EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as of 10 July 2001, is made between Xxxxxx
Medical Technology, Inc., a Delaware corporation (the "Company"), and Xxxxx X
Xxxxx (the "Employee").
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein set
forth.
2. Duties. The Employee is engaged as the President-International
of the Company and hereby promises to perform and discharge well and faithfully
the duties which may be assigned to him from time to time by the Board of
Directors of the Company (the "Board") in connection with the conduct of the
Company's business.
3. Extent of Services. The Employee shall devote his entire
time, attention and energies to the business of the Company and shall not,
during the term of this Agreement, be engaged in any other business activity,
regardless of whether such business activity is pursued for gain, profit or
other pecuniary advantage; but this shall not be construed as preventing the
Employee from investing his personal assets in businesses which do not compete
with the Company in such form or manner as will not require any services on the
part of the Employee in the operation of the affairs of the companies in which
such investments are made and in which his participation is solely that of an
investor, and except that the Employee may purchase securities in any
corporation whose securities are regularly traded on NASDAQ, a national or
regional stock exchange or in the over-the-counter market provided that such
purchase shall not result in his collectively owning beneficially at any time
one percent (1%) or more of the equity securities of any corporation engaged in
a business competitive to that of the Company. Nothing in this paragraph 3 shall
prevent the Employee from serving on the Board of Directors of any other
company, so long as the Board shall approve each position so held by the
Employee.
4. Compensation Matters.
(a) Base Salary. For services rendered under this
Agreement, the Company shall pay the Employee an aggregate salary of $200,000
per annum (the "Base Salary"), payable (after deduction of applicable payroll
taxes) in accordance with the customary payroll practices of the Company, as
may exist from time to time.
(b) Annual Bonus. During Employee's employment hereunder,
in addition to Salary, the Employee shall be eligible to receive an annual
performance bonus (the "Bonus") with a target of 45% of Base Salary for each
calendar year during Employee's employment; provided that, except as otherwise
provided in this Agreement, the Employee must be employed on the last day of
such calendar year in order to receive the Bonus attributable thereto. The
Employee's entitlement to the Bonus for any particular calendar year shall be
based on the attainment of performance objectives established by
the Compensation Committee of the Company (the "Committee") and communicated to
the Employee in writing at the beginning of each calendar year. The Committee
shall determine the Employee's entitlement to the Bonus, based on the
achievement of the performance objectives for such year, as determined by the
Committee and communicated to the Employee, in good faith within sixty (60) days
after the end of each such calendar year, which shall be paid by the Company no
later than ten days following such determination. For the year 2001, you will be
guaranteed a minimum of $22,500 in bonus payment, to be paid out in 2002 upon
completion of year-end financial audits or no later than March 31, 2002. The
Employee shall also be eligible for and participate in such fringe benefits as
shall be generally provided to executives of the Company, including medical
insurance and retirement programs which may be adopted from time to time during
the term hereof by the Company. The Employee shall be responsible for making any
generally applicable employee contributions required under such fringe benefit
programs.
(c) Initial Option Grant. On the effective date of this
Agreement, Xxxxxx Acquisition Holdings, Inc. ("Holdings") will grant the
Employee options to purchase a number of shares of Holdings common stock under
the Holding 1999 Equity Incentive Plan (the "Stock Option Plan") equal to 75,000
(fully diluted) of the then outstanding shares of Holdings common stock at a
price per share of $8.25 per share on the date of grant as determined by the
Board of Directors of Holdings in accordance with the terms of the Stock Option
Plan, such options to terminate on the tenth anniversary of the effective date
hereof and to vest as to 25% of the options on and after the first anniversary
of the effective date hereof, an additional 25% of the options on and after the
second anniversary of the effective date hereof, an additional 25% of the
options on and after the third anniversary of the effective date hereof, an
additional 25% of the options on and after the fourth anniversary of the
effective date hereof. Such options will be evidenced by a stock option
agreement to be entered into by Holdings and the Employee.
(d) Future Option Incentive Grants. In addition to the
options granted pursuant to paragraph 4(e) above, during the term of this
Agreement, the Employee shall be eligible for participation in the Stock Option
Plan and any other stock option plan administered by the Compensation Committee
of the Board of Directors.
