Exhibit 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of March
22, 1999 (the "Effective Date") by and between Qb Medical, Inc., a Delaware
corporation (the `Company" or "Qb Medical"), and Xxxxxxx X. Xxxxxxx, an
individual ("Xx. Xxxxxxx"), residing at 00 Xxxxxx Xxxx, Xxxxxxx, XX 00000.
WITNESSETH
WHEREAS, the Company desires to employ Xx. Xxxxxxx to provide certain
services to the Company subject to the terms set forth herein; and
WHEREAS, Xx. Xxxxxxx desires to be employed by the Company in return for
certain compensation and benefits.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT BY THE COMPANY. Subject to the terms and conditions set
forth in this Agreement, the Company agrees to employ Xx. Xxxxxxx to render
full-time services to the Company as its Chief Executive Officer. Xx. Xxxxxxx
shall perform the duties and have the responsibilities and authorities that are
customarily associated with his then current title, and such other duties of an
executive nature as may be assigned from time to time by the Company's Board of
Directors (the "Board"), consistent with the Bylaws of the Company. In addition,
Xx. Xxxxxxx shall serve on the Board for so long as he remains Chief Executive
Officer and shall serve until the first annual meeting of stockholders or until
his successor is elected and qualified. As Chief Executive Officer, and also as
a Director of the Company, Xx. Xxxxxxx agrees to devote his best efforts and
substantially all of his business time and attention (except for vacation
periods as set forth herein and reasonable periods of illness or other
incapacities permitted by the Company's general employment policies or, in the
absence of such policies, consistent with the employment policies common to the
industry at large) to the business of the Company and to use the highest degree
of professionalism in performing services for the Company. Notwithstanding the
foregoing, Xx. Xxxxxxx may continue to serve on the Board of Directors of VascA,
Inc. ("VascA") and provide consulting services to VascA on terms reasonably
satisfactory to the Board.
2. COMPENSATION.
2.1 Salary. During the term of this Agreement, as compensation for
the proper and satisfactory performance of all duties to be performed and
services to be provided under this Agreement, the Company agrees to pay Xx.
Xxxxxxx a base salary ("Base Salary") in the amount of Two Hundred Twenty-Five
Thousand Dollars ($225,000) per year of employment, payable on a semi-monthly
basis and in accordance with the Company's standard payroll practices, less
required deductions for state and federal withholding taxes, Social Security and
all
other employee taxes and payroll deductions (the "Semi-Monthly Base Payment").
Xx. Xxxxxxx'x base salary shall be reviewed annually by the Board and may be
increased or decreased in the sole discretion of the Board; provided, however,
that if at any time during the Period of Employment Xx. Xxxxxxx'x Base Salary is
reduced by more than 25%, then Xx. Xxxxxxx shall be entitled to terminate his
employment with the Company and such termination shall be considered a Company
initiated termination without cause in accordance with Section 7.3(a) hereof.
2.2 Equity.
(a) As of the Effective Date and subject to the terms of this
Agreement, the Company shall grant to Xx. Xxxxxxx an incentive stock option,
exercisable at any time during the Period of Employment (as defined below) and
within ten (10) years after the grant of the option (the "Stock Option"), to
purchase an aggregate of _______ (______) shares of the Company's Common Stock
at a price of _______ ($0.___) per share (the "Shares"). Such number of shares
of Common Stock constitutes six percent (6%) of the fully-diluted shares of
capital stock of the Company as of the anticipated closing of the Company's
Series B Convertible Preferred Stock financing contemplated by the Contribution
Agreement dated as of December 31, 1998 by and among the Company, VascA, Inc.
and certain other parties.
(b) The Stock Option shall be immediately exercisable and
Shares acquired upon exercise of the option shall be subject to repurchase by
the Company except to the extent that such shares are "vested." Twenty-five
percent (25%) of the aggregate number of Shares shall vest upon the first
anniversary of the Effective Date, provided that Xx. Xxxxxxx has been in the
continuous employment of the Company as an executive officer of the Company from
the Effective Date through and including such anniversary date. The remaining
seventy-five percent (75%) of the Shares shall thereafter vest at the end of
each month at the rate of one thirty-sixth (1/36th) of such remaining shares per
month for so long as Xx. Xxxxxxx is employed by the Company in the capacity of
an executive officer and until all remaining Shares have vested or have been
otherwise terminated or canceled pursuant to the terms of this Agreement;
provided, however, that upon a merger or consolidation of the Company with or
into any other corporation or entity (except with or into a wholly-owned
subsidiary or into another corporation which is initially 50% or more owned by
the stockholders of the Company) or a sale of all or substantially all of the
assets of the Company, any previously unvested Shares shall immediately become
fully vested.
