Document:

Exhibit 10.2

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment
Agreement (“Amended Employment Agreement”) is effective as of July 1, 2014 (the “Effective Date”), by and
among Electromed, Inc., a Minnesota corporation (the “Corporation”), and Jeremy Brock (“Employee”).

 

RECITALS

 

WHEREAS, the Corporation
and the Employee previously entered into an Employment Agreement, dated as of October 18, 2011 (the “Original Agreement”);
and

 

WHEREAS, the Corporation
modified, amended and restated the Original Agreement on November 15, 2012 (the “Amendment”); and

 

WHEREAS, the Corporation
and Employee desire to modify and amend and restate the Employment Agreement on the terms and conditions set forth in this Amended
and Restated Employment Agreement (the “Amended Employment Agreement”); and

 

WHEREAS, Corporation wishes
to continue to employ Employee to the position of Chief Financial Officer and Employee wishes to continue his employment pursuant
to the terms and conditions set forth in this Amended Employment Agreement.

 

WHEREAS, the Corporation
and Employee desire to enter into this Amended Employment Agreement, and it is the intention of the Corporation and Employee that
this Amended Employment Agreement entirely supersedes any prior agreements with respect hereto.

 

AGREEMENT

 

In consideration of the above recitals
and the mutual promises set forth in this Amended Employment Agreement, the parties agree as follows:

 

1.                   Nature and Capacity of
Employment.  Effective as of the Effective Date, the Corporation hereby agrees to continue to employ the Employee
as its Chief Financial Officer, subject to the direction of the Board of Directors of the Corporation and pursuant to the terms
and conditions set forth in this Amended Employment Agreement. The Employee hereby agrees to continue acting in that capacity under
the terms and conditions set forth in this Amended Employment Agreement. The Employee agrees to perform or be available to perform
the functions of this position, pursuant to the terms of this Amended Employment Agreement.

 

    	 

    	 

    

2.                   Term of Employment.  The
term of the Employee’s employment hereunder
shall commence on the Effective Date of this Amended Employment Agreement and shall continue thereafter for a period of two years,
or through June 30, 2016 (the “Two Year Term”), unless terminated earlier in accordance with Paragraph 4 of this Amended
Employment Agreement.  The term of this Amended Employment Agreement and the Employee’s
employment hereunder shall automatically renew for successive one year periods beyond
the expiration of the Two Year Term (the “Renewal Term”), unless at least ninety (90) days prior to the expiration
of the Two Year Term or any Renewal Term either party hereto gives written notice to the other party that it does not intend to
renew this Amended Employment Agreement for the coming year. During the Two Year Term or any Renewal Term, this Amended Employment
Agreement may be terminated pursuant to the terms of Paragraph 4 of this Amended Employment Agreement.

 

3.                   Compensation and Benefits.

 

3.1.          Base Salary.  As
of the Effective Date, the Corporation agrees to pay the Employee an annualized base salary of $155,000 (the “Base Salary”),
which amount shall be earned by the Employee on a pro rata basis as the Employee performs services and which shall be paid according
to the Corporation’s normal payroll practices. Employee shall be eligible for a raise of the Base Salary payable under this
Paragraph 3.1 and such raise shall be negotiated in good faith by the Chief Executive Officer, acting in collaboration with the
Corporation’s Compensation Committee, and the Employee. Such raise shall not be less than .0333 of the then current Base
Salary upon completion of one year’s service and shall be subject to approval by the Corporation’s Board of Directors
following review of Corporation’s progress toward meeting performance goals. The Board of Directors acting reasonably shall
also have the right to annually review and determine the amount of Base Salary payable pursuant to this Paragraph 3.1.

 

3.2          Non-Equity
Incentive Compensation.  For the fiscal years ending June 30, 2015 and June 30, 2016, Employee shall receive a bonus
in the maximum aggregate amount of 30% of the base salary set forth in Paragraph 3.1 only if he achieves the goals and milestones
set forth in the CFO Bonus Plan implemented for the applicable fiscal year, as such goals have been determined by, and as achievement
against such goals will be evaluated by, the Personnel and Compensation Committee of the Board of Directors. Future Non-Equity
Incentive Compensation will be determined by the Personnel and Compensation Committee or the Board of Directors in their discretion.
If a bonus is earned in accordance with this Paragraph 3.2, it will be paid to Employee by the Corporation regardless of whether
he is employed by the Corporation on the date payable.