(e) The Committee shall review the Employee's
compensation at least once per year and award such bonuses or make such
increases to the Base Salary as the Committee, in its sole discretion,
determines are merited, based upon the Employee's performance and consistent
with compensation policies of the Company.
5. Sick Leave and Vacation. During the term of this Agreement the
Employee shall be entitled to annual vacation of at least five (5) weeks, or
such greater time period if permitted by Company policy, to be taken at his
discretion, in a manner consistent with his obligations to the Company under
this Agreement. The actual dates of such vacation periods shall be agreed upon
by mutual discussions between the Company and Employee; provided, however, that
the Company shall have the ultimate decision with respect to the
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actual vacation dates to be taken by Employee, which decision shall not be
unreasonable. The Employee shall also be entitled to sick leave consistent with
Company policy.
6. Term.
(a) The Employee's employment under this Agreement shall
commence on effective date first set forth above and shall expire on the third
anniversary of such date. Notwithstanding the forgoing, the Company may at its
election, subject to paragraph 6(b) below, terminate the obligations of the
Company under this Agreement as follows;
(i) Upon 30 days' notice if the Employee
becomes physically or mentally incapacitated or is injured so that he is unable
to perform the services required of him hereunder and such inability to perform
continues for a period in excess of six months and is continuing at the time of
such notice; or
(ii) For "Cause" upon notice of such termination
to the Employee. For purposes of this Agreement, the Company shall have "Cause"
to terminate its obligations hereunder upon (A) the determination by the Board
that the Employee has ceased to perform his duties hereunder (other than as a
result of his incapacity due to physical or mental illness or injury), which
failure amounts to an intentional and extended neglect of his duties hereunder,
(B) the Employee's death, (C) the Board's determination that the Employee has
engaged or is about to engage in conduct materially injurious to the Company,
(D) the Employee's having been convicted of a felony, or (E) the Employee's
participation in activities proscribed by the provisions of paragraphs 8 or 9
hereof or material breach of any of the other covenants herein; or
(iii) Without Cause upon 30 days' notice of such
termination to the employee.
(b) (i) If this Agreement is terminated pursuant to
paragraph 6(a) (i) above, the Employee shall receive salary continuation pay
from the date of such termination until the third anniversary of the date hereof
at the rate of 100% of the Base Salary, reduced by applicable payroll taxes and
further reduced by the amount received by the Employee during such period under
any Company-maintained disability insurance policy or plan or under Social
Security or similar laws. Such salary continuation payments shall be paid
periodically to the Employee as provided in paragraph 4(a) for the payment of
the Base Salary.
(ii) If this Agreement is terminated pursuant to
paragraph 6(a) (ii) above, the Employee shall receive no salary continuation pay
or severance pay.
(iii) If this Agreement is terminated pursuant to
paragraph 6(a) (iii) above, the Employee shall receive salary continuation pay
for a period of twelve (12) months from and after the date of such termination
(the "Salary Continuation Period") equal to the Base Salary. Such salary
continuation payments (less applicable payroll taxes) shall be paid periodically
to the Employee as provided in paragraph 4 (a) for the payment
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of the Base Salary. During the Salary Continuation Period, the Employee shall
also be eligible to received continued coverage under all of the Company's
current health benefit and life insurance programs at the same rates that were
applicable to the Employee prior to the commencement of the Salary Continuation
Period. At the commencement of the Salary Continuation Period, all of the
Employee's unexercised options shall automatically vest and be fully exercisable
and the Employee shall have one (1) year from such date to exercise all
unexercised options. This provision will not affect the terms of any options
granted to the Employee after the date of this Agreement.
(c) During the Salary Continuation Period, the Employee
shall be under no obligation to mitigate the costs
to any of the Company of the salary continuation
payments. Not later than ninety (90) days prior to
the expiration of the stated term of the Agreement,
the parties shall begin to negotiate in good faith
the terms of any extension of this Agreement,
provided that no party shall be under any obligation
to enter into such an extension.
7. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Agreement and to perform the
services contemplated herein, and (b) he has the full right, power and
authority, subject to no rights of third parties, to grant to the Company the
rights contemplated by paragraph 9 hereof.
