EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of January 31,
2004 (the "Effective Date"), is made between Xxxxxx Medical Technology, Inc., a
Delaware corporation (the "Company") and F. Xxxxx Xxxx (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 and Chief
Executive Officer 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 without the
approval of the Company, during the term of this Agreement, be engaged in any
other business activity, regardless of whether such 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 such
purchase shall not result in his collectively owning beneficially at any one
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 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 $270,000 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 the Employee's employment hereunder, in
addition to Base Salary, the Employee shall be eligible to receive an annual
performance bonus (the "Bonus") with a target of 50% of Base Salary for each
calendar year during Employee's employment; provided that, except as otherwise
provided in this Agreement, 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 of 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 (10 days
following such determination. 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.
Bays Employment Agreement
January 31, 2004
Page 2
(c) Future Option Incentive Grants. During the term of this
Agreement, the Employee shall be eligible for participation in the Amended and
Restated Xxxxxx Medical Group, Inc. 1999 Equity Incentive Plan (the "Stock
Option Plan"), as may be amended from time to time, and any other stock option
plan administered by the Compensation Committee of the Board of Directors.
(d) 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
mutual discussions between the Company and Employee; provided, however, that the
Company shall have the ultimate decision with respect to the 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. Expenses: Relocation. During the term of this Agreement, the
Company shall reimburse the Employee for all reasonable out-of-pocket expenses
incurred by the Employee in connection with the business of the Company and in
performance of his duties under this Agreement upon the Employee's presentation
to the Company of an itemized accounting of such expenses with reasonable
supporting data.
7. Term.
(a) The Employee employment under this Agreement shall commence on
the Effective Date and shall expire on April 1, 2005. Notwithstanding the
foregoing, the Company may at its election, subject to paragraph 7(b) below,
terminate the obligations of the Company 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 (6) 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 determination of the Board 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 9 or 10 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 7(a)(i) above, the Employee shall receive salary continuation pay from
the date of such termination until April 1, 2005 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.
Bays Employment Agreement
January 31,2004
Page 3
(ii) If this Agreement is terminated
pursuant 7(a)(ii) above, the Employee shall receive no salary continuation pay
or severance pay.
(iii) If this Agreement is terminated
pursuant to paragraph 7(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 of
the Base Salary. During the Salary Continuation Period, the Employee shall also
be eligible to receive 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.
(c) During the Salary Continuation Period, the Employee
shall be under no obligation to mitigate any of the costs to the Company of the
salary continuation payments.
8. 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 10 hereof.
9. 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).
10. 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 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.
Bays Employment Agreement
January 31, 2004
Page 4
11. Covenants Not To Compete or Interfere. During the term of this
Agreement, including any extensions, and 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 in 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, in 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, lessee or employee of the Company or its
subsidiaries. It is the intent of the parties that the agreement set forth in
this paragraph 11 apply in all parts of the world.
Employee agrees that a monetary remedy for a breach of the agreement
set forth in this paragraph 11 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 11 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 11 shall be adjudicated
to be invalid or unenforceable, this paragraph 11 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 11, imposes any additional terms or restrictions
which respect to the agreement set forth in this paragraph 11, this paragraph 11
shall be deemed amended to incorporate such additional terms or restrictions.
12. Injunctive Relief. If there is a breach or threatened breach
of the provisions of paragraphs 9, 10 or 11 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.
13. [Reserved].
14. Car Allowance. The Employee shall be entitled to a monthly
allowance of $850.00, which the Employee may utilize to cover expenses relating
to the use of his personal automobile. The Company shall pay for all regularly
scheduled maintenance, insurance, repairs, and registration fees for such
automobile. The Company shall not be responsible for any costs, expenses, or
other obligations related to such automobile other than regularly scheduled
maintenance costs, insurance, repairs, registration fees, and the monthly
allowance payable hereunder.
15. 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.
Bays Employment Agreement
January 31,2004
Page 5
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 0000 Xxxx Xxxx, Xxxxxxxxxxxx, XX 00000, in the case of the Employee, or to
Xxxxxx Medical Technology, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000, Attn:
General Counsel, in the case of the Company, or to such other address as either
party shall notify the other.
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 of the other party.
18. Governing Law. This Agreement shall be governed by and
construed by and enforced in accordance with the laws of the state of Tennessee,
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 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 as of the
Effective Date.
AGREED AND ACCEPTED:
XXXXXX MEDICAL TECHNOLOGY, INC. EMPLOYEE
By: /s/ Xxxxx X. Xxxxxx /s/ F. Xxxxx Xxxx
--------------------------- ------------------------
Xxxxx X. Xxxxxx F. Xxxxx Xxxx
Chairman of the Board of Directors