 

3.3          Non-Qualified
Stock Option.  On the later of the Effective Date or the date on which this Agreement is executed by the Corporation,
or if such date is not a business day on which stocks listed on the NYSE MKT national exchange are trading, the first such business
day following the Effective Date, Employee shall be granted a non-qualified stock option to purchase 30,000 shares of the Corporation’s
common stock pursuant to the Corporation’s 2012 Stock Incentive Plan. The option shall have an exercise price equal to the
fair market value of the Corporation’s common stock on the date of the grant, shall have a 10-year term, and shall vest as
to 10,000 shares on the last day of each of the Corporation’s fiscal years ending June 30, 2015, 2016 and 2017. The remaining
terms of the option will be governed by the 2012 Stock Incentive Plan and the non-qualified stock option agreement to be executed
by the Corporation and the Employee on or about the date of grant. Should there be a Change of Control, as defined in Paragraph
4.3 of this Amended Employment Agreement, the options will fully vest upon the Change of Control.

 

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3.4.          Employee Benefits.  During
the Employee’s employment with the Corporation, the Employee shall be entitled to participate in the retirement plans, health
plans, and all other employee benefits made available by the Corporation, and as they may be changed from time to time. The Employee
acknowledges and agrees that he will be subject to all eligibility requirements and all other provisions of these benefits plans,
and that the Corporation is under no obligation to the Employee to establish and maintain any employee benefit plan in which the
Employee may participate. The terms and provisions of any employee benefit plan of the Corporation are matters within the exclusive
province of the Corporation’s Board of Directors, subject to applicable law.

 

3.5.          Paid Time
Off.  The Corporation agrees that the Employee shall be entitled to Paid Time Off (“PTO”) of up to twenty
(20) days per calendar year, prorated for any partial calendar year of employment, without reduction of the minimum annual base
salary payable to the Employee pursuant to Paragraph 3.1 of this Amended Employment Agreement. PTO which is unused at the
end of any calendar year will carry over to the next calendar year, subject to the Corporation’s limitations
on carry-over and accrual maximums. At the end of Employee’s employment for any reason, the Corporation will pay Employee
for his ending balance of unused PTO.

 

3.6.          Other Benefits:  During
the Two Year Term or Renewal Term, the Corporation shall directly pay the cost of a cell
phone or wireless handheld device for the Employee’s use. Additionally, during the Two Year Term or any Renewal Term, the
Corporation shall provide an automobile allowance of $400 per month. The Corporation shall also provide a corporate credit card
for approved business expenses and shall otherwise reimburse the Employee for, or pay directly, all reasonable business
expenses incurred by the Employee in the performance of his duties under this Amended Employment Agreement, provided that
the Employee incurs and accounts for such expenses in accordance with all Corporation policies and directives in effect from time
to time.

 

4.                   Termination of Employment
Prior to the End of the Two Year Term or Renewal Term.  The Employee’s employment may be terminated prior to
the expiration of the Two Year Term or a Renewal Term as follows:

 

4.1.          For Cause
Termination, Without Severance.  Notwithstanding anything contained herein to the contrary, the Corporation may discharge
the Employee for Cause and terminate this Amended Employment Agreement immediately upon written notice to the Employee. For the
purposes of this Amended Employment Agreement, “Cause” shall mean the occurrence of any of the following:

 

(i)          Employee’s
material failure to perform his job duties competently as reasonably determined by the Corporation’s Board of Directors;
or

 

(ii)          gross misconduct
by the Employee which the Corporation’s Board of Directors determines is (or will be if continued) demonstrably and materially
damaging to the Corporation; or

 

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(iii)          fraud, misappropriation,
or embezzlement by the Employee; or

 

(iv)          conviction of a
felony crime or a crime of moral turpitude; or

 

(v)           conduct in the course
of employment that the Corporation’s Board of Directors determines is unethical; or

 

(vii)          the material breach
of this Amended Employment Agreement by the Employee.

 

With respect to Sections
4.1 (i) and (v), the Corporation shall first provide Employee with written notice and an opportunity to cure such breach, if curable,
in the reasonable discretion of the Corporation’s Board of Directors, and identify with specificity the action needed to
cure within 30 days of Employee’s receipt of written notice from the Corporation. If the Corporation terminates the Employee’s
employment for Cause pursuant to this Paragraph 4.1, the Employee shall not be entitled to severance pay.