8. Disclosure of Information. The Employee recognizes and
acknowledges that the Company's and its predecessors' trade secrets, know-how
and proprietary processes as they may exist from time to time are valuable,
special and unique assets of the Company's businesses, access to and knowledge
of which are essential to the performance of the Employee's duties hereunder.
The Employee will not, during or after the term of his employment by any of the
Company, in whole or in part, disclose such secrets, know-how or processes to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, nor shall the Employee make use of any such property for his
own purposes or for the benefit of any person, firm, corporation or other entity
(except the Company) under any circumstances during or after the term of his
employment, provided that after the term of his employment these restrictions
shall not apply to such secrets, know-how and processes which are then in the
public domain (provided further that the Employee was not responsible, directly
or indirectly, for such secrets, know-how or processes entering the public
domain without the Company's consent).
9. Inventions. The Employee hereby sells, transfers and assigns
to the Company or to any person, or entity designated by the Company all of the
entire right, title and interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or jointly,
during the term hereof which relate to methods, apparatus, designs, products,
processes or devices, sold, leased, used or under consideration or development
by the Company or any of its predecessors, or which otherwise relate to or
pertain to the business, functions or operations of the Company or any of its
predecessors or which arise from the efforts of the Employee during the course
of his employment for the Company or any of its predecessors. The Employee shall
communicate promptly and
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disclose to the Company, in such form as the Company requests, all information,
details and data pertaining to the aforementioned inventions, ideas, disclosures
and improvements; and the Employee shall execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may be
necessary or required of the Employee to permit the Company or any person or
entity designated by the Company to file and prosecute the patent applications
and, as to copyrightable material, to obtain copyright thereof. Any invention
relating to the business of the Company and disclosed by the Employee within one
year following the termination of this Agreement shall be deemed to fall within
the provisions of this paragraph unless proved to have been first conceived and
made following such termination.
10. Covenants Not To Compete or Interfere. For a period ending
twelve (12) months from and after the termination of the Employee's employment
hereunder, the Employee shall not (whether as an officer, director, owner,
employee, partner or other direct or indirect participant) engage in any
Competitive Business. "Competitive Business" shall mean the manufacturing,
supplying, producing, selling, distributing or providing for sale of any
orthopaedic product, device or instrument manufactured or sold by the Company or
its subsidiaries or in clinical development sponsored by the Company or its
subsidiaries, of each case, as of the date of termination of the Employee's
employment. For such period, the Employee shall also not interfere with, disrupt
or attempt to disrupt the relationship, contractual or otherwise, between the
Company or its subsidiaries and any customer, supplier, lessor, leasee or
employee of the Company or its subsidiaries. It is the intent of the parties
that the agreement set forth in this paragraph 10 apply in the International
Markets only.
Employee agrees that a monetary remedy for a breach of the
agreement set forth in this paragraph 10 will be inadequate and impracticable
and further agrees that such a breach would cause the Company irreparable harm,
and that the Company shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event of such a
breach, Employee agrees that the Company shall be entitled to such injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions as a court of competent jurisdiction shall determine.
It is the desire and intent of the parties that the provisions
of this paragraph 10 shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular portion of this paragraph 10 shall be
adjudicated to be invalid or unenforceable, this paragraph 10 shall be deemed
curtailed, whether as to time or location, to the minimum extent required for
its validity under the applicable law and shall be binding and enforceable with
respect to the Employee as so curtailed, such curtailment to apply only with
respect to the operation of this paragraph in the particular jurisdiction in
which such adjudication is made. If a court in any jurisdiction, in adjudicating
the validity of this paragraph 10, imposes any additional terms or restrictions
with respect to the agreement set forth, in this paragraph 10, this paragraph 10
shall be deemed amended to incorporate such additional terms or restrictions.
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11. Injunctive Relief. If there is a breach or threatened breach
of the provisions of paragraphs 8, 9 or 10 of this Agreement, the Company shall
be entitled to an injunction restraining the Employee from such breach. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies for such breach or threatened breach.
