EXHIBIT 10.08
Heartware, Inc.
Heartware Limited
Xxxxxxx X. Xxxxxxxx
Executive Service Agreement
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Contents
1 INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 2
1.3 Headings 2
2 EMPLOYMENT OF EXECUTIVE 3
3 TERM 3
4 LOCATION 3
5 HOURS 3
6 DUTIES 3
6.1 General duties 3
6.2 Specific duties 4
7 REMUNERATION 4
7.1 Salary 4
7.2 Salary payments 4
7.3 Salary Review 4
7.4 Bonus scheme 5
7.5 Sign on bonus 5
7.6 Other benefits 5
8 Expenses 5
9 Employee Share Option Plan 6
10 Annual leave 6
10.1 Entitlement to annual leave 6
10.2 Taking annual leave 6
11 PROPRIETARY INFORMATION AGREEMENT 6
12 ACKNOWLEDGMENTS 7
13 RESTRICTIVE COVENANTS 7
13.1 Non-competition 7
13.2 Non-solicitation 8
13.3 General provisions 8
14 TERMINATION 8
14.1 Termination for cause 9
14.2 Termination without Cause 10
14.3 Termination by Executive for "Good Reason" 10
14.4 Deemed breach 11
14.5 Garden leave 11
15 RESIGNATION AS AN OFFICER 11
16 COMPANY PROPERTY 12
16.1 Company property 12
16.2 Confidential information 12
16.3 Destruction of property 12
17 POLICIES 12
18 SURVEILLANCE 13
18.1 Computer use 13
18.2 Camera surveillance 13
19 SEVERABILITY 13
20 GOVERNING LAW 13
21 ARBITRATION 13
22 NO WAIVER 13
23 ENTIRE AGREEMENT 14
24 TAX CONSEQUENCES 14
25 NOTICES 14
26 PUBLICITY 14
27 NON-DISPARAGEMENT 14
28 MISCELLANEOUS 15
ii
DATE
Parties
HEARTWARE, INC. a Delaware corporation of 0000 Xxxxxxxxx Xxx, Xxxxxxx,
Xxxxxxx XXX 00000-0000 (COMPANY)
HEARTWARE LIMITED (ACN 111 970 256) an Australian corporation of Xxxxx 00,
0 Xxxx Xxxxxx, Xxxxxx in the State of New South Wales, Australia (HEARTWARE
AUSTRALIA)
XXXXXXX X. XXXXXXXX of Town Line Road, Franklin, Massachusetts, USA
(EXECUTIVE)
BACKGROUND
A HeartWare Australia is the owner of all of the issued and outstanding
voting stock of the Company.
B The Company wishes to employ the Executive and to appoint him to the
position of President of the Company and HeartWare Australia wishes to
appoint him to the position of director and Chief Executive Officer of
HeartWare Australia. The Executive has agreed to accept the employment with
the Company and appointments as President, director and Chief Executive
Officer of the Company and HeartWare Australia, respectively, on the terms
and conditions set out in this Agreement.
AGREED TERMS
1 Interpretation
1.1 DEFINITIONS
In this document:
AGREEMENT means the agreement as evidenced by this document.
BOARD means the board of directors of the Company.
COMMENCEMENT DATE means 18 September 2006 or such other date as the parties
may agree in writing.
COMPETITIVE BUSINESS means any business or activity which is involved in
the research, development, sale, distribution and/or marketing of
mechanical circulatory assist devices.
CONFIDENTIAL INFORMATION includes all information, howsoever recorded or
stored, relating to the business, methodology or affairs of the Company,
HeartWare Australia or any other company in the Group, or any person or
entity with which the Company, HeartWare Australia or any other company in
the Group deals or is concerned which is not within the public domain.
DISPUTE means a difference or dispute arising out of or in relation to this
Agreement or the Employment.
EMPLOYMENT means the employment of the Executive under this Agreement.
GROUP means HeartWare Australia, the Company and such other respective
parent,
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subsidiary, affiliate, or otherwise related corporations as may exist from
time to time.
HEARTWARE AUSTRALIA BOARD means the board of directors of HeartWare
Australia.
INTELLECTUAL PROPERTY includes, but is not limited to, ideas, designs,
patents, trade marks, copyright and designs whether registered or
unregistered, software developments, computer programs, security codes,
eligible layout rights, know-how, inventions and improvements in procedures
made or discoveries conceived from the moment of creation and/or fixation
in tangible media.
1.2 INTERPRETATION
Unless expressed to the contrary:
(a) words importing:
(i) the singular include the plural and vice versa;
(ii) any gender includes the other genders;
(b) if a word or phrase is defined cognate words and phrases have
corresponding definitions;
(c) a reference to:
(i) a person includes a firm, unincorporated association, corporation
and a government or statutory body or authority;
(ii) a person includes its legal personal representatives, successors
and assigns;
(iii) a statute, ordinance, code or other law includes regulations and
other statutory instruments under it and consolidations,
amendments, re-enactments or replacements of any of them;
(iv) a right includes a benefit, remedy, discretion, authority or
power;
(v) an obligation includes a warranty or representation and a
reference to a failure to observe or perform an obligation
includes a breach of warranty or representation;
(vi) time is to local time in the State of Florida;
(vii) "$" or "dollars" is a reference to the lawful currency of the
United States of America;
(viii) AUD is reference to the lawful currency of Australia; and
(ix) writing includes any mode of representing or reproducing words in
tangible and permanently visible form, and includes facsimile
transmission.
