EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of April 1, 2004
(the "Effective Date"), is made between Xxxxxx Medical Technology, Inc., a
Delaware corporation (the "Company") and Xxxxxxx X. Xxxxxxx (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 Vice President, Research and
Development 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
President and Chief Executive Officer or 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 anyone 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 $207,100 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 45% 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.
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April 1, 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 three (3) 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 President
or 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 President or
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.
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April 1, 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.
11. Covenants Not To Compete or Interfere. During the term of this
Agreement, including any
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April 1, 2004
Page 4
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. [Reserved].
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.
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 Xxxxxxx Xxxx Xxxx., Xxxxxxxxxx, 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
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April 1, 2004
Page 5
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/ F. Xxxxx Xxxx /s/ Xxxxxxx X. Xxxxxxx
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Title: President & CEO Xxxxxxx X. Xxxxxxx
