Exhibit 10.34
EMPLOYMENT AGREEMENT
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AGREEMENT, effective as of the 1st day of June, 1997, by and between
NEUROMEDICAL SYSTEMS, INC., a Delaware corporation with principal executive
offices at Two Executive Boulevard, Suffern, New York 10901-4114 ("NSI"), and
Xxxxxxx X.X. Xx, M.D. (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee was previously employed as president of Papnet (Far
East) Ltd. ("PFEL"), a Cayman Islands corporation;
WHEREAS, the Employee is currently employed by New System International
Ltd. ("New Sys"), a Hong Kong corporation and former subsidiary of PFEL;
WHEREAS, all of the capital stock of New Sys was acquired from PFEL as of
the date set forth above by NSI Asia Pacific Ltd. ("NSI-APL"), a Cayman Islands
corporation and wholly owned subsidiary of NSI; and
WHEREAS, NSI is desirous to employ the Employee as President of NSI-
APL and its subsidiaries, and the Employee is desirous to serve NSI in such
capacity, all upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment.
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NSI agrees to employ the Employee, and the Employee agrees to be employed
by NSI, upon the terms and subject to the conditions of this Agreement.
2. Term.
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The employment of the Employee by NSI as provided in Section 1 will be for
the period commencing on the date hereof (the "Commencement Date") and ending
on the first (1st) anniversary of the Commencement Date (the "Term"); provided,
however, on the first anniversary of the Commencement Date and on each
anniversary thereafter, the Term shall be automatically extended for an
additional period of one (1) year, unless either party gives written notice to
the other at least ninety (90) days prior thereto that the Term of this
Agreement shall not be so extended; provided, further, however, that the Term
may be earlier terminated as hereinafter provided.
3. Duties; Best Efforts; Indemnification.
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The Employee shall serve as President of NSI-APL, or such other senior
management level position(s) as the Board of Directors of NSI (the "Board") may
from time to time and in its reasonable discretion appoint the Employee, and
shall perform and discharge well and faithfully the duties which may from time
to time be prescribed by the President and Chief Executive Officer of NSI. The
Employee shall devote 90% all of his business time, attention and energies to
the business and affairs of NSI-APL and its subsidiaries, shall use his best
efforts to advance the best interests of NSI-APL and its subsidiaries, and shall
not, except for 10% of his time during the Term which may be devoted to non-
competing consultation activities, be actively engaged in any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage.
Subject to the provisions of NSI's Certificate of Incorporation and Bylaws,
each as amended from time to time, NSI shall indemnify the Employee to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, for all amounts (including without
limitation, judgments, fines, settlement payments, expenses and attorney's fees)
incurred or paid by the Employee in connection with any action, suit,
investigation or proceeding arising out of or relating to the performance by the
Employee of services for, or the acting by the Employee as an officer or
employee of, NSI, or any other person or enterprise at NSI's request; provided,
however, that NSI shall not be required to indemnify the Employee against any
liability
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resulting from conduct which is willful, intentional or grossly negligent. NSI
shall use its best efforts to obtain and maintain in full force and effect
during the Term directors' and officers' liability insurance policies providing
full and adequate protection to the Employee for his capacities, provided that
the Board of Directors of NSI (the "Board") shall have no obligation to purchase
such insurance if, in its opinion, coverage is available only on unreasonable
terms.
4. Compensation and Benefits.
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(a) Base Salary. NSI shall pay to the Employee a base salary (the "Base
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Salary") at a rate of not less than US$174,000 per annum, payable in twelve (12)
equal monthly installments in arrears and in accordance with NSI's ordinary
payroll practices as in effect from time to time during the Term. The Board at
least annually will review the Base Salary and other compensation during the
Term with a view to the increase thereof based upon the Employee's performance,
the performance of NSI, inflation, then prevailing industry salary scales and
other relevant factors. Base Salary will not include any bonus paid to the
Employee from time to time.