(c) In the event that Xx. Xxxxxxx exercises the Stock Option,
then, upon the death or complete and permanent disability of Xx. Xxxxxxx, or
upon the termination of Xx. Xxxxxxx'x employment for any reason, the Company
shall have the right but not the obligation to repurchase from Xx. Xxxxxxx all
Shares subject to such exercise that have not yet vested as of the date of such
death, disability or termination.
3. ADDITIONAL BENEFITS.
3.1 Standard Company Benefits. Xx. Xxxxxxx shall be entitled to all
rights and benefits for which he would be eligible under the terms and
conditions of the Company's standard benefits package in effect from time to
time for its executive employees, including by
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way of illustration only, long-term disability insurance, family health care
insurance, officer and director liability insurance (when provided to the
Company's other officers and/or directors), vacation and sick leave (the "Fringe
Benefits"). The Company agrees to pay Xx. Xxxxxxx'x monthly COBRA continuation
policy premiums (if any), and the reasonable cost of disability insurance, until
the Company's own health care program is instituted for the Company's employees.
The Company reserves the right to change such Fringe Benefits from time to time
in its sole discretion.
3.2 Accumulation of Fringe Benefits. Xx. Xxxxxxx shall not earn or
accumulate unused vacation or sick leave, or other Fringe Benefits, in excess of
an unused amount equal to the amount of such benefit earned during a one (1)
year period. Furthermore, Xx. Xxxxxxx shall not be entitled to receive payments
in lieu of such unused Fringe Benefits, other than for unused vacation earned
and accumulated at the time the employment relationship terminates. All unused
sick leave and other Fringe Benefits earned during the twelve (12) month period
ending on each anniversary of the Commencement Date shall be forfeited if not
used within ninety (90) days following such anniversary date. Notwithstanding
the foregoing, in the event that the Company adopts a more favorable
accumulation policy for its executive officers, Xx. Xxxxxxx shall be entitled to
the benefits of such more favorable accumulation policy as of the adoption by
the Company thereof.
4. OUTSIDE ACTIVITIES. Xx. Xxxxxxx agrees that he will not, without first
obtaining the Board's prior written approval, directly or indirectly engage or
prepare to engage in any activity in competition with the Company, provide
services to, or establish a business relationship with, a business or individual
engaged in or preparing to engage in competition with the Company, or accept a
seat on the board of directors or other managing committee or team for any other
business entity, except as otherwise provided herein. For purposes of this
paragraph, the holding of less than one percent (1%) of the outstanding voting
securities of any firm, business or organization in competition with the Company
shall not constitute activities or services precluded by this section.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION OBLIGATIONS. Xx. Xxxxxxx
hereby agrees to execute and acknowledges his obligations pursuant to the
Employee Proprietary Information and Inventions Agreement attached hereto as
Exhibit A (the "Proprietary Information Agreement"), including but not limited
to, the obligation to refrain from using or disclosing the proprietary and
confidential information of the Company. Xx. Xxxxxxx further acknowledges that
these obligations shall survive the termination of Xx. Xxxxxxx'x employment with
the Company.
6. NONSOLICITATION. While employed by the Company and for one (1) year
thereafter, Xx. Xxxxxxx agrees that in order to protect the Company's
confidential and proprietary information from unauthorized use, Xx. Xxxxxxx will
not, either directly or through others, solicit or attempt to solicit (i) any
employee, consultant or independent contractor of the Company, other than Xxxxx
Xxxxxxxx, to terminate his or her relationship with the Company in order to
become an employee, consultant or independent contractor to or for any other
person or business entity or (ii) the business of any customer, vendor or
distributor of the Company which, at the time of termination or one (1) year
immediately prior thereto, was listed on the Company's
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customer, vendor or distributor list to the extent that the business solicited
relates to products or services which are directly competitive with those of the
Company.
