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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 16th day of October,
2000, by and between Xxxxxx Xxxxxxxxxx (the "Executive") and INVIVO CORPORATION,
a Delaware corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation considers it essential to the best interests of
the Corporation and its stockholders to take steps to retain key personnel such
as the Executive; and
WHEREAS, the Corporation recognizes particularly that uncertainty might
arise among personnel in the context of any possible or actual Change in
Control, as hereinafter defined, which could result in the departure or
distraction of key personnel to the detriment of the Corporation and its
stockholders; and
WHEREAS, the Corporation has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of key
personnel of the Corporation including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from any possible or actual Change in Control.
NOW, THEREFORE, in consideration of the covenants, terms, and conditions
contained herein, the Corporation and the Executive agree:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings set forth in this Section 1.
a. "Administrative Committee" shall mean the Board or a committee
appointed by the Board to administer this Agreement.
b. "Affiliate" shall mean, with respect to a first Person, a second
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the first
Person.
c. "Associate" shall mean, with respect to a Person, (a) any corporation
or organization of which such Person is an officer or partner or, directly
or indirectly, the beneficial owner of ten percent (10%) or more of any
class of equity securities, (b) any trust or other estate in which such
Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity, and (c) any relative
or spouse of such Person, or any relative of such spouse, who has the same
home as such Person.
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d. "Benefit Continuation Period" shall mean the period beginning on the
date of the Severance of Employment or Non-Change in Control Termination,
as the case may be, and ending on the earlier to occur of (a) the one year
anniversary of the Severance of Employment, where termination was a
Severance of Employment, and the date six months from the date of such
Non-Change in Control Termination where termination was a Non-Change in
Control Termination, or (b) the date that the Executive and the Executive's
dependents are eligible and elect coverage under the plans of a subsequent
employer that provide substantially equivalent or greater benefits to the
Executive and the Executive's dependents.
e. "Board" shall mean the Board of Directors of the Corporation.
f. "Business Combination" shall mean a merger or consolidation of the
Corporation and one or more other entities in which the Corporation or a
subsidiary of the Corporation is a merging or consolidating party.
g. "Change in Control" shall mean (a) the sale of all or substantially
all of the assets of the Corporation; (b) any change in ownership or
control of the outstanding voting securities of the Corporation following
which any Person beneficially owns, together with its Affiliates and
Associates, fifty percent (50%) or more of the outstanding voting
securities of the Corporation; (c) any change in the membership of the
Corporation's Board following which Continuing Directors do not constitute
a majority of the Board; or (d) a Business Combination immediately
following which the stockholders of the Corporation immediately prior to
such Business Combination do not hold more than fifty percent (50%) of the
outstanding voting securities of the surviving entity, or the parent
company of the surviving entity, of such Business Combination in the same
proportion as such stockholders held Common Stock of the Corporation
immediately prior to such Business Combination. Notwithstanding the
foregoing, the occurrence of any of the events set forth in the prior
sentence shall not constitute a Change in Control unless such event occurs
on or prior to June 30, 2001, or such event occurs on or prior to August
31, 2001 pursuant to the terms of definitive agreement providing for such
Change in Control that is entered into on or before June 30, 2001.
h. "Code" shall mean the Internal Revenue Code of 1986, as amended to
date.
i. "Constructive Discharge" shall mean (a) without the Executive's
express written consent, the assignment to the Executive of any duties, or
the removal from or reduction or limitation of the Executive's duties or
responsibilities, which is inconsistent with the Executive's position,
organization level, duties, responsibilities or compensation status with
the Corporation immediately prior to such assignment, removal, reduction or
limitation; (b) without the Executive's express written consent, a
substantial reduction of the facilities and perquisites (including office
space and location) available to the Executive; (c) a reduction by the
Corporation in the base cash salary of the Executive; (d) a material
reduction by the Corporation in the kind and level of employee benefits to
which the Executive is entitled, with the result that the Executive's
overall benefit package is materially reduced; or (e) without the
Executive's express written consent, the relocation of the Executive to a
facility or location more than thirty five (35) miles from the Executive's
then present location.
j. "Continuing Director" shall mean, at any given time, a member of the
Board who was (a) a member of the Board on August 31, 2000, (b) elected to
the Board by the Board after August 31, 2000, provided that a majority of
the Continuing Directors voted in favor of such election, or (c) nominated
to the Board by the Board after August 31, 2000, provided that a majority
of the Continuing Directors voted in favor of such nomination, and
subsequently elected to the Board by the stockholders of the Corporation.