 

4.2.          Without Cause,
With Severance.  The Corporation may terminate the Employee’s employment immediately at any time and for any
reason without Cause upon providing notice to the Employee. However, in such event, provided that the Employee meets all of the
conditions set forth in this paragraph for receiving severance pay, the Corporation shall pay the Employee severance pay in the
amount of one year’s base salary at his then current base salary (the “Severance Amount”) payable in a lump sum
within sixty (60) days after termination, together with any earned but unpaid non-equity incentive compensation. The Employee shall
only be entitled to receive the Severance Amount described herein if the Employee (a) complies with his separate Non-Competition,
Non-Solicitation, and Confidentiality Agreement with an effective date of October 18, 2011 and (b) before the 60th day after his
termination, signs, does not rescind and complies with a Confidential Separation Agreement at the time of termination in a form
prepared by the Corporation that includes in part: (i) agreement to a general release of any and all legal claims; (ii) return
of all of the Corporation’s property in the Employee’s possession; and (iii) agreement not to disparage the Corporation
and its representatives. Such release shall not release or waive Employee’s rights to indemnification or advancement of expenses
from the Corporation in accordance with and subject to the Corporation’s Articles of Incorporation, Bylaws, and Section 302A.521
of the Minnesota Business Corporations Act.

 

4.3.          Resignation
By the Employee for Good Reason, With Severance.  The Employee may resign the Employee’s position at any time
for Good Reason and receive the Severance Amount described above. “Good Reason” shall mean the occurrence of any of
the following:

 

(i)          a material diminution
in the Employee’s responsibilities, authority or duties; or

 

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(ii)          a material diminution
in the Employee's salary, other than pursuant to a reduction in the salary for all executive employees of the Corporation and its
affiliates, applied on a pro rata basis to all salaried executives including Employee;

 

(iii)          the material breach
of this Amended Employment Agreement by the Corporation.

 

Notwithstanding the foregoing,
none of the forgoing events shall be considered “Good Reason” if it occurs in connection with Employee’s death
or disability, provided that the Corporation has made diligent efforts to reasonably accommodate Employee’s condition.

 

Before “Good Reason”
has been deemed to have occurred, Employee must give the Corporation written notice detailing why Employee believes a Good Reason
event has occurred and such notice must be provided to the Board of the Corporation within 90 calendar days after Employee’s
actual knowledge of the initial occurrence of such alleged Good Reason event Employee’s Board shall then have 30 calendar
days after its receipt of written notice to cure the condition cited in the written notice, and if so cured, “Good Reason”
will be deemed not to have occurred with respect to the condition in question. If such condition is not so cured, “Good Reason”
will be deemed to have occurred with respect to the condition in question, and Employee must terminate employment within 30 calendar
days following such 30 calendar day Board cure period. (For these purposes a notice shall be sufficient if it is transmitted by
facsimile or email on to the Board and if it provides a general indication of the nature of the acts, omissions, breach or breaches.)

 

In the event the Board
cannot cure the “Good Reason” as set forth above, and provided that the Employee meets all of the conditions set forth
in this paragraph for receiving severance pay, the Corporation shall pay the Employee severance pay in the amount of one year’s
base salary at his then current base salary (the “Severance Amount”) payable in a lump sum on the 60th day
after termination, together with any earned but unpaid non-equity incentive compensation. The Employee shall only be entitled to
receive the Severance Amount described herein if the Employee (a) complies with his separate Non-Competition, Non-Solicitation,
and Confidentiality Agreement dated October 18, 2011 and (b) before the 60th day after his termination, signs, does
not rescind, and complies with a Confidential Separation Agreement at the time of termination in a form prepared by the Corporation
that includes in part: (i) agreement to a general release of any and all legal claims; (ii) return of all of the Corporation’s
property in the Employee’s possession; and (iii) agreement not to disparage the Corporation and its representatives. Such
release shall not release or waive Employee’s rights to indemnification or advancement of expenses from the Corporation in
accordance with and subject to the Corporation’s Articles of Incorporation and Section 302A.521 of the Minnesota Business
Corporations Act.

 

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4.4.          Resignation
by the Employee Due to Change of Control, With Severance.  For purposes of this Amended Employment Agreement, “Change
of Control” means: 

 

(i)          
A “change in ownership,” as described in Section 1.409A-3(i)(5)(v) of the Treasury
Regulations.

 

(ii)          A “change
in effective control,” as described in Section 1.409A-3(i)(5)(vi) of the Treasury Regulations.

 

(iii)         A “change
in ownership of a substantial portion of the assets,” as described in Section 1.409A-3(i)(5)(vii) of the Treasury Regulations.