7. TERM AND TERMINATION OF EMPLOYMENT.
7.1 Period of Employment. Xx. Xxxxxxx'x period of employment by the
Company pursuant to this Agreement shall commence on March 22, 1999 (the
"Commencement Date") and shall end upon the date that the employment
relationship is terminated pursuant to this Section 7 (the "Termination Date").
The period of employment commencing on the Commencement Date and ending on the
Termination Date shall be known as the Period of Employment (the "Period of
Employment").
7.2 Termination at Will. Although Xx. Xxxxxxx and the Company
anticipate a long and mutually rewarding employment relationship, Xx. Xxxxxxx
and the Company each acknowledge that either party has the right to terminate
Xx. Xxxxxxx'x employment with the Company at any time for any reason whatsoever,
with or without cause subject, however, to the terms of this Agreement. This
at-will employment relationship cannot be changed except in writing signed by a
duly authorized officer of the Company and Xx. Xxxxxxx.
7.3 Company Initiated Termination.
(a) The Company may terminate this employment relationship
immediately without cause upon written notice to Xx. Xxxxxxx. In the event the
Company so terminates Xx. Xxxxxxx'x employment and provided that Xx. Xxxxxxx has
executed a release of liability in favor of Qb Medical in a form acceptable to
Qb Medical, Xx. Xxxxxxx shall receive a lump sum payment equivalent to his then
accumulated but unused vacation time together with any unpaid benefits through
the date of termination and, as severance, continued payment of his Semi-Monthly
Base Payment for a period of time not to exceed six (6) months after the
Termination Date, or until Xx. Xxxxxxx has secured full-time employment or
consulting assignment(s), which ever first occurs (the "Severance Period").
i. In the event that, during the Severance Period, Xx.
Xxxxxxx secures full-time employment in which he is paid less per
semi-monthly period than the amount of the Semi-Monthly Base Payment to be
received as severance hereunder, then Xx. Xxxxxxx shall be entitled to be
paid reduced severance payments by the Company equal to the difference
between the amount of the Semi-Monthly Base Payment and the semi-monthly
compensation to be paid to Xx. Xxxxxxx pursuant to such full-time
employment or consulting assignment(s).
ii. In the event that the Company relocates its
principal place of business to a location more than fifty (50) miles away
from its current location and Xx. Xxxxxxx elects to terminate his
employment hereunder rather than continue his employment at the new
location, such termination will be deemed to be a termination by the
Company without cause and will be subject to the terms of this Section
7.3(a).
iii. IN THE EVENT THAT XX. XXXXXXX ELECTS TO AND DOES
RECEIVE ANY OF THE BENEFITS PROVIDED UNDER THIS SUBSECTION 7.3, XX.
XXXXXXX AGREES THAT SUCH PAYMENTS SHALL
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CONSTITUTE HIS SOLE AND EXCLUSIVE RIGHTS AND ENTITLEMENTS IN CONNECTION
WITH HIS EMPLOYMENT BY THE COMPANY, THE TERMINATION OF SUCH EMPLOYMENT AND
ANY AND ALL MATTERS RELATING TO OR ARISING IN CONNECTION WITH SUCH
EMPLOYMENT, AND AGREES THAT HIS ACCEPTANCE OF ANY SUCH PAYMENTS SHALL
RELEASE THE COMPANY AND ANY AND ALL AFFILIATED PERSONS AND ENTITIES
(INCLUDING ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) FROM ANY CLAIMS
THAT XX. XXXXXXX MAY OTHERWISE HAVE OR ASSERT IN CONNECTION WITH SUCH
MATTERS. IF XX. XXXXXXX DESIRES TO PURSUE OR ENFORCE ANY RIGHTS,
ENTITLEMENTS OR REMEDIES THAT WOULD OTHERWISE BE WAIVED OR RELEASED, THEN
HE SHALL REFUSE ANY PAYMENTS PROVIDED FOR IN THIS SUBSECTION 7.3. IF XX.
XXXXXXX ACCEPTS ANY SUCH SEVERANCE PAYMENT OR PAYMENTS, HE SHALL BE DEEMED
TO HAVE AGREED TO THE FOREGOING EXCLUSIVITY OF RIGHTS AND WAIVER OF
CLAIMS.