(d) the language in all parts of this Agreement will be construed, in all
cases, according to its fair meaning, and not for or against either
party hereto; the parties acknowledge that each party and its counsel
have reviewed and revised this Agreement (or have been given the
opportunity to review and revise the Agreement) and that the normal
rule of construction, to the effect that any ambiguities are to be
resolved against the drafting party, will not be employed in the
interpretation of this Agreement.
1.3 HEADINGS
Headings do not affect the interpretation of this Agreement.
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2 Employment of Executive
Subject to CLAUSE 11, the Company shall employ the Executive and the
Executive shall serve the Company as President and shall serve HeartWare
Australia as a director and Chief Executive Officer. In his capacity as
President of the Company, he shall report to, and receive direction from,
the Board. The parties agree that the Executive is not, by reason of this
Agreement or otherwise, an employee of HeartWare Australia.
3 Term
The Employment will commence on the Commencement Date and continue until
terminated in accordance with this Agreement. This employment relationship
is of no set duration.
4 Location
The Executive will be based at Company premises to be located in or near
the City of Boston, Massachusetts, but the Executive acknowledges that,
from time to time, the Executive will be required to perform his duties at
such other place or places as the needs of the Company or HeartWare
Australia may reasonably require. The Company and HeartWare Australia
acknowledge that it is their present intention to establish a
non-manufacturing facility of the Company in or near the City of Boston,
Massachusetts, within six (6) months from the Commencement Date. The
location of such facility shall be mutually agreed upon by the Executive
and the HeartWare Australia Board.
5 Hours
The Executive will work during the normal business hours of the Company and
such other hours as are reasonably necessary for the Executive to perform
his duties. The Executive acknowledges and agrees that, having regard to
the nature and seniority of the Executive's position and the operational
requirements of the Company and HeartWare Australia, such additional hours
are reasonable.
The Executive acknowledges that he is an exempt employee under the
wage-hour laws of the United States and Massachusetts and, as such, he is
not required to be paid, and will not be entitled to, any remuneration
beyond that specified in this Agreement for work performed outside normal
business hours.
6 Duties
6.1 GENERAL DUTIES
The Executive will:
(a) perform the duties assigned to the Executive from time to time that
are consistent with the positions for which he is being engaged and
comply with all lawful directions given to the Executive by the Board,
the HeartWare Australia Board and any person duly authorised by the
Board or the HeartWare Australia Board, to the extent such directions
would not reasonably be expected to result in a violation of the terms
of this Agreement or applicable law;
(b) promote and enhance the interests, welfare, business, profitability,
growth and reputation of the Company, HeartWare Australia and the rest
of Group;
(c) not intentionally do anything which is or may be harmful to the
Company, HeartWare Australia or any other company in the Group;
(d) perform his duties and responsibilities in a proper and efficient
manner;
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(e) promptly report to the Board, the HeartWare Australia Board or such
person as the Board or the HeartWare Australia Board may from time to
time determine, all information and explanations as it may reasonably
require in connection with matters relating to the Employment or the
business of the Company, HeartWare Australia and any other company in
the Group;
(f) except in the case of absence by reason of illness or incapacity or on
leave in accordance with this Agreement, devote substantially all of
his business time, attention and abilities to the business of the
Company, HeartWare Australia and the rest of the Group, provided that
the Executive may engage in non-competitive charitable activities,
management of his personal investments, and participate as a member of
the board of directors of companies that are not engaged in a
Competitive Business, provided that membership by the Executive on
such boards of directors has been previously approved by the HeartWare
Australia Board in writing (such approval not to be unreasonably
withheld), for reasonable periods of time each month so long as such
activities do not, individually or in the aggregate, interfere in any
significant manner with the Executive's responsibilities under this
Employment Agreement;
(g) not act, or take any action that could reasonably be expected to be,
in conflict with the best interests of the Company, HeartWare
Australia or any other company in the Group.
6.2 SPECIFIC DUTIES
Without limiting CLAUSE 6.1, the Executive will perform all of the duties
which are ordinarily and customarily performed by a person holding the
position of President and/or Chief Executive Officer of a publicly listed
company, including the obligations imposed on Executive as a corporate
officer by any exchange on which the Company's stock is currently listed or
traded or such obligations as may be imposed on him in the future based on
the fact that the Company becomes listed on any other exchanges.
7 Remuneration
7.1 SALARY
As compensation for the Employment as well as the related obligations the
Executive has agreed to perform in connection with this Agreement, the
Company will pay to the Executive a salary of $350,000 per annum, payable
as specified in clause 7.2 below, or on such other periodic basis as may be
mutually agreed upon. The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
7.2 SALARY PAYMENTS
The salary will be paid bi-monthly in arrears by check or via direct
deposit into a bank account nominated by the Executive.
7.3 SALARY REVIEW
The Executive's salary will be reviewed annually. Any additional increase
to his salary will be at the sole discretion of the Company.
The Executive acknowledges and agrees:
(a) he is not entitled to any remuneration or any other payments or
benefits in connection with his appointment to the position of Chief
Executive Officer or director of HeartWare Australia, other than as
provided under this Agreement; and
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(b) if, during the Employment, the Executive is appointed as a director of
the Board or appointed as a director of any board of directors of any
other company in the Group, the Executive is not entitled to any
increase in his salary or any other payment or fee in connection with
the appointment(s).