 

Employee shall have the
right to terminate the Employee’s employment for any reason within six (6) months following a Change of Control in the Corporation
upon providing thirty (30) days advance written notice to the Corporation. The Corporation may then elect either (a) to have the
Employee continue performing work for the Corporation throughout the 30 day notice period; or (b) to accept the Employee’s
resignation effective immediately.

 

In the event of the Employee’s
termination of employment with the Corporation following a Change of Control under this Paragraph 4.4, provided that the Employee
meets all of the conditions set forth in this paragraph for receiving severance pay, the Corporation shall pay the Employee the
Severance Amount outlined in Paragraph 4.2 above in a lump sum within sixty (60) days after termination. In addition, the Employee
shall only be entitled to receive the Severance Amount described herein if the Employee (a) complies with his separate Non-Competition,
Non-Solicitation, and Confidentiality Agreement with an effective date of October 18, 2011 and (b) before the 60th day
after his termination, signs, does not rescind, and complies with a Confidential Separation Agreement at the time of termination
in a form prepared by the Corporation that includes in part: (i) agreement to a general release of any and all legal claims; (ii)
return of all of the Corporation’s property in the Employee’s possession; and (iii) agreement not to disparage the
Corporation and its representatives. Such release shall not release or waive Employee’s rights to indemnification or advancement
of expenses from the Corporation in accordance with and subject to the Corporation’s Articles of Incorporation and Section
302A.521 of the Minnesota Business Corporations Act.

 

4.5.          Other Resignation
by the Employee, Without Severance.  The Employee may resign the Employee’s position upon providing sixty (60)
days advance, written notice to the Corporation. The Corporation may then elect either (a) to have the Employee continue performing
work for the Corporation throughout the 60 day notice period; or (b) to accept the Employee’s resignation effective immediately.
In the event of the Employee’s termination of employment with the Corporation under this Paragraph 4.4, the Employee shall
not be paid any severance pay, but Employee shall be entitled to any earned but unpaid non-equity incentive compensation.

 

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4.6.          Because of
Death, Disability or Incapacity of the Employee, Without Severance.  In the event of the Employee’s death,
this Amended Employment Agreement shall terminate immediately. If the Employee is unable to perform the Employee’s essential
job functions, with or without reasonable accommodation, for more than ninety (90) days, or such longer period as required by law,
in any consecutive twelve (12) month period by reason of physical or mental disability or incapacity, the Corporation may terminate
the Employee’s employment upon thirty (30) days advance written notice to the Employee. This Paragraph does not relieve the
Corporation of any duty to reasonably accommodate a qualifying disability under the Americans with Disabilities Act, the Minnesota
Human Rights Act, any legal duty under the Family Medical Leave Act, or any of its other duties pursuant to applicable law. If
the Employee’s employment is terminated pursuant to this Paragraph, the Employee shall not be entitled to severance pay,
but Employee shall be entitled to any earned but unpaid non-equity incentive compensation.

 

4.7          Non-Renewal
By Either Party Upon Expiration of the Two Year Term or Renewal Term.  For the avoidance of doubt, the parties agree
that either party may elect, with or without cause, not to renew this Amended Employment Agreement at the end of the then-current
Term and that Employee shall not be entitled to severance pay in the event of non-renewal by either party.

 

4.8          Section 409A
and Taxes Generally.  The Corporation shall be entitled to withhold on and report the making of such payments as
may be required by law as determined in the reasonable discretion of the Corporation. Notwithstanding anything in this Amended
Employment Agreement to the contrary, if at the time of Employee’s termination of employment (which shall have the same meaning
as “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations,
notices and other guidance of general applicability issued thereunder (“Section 409A”)), the Corporation determines
that Employee is a “specified employee” within the meaning of Section 409A, then, to the extent any payment or benefit
that Employee becomes entitled to under this Amended Employment Agreement on account of Employee’s separation from service
would be considered deferred compensation subject to Section 409A, such payment shall not be payable and such benefit shall not
be provided until the date that is the earlier of (a) six months and one day after Employee’s separation from service, and
(b) Employee’s death. The parties intend that this Amended Employment Agreement will be administered in accordance with Section
409A and, to the extent that any provision of this Amended Employment Agreement is ambiguous as to its compliance with Section
409A, the provision shall be read in such a manner so that all payments hereunder comply with, or are exempt from, Section 409A.
The parties agree that this Amended Employment Agreement may be amended, as may be necessary to fully comply with, or to be exempt
from, Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without
additional cost to either party.