(b) The Company may immediately terminate this employment
relationship with cause upon written notice to Xx. Xxxxxxx. In the event Xx.
Xxxxxxx'x employment is terminated at any time with cause, all of Xx. Xxxxxxx'x
compensation and benefits will cease immediately, and Xx. Xxxxxxx shall not be
entitled to any compensation, severance, acceleration of vesting or other
benefits as of the date of such termination. For purposes of this Agreement,
"cause" shall be limited to the following: (i) Xx. Xxxxxxx'x willful misconduct
concerning any material responsibility assumed by or reasonably assigned to Xx.
Xxxxxxx; (ii) without obtaining the prior written consent of the Company's Board
of Directors, Xx. Xxxxxxx'x active and intentional performance of services for
any other corporation, business entity or person which competes with the Company
or any of its subsidiaries while Xx. Xxxxxxx is employed by the Company or any
of its subsidiaries; (iii) the reasonable determination by the Board of
Directors that Xx. Xxxxxxx has stolen or embezzled either funds or property of
the Company or any of its subsidiaries; (iv) Xx. Xxxxxxx'x conviction by a court
of competent jurisdiction of a felony (other than a traffic or moving violation)
involving moral turpitude or dishonesty; or (v) Xx. Xxxxxxx'x intentional or
grossly negligent conduct or violation of law which results in either an
improper personal benefit to Xx. Xxxxxxx or a material injury to the Company.
Physical or mental disability shall not constitute "cause".
(c) Except as expressly provided herein, Xx. Xxxxxxx will not
be entitled to any other compensation, severance, pay-in-lieu of notice or any
other such compensation upon the termination of his employment by the Company.
This severance provision does not affect the "at will" nature of Xx. Xxxxxxx'x
employment.
7.4 Xx. Xxxxxxx Initiated Termination. Xx. Xxxxxxx may voluntarily
terminate his employment with the Company at any time by giving the Board thirty
(30) days written notice. In the event Xx. Xxxxxxx voluntarily terminates his
employment with the Company, all of Xx. Xxxxxxx'x compensation and benefits will
cease as of the termination date. Xx. Xxxxxxx acknowledges that he will not
receive any severance pay or other benefits upon such voluntary termination,
other than a lump sum payment equivalent to his then accumulated but unused
vacation time together with any unpaid benefits through the date of termination.
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7.5 Exclusive Remedy. The parties agree that the payments and/or
benefits described in subsection 7.3 shall be Xx. Xxxxxxx'x sole and exclusive
remedy in the event the Company terminates Xx. Xxxxxxx'x employment, and Xx.
Xxxxxxx shall be entitled to no further compensation for any damage or injury
arising out of the termination of his employment by Qb Medical; provided,
however, that nothing contained in this paragraph shall limit Xx. Xxxxxxx'x
right to be indemnified by Qb Medical for his actions as its officer, employee
or director.
7.6 Obligations Upon Termination.
(a) The obligations of the parties under Sections 5, 6, 7, and
9 shall survive the termination of this Agreement.
(b) Upon the end of the Period of Employment, Xx. Xxxxxxx
shall promptly deliver to the Company all materials, property, documents, data
and other information belonging to the Company or containing the Company's trade
secrets or other Proprietary Information, as such term is defined in the
Proprietary Information Agreement attached hereto as Exhibit A. Xx. Xxxxxxx
shall not take any materials, property, documents or other information, or any
reproduction or excerpt thereof, belonging to the Company or containing any of
the Company's Proprietary Information.
(c) Upon termination of the Period of Employment, Xx. Xxxxxxx
shall be deemed to have resigned from any and all offices then held with the
Company.