(b) Out-of-Pocket Expenses. NSI shall promptly pay to the Employee the
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reasonable expenses incurred by him in the performance of his duties hereunder,
including, without limitation, those incurred in connection with business
related travel or entertainment, or, if such expenses are paid directly by the
Employee, shall promptly reimburse him for such payment, provided that the
Employee properly accounts therefor in accordance with NSI's policy.
(c) Participation in Benefit Plans. The Employee shall be entitled to
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participate in or receive benefits under any pension plan, profit sharing plan,
health and accident plan or any other employee benefit plan or arrangement made
available in the future by NSI to its executives and key management employees,
subject to the terms and conditions applicable to executives and key management
generally.
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(d) Vacation. The Employee shall be entitled to such paid vacation days
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in each calendar year as determined by NSI from time to time, but not less than
three (3) weeks in any calendar year, prorated in any calendar year during which
the Employee is employed hereunder for less than an entire year in accordance
with the number of days in such year during which he is so employed. The
Employee shall also be entitled to all paid holidays given by NSI to its
executives and key management employees. Such vacation and holiday allowance
shall otherwise be subject to the policies and practices of NSI.
(e) Housing Allowance. NSI shall pay to the Employee an annual housing
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allowance of US$60,000, payable in twelve equal monthly installments in arrears.
(f) Bonus. NSI shall pay to the Employee an annual bonus equal to the
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higher of one (1) month Base Salary or such greater amount granted by the Board
(i.e., a minimum of one (1) month Base Salary is guaranteed as an annual bonus
payment by NSI to the Employee). Such bonus shall be paid at the earlier of
twelve (12) months following the effective date hereof or at the date of grant
of a bonus to Employee by the Board.
(g) Stock Options Grant. Employee shall be eligible to receive stock
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options for the purchase of NSI Common Stock in accordance with the terms and
conditions of the NSI 1993 Stock Incentive Plan, as amended and restated October
25, 1995, with such additional terms and conditions of the Board as determined
in accordance therewith. The initial stock option grant to Employee following
execution of this Agreement shall be for 40,000 shares of NSI Common Stock,
which shall be exercisable at a purchase price of $4.00 per share and which will
vest over a four (4) year period, becoming exercisable at a rate of 25% per year
as of July 28th of each year (i.e., 25% will become exercisable on July 28, 1998
and an additional 25% each year thereafter until fully vested on July 28, 2001);
the amount of grant eligibility in subsequent years shall be determined by the
Board upon renewal of this Agreement.
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(h) Taxes. Any and all taxes payable by Employee are the sole
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responsibility of the Employee, provided, however, that NSI shall comply with
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any and all applicable tax laws with respect to the withholding of amounts from
Employee compensation subject to U.S. federal, state, and local taxes, and any
other jurisdictional taxes with respect to which NSI and/or its subsidiaries
have a legal obligation of compliance.
5. Termination.
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The Employee's employment hereunder shall be terminated upon the Employee's
death and may be terminated as follows:
(a) By NSI for "Cause." A termination for Cause is a termination upon a
finding by NSI that the Employee has (i) intentionally failed to perform
reasonably assigned duties, (ii) engaged in dishonest or willful misconduct in
the performance of his duties, (iii) engaged in a transaction in connection with
the performance of his duties to the Company or any of its Subsidiaries thereof
which transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit by the Employee, or
(iv) willfully violated any law, rule or regulation in connection with the
performance of his duties (other than traffic violations or similar offenses).
(b) By NSI due to the Employee's "Disability." For purposes of this
Agreement a termination for Disability shall occur (i) upon the thirtieth (30th)
day after the issuance of a written termination notice to the Employee in the
event that the Employee shall have become so incapacitated as to be unable to
resume, within the ensuing six (6) months, his employment hereunder by reason of
physical or mental illness or injury, or (ii) upon the issuance of a written
termination notice after the Employee has been unable to substantially perform
his duties hereunder for three (3) consecutive months by reason of any physical
or mental illness.
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6. Compensation Upon Termination.