7.4 BONUS SCHEME
(a) The Executive is eligible to participate in HeartWare Australia's
performance based bonus scheme. Subject to the achievement by the
Executive, to the reasonable satisfaction of the HeartWare Australia
Board, of the Executive's Key Performance Indicators (which will be
determined by the HeartWare Australia Board in consultation with the
Executive), the Executive will be paid an amount (which shall not
exceed $75,000 in the first year of Employment but may, at the
discretion of the HeartWare Australia Board, exceed $75,000
thereafter) by way of an annual bonus payment.
(b) The Executive may be eligible to participate in other bonus schemes of
the Company or HeartWare Australia and the amount of any such bonus
payable to the Executive (if any) will be determined by the Company or
HeartWare Australia Board (as the case may be), in their absolute
discretion. Any such bonuses are not guaranteed.
7.5 SIGN ON BONUS
On the Commencement Date, the Company will pay to the Executive a one-off
bonus payment of $75,000 (less applicable taxes) (Sign-on Bonus). The
Executive agrees that if the Employment is terminated by the Company for
Cause, or by the Executive for any reason other than for Good Reason (as
defined below), within the period of six months from the Commencement Date,
the Executive must repay the Sign-on Bonus to the Company in full within 14
days of the date that the Employment is terminated by the Executive. The
Executive shall not be required to repay the Sign-on Bonus under any other
circumstances.
7.6 OTHER BENEFITS
The Executive is entitled to such other benefits available generally to
Company employees pursuant to Company programs as may be implemented from
time to time, such as participation in Group insurance schemes, in
accordance with the policies of the Company in place from time to time,
subject to the applicable terms and conditions of the benefit plans then in
effect. Nothing herein shall affect the Company's ability to modify, alter,
terminate or otherwise change any benefit plan it has in effect at any
given time, to the extent permitted by law. The parties acknowledge that
Executive has been provided with access to the summary plan descriptions or
similar materials describing the benefits currently available to Company
employees, including but not limited to health, dental and disability
insurance.
8 Expenses
On provision of documentary evidence reasonably required by the Company,
the Company will reimburse the Executive for all reasonable travelling,
accommodation and general expenses incurred by the Executive in the
performance of the Executive's duties in connection with the business of
the Company, HeartWare Australia or any other company in the Group. This
reimbursement shall include reasonable expenses for establishing and
maintaining a temporary office for Company business at the Executive's
residence, including reasonable videoconferencing capabilities, from the
Commencement Date until the Company opens its non-manufacturing facility in
or near the City of Boston as described at CLAUSE 4 above. Without
otherwise limiting the foregoing, the Executive shall be entitled to travel
Business Class on all international flights undertaken for purposes of
furthering the business of the Company and HeartWare Australia.
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9 Employee Share Option Plan
(a) On the Commencement Date, HeartWare Australia will grant the Executive
options under HeartWare Australia's Employee Share Option Plan (ESOP),
subject to the terms of the ESOP.
(b) The number, exercise price and vesting dates of the options will be as
follows:
NUMBER OF EXERCISE
OPTIONS PRICE VESTING DATE
--------- -------- ---------------------
1,395,316 AUD$1.10 First Anniversary of
Commencement Date
1,395,316 AUD$1.10 Second Anniversary of
Commencement Date
1,395,316 AUD$1.10 Third Anniversary of
Commencement Date
1,395,316 AUD$1.10 Fourth Anniversary of
Commencement Date
The Executive shall have 60 days after the effective date of
termination of the Employment to exercise all vested options granted
under the ESOP.
(c) For the avoidance of doubt and without limiting the terms of the ESOP,
upon the termination of the Employment, for whatever reason, the
Executive will not be entitled to exercise any options that were due
to vest under CLAUSE 9(B) after the date that the Employment is
terminated, other than any options, the vesting of which is
accelerated under CLAUSES 14.2(B), 14.3, 14.4 AND 14.5, and all such
unvested options (other than any such accelerated options) will lapse
upon the termination of the Employment.
(d) During the Employment, HeartWare Australia may, at its sole
discretion, grant additional options to the Executive under the ESOP.
10 Annual leave
10.1 ENTITLEMENT TO ANNUAL LEAVE
The Executive shall be entitled to four (4) weeks annual (vacation) leave
per annum. Annual leave does not accrue from year to year during the
Employment.
10.2 TAKING ANNUAL LEAVE
(a) Annual leave will be taken at times approved by the Board (acting
reasonably).
(b) Upon the termination of the Employment, the Executive will be paid an
amount equal to any accrued, but untaken annual leave.
11 Proprietary Information Agreement
The Employment is conditional upon the execution by the Executive of the
Proprietary Information, Confidentiality and Inventions Assignment
Agreement (PROPRIETARY INFORMATION AGREEMENT). The Executive agrees to
comply with the terms of the Proprietary Information Agreement. The
Executive acknowledges that the Company's willingness to employ him
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under the terms of this Agreement is contingent upon the Executive's
execution of and compliance with the terms of the Proprietary Information
Agreement.