8. NOTICES. All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered or delivered by
registered or certified mail (return receipt requested), or private overnight
mail (delivery confirmed by such service) to the address listed below, or to
such other address as either party shall designate by notice in writing to the
other in accordance with the terms hereof:
If to the Company:
Qb Medical, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chairman of the Board
If to Xx. Xxxxxxx:
Xxxxxxx X. Xxxxxxx
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
9. ARBITRATION/ATTORNEYS' FEES. To ensure rapid and economical resolution
of any and all disputes directly or indirectly arising out of or in any way
connected or related to Xx. Xxxxxxx'x employment with the Company or the
termination of that employment, with the sole exception of disputes which arise
under Xx. Xxxxxxx'x Proprietary Information
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Agreement (collectively, the "Arbitrable Claims"), the Company and Xx. Xxxxxxx
each agree that any and all such disputes, whether of law or fact of any nature
whatsoever, shall, if such dispute cannot be resolved within thirty (30) days
despite good faith negotiation, be resolved by final and binding arbitration by
Judicial Arbitration and Mediation Services, Inc. ("JAMS") in Boston,
Massachusetts. The Arbitrable Claims include, but are not limited to: any and
all such claims related to salary, bonuses, commissions, stock, stock options,
or any other ownership interests in the Company, vacation pay, fringe benefits,
expense reimbursements, severance benefits, or any other form of compensation;
claims pursuant to any federal, state or local law or cause of action including,
but not limited to, the federal Civil Rights Act of 1964, as amended; the
federal Age Discrimination in Employment Act of 1967, as amended; the federal
Americans with Disabilities Act of 1990; tort law; contract law; wrongful
discharge; discrimination; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing. Xx. Xxxxxxx and the Company
acknowledge and agree that any and all rights he may otherwise have to resolve
such Arbitrable Claims by jury trial, by a court, or in any forum other than the
JAMS, are hereby expressly waived. If any party to this Agreement brings an
action under this Agreement, the prevailing party will be entitled to recover
his or its attorneys' fees and costs, as well as any, other relief to which that
party may be entitled.
10. GENERAL.
10.1 Entire Agreement. This Agreement, and Exhibit A, is the
complete, final and exclusive embodiment of the entire agreement between Xx.
Xxxxxxx and the Company with respect to the subject matter hereof. This
Agreement is entered into without reliance upon any promise, warranty or
representation, written or oral, other than those expressly contained herein,
and it supersedes, replaces and substitutes for all prior negotiations,
representations, promises, warranties, or agreements made between Xx. Xxxxxxx
and the Company, whether written or oral, concerning the terms and conditions of
Xx. Xxxxxxx'x employment or the termination of such employment.
10.2 Severability. If a court of competent jurisdiction determines
that any term or provision of this Agreement is invalid or unenforceable, then
the remaining terms and provisions shall be unimpaired. Such court shall have
the authority to modify or replace the invalid or unenforceable term or
provision with a valid and enforceable term or provision which most accurately
represents the parties' intention with respect to the invalid or unenforceable
term or provision.
10.3 Successors and Assigns. This Agreement shall bind the heirs,
personal representatives, successors, assigns, executors and administrators of
each party, and inure to the benefit of each party, its heirs, successors and
assigns. However, because of the unique and personal nature of Xx. Xxxxxxx'x
duties under this Agreement, Xx. Xxxxxxx agrees that he shall not be entitled to
delegate the performance of his duties or assign any of his rights or
obligations under this Agreement.
10.4 Applicable Law. This Agreement shall be deemed to have been
entered into and shall be construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts as applied to contracts made and to be
performed entirely within Massachusetts.
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10.5 Jurisdiction and Venue. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, Xx. Xxxxxxx and the Company specifically consent and agree that the
courts of the Commonwealth of Massachusetts and/or the United States Federal
Courts located in the Commonwealth of Massachusetts shall have exclusive
jurisdiction over each of the parties and such proceedings.
10.6 Headings. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
10.7 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
10.8 Reimbursement of Attorneys Fees. The Company shall reimburse
Xx. Xxxxxxx up to a maximum of three thousand dollars ($3,000) for all
reasonable and necessary attorneys' fees and expenses incurred by him in
connection with the review of this Agreement and the provision of advice in
connection therewith.
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IN WITNESS WHEREOF, the parties have duly authorized and caused this
Agreement to be executed as follows:
XXXXXXX X. XXXXXXX, QB MEDICAL, INC.
an individual a Delaware corporation
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxxx
------------------------------------ ---------------------------------
Name: Xxxxx Xxxxxxxx
Date: March 22, 1999 Title: Chairman of the Board
Date: March 22, 1999
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