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(a) In the event of the termination of the Employee's employment as a
result of the Employee's death, NSI shall (i) pay to the Employee's estate his
Base Salary through the date of his death and (ii) for the shorter of one (1)
year following his death or the balance of the Term (as if such termination had
not occurred) provide continuation coverage to the members of the Employee's
family under all Blue Cross/Blue Shield, major medical and other health,
accident, life or other disability plans and programs in which such family
members participated immediately prior to his death.
(b) In the event of the termination of the Employee's employment by NSI
for Cause or by the Employee for any reason, NSI shall pay to the Employee his
Base Salary through the date of his termination and the Employee's entitlement
to any other compensation or benefits shall be determined in accordance with
NSI's plans, policies and practices as in effect from time to time.
(c) In the event of the termination of the Employee's employment by NSI
due to Disability, NSI shall pay to the Employee his Base Salary through the
date of his termination. In addition, for the shorter of one (1) year following
any such termination or the balance of the Term (as if such termination had not
occurred), NSI shall (i) continue to pay the Employee the Base Salary in effect
at the time of such termination less the amount, if any, then payable to the
Employee under any disability benefits of NSI, and (ii) provide the Employee
continuation coverage under all Blue Cross/Blue Shield, major medical and other
health, accident, life or other disability plans and programs in which the
Employee participated immediately prior to such termination, to the extent that
such benefits continue to be made available to active employees of NSI.
(d) In the event that the Employee's employment is terminated by NSI
other than for Cause or Disability, for a period of one (1) year following any
such termination, NSI shall (i) continue to pay the Employee the Base Salary in
effect at the time of such termination, and (ii) provide continuation coverage
under all Blue
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Cross/Blue Shield, accident, life or other disability plans and programs in
which the Employee participated immediately prior to such termination, to the
extent such benefits continue to be made available to active employees of NSI.
The continuation of Base Salary provided for in clause (i) of the preceding
sentence shall not be reduced by any compensation or other income that the
Employee may earn from subsequent employment or otherwise.
(e) The continuation coverage under any Blue Cross/Blue Shield, major
medical and other health, accident, life or other disability plans and programs
for the periods provided in Sections 6(a), 6(c) and 6(d) shall be provided (i)
at the expense of NSI, and (ii) in satisfaction of NSI's obligation under
Section 4980B of the Code (and any similar state law) with respect to the period
of time such benefits are continued hereunder. Notwithstanding anything to the
contrary contained herein, NSI's obligation to provide such continuation
coverage under Sections 6(a), 6(c) or 6(d) shall cease immediately upon the date
any covered individual becomes eligible for similar benefits under the plans or
policies of another employer.
(f) This Section 6 sets forth the only obligations of NSI with respect
to the termination of the Employee's employment with NSI and the Employee
acknowledges that upon his termination of employment he shall not be entitled to
any payments or benefits which are not explicitly provided herein.
7. Covenant Regarding Inventions and Copyrights.
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The Employee shall disclose promptly to NSI any and all inventions,
discoveries, improvements and patentable or copyrightable works initiated,
conceived or made by him, either alone or in conjunction with others, during the
Term and related to the business or activities of NSI and he assigns all of his
interest therein to NSI or its nominee; whenever requested to do so by NSI, the
Employee shall execute any and all applications, assignments or other
instruments which NSI shall deem necessary to apply for and obtain letters
patent or copyrights of the United States or any foreign country or
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otherwise protect NSI's interest therein. These obligations shall continue
beyond the conclusion of the Term with respect to inventions, discoveries,
improvements or copyrightable works initiated, conceived or made by the Employee
during the Term and shall be binding upon the Employee's assigns, executors,
administrators and other legal representatives.