12 Acknowledgments
The Executive acknowledges and agrees that:
(a) the Company, HeartWare Australia and the rest of the Group have spent
and will spend effort and money in establishing and maintaining their
customer base, employee skills and the Confidential Information and
they have significant value to the Company and the Company has a
protectable business interest in its customer base, and Confidential
Information, as well as the skills it develops in its employees;
(b) employment by the Company creates a relationship of confidence and
trust with respect to any Confidential Information that may be
disclosed to Executive by the Company that relates to the business of
the Company or HeartWare Australia or any other member of the Group,
as well as any customer, consultant, vendor or supplier of the Company
or HeartWare Australia or any other party with whom the Company or any
other party with whom the Company agrees to hold such information
(including any and all copies thereof) of such party in confidence;
(c) the business of the Company, HeartWare Australia and the rest of the
Group is and is expected to continue to be conducted on a worldwide
basis, and the Executive will be actively involved with the business
of the Company, HeartWare Australia and other Group members on a
worldwide basis;
(d) the only fair and reasonable manner in which the interests of the
Company, HeartWare Australia and the rest of the Group can be
protected is by the restraints imposed on the Executive in this
Agreement and the Proprietary Information Agreement;
(e) the Executive has received adequate consideration for the restraint
obligations imposed on the Executive in this Agreement and the
Proprietary Information Agreement;
(f) the duration, extent and application of the respective restraints
contained in this Agreement and the Proprietary Information Agreement
are at the date of this Agreement (and as the parties can at that date
foresee) not greater than is reasonably necessary for the protection
of the interests of the Company and HeartWare Australia given the
nature of the business and undertaking of the Company and HeartWare
Australia; and
(g) Executive represents and acknowledges that he is not bound by any
restrictive covenants and has no prior or other obligations or
commitments of any kind that would in any way prevent, restrict,
hinder or interfere with Executive's acceptance of employment or the
performance of all duties and services hereunder to the fullest extent
of the Executive's ability and knowledge
13 Restrictive Covenants
13.1 NON-COMPETITION
(a) During employment
The Executive will not without the prior written consent of the Company or
HeartWare Australia during the Employment either directly or indirectly in
any capacity (including without limitation as principal, agent, partner,
employee, shareholder, unitholder, joint venturer, director, trustee,
beneficiary, manager, consultant or advisor) carry on, advise, provide
services to or be engaged, concerned or interested in or associated with
any Competitive
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Business, or be engaged or interested in any public or private work or
duties which in the reasonable opinion of the Board or the HeartWare
Australia Board may hinder or otherwise interfere with the performance of
the Executive of his duties under this Agreement.
(b) After employment
The Executive will not at any time in the 12 months following the
termination of the Employment (for whatever reason) without the written
consent of the Company or HeartWare Australia:
(i) on a worldwide basis directly or indirectly in any capacity
(whether as principal, agent, partner, employee, shareholder,
unit holder, joint venture, director, trustee, beneficiary,
manager, consultant or advisor) carry on, advise, provide work or
services to or be engaged, concerned or interested in or
associated with a Competitive Business; or
(ii) counsel, procure or otherwise assist any person to do any of the
acts referred to in CLAUSE 13.1(B)(I) above.
Given that the business of the Company and HeartWare Australia and the
Group is and is expected to continue to be conducted on a worldwide basis,
and the Executive will be actively involved with and intimately familiar
with the business of the Company, HeartWare Australia and the Group on a
worldwide basis, the Executive acknowledges and agrees that more narrow
geographical limitations of any nature on this non-competition covenant
(and the non-solicitation provisions set forth below) are therefore not
appropriate and would not adequately protect the Company or HeartWare
Australia.
Nothing in this CLAUSE 13.1 prohibits the Executive (whether directly or
through nominees) of holding shares listed on a recognised stock exchange,
provided the Executive does not hold more than 5% of the issued capital of
a company.
13.2 NON-SOLICITATION
During the Executive's employment with the Company and for twelve (12)
months after termination thereof (for whatever reason), the Executive shall
not, directly or indirectly, on his own behalf or on behalf of any third
party, without the express written consent of the Company or HeartWare
Australia:
(a) canvass, solicit, target, induce or entice or endeavour to solicit,
target, induce or entice away from the Company or HeartWare Australia,
or attempt to divert, reduce or take away, the business or patronage
(with respect to products or services of the kind or type developed,
produced, marketed, furnished or sold by the Company with which
Executive was substantively involved during the course of his
employment with the Company) of, of any of the clients, customers,
vendors, suppliers or accounts, or prospective clients, customers,
suppliers, vendors or accounts of the Company, HeartWare Australia or
any other company in the Group, that were contacted, solicited or
served by the Executive while employed by the Company or supplier to
or in the habit of dealing with the Company, HeartWare Australia or
any other company in the Group;
(b) target, recruit, solicit, hire away, or otherwise interfere with the
employment relationship of, or endeavour to entice away, any employee
of the Company, HeartWare Australia or any other company in the Group,
or otherwise induce any such employee to cease their relationship with
the Company, HeartWare Australia or the Group; or
(c) counsel, procure or otherwise assist any person to do any of the acts
referred to in CLAUSES 13.2(B) OR (C) above.
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The Executive acknowledges and agrees that, in the event of a breach or
threatened breach of any section of this CLAUSE 13 by Executive, the
Company may suffer irreparable harm and will therefore be entitled to
injunctive relief to enforce this provision, which shall be in addition to
any other remedies available to it, as well as an award of attorneys' fees
and costs to cover the expenses it incurs in seeking to enforce this
provision.
13.3 GENERAL PROVISIONS
(a) The parties agree that the relevant public policy aspects of covenants
not to compete have been discussed, and that every effort has been
made to limit the restrictions placed upon the Executive to those that
are reasonable and necessary to protect the Company's legitimate
interests. Executive acknowledges that, based upon his education,
experience, and training, this non-compete provision will not prevent
him from earning a livelihood and supporting himself and his family
during the relevant time period.
(b) If any restriction set forth in CLAUSE 13 is found by any court of
competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or
geographic area, it shall be interpreted to extend over the maximum
period of time, range of activities or geographic areas as to which it
may be enforceable.