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k. "Just Cause Termination" shall mean a termination by the Corporation
of the Executive's employment in connection with the good faith
determination of the Corporation's Board of Directors that the Executive
has engaged in:
(i) any material breach of any written agreement between Executive
and the Corporation, if such breach causes material harm to the
Corporation;
(ii) any gross negligence or willful misconduct by Executive in
performance of duties to the Corporation that causes material harm to
the Corporation;
(iii) the substantial and repeated failure of Executive to follow the
lawful written directions of the Board or to the person whom Executive
reports;
(iv) commission of a felony under the laws of the United States or
any state thereof;
(v) commission of any material act of fraud, embezzlement or
dishonesty; or
(vi) the abuse of alcohol or controlled substances that has a
materially detrimental effect upon Executive's performance of his
duties.
l. "Non-Change in Control Termination" shall mean that either (i) the
Executive's employment is terminated by the Corporation and the termination
is not a Just Cause Termination and is not by reason of the Executive's
death or disability, or (ii) the Executive terminates his or her employment
with the Corporation by resignation following a Constructive Discharge,
and, in either event, no Change in Control has occurred prior to such
termination or resignation.
m. "Person" shall mean any individual, corporation, partnership, limited
liability company, sole proprietorship, joint venture or other
organization.
n. "Severance of Employment" shall mean (a) the termination of the
Executive's employment with the Corporation within two (2) years after the
date of a Change in Control by (i) discharge by the Corporation or (ii)
resignation of the Executive following a Constructive Discharge, or (b) the
termination of the Executive's employment with the Corporation by
resignation of the Executive within the thirty (30) day period immediately
following the first anniversary of a Change in Control. Despite the
foregoing, neither of the following will constitute a Severance of
Employment:
i. The termination of the Executive's employment by reason of death
or disability.
ii. A Just Cause Termination of the Executive's employment.
2. POSITION.
During the term of this Agreement, Corporation will employ the Executive,
and the Executive will serve the Corporation in the capacity of
_____________________________.
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3. TERM OF EMPLOYMENT.
The Corporation agrees to continue the Executive's employment, and the
Executive agrees to remain in the employ of the Corporation, for a period of one
(1) year from the date hereof unless the Executive's employment is earlier
terminated pursuant to the provisions of this Agreement.
4. COMPENSATION AND BENEFITS.
a. The Corporation agrees to pay the Executive a minimum
annual salary of $200,000, or in the event of any portion of a year, a pro rata
amount of such annual salary. The Executive's salary will be payable as earned
in accordance with Corporation's customary payroll practice.
b. The Executive will be eligible to receive an annual cash
bonus in the discretion of the Corporation's Board of Directors.
c. The Executive will be eligible to participate in
Corporation's employee benefit plans of general application, including without
limitation pension and profit-sharing plans, deferred compensation, supplemental
retirement or excess-benefit plans, stock option, incentive or other bonus
plans, life, health and dental insurance programs, 401(k) plan, paid vacations
and sabbatical leave plans, and similar plans or programs, in accordance with
the rules established for individual participation in any such plan. The
Executive shall be entitled each year to three (3) weeks leave for vacation at
full pay. The Executive shall also be entitled to reasonable holidays and
illness days with full pay in accordance with the Corporation's policy from time
to time in effect.
d. The Corporation will reimburse the Executive for all
reasonable and necessary expenses incurred by the Executive in connection with
the Corporation's business.
5. ADMINISTRATION.
The Administrative Committee shall administer this Agreement and shall have
the power and the duty to make all determinations necessary for the
implementation of this Agreement, including by way of example and not as a
limitation, the occurrence of a Change in Control and the date of such change.
Any such determination (a) shall be made on the basis of all information known
to the persons making the determination, after reasonable inquiry, (b) may be
made prospectively and subject to one or more contingent events, and (c) will be
binding on the Corporation but not the Executive. Any disagreement between the
Corporation and the Executive concerning any such determination or the
administration, implementation or interpretation of this Agreement shall be
subject to the claims and arbitration procedures set forth in Section 16
hereunder.