 

5.                   Miscellaneous.

 

5.1.          Integration.  This
Amended Employment Agreement embodies the entire agreement and understanding among the parties relative to subject matter hereof
and supersedes all prior agreements and understandings relating to such subject matter, including but not limited to any earlier
employment agreements of or offer letters to the Employee. Notwithstanding the foregoing, this Amended Employment Agreement does
not replace or otherwise impact the enforceability of the separate Non-Competition, Non-Solicitation, and Confidentiality Agreement
with an effective date of October 18, 2011.

 

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5.2.          Applicable
Law.  This Amended Employment Agreement and the rights of the parties shall be governed by and construed and enforced
in accordance with the laws of the state of Minnesota.

 

5.3.          Payments.  All
amounts paid under this Amended Employment Agreement shall be subject to normal withholdings or such other treatment as required
by law.

 

5.4          Employee’s
Representations.  The Employee represents that he is not subject to any agreement or obligation that would prevent
or limit him from entering into this Amended Employment Agreement or that would be breached upon performance of his duties under
this Amended Employment Agreement, including but not limited to any duties owed to any former employers not to compete. If
the Employee possesses any information that he knows or should know is considered by any third party, such as a former employer
of the Employee’s, to be confidential, trade secret, or otherwise proprietary, the Employee shall not disclose such information
to the Corporation or use such information to benefit the Corporation in any way.

 

5.5.          Counterparts.  This
Amended Employment Agreement may be executed in several counterparts and as so executed shall constitute one agreement binding
on the parties hereto.

 

5.6.          Binding Effect.  Except
as herein or otherwise provided to the contrary, this Amended Employment Agreement shall be binding upon and inure to the benefit
of the Corporation and its successors, assigns and personal representatives without any requirement of the consent of the Employee
for assignment of its rights or obligations hereunder.

 

5.7.          Modification.  This
Amended Employment Agreement shall not be modified or amended except by a written instrument signed by the parties.

 

5.8.          Severability.  The
invalidity or partial invalidity of any portion of this Amended Employment Agreement shall not invalidate the remainder thereof,
and said remainder shall remain in fully force and effect.

 

5.9.          Opportunity
to Obtain Advice of Counsel.  The Employee acknowledges that the Employee has been advised by the Corporation to
obtain legal advice prior to executing this Amended Employment Agreement, and that the Employee had sufficient opportunity to do
so prior to signing this Amended Employment Agreement.

 

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5.10          Indemnification.  As
to acts or omissions of Employee which are within the scope of Employee’s authority as an officer, director, or employee
of the Corporation and/or any affiliate of the Corporation, the Corporation will indemnify Employee in accordance with and subject
to the limitations contained in its Articles of Incorporation, Bylaws and Section 302A.521 of the Minnesota Business Corporations
Act. If Employee is made or threatened to be made a party to any threatened, pending, or completed civil, criminal, administrative,
arbitration, or investigative proceeding, including a proceeding by or in the right of the corporation, Employee is entitled, upon
written request to the Corporation, to payment or reimbursement by the Corporation of reasonable expenses, including attorneys'
fees and disbursements, incurred by Employee in advance of the final disposition of the proceeding, (a) upon receipt by the Corporation
of a written affirmation by Employee of a good faith belief that the criteria for indemnification set forth in Section 302A.521,
subdivision 2 of the Minnesota Business Corporations Act have been satisfied and a written undertaking by Employee to repay all
amounts so paid or reimbursed by the Corporation, if it is ultimately determined that the criteria for indemnification have not
been satisfied, and (b) after a determination that the facts then known to those making the determination would not preclude indemnification
under the Corporation’s Articles of Incorporation and Bylaws and Section 302A.521 of the Minnesota Business Corporations
Act, including but not limited to whether the alleged misconduct by Employee that is the subject of the proceeding is within the
course and scope of Employee’s employment.

 

5.11          D&O Insurance.  The
Corporation shall maintain an insurance policy or policies providing directors' and officers' liability insurance, comprehensive
general liability insurance, and errors and omissions insurance, and the Employee shall be covered by such policy or policies,
in accordance with its or their terms, to the maximum extent of the coverage available for any officer of the Corporation.