(c) The restrictions contained in CLAUSE 13 are necessary for the
protection of the business and goodwill of the Company and/or its
affiliates and are considered by the Executive to be reasonable for
such purposes. The Executive agrees that any material breach of CLAUSE
13 will cause the Company and/or its affiliates substantial and
irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Company
shall have the right to seek specific performance and injunctive
relief.
(d) The provisions of CLAUSE 13 shall survive termination or expiration of
this Agreement.
(e) The existence of a claim, charge, or cause of action by Executive
against the Company shall not constitute a defense to the enforcement
by the Company of the foregoing restrictive covenants, but such claim,
charge, or cause of action shall be litigated separately.
14 Termination
14.1 TERMINATION FOR CAUSE
Notwithstanding any other provision contained in this Agreement, the
Employment may be terminated by the Company: (A) immediately for "Cause" in
the event of a termination under CLAUSE 14.1(B), 14.1(C), 14.1(E), 14.1(H)
or 14.1(I); and (B) for "Cause", in the event of a termination under CLAUSE
14.1(A), 14.1(D), 14.1(F) OR 14.1(G), upon the end of a thirty (30) day
period from the date of giving of notice to the Executive of a termination
for Cause under such CLAUSES, during which period the Executive shall have
the right to cure the basis for such termination and, to the extent so
cured (if it is reasonably susceptible of cure or correction), the Company
shall not be entitled to terminate the Employment for Cause on such basis
For purposes of this Agreement, a termination for "Cause" shall mean a
termination based on:
(a) Executive's material or persistent breach of this Agreement;
(b) Executive engaging in any act which constitutes serious misconduct,
theft, fraud, material misrepresentation, serious dereliction of
fiduciary obligations or duty of loyalty to the Company;
(c) Executive's conviction of a felony, or a plea of guilty or nolo
contendere to a felony charge or any criminal act involving moral
turpitude or which in the reasonable
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opinion of the Board or the HeartWare Australia Board brings the
Executive, the Board, the HeartWare Australia Board, the Company,
HeartWare Australia or any other company in the Group into disrepute;
(d) Executive's neglect of or negligent performance of his duties under
this Agreement;
(e) Executive's willful unauthorized disclosure of material confidential
information belonging to the Company, or entrusted to the Company by a
client, customer, or other third party;
(f) Executive repeatedly being under the influence of drugs or alcohol
(other than prescription medicine or other medically-related drugs to
the extent that they are taken in accordance with their directions)
during the performance of his duties under this Agreement, or, while
under the influence of such drugs or alcohol, engaging in grossly
inappropriate conduct during the performance of his duties under this
Agreement;
(g) Repeated failure by the Executive to comply with the lawful directions
of the Board that are not inconsistent with the terms of this
Agreement; or
(h) Executive's actual engagement in conduct that violates applicable
state or federal laws governing the workplace that could reasonably be
expected to bring the Company, HeartWare Australia or any other
company in the group into disrepute.
In the event that Executive's employment is terminated for Cause, the
Company will only pay to the Executive the amount of salary and any
statutory entitlements to which the Executive is entitled up to the date of
such termination.
14.2 TERMINATION WITHOUT CAUSE
(a) Either the Company or the Executive may terminate the Employment, at
any time, by giving three (3) months' prior notice in writing to the
other party.
(b) In the event of any termination of the Employment by the Company for
any reason other than for Cause, the Company shall be required to
continue to pay the Executive the salary then in effect pursuant to
Section 7.1 for a period of six (6) months following such termination,
and shall continue to provide to the Executive (and his family, where
applicable) for such six (6) month period the benefits being provided
to Executive pursuant to Section 7.6 immediately prior to such
termination. In addition, the Executive shall be entitled to
acceleration of a pro rata portion of the options that would otherwise
vest on the next anniversary of the Commencement Date following the
date of termination, based on the number of months he was employed
during the relevant 12 month period through the date of termination
(in other words, Executive shall be entitled to accelerated vesting,
with the number of options that will be accelerated being determined
by a formula, pursuant to which the total annual option entitlement
(1,395,316 shares) is multiplied by a fraction, the numerator of which
is the number of months actually worked during the relevant twelve
month period, measured from the most recent anniversary of the
Commencement Date, and the denominator of which is twelve (12)).
(c) In the event of the termination of the Employment by the Executive
pursuant to clause 14.2(a), the Company may elect to pay the Executive
three (3) months' salary in lieu of providing notice or any
combination of such notice and payment in lieu of notice.
(d) In the event of the termination of the Employment by the Company
pursuant to CLAUSE 14.2(A), the Company may elect to pay the Executive
three months' salary in lieu of providing notice or any combination of
such notice and payment in lieu of notice, in addition to payment of
the other amounts and provisions of the other benefits provided in
CLAUSE 14.2(B).
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14.3 TERMINATION BY EXECUTIVE FOR "GOOD REASON"
Notwithstanding the above, at any time after the Commencement Date, the
Executive shall have the right to terminate his employment under this
Agreement for "Good Reason" (as defined below) upon thirty (30) days' prior
written notice to the Company.