6. OBLIGATIONS OF THE CORPORATION UPON CHANGE IN CONTROL.
a. Within fifteen (15) days after a Change in Control or at such earlier
time as may be required by law, the Corporation shall pay to the Executive:
i. The full amount of any earned but unpaid base salary through the
date of the Change in Control, plus a cash payment for all reasonable
travel, entertainment and other expenses properly incurred by the Executive
in connection with his or her employment by the Corporation to the extent
the Executive has not already been reimbursed for such expenses.
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ii. The full amount of any unpaid annual cash bonus for any fiscal year
of the Corporation prior to the year in which the Change in Control occurs,
and a pro rata amount of any unpaid annual cash bonus for the fiscal year
in which the Change in Control occurs calculated by multiplying (A) the
number of full calendar months that the Executive was employed by the
Corporation in such fiscal year divided by 12 and (B) the amount of
$40,000, representing the target annual cash bonus amount.
b. In the event that the Executive is employed by the Corporation on the
date of a Change in Control, then on the earlier to occur of (i) ninety (90)
days after the date of the Change in Control or (ii) three (3) business days
after the date that the Executive ceases to be employed by the Corporation, then
the Corporation shall pay to the Executive the amount of $252,000, representing
an amount equal to the aggregate of the Executive's annual base salary and
target bonus plus other benefits and expenses, unless the Executive ceases to be
employed by the Corporation for either of the following reasons prior to the
date which is ninety (90) days after the date that the Change in Control occurs,
in which event no amount shall be due under this Section 6.b.: (1) a Just Cause
Termination of the Executive prior to ninety (90) days after the date of a
Change in Control or (2) the voluntary resignation of the Executive prior to
ninety (90) days after the date of a Change in Control, other than a resignation
following a Constructive Discharge. The Executive shall be eligible to make
contributions to the Corporation's Section 401(k) plan, to the extent allowed
under the plan, from amounts payable to the Executive under this Section 6.
c. If and to the extent that the Executive continues to be employed by the
Corporation following a Change in Control, the Executive shall continue to
receive his salary and be eligible for bonus notwithstanding the payment of the
amounts provided herein.
d. Immediately prior to a Change in Control, any unvested stock options to
purchase shares of Common Stock from the Corporation then held by the Executive
shall become fully vested and exercisable at the time of the Change in Control.
7. OBLIGATIONS OF THE CORPORATION UPON NON-CHANGE IN CONTROL TERMINATION.
a. Within fifteen (15) days after a Non-Change in Control Termination or at
such earlier time as may be required by law, the Corporation shall pay to the
Executive:
i. The full amount of any earned but unpaid base salary through the
date of the Non-Change in Control Termination, plus a cash payment for (a)
all unused vacation time which the Executive has accrued as of the
Non-Change in Control Termination, and (b) all reasonable travel,
entertainment and other expenses properly incurred by the Executive in
connection with his or her employment by the Corporation to the extent the
Executive has not already been reimbursed for such expenses.
ii. The full amount of any unpaid annual cash bonus for any fiscal year
of the Corporation prior to the year in which the Non-Change in Control
Termination occurs, and a pro rata amount of any unpaid annual cash bonus
for the fiscal year in which the Non-Change in Control Termination occurs
calculated by multiplying (A) the number of full calendar months that the
Executive was employed by the Corporation in such fiscal year divided by 12
and (B) the amount of $40,000, representing the target annual cash bonus
amount.
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b. Within 30 days after a Non-Change in Control Termination, the
Corporation shall pay to the Executive the amount of $126,000 and no further
payments (other than as provided in this Agreement) shall be due in respect of
the Executive's salary or bonus for such year.
8. TERMINATION DUE TO DEATH OR DISABILITY.
Within fifteen (15) days after the Executive is terminated due to death or
disability, or at such earlier time as may be required by law, the Corporation
shall pay (a) to the Executive, if the Executive has been terminated due to
disability, or (b) if the Executive has died, to the Executive's surviving
spouse, issue by right of representation or estate, in that order:
a. The full amount of any earned but unpaid base salary through the date of
termination, plus a cash payment for (a) all unused vacation time which the
Executive has accrued as of the date of termination, and (b) all reasonable
travel, entertainment and other expenses properly incurred by the Executive in
connection with his or her employment by the Corporation to the extent the
Executive has not already been reimbursed for such expenses.
b. The full amount of any unpaid annual cash bonus for any fiscal year of
the Corporation prior to the year in which the termination due to death or
disability occurs, and a pro rata amount of any unpaid annual cash bonus for the
fiscal year in which the termination due to death or disability occurs
calculated by multiplying (A) the number of full calendar months that the
Executive was employed by the Corporation in such fiscal year divided by 12 and
(B) the amount of $40,000, representing the target annual cash bonus amount.
c. If the termination due to death or disability occurs after the date of a
Change in Control and prior to ninety (90) days after the date of a Change in
Control, the full amount otherwise payable to the Executive under Section 6.b.
hereof.