 

5.12.          280G Limitations.  In
the event that the severance and other benefits provided for in this Amended Employment Agreement or otherwise payable to Employee
(a) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended,
(the “Code”) and (b) would be subject to the excise tax imposed by Code Section 4999, then such benefits shall be either
be: (i) delivered in full, or (ii) delivered as to such lesser extent which would result in no portion of such severance benefits
being subject to excise tax under Code Section 4999, whichever of the foregoing amounts, taking into account the applicable federal,
state and local income and employment taxes and the excise tax imposed by Code Section 4999, results in the receipt by Employee,
on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be subject
to excise tax under Code Section 4999.

 

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Any determination required
under this Section 5.12 will be made in writing by an accounting firm selected by the Corporation or such other person or entity
to which the parties mutually agree (the “Accountants”), whose determination will be conclusive and binding upon Employee
and the Company for all purposes. For purposes of making the calculations required by this Section 5.12, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning
the application of Code Sections 280G and 4999. The Corporation and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a determination under this Section. The Corporation shall
bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.12. Any
reduction in payments and/or benefits required by this Section 5.12 shall occur in the following order: (A) cash payments shall
be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence
of the event triggering such excise tax will be the first cash payment to be reduced; (B) accelerated vesting of stock awards,
if any, shall be cancelled/reduced next and in the reverse order of the date of grant for such stock awards (i.e., the vesting
of the most recently granted stock awards will be reduced first), with full-value awards reversed before any stock option or stock
appreciation rights are reduced; and (C) deferred compensation amounts subject to Section 409A shall be reduced last.

 

*****remainder of page intentionally left blank—signature
page to follow*****

 

 

 

 

 

 

 

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THIS AMENDED EMPLOYMENT AGREEMENT was voluntarily and knowingly executed
by the parties effective as of the date and year first set forth above.

 

	 	ELECTROMED, INC.
	 	 
	Date:  July 10, 2014	/s/ Kathleen Skarvan
	 	By:  	Kathleen Skarvan
	 	Its:	Chief Executive Officer
	 	 	 
	 	 	 
	 	EMPLOYEE:
	 	 	 
	Date:  July 10, 2014	/s/ Jeremy Brock
	 	Jeremy Brock

 

 

 

 

 

 

 

 

 

 

    	11Exhibit 4.11

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS.  ALL SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (A “TRANSFER”) WITHOUT REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BECAUSE THE TRANSFER IS EXEMPT FROM REGISTRATION OR THE TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR RULE 144A UNDER THE ACT.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

Warrant Certificate No. 3

 

COMMON STOCK WARRANT

 

For the Purchase of Shares of Common Stock

of

CVSL INC.

July 2, 2014

 

THIS CERTIFIES THAT,                   , for value received, and successors and assigns (collectively, “Warrantholder”), is entitled to subscribe for and purchase, subject to the terms hereof, from CVSL Inc., a Florida corporation (the “Company”), ONE MILLION (1,000,000) fully-paid and non-assessable shares (the “Shares”) of the Company’s Common Stock, par value $0.0001 per share (“Common Stock”), at a price per share equal to SIXTY FOUR CENTS ($0.64) (the “Warrant Exercise Price”), such price (i) representing the average closing price of a share of the Common Stock for the 10 trading days prior to the grant of this Warrant and (ii) being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant.

 

This Warrant is granted in connection with the Exclusivity Agreement, of even date herewith, by and between the Company and Warrantholder (the “Exclusivity Agreement”).

 

1.                                      Term.  Except as otherwise provided for herein, the ONE MILLION (1,000,000) Shares represented by this Warrant shall be exercisable, in whole or in part, at any time and from time to time, upon the expiration of 720 days of the date of the original issuance of this Warrant and ending at 5:00 p.m., Dallas, Texas time, on the first anniversary of the original issuance date of this Warrant (the “Expiration Date”); provided, however, unless on the Expiration Date stated above either (i) the Shares are subject to an effective registration statement of the Company under the Securities Act of 1933, as amended, or (ii) the Common Stock is listed or included for quotation on at least one of the Nasdaq National Market, the New York Stock Exchange or the New York Stock Exchange Amex (and such listed trading has not been suspended or otherwise restricted pursuant to an effective order of such exchange), then the Expiration Date shall be

 

 

extended through, and the term “Expiration Date” shall be deemed to mean, the next following anniversary of the original issuance date of this Warrant upon which one of the foregoing conditions has been met.