For purposes of this Agreement, "Good Reason" is defined as any one of the
following: (i) Company's material breach of any provision of this
Agreement; (ii) any material adverse change in Executive's position which
results in: (A) a material diminution in any material respect in
Executive's position, authority or compensation, which diminution continues
in time over at least thirty (30) days, such that it constitutes an
effective demotion, or (iii) at any time after the thirtieth (30th) month
after the Commencement Date the HeartWare Australia Board and Executive
shall have mutually determined, acting in good faith, that, in the
reasonable performance of his duties under this Agreement, it shall be
necessary for Executive to spend more than five (5) nights per month over
any consecutive three month period beginning with the twenty-seventh (27th)
month following the Commencement Date in the Company's facilities in
Florida for the purposes of carrying out the Executives duties and
responsibilities under this Agreement, provided, however, that the
Executive shall not be permitted to terminate the Employment for Good
Reason under this clause (iii) to the extent that the Executive is in
Florida facilitating the relocation of substantially all of its
non-manufacturing operations to the Boston, Massachusetts, vicinity, and
provided, further, that any circumstances alleged by the Executive to
constitute Good Reason under clauses (i) and (ii) above of the foregoing
shall not constitute Good Reason unless the Executive shall have provided
the Company with written notice of such circumstances constituting Good
Reason (which notice shall specify in reasonable detail the particulars of
such Good Reason) and the Company has not cured any such alleged Good
Reason within 30 days of Company's receipt of such written notice.
A termination for Good Reason shall be treated for all severance purposes
as a Termination by the Company other than for Cause and the Executive
shall be entitled to receive the benefits set out under CLAUSE 14.2(B). The
Executive shall also be entitled to receive any accrued but unpaid salary
and holiday leave, and to be reimbursed for any reasonable reimbursable
expenses that have not been reimbursed prior to such termination.
14.4 TERMINATION FOR EXECUTIVE'S PERMANENT DISABILITY
To the extent permitted by applicable law, in the event that the Executive
becomes incapacitated due to illness or injury of any kind which prevents
or, in the opinion of an independent physician selected at the mutual
agreement of the Company and Executive (or, to the extent he is unable to
do so, his spouse or other representative), will prevent the Executive from
performing his duties under this Agreement for a period of three
consecutive months or any periods aggregating three months in any period of
12 months during the period of the Employment, the Company shall be
entitled to terminate the Executive's employment. In the event that
Executive's employment is terminated due to Executive's permanent
disability, Executive shall be entitled to:
(a) continue to receive the salary then in effect pursuant to Section 7.1
for a period of three (3) months following the effective date of such
termination;
(b) continue to receive the benefits being provided to Executive (and his
family, where applicable) pursuant to Section 7.6 immediately prior to
such termination for a period of three (3) months following the
effective date of termination; and
(c) acceleration of the options to the extent that Executive's interest
shall vest in a pro rata portion of those options, based on the number
of months he was employed during the relevant 12 month period through
the last day he actually reported to work (in other words, Executive
shall be entitled to accelerated vesting, with the number of options
that will be accelerated being determined by a formula, pursuant to
which the total annual
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option entitlement (1,395,316 shares) is multiplied by a fraction, the
numerator of which is the number of months actually worked during the
relevant twelve month period, measured from the most recent
anniversary of the Commencement Date, and the denominator of which is
twelve (12)).
Nothing herein shall be deemed to affect Executive's entitlement to any
disability benefits he is or may be eligible or entitled to receive in
connection with or as a result of his employment with the Company.
14.5 TERMINATION DUE TO EXECUTIVE'S DEATH
Executive's employment pursuant to this Agreement shall terminate
immediately upon the Executive's death. Under such circumstances,
Executive's estate shall receive any accrued but unpaid salary. In
addition, the Company shall pay Executive's estate the salary then in
effect pursuant to Section 7.1 for a period of six (6) months following the
effective date of such termination, and, to the extent applicable, the
Company shall continue to provide the Executive's family with the benefits
being provided pursuant to Section 7.6 immediately prior to such
termination for a period of six (6) months following the effective date of
termination. Furthermore, Executive's interest in the options in which he
was scheduled to vest at the end of the relevant twelve month period shall
be accelerated to the extent that Executive's interest shall vest in a pro
rata portion of those options, based on the number of months he was
employed during the relevant year up through his last day of employment (in
other words, Executive shall be entitled to accelerated vesting, with the
number of options that will be accelerated being determined by a formula,
pursuant to which the total annual option entitlement (1,395,316 shares) is
multiplied by a fraction, the numerator of which is the number of months
actually worked during the relevant twelve month period, measured from the
most recent anniversary of the Commencement Date, and the denominator of
which is twelve (12)). Except as provided herein, the Company shall not
have any further liability or obligation to the Employee, his/her
executors, heirs, assigns or any other person claiming under or through
his/her estate.
14.6 DEEMED BREACH
Termination of this Agreement by either party pursuant to the express terms
of CLAUSE 14 shall not constitute a breach of this Agreement by the party
terminating the relationship.
14.7 GARDEN LEAVE
During:
(a) part or all of any period of notice of termination given by the
Executive or the Company; or
(b) any period not exceeding two weeks during which the Company is
investigating any disciplinary issue involving the Executive,
the Company or HeartWare Australia may, at their sole discretion:
(i) require the Executive to perform only such duties as the Company
or HeartWare Australia may determine or not to perform any duties
at all; and/or
(ii) require the Executive not to have any contact with any employees,
customers or business associates of the Company, HeartWare
Australia or any other company in the Group other than normal
social contact; and/or
(iii) exclude the Executive from all or any part of the Company's
premises, HeartWare Australia's premises or the premises of any
other company in the Group,
provided that the Executive's remuneration will not be withheld or reduced
as a result of the Executive complying with such directions.
