing
Law.  The parties agree that this
Agreement will be governed by the laws of the State of Delaware.

 

i.                                          Arbitration.  Any controversy or claim arising out of or
relating to this Agreement or the breach thereof (including the arbitrability
of any controversy or claim), shall be settled by arbitration in accordance
with the laws of the State of Delaware by one arbitrator.  If the parties cannot agree on the
appointment of an arbitrator, then the arbitrator shall be appointed by the
American Arbitration Association.  The
arbitration shall be conducted in Clark County, Nevada in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of an arbitrator which shall be as provided in this Section
12.i.  The

 

11

 

cost of any
arbitration proceeding hereunder shall be borne by the Company.  The award of the arbitrator shall be binding
upon the parties.  Judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.

 

If it shall be
necessary or desirable for Executive to retain legal counsel and incur other
costs and expenses in connection with the enforcement of any or all of his
rights under this Agreement, and provided that Executive substantially prevails
in the enforcement of such rights, the Company shall pay (or Executive shall be
entitled to recover from the Company, as the case may be) Executive’s
reasonable attorneys’ fees and costs and expenses in connection with the
enforcement of his rights including the enforcement of any arbitration award.

 

j.                                          Guaranty.  The Company shall cause each of its material
Affiliates to execute and deliver to Executive a Guaranty in the form of
Schedule II hereto.

 

k.                                       Entire
Agreement.  This Agreement contains
the entire agreement of the parties relating to Executive’s employment with the
Company and supersedes all prior agreements and understandings with respect to
such subject matter.

 

IN WITNESS WHEREOF, Executive
and the Company have executed this Agreement as of the date first set forth
above.

 

	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  MEDICOR LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Donald K. McGhan

  	
   

  
	
   

  	
   

  	
  Its:
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “EXECUTIVE” 

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Jim J.
  McGhan

  	
   

  
	
   

  	
  Jim J. McGhan

  
							

 

12Exhibit
10.2

 

EMPLOYMENT
AGREEMENT STOCK OPTION

 

This Employment Agreement Stock Option (Stock Option
#EO29), dated as of October 27, 2003,
is by and between MediCor Ltd. and its
subsidiaries (collectively, the “Corporation”), and Jim J. McGhan (the “Employee”).

 

Effective as of October 27, 2003, the Employee will
receive an Employment Option (the “Option”) of ONE HUNDRED TWENTY THOUSAND (120,000) shares of the
Corporation’s Common Stock, at a composite price of ONE DOLLAR AND FIFTY CENTS ($1.50) per share to be vested as
follows: 25%
PER YEAR FOR EACH FULL YEAR OF EMPLOYMENT FROM THE EMPLOYMENT DATE.

 

The Option will expire seven (7) years from the Employment Date
identified in  the Employment Agreement,
or upon termination of employment (as herein provided), whichever first
occurs.  The Option is not a part of the
Corporation’s Stock Compensation Plan (if any), is not transferable and may be
exercised only by the Employee, the Employee’s executor or spouse.  Continued employment with the Corporation is
a condition of the vesting of the Options. 
The Option may be exercised within six (6) months of the termination of
employment of the Employee, unless the Employee’s employment is terminated “For
Cause” as provided in Section 5 of the Employment Agreement, in which case the
un-vested portion of the Option terminates at the date of termination of the
Employee.  The Employee will execute
such other documents and make such representations as may be required for
securities or other regulatory compliance.

 

The number of shares and the option price subject to
the Option shall be adjusted for any stock dividend, split-up, combination or
exchange of shares, or any other similar change.

 

In the event of a Change of Control in ownership of
the Corporation (defined for the purpose of this Agreement as the purchase of
more than fifty percent (50%) of the Corporation’s outstanding shares by a
shareholder who, at the date of this Agreement is not a shareholder of the
Corporation), all shares of the Option shall vest and be available for purchase
within thirty (30) days of notification by the Corporation to the Employee of
the Change of Control.

 

IN
WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement Stock Option to be effective as of the 27th day
of October 2003.

 

	
   

  	
  CORPORATION:

  
	
   

  	
  MediCor Ltd.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Donald
  K. McGhan

  	
   

  
	
   

  	
   

  	
  Donald K. McGhan

  
	
   

  	
   

  	
  Title:Chairman of the Board

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jim J.
  McGhan

  	
   

  
	
   

  	
   

  	
  Jim J. McGhan

  
						

 

1

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