9. OTHER TERMINATION.
Within fifteen (15) days after (a) a Just Cause Termination of the
Executive or (b) the voluntary resignation of the Executive, other than a
resignation following a Constructive Discharge or at such earlier time as may be
required by law, the Corporation shall pay to the Executive the full amount of
any earned but unpaid base salary through the date of such termination or
resignation, plus a cash payment for (i) all unused vacation time which the
Executive has accrued as of date of such termination or resignation, and (ii)
all reasonable travel, entertainment and other expenses properly incurred by the
Executive in connection with his or her employment by the Corporation to the
extent the Executive has not already been reimbursed for such expenses.
10. CONTINUATION OF BENEFITS AFTER TERMINATION.
a. After a Severance of Employment or a Non-Change in Control Termination,
the Executive and the Executive's eligible dependents shall continue to be
eligible to participate during the Benefit Continuation Period in the medical,
dental, vision, health, disability, life and other similar plans and
arrangements applicable to the Executive immediately prior to the Severance of
Employment or Non-Change in Control Termination. The Executive shall participate
on the same terms and conditions in effect throughout the Benefit Continuation
Period for active employees of the Corporation.
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b. If, at the conclusion of the Benefit Continuation Period, the Executive
is not eligible to receive coverage under the plans of a subsequent employer
that provide substantially equivalent or greater benefits to the Executive and
the Executive's dependents, the Executive may exercise his or her right under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), to continue to participate in the Corporation's medical, dental,
vision, health, disability, life and other similar plans and arrangements
applicable to the Executive, subject to the terms and conditions set forth in
COBRA and any rules and regulations promulgated thereunder.
11. FEDERAL EXCISE TAX.
a. If any amounts payable to the Executive under this Agreement are
characterized as excess parachute payments pursuant to Section 4999 of the Code
and Executive thereby would be subject to any United States federal excise tax
due to that characterization, then Executive may elect, in Executive's sole
discretion, to reduce the amounts payable under this Agreement or to have any
portion of applicable options not vest in order to avoid any "excess parachute
payment" under Section 280G(b)(1) of the Code.
b. Unless the Corporation and Executive otherwise agree in writing, any
determination required under this Section 11 shall be made in writing by
independent public accountants for the Corporation (the "Accountants"), whose
determination shall be conclusive and binding upon Executive and the Corporation
for all purposes. For purposes of making the calculations required by this
Section 11, the Accountants may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The
Corporation and Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make the
required determinations. The Corporation shall bear all fees and expenses the
Accountants may reasonably charge in connection with the services contemplated
by this Section 11. The Corporation shall pay all reasonable legal fees and
expenses incurred in defending against any claim by the Internal Revenue Service
that would require payment of any tax under Section 4999 of the Code and shall
promptly reimburse them for the reasonable expenses incurred by Executive in
connection with defending such claim provided that Executive: (i) give the
Corporation any information reasonably requested by the Corporation relating to
the claim; (ii) accept legal representation with respect to such claim by an
attorney reasonably selected by the Corporation and reasonably acceptable to
Executive; (iii) cooperate with the Corporation in good faith in contesting the
claim; and (iv) permit the Corporation to participate in and control any
proceedings relating to the claim.
12. TAXES.
The Corporation shall deduct from any payments to the Executive under this
Agreement amounts that the Corporation is required to withhold and pay either to
government agencies on behalf of the Executive or under court order to any
Person.
13. DEATH PRIOR TO PAYMENT OF AMOUNTS DUE.
In the event of the Executive's death after a Change in Control, Severance
of Employment or Non-Change in Control Termination but prior to payment to the
Executive of amounts due under this Agreement, such payment shall be made to the
Executive's surviving spouse, issue by right of representation or estate, in
that order.