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15 Resignation as an officer
Upon the termination of the Employment, the Executive shall at the request
of the Board or the HeartWare Australia Board (as the case may be) resign
without claim for compensation from:
(a) any office which the Executive holds as a director, secretary or
public officer of the Company, HeartWare Australia or the Group, or
any other company in which the Executive holds office in connection
with the Employment; and
(b) all such other offices and trusteeships held by the Executive in or in
connection with such companies.
If the Executive fails to resign in accordance with this clause, the
Executive irrevocably appoints the chairman of the HeartWare Australia
Board as the Executive's attorney with the irrevocable right to sign any
agreements or documents on behalf of the Executive and do anything required
to give effect to the Executive's resignation. The Executive ratifies and
confirms anything done by the Board or the HeartWare Australia Board
pursuant to the power conferred by this clause.
16 Company property
16.1 COMPANY PROPERTY
All correspondence, records, documents, software, promotional materials,
and other Company property, including all copies, which come into the
Executive's possession by, through or in the course of his employment,
regardless of the source and whether created by the Executive, are the sole
and exclusive property of the Company, and immediately upon the termination
of the Executive's employment, or at any time the Company shall request,
the Executive shall return to the Company all such property of the Company,
without retaining any copies, summaries or excerpts of any kind or in any
format whatsoever. Executive further agrees that should he discover any
Company property or Confidential Company Information in his possession
after the return of such property has been requested, Executive agrees to
return it promptly to Company without retaining copies, summaries or
excerpts of any kind or in any format whatsoever.
16.2 CONFIDENTIAL INFORMATION
The Executive shall immediately deliver to the Company all Confidential
Information, documentation of any description (whether in physical or
electronic form) relating to the business of the Company, HeartWare
Australia and any other company in the Group and all other property of any
description belonging to the Company, HeartWare Australia or any other
company in the Group which is in his possession, power or control which is
physically capable of delivery on the termination of the Employment with
the Company, however caused or at any time at the request of a person
authorised by the Board or the HeartWare Australia Board, including all
copies of any such property or Confidential Information.
16.3 DESTRUCTION OF PROPERTY
Instead of delivering any of the above items, the Board or the HeartWare
Australia Board may request the Executive to destroy any or all of the
above items and certify in writing to the Board or the HeartWare Australia
Board (as the case may be) that such items have been destroyed or direct
that any or all of the items above contained in computer software or data
be destroyed by erasing it from the magnetic media on which it is stored so
that the information cannot be recovered or reconstructed.
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17 Policies
The Executive agrees to abide by all policies of the Company and HeartWare
Australia as replaced, amended or varied from time to time, to the extent
not inconsistent with this Agreement. The policies of the Company and
HeartWare Australia, however, are not incorporated into this Agreement.
18 Surveillance
18.1 COMPUTER USE
From the Commencement Date, on an ongoing basis, the Executive's computer
use, including but not limited to internet and email use, may be subject to
continuous monitoring through the use of software, in accordance with
applicable policies.
18.2 CAMERA SURVEILLANCE
From the Commencement Date, on an ongoing basis, the Executive may be
subject to camera surveillance through visible cameras whilst the Executive
is on the Company's or HeartWare Australia's premises, to the extent
permitted by applicable law.
19 Severability
Any provision of this Agreement which is or becomes illegal, void or
unenforceable in any jurisdiction is severable, and such provision will be
ineffective in that jurisdiction to the extent of the illegality, voidness
or unenforceability and will not invalidate the remaining provisions of
this Agreement nor affect the validity or enforceability of that provision
in any other jurisdiction.
20 Governing law
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the principles of conflicts of law thereof.
21 Arbitration
The parties agree that, except as discussed in this Agreement, any
controversy, claim or dispute arising out of or relating to this agreement
or the breach thereof, or arising out of or relating to the employment of
the Executive, or the termination thereof, including any statutory or
common law claims under federal, state, or local law, including all laws
prohibiting discrimination in the workplace, shall be resolved by
arbitration before a single arbitrator selected by the parties in Boston,
Massachusetts in accordance with the Employment Dispute Resolution Rules of
JAMS (if the parties are unable to reach agreement as to an arbitrator
after submission of a written demand for arbitration, then an arbitrator
shall be selected pursuant to the applicable JAMS rules. The parties agree
that any award rendered by the arbitrator shall be final and binding, and
that judgment upon the award may be entered in any court having
jurisdiction thereof. The parties further acknowledge and agree that, due
to the nature of the confidential information, trade secrets, and
intellectual property belonging to the company to which the executive has
or will be given access, and the likelihood of significant harm that the
Company would suffer in the event that such information was disclosed to
third parties, nothing in this paragraph shall preclude the Company from
going to court to seek injunctive relief to prevent Executive from
violating the obligations established in paragraphs 7 through 9 of this
agreement. This agreement to arbitrate does not include claims that, by
law, may not be subject to mandatory arbitration.
15
22 No waiver
No failure to exercise or any delay in exercising any right, power or
remedy under this Agreement in any one instance will operate as a waiver in
any subsequent instance. Nor will any single or partial exercise of any
right, power or remedy preclude any other or further exercise of that or
any other right, power or remedy. Any waiver by the Company of a beach of
any provision of this Agreement in any one instance shall not operate or be
construed as a waiver of any subsequent breach hereof.