12. Change of Control. Upon the occurrence of a Change of Control
(as defined below), all of the unexercised options shall automatically vest and
be fully exercisable and shall remain so exercisable in accordance with the
respective terms of such options. This provision shall apply without regard to
whether the Stock Option Plan or the Stockholders Agreement specifically
provides for accelerated vesting upon a Change in Control. For purposes of this
Agreement, "Change of Control" shall mean the first occurrence after the
effective date hereof of:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50% or more (on a fully diluted basis) of either (A) the then outstanding
shares of common stock of the Company, taking into account as outstanding for
this purpose such common stock issuable upon the exercise of options or
warrants, the conversion of convertible stock or debt, and the exercise of any
similar right to acquire such common stock (the "Outstanding Company Common
Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (w) any acquisition pursuant to an initial
public offering of shares of common stock of the Company pursuant to a
registration statement declared effective under the Securities Act of 1933, as
amended, (x) any acquisition by the Company or any "affiliate" of the Company,
within the meaning of 17 C.F.R. ss. 230.405 (an "Affiliate"), (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Affiliate of the Company, (z) any acquisition
by any corporation or business entity pursuant to a transaction which complies
with clauses (A), (B), (C) and (D) of subsection (ii) of this Section 13
(persons and entities described in clauses (w), (x), (y) and (z) being referred
to herein as "Permitted Holders"); or
(ii) The consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation
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which as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, and (B) no Person
(excluding any Permitted Holder) beneficially owns, directly or indirectly, 50%
or more (on a fully-diluted basis) of, respectively, the then outstanding shares
of common stock of the corporation resulting from such Business Combination,
taking into account as outstanding for this purpose such common stock issuable
upon the exercise of options or warrants, the conversion of convertible stock or
debt, and the exercise of any similar right to acquire such common stock, or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination, (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the incumbent Board of Directors of the Company at the time of the
execution of the initial agreement providing for such Business Combination and
(D) the Employee is the President - International Xxxxxx Medical Technology,
Inc. of the new entity resulting from the Business Combination; or
(iii) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company; or
(iv) The sale of at least 80% of the assets of the Company
to an unrelated party, or completion of a transaction having a similar effect;
or
(v) The individuals who on the date of this Agreement
constitute the Board thereafter cease to constitute at least a majority thereof;
provided that any person becoming a member of the Board subsequent to the date
of this Agreement and whose election or nomination was approved by a vote of at
least two-thirds of the directors who then comprised the Board immediately prior
to such vote shall be considered a member of the Board on the date of this
Agreement.
13. Car Allowance. The Employee shall be entitled to a monthly
allowance of $650.00, which the Employee may utilize to cover expenses relating
to the use of his personal automobile.
14. Insurance. The Company may, at its election and for its
benefit, insure the Employee against accidental loss or death, and the Employee
shall submit to such physical examination and supply such information as may be
required in connection therewith.
15. Documented Transition Expenses. Employee will be eligible for
transitional expenses not to exceed $25,000 for incidental new home costs,
discount points on new home loan, and tuition penalties for early withdrawal of
two children from school.
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16. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and if sent by registered mail
to Employee's current address in the case of the Employee, or to Xxxxxx Medical
Technology, Inc., attention President and CEO, 0000 Xxxxxxx Xxxx, Xxxxxxxxx, XX
00000.
17. Waiver of Breach. A waiver by the Company or Employee of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other party.
18. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without reference to the conflicts of laws principles therein.
19. Assignment. This Agreement may be assigned, without the
consent of the Employee, by the Company to any person, partnership, corporation,
or other entity which has purchased substantially all the assets of such
Company, provided such assignee assumes all the liabilities of such Company
hereunder.
20. Entire Agreement. This instrument and the Option Agreement
entered into pursuant to Section 4(e) hereunder contains the entire agreement of
the parties with respect to the subject matter referred to herein and supersedes
any and all agreements, letters of intent or understandings between the Employee
and the Company, its subsidiaries or any of the Company's principal shareholders
with respect thereto. These Agreements may be changed only by an agreement or
agreements in writing signed by a party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set forth below.
XXXXXX MEDICAL TECHNOLOGY, INC. EMPLOYEE
By: /s/ F. Xxxxx Xxxx /s/ Xxxxx X. Xxxxx
----------------------------------- --------------------------------
F. Xxxxx Xxxx Xxxxx X. Xxxxx
President and Chief Executive Officer Date: 10 July 2001
Date: July 11, 2001
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