14. ASSIGNMENT.
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This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and the successors and assigns of the Corporation, including any
successor or assign pursuant to a Change in Control.
15. NON-ASSIGNMENT BY THE EXECUTIVE.
The Executive shall not assign, hypothecate, or transfer any of the rights
herein to any Person other than pursuant to the laws of descent and
distribution. Any attempt to assign, hypothecate or transfer the rights
hereunder shall immediately terminate all of the Executive's rights under this
Agreement.
16. CLAIMS PROCEDURE AND ARBITRATION.
a. In the event of a disagreement between the Corporation and the Executive
on any matter arising under this Agreement, the Executive, in claiming a benefit
or requesting an interpretation or ruling under this Agreement, shall submit the
claim or request in writing to the Administrative Committee, which shall respond
in writing as soon as practicable.
b. If a claim or request is denied, the Administrative Committee shall
prepare and deliver to the Executive a written notice of denial which shall
state (a) the reason for denial, with specific reference to the provisions of
this Agreement on which denial is based; (b) a description of any additional
material or information required to prevail with the claim or request and an
explanation of why it is necessary; and (c) an explanation of the Agreement's
claim review procedure.
c. If the Administrative Committee fails to respond in writing to any claim
or request within thirty (30) days of the date such claim or request is
submitted, such failure to respond shall constitute a denial of the claim or
request.
d. If a claim or request is denied, the Executive may submit the claim or
request to mandatory and binding arbitration (an "Arbitration"). The Executive
may initiate an Arbitration by sending the Corporation an Arbitration demand in
writing. The Arbitration shall be presided over by a single arbitrator (the
"Arbitrator") selected in accordance with the Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association. Any Arbitration
shall be conducted in San Francisco, California in accordance with the
Arbitration Rules and the substantive law of the State of California; provided,
however, that the Arbitrator will have no power or authority, under the
Arbitration Rules or otherwise, to relieve the parties from their obligation
hereunder to arbitrate, or otherwise to amend or disregard any provision of this
Agreement. Judgment upon any award rendered in an Arbitration may be entered in
any court of competent jurisdiction.
17. ATTORNEYS' FEES.
In the event that any Arbitration, suit, action or proceeding (including
any appeal therefrom, but excluding any and all proceedings before the
Administrative Committee) is brought by the Executive to review any decision of
the Administrative Committee pertaining to this Agreement or to enforce any
right hereunder, and the Executive is the prevailing party in such Arbitration,
suit, action or proceeding, the Executive shall be entitled to recover from the
Corporation his or her attorneys' fees and other reasonable costs incurred in
connection therewith. During the pendency of any such Arbitration, suit, action
or proceeding, the Corporation shall promptly pay all of the Executive's
attorneys' fees and reasonable costs incurred by the Executive with respect to
such Arbitration, suit,
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action or proceeding, subject to the Executive's obligation hereunder to repay
all such sums if the Corporation is the prevailing party in such Arbitration,
suit, action or proceeding.
18. PARTIAL INVALIDITY.
Invalidity of any part or provision of this Agreement shall not affect the
enforceability of any other part or provision of this Agreement.
19. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing herein shall confer, nor shall it be construed to confer, on the
Executive any right to, guarantee of, or contract for a continued employment by
the Corporation, or in any way limit the right of the Corporation to terminate
the employment of the Executive.
20. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, as applied to contracts executed and performed
entirely in California.
21. NOTICES.
Any notices given hereunder must be in writing and may be delivered in
person or by certified or registered mail, return receipt requested, postage
prepaid. Notices to the Corporation should be delivered to Invivo Corporation,
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, Attn: President, or to such
other address as Corporation from time to time furnishes to the Executive in a
notice. Notices to Executive should be delivered to the address shown beneath
Executive's signature below, or to such other address as the Executive from time
to time furnishes to the Corporation in a notice.
22. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the parties hereto.
This Agreement fully supersedes any and all prior agreements or understandings
pertaining to similar benefits.
23. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which, taken together, constitute
one and the same agreement.
24. AMENDMENTS.
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This Agreement may not be modified except by a writing signed by both
parties.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the day and year first above written.
EXECUTIVE INVIVO CORPORATION
_______________________________ By: _______________________________
(signature)
Street Address (One of Two Required and
City, State and Zip Code Authorized Signatures)
And By: ____________________________
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