23 Entire agreement
Except as otherwise expressly provided herein, this Agreement, along with
the Proprietary Information Agreement, constitutes the whole of the terms
and conditions of the Employment and supersedes all previous agreements,
arrangements, understandings or representations in relation to the
Employment, whether oral or written. This Agreement may not be amended,
waived, discharged or terminated orally, but only by an instrument in
writing, specifically identified as an amendment to this Agreement, and
signed by all parties. By entering into this Agreement, the Executive
certifies and acknowledges that he has carefully read all of the provisions
of this Agreement and that he voluntarily and knowingly enters into said
Agreement.
24 Tax consequences
The Company will have no obligation to any Person entitled to the benefits
of this Agreement with respect to any tax obligation any such Person incurs
as a result of or attributable to this Agreement, including all
supplemental agreements and employee benefits plans incorporated by
reference therein, or arising from any payments made or to be made under
this Agreement or thereunder.
25 Notices
Any notice provided for in this Agreement shall be provided in writing.
Notices shall be effective from the date of service, if served personally
on the party to whom notice is to be given, or on the second day after
mailing, if mailed by first class mail, postage prepaid. Notices shall be
properly addressed to the parties at their respective addresses or to such
other address as either party may later specify by notice to the other.
26 Publicity
Neither party shall issue, without consent of the other party, any press
release or make any public announcement with respect to this Agreement or
the employment relationship between them. Following the date of this
Agreement and regardless of any dispute that may arise in the future, the
Executive and the Company jointly and mutually agree that they will not
disparage, criticize or make statements which are negative, detrimental or
injurious to the other to any individual, company or client, including
within the Company.
27 Non-disparagement
The Executive shall not, while the Executive is employed by the Company or
at any time thereafter, directly, or through any other personal entity,
make any public or private statements that are disparaging of the Company,
HeartWare Australia or any other member of the Group, their respective
businesses or employees, officers, directors, or stockholders. The Company
agrees that, subsequent to the termination of Executive's employment with
the Company for any reason, it will refrain from making any public
statements that are disparaging of Executive. The Company's obligations
under this section extend only to then current officers and members of the
board, and only for so long as those individuals are officers or directors
of
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the Company. Nothing herein shall be deemed to prevent the Executive or the
Company from complying with their respective legal obligations or
responding to a subpoena or other court order.
28 Indemnification of Executive
Except in the case of negligence, fraud, embezzlement or misrepresentation
the Company hereby agrees to indemnify and hold harmless Executive to the
fullest extent permitted by Section 145 of the Delaware General Corporation
Law and to cause any subsidiary of the Company to indemnify and hold
harmless Executive to the fullest extent permitted by the provisions of the
laws of the jurisdiction of its incorporation against any liability, loss
or expense (including reasonable attorney's fees and costs incurred in
defense of such claims) incurred in connection with the Executive's
services as an officer or director of the Company or any of its
subsidiaries or affiliates, including HeartWare Australia, if in each of
the foregoing cases, (i) Executive acted in good faith and in a manner
Executive believed to be in, or not opposed to, the best interests of the
Company, and, with respect to any criminal proceeding, had no reasonable
cause to believe Executive's conduct was unlawful, and (ii) Executive's
conduct did not constitute gross negligence or wilful or wanton misconduct.
Without limitation of the foregoing, this Section 28 shall be deemed to
grant to the Executive the rights to indemnification provided by the
Company's certificate of incorporation and by-laws, as currently
constituted, regardless of any subsequent amendment or modification of the
applicable provisions of such instruments, with such provisions being
deemed incorporated herein by reference. The Company shall advance or cause
its subsidiaries to advance all expenses (including all reasonable legal
fees and expenses) reasonably incurred by the Executive in defending any
such claim, action or proceeding, whether civil, administrative, criminal
or otherwise, brought against the Executive in his capacity as an officer
of director of the Company or any of its subsidiaries or affiliates,
including HeartWare Australia, to the fullest extent permitted under
applicable law, provided Executive provides an undertaking pursuant to
which he agrees to repay all such advances if it is ultimately determined
that Executive is not entitled to indemnification under the circumstances.
Notwithstanding anything else contained in this Agreement, the above shall
not apply where the liability, loss or expense (including reasonable
attorney's fees and costs incurred in defense of such claims) incurred by
the Executive arise as a result, directly or indirectly, of any claim or
action taken against the Executive by the Company, HeartWare Australia or
any of their respective subsidiaries or affiliates.
29 Miscellaneous
(a) The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
(b) The Company agrees to reimburse the fees and expenses of Xxxxxxx
XxXxxxxxx, LLP, counsel to the Executive, incurred in connection with
the preparation and negotiation of this Agreement and all related
matters, such fees and expenses not to exceed $5,000.
(c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their heirs, personal representatives, successors and
assigns. In the event the Company is acquired, is a non surviving
party in a merger, or transfers substantially all of its assets, this
Agreement shall not be terminated and the transferee or surviving
company shall be bound by the provisions of this Agreement. The
parties understand that the obligations of the Executive are personal
and may not be assigned by him.
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EXECUTED as an agreement.
EXECUTED by HEARTWARE, INC by its )
duly appointed officer in the )
presence of: )
------------------------------------- ----------------------------------------
Witness Officer
------------------------------------- ----------------------------------------
Name of Witness (print) Name of Officer (print)
EXECUTED by HEARTWARE LIMITED by )
its duly appointed officer in the )
presence of: )
------------------------------------- ----------------------------------------
Witness Officer
------------------------------------- ----------------------------------------
Name of Witness (print) Name of Officer (print)
SIGNED by XXXXXXX X XXXXXXXX in )
the presence of: )
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------- ----------------------------------------
Witness Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Name of Witness (print)