 

2.                                      Number of Shares; Vesting of Shares.  Subject to the terms and conditions set forth herein, including the Expiration Date, the Warrantholder is entitled, upon surrender of this Warrant, to purchase from the Company the Shares represented by this Warrant as follows:  1,000,000 Shares represented by this Warrant shall be exercisable, in whole or in part, at any time and from time to time, 720 days after the original issuance date of this Warrant, unless the Warrantholder is in breach of, or has breached, the Consultancy Agreement between the parties hereto of the same date on or before the time of such exercise.  In the event of such breach determinable in the sole discretion of the CVSL Board of Directors, this Warrant shall be null and void and of no force or effect.

 

3.                                      Method of Exercise; Net Issue Exercise.

 

(a)                                 Method of Exercise; Payment; Issuance of New Warrant.  The purchase right represented by this Warrant may be exercised by the holder hereof, in whole or in part and from time to time, by the surrender of this Warrant (together with the notice of exercise form attached hereto as Exhibit A, duly executed) at the principal office of the Company and by the payment to the Company, by check or bank draft, of an amount equal to the then applicable Warrant Exercise Price per share multiplied by the number of Shares then being purchased.  The person or persons in whose name(s) any certificate(s) representing the Shares shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the Shares represented thereby (and such Shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised.  In the event of any exercise of the rights represented by this Warrant, certificates for the Shares of stock so purchased shall be delivered to the holder hereof as soon as possible and in any event within 45 days of receipt of such notice and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the holder hereof as soon as possible and in any event within such 45-day period.

 

(b)                                 Share Issuance/Restrictive Legends/Representations.  Notwithstanding the foregoing, (i) the Company shall not be obligated to deliver any shares of Common Stock during any period when the Company determines that the exercisability of the Warrant or the delivery of shares hereunder would violate any federal, state or other applicable laws and/or may issue shares subject to any restrictive legends that, as determined by the Company’s counsel, is necessary to comply with securities or other regulatory requirements, and (ii) the date on which shares are issued may include a delay in order to provide the Company such time as it determines appropriate to address administrative matters.  Warrantholder is an accredited investor within the meaning of Rule 501 of Regulation D promulgated under the Act, is aware of the Company’s

 

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business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Common Stock, and Warrantholder is acquiring the Shares for his own account for the purpose of investment and not with a view to distribute the same, or for resale in connection with any distribution thereof, within the meaning of the Act.

 

(c)                                  Piggyback Registration.  If, during the Term of this Agreement, the Company proposes to register any shares of its Common Stock in connection with a shelf registration statement under Rule 415 of Regulation C of the Act (“Shelf Registration”), the Company shall promptly, and in any event at least ten days prior to the filing of the registration statement, give written notice to the Warrantholder of its intention to effect such registration.  Upon the written request of the Warrantholder given within ten days after the mailing of such notice by the Company, the Company shall, subject to the provisions of this Section 3, cause to be registered under the Act all of the Common Stock that such Investor has requested to be registered.  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3 prior to the effectiveness of such registration whether or not the Warrantholder has elected to include any Common Stock in such registration and shall promptly notify the Warrantholder of such termination or withdrawal.  The piggyback registration rights set forth herein relate solely to those that may be available under a Shelf Registration by the Company, if any, and expressly exclude (i) the registration of any securities of the Company in connection with an underwritten public offering; (ii) a registration relating solely to an employee benefit plan, (ii) a registration relating solely to a transaction under Rule 145 of the Securities Act, or (iv) a registration in which the only securities being registered is common stock issuable upon conversion of debt securities which are also being registered.

 

4.                                      Stock Fully Paid; Reservation of Shares.  All Shares that may be issued upon the exercise of the rights represented by this Warrant shall, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof.  During the period within which the rights represented by the Warrant may be exercised, the Company shall at all times have authorized and reserved for the purpose of issuance upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant.

 

5.                                      Adjustment of Warrant Exercise Price and Number of Shares.  The number and kind of securities purchasable upon the exercise of the Warrant and the Warrant Exercise Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

 

(a)                                 Reclassification or Merger.  In case of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing

 

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corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall execute a new Warrant (in form and substance satisfactory to the Warrantholder) providing that the holder of this Warrant shall have the right to exercise such new Warrant and upon such exercise to receive, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by a holder of one share of Common Stock.  Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same.  The provisions of this subsection (a) shall similarly apply to successive reclassification, changes, mergers and transfers.

 

(b)                                 Subdivisions or Combination of Shares.  If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise hereof shall be proportionately adjusted such that the aggregate exercise price of this Warrant shall at all times remains equal.  Any adjustments under this subsection (b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(c)                                  Stock Dividends.  If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend payable in shares of Common Stock (except any distribution specifically provided for in the foregoing subsections (a) and (b)), then the Warrant Exercise Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Exercise Price in effect immediately prior to such date of determination by a fraction, (i) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution and (ii) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution and the number of shares of Common Stock subject to this Warrant shall be proportionately adjusted.  Any adjustment under this subsection (c) shall become effective as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(d)                                 No Impairment.  The Company will not, by amendment of its Articles of Incorporation (as amended, restated, supplemented or otherwise modified from time) or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment.

 

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6.                                      Notice of Adjustments.  Whenever the Warrant Exercise Price shall be adjusted pursuant to the provisions hereof, the Company shall within 20 days of such adjustment deliver a certificate signed by its chief executive officer of chief financial officer to the registered holder(s) hereof setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Exercise Price after giving effect to such adjustment.

 

7.                                      Fractional Shares.  No fractional shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares, the Company shall make a cash payment therefor upon the basis of the Warrant Exercise Price then in effect.

 

8.                                      Transfers and Exchanges.  This Warrant may be transferred upon the prior written consent of the Company, which consent shall not be unreasonably withheld, provided that no such consent shall be required for the transfer of this Warrant by operation of law.

 

9.                                      Rights as Shareholders.  No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be deemed the holder of Common Stock, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the shares of Common Stock purchasable upon the exercise hereof shall have become deliverable, as provided herein.  However, nothing in this Section 9 shall limit the right of the Warrantholder to be provided the notices required under this Warrant.

 

10.                               Modification and Waiver.  Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the holders of a majority of shares of Common Stock issued or issuable upon exercise of this Warrant.  Any waiver or amendment effected in accordance with this Section shall be binding upon each holder of any Shares issuable upon exercise of this Warrant.

 

11.                               Notices.  Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to each such holder at his, her or its address as shown on the books of the Company or to the Company at the address indicated on the signature page of this Warrant.

 

12.                               Assumption of Warrant.  If at any time, while this Warrant, or any portion thereof, is outstanding and unexpired there shall be (i) an acquisition of the Company by another entity by means of a merger, consolidation or other transaction or series of related transactions resulting in the exchange of the outstanding shares of the Company’s capital stock such that shareholders of the Company prior to such transaction own, directly or indirectly, less than 50% of the voting power of the surviving entity or (ii) a sale or transfer of all or substantially all of the

 

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Company’s assets to any other person, then, as a part of such acquisition, sale or transfer, lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Warrant Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such acquisition, sale or transfer which a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such acquisition, sale or transfer if this Warrant had been exercised immediately before such acquisition, sale or transfer, all subject to further adjustment as provided in this Section 12; and in any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the Warrantholder to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the number of Shares of the Warrantholder is entitled to purchase) shall thereafter by applicable, as nearly as possible, in relation to any shares of Common Stock or other securities or other property thereafter deliverable upon the exercise of this Warrant.

 

13.                               Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Warrantholder.  The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Warrantholder but at the Company’s expense, acknowledge in writing its continuing obligation to the Warrantholder in respect of any rights to which the Warrantholder shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of the Warrantholder to make any such request shall not affect the continuing obligation of the Company to the Warrantholder in respect of such rights.

 

14.                               Lost Warrants or Stock Certificates.  The Company covenants to the holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

15.                               Descriptive Headings.  The descriptive headings of the several sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

 

16.                               Governing Law.  This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Texas if not otherwise in conflict with the laws governing matters of corporate concern in the State of the Company’s incorporation.

 

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17.                               Counterparts.  This Common Stock Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, this Common Stock Warrant is executed effective as of the date first above written.

 

	
 
    	
CVSL   INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kelly L. Kittrell
    
	
 
    	
 
    	
Kelly   L. Kittrell
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
2400   Dallas Parkway, Suite 230
    
	
 
    	
Plano,   Texas 75093
    
	
 
    	
 
    
	
 
    	
Accepted   and Agreed:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    

 

SIGNATURE PAGE

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

To:                             CVSL Inc.

2400 Dallas Parkway, Suite 230

Dallas, Texas  75093

 

Attn:                    Kelly L. Kittrell, CFO

 

The undersigned hereby elects to purchase                        shares of Common Stock of CVSL Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

 

Such payment is hereby made in the amount of                        by wire transfer or by certified or bank check.

 

Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below

 

	
 
    	
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Address:
    	
 
    	
 
    

 

 

	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
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