8. Protection of Confidential Information.
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The Employee acknowledges that he has been and will be provided with
information about, and his employment by NSI will, throughout the Term, bring
him into close contact with, many confidential affairs of NSI and its
subsidiaries, including proprietary information about costs, profits, markets,
sales, products, key personnel, pricing policies, operational methods, technical
processes and other business affairs and methods, plans for future developments
and other information not readily available to the public, all of which are
highly confidential and proprietary and all of which were developed by NSI at
great effort and expense. The Employee further acknowledges that the services
to be performed by him under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character, that the business of NSI will be
conducted throughout the world (the "Territory"), that its products will be
marketed throughout the Territory, that NSI competes and will compete in nearly
all of its business activities with other organizations which are located in
nearly any part of the Territory and that the nature of the relationship of the
Employee with NSI is such that the Employee is capable of competing with NSI
from nearly any location in the Territory. In recognition of the foregoing, the
Employee covenants and agrees during the Term and for a period of five (5) years
thereafter:
(i) That he will keep secret all confidential matters of NSI and not
copy them or disclose them to anyone outside of NSI, either during or after the
Term, except with NSI's prior written consent or, if during the Term, in the
performance of his
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duties hereunder, the Employee makes a good faith determination that it is in
the best interest of NSI to disclose such matters;
(ii) That he will not make use of any of such confidential matters for
his own purposes or the benefit of anyone other than NSI; and
(iii) That he will deliver promptly to NSI on termination of this
Agreement, or at any time NSI may so request, all confidential memoranda, notes,
records, reports and other confidential documents (and all copies thereof)
relating to the business of NSI, which he may then possess or have under his
control.
9. Restriction on Competition, Interference and Solicitation.
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In recognition of the considerations described in Section 8 hereof, the
Employee covenants and agrees that, during the Term and for a period of two (2)
years after the termination of his employment hereunder, the Employee will not,
directly or indirectly; (A) enter into the employ of, or render any services to,
any person, firm or corporation engaged in any business competitive with the
business of NSI in any part of the Territory; (B) engage in any such business
for his account; (C) become interested in any such business as an individual,
partner, shareholder, creditor, director, officer, principal, agent, employee,
trustee, consultant advisor, franchisee or in any other relationship or
capacity; or (D) interfere with NSI's relationship with, or endeavor to employ
or entice away from NSI any person, firm, corporation, governmental entity or
other business organization who or which is or was an employee, customer or
supplier of, or maintained a business relationship with, NSI at any time
(whether before, during or after the Term), or which NSI has solicited or
prepared to solicit; provided, however, that nothing contained in this Section 9
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shall be deemed to prohibit the Employee from acquiring or holding, solely for
investment, publicly traded securities of any corporation some of the activities
of which are competitive with the business of NSI so long as such securities do
not, in the aggregate, constitute more than five percent (5%) of any class or
series of outstanding securities of such corporation.
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10. Specific Remedies.
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For purposes of Sections 7, 8 and 9 of this Agreement, references to NSI
shall include all current and future majority-owned subsidiaries of NSI and all
current and future joint ventures in which NSI may from time to time be
involved. It is understood by the Employee and NSI that the covenants contained
in this Section 10 and in Sections 7, 8, and 9 hereof are essential elements of
this Agreement and that, but for the agreement of the Employee to comply with
such covenants, NSI would not have agreed to enter into this Agreement. NSI and
the Employee have independently consulted with their respective counsel and have
been advised concerning the reasonableness and propriety of such covenants with
specific regard to the nature of the business conducted by NSI and the interests
of NSI and its stockholders. The Employee agrees that the covenants of Sections
7, 8, and 9 are reasonable and valid. If the Employee commits a breach of any
of the provisions of Sections 7, 8, or 9, such breach shall be deemed to be
grounds for termination for Cause. In addition, the Employee acknowledges that
NSI may have no adequate remedy at law if he violates any of the terms hereof.
The Employee therefore understands and agrees that NSI shall have: (i) the right
to have such provisions specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach will cause
irreparable injury to NSI and that money damages will not provide an adequate
remedy to NSI, and (ii) the right to require the Employee to account for and pay
over to NSI all compensation, profits, monies, accruals, increments and other
benefits (collectively, the "Benefits") derived or received by the Employee as a
result of any transaction constituting a willful breach of any of the provisions
of Sections 7, 8, or 9 and the Employee hereby agrees to account for and pay
over such Benefits to NSI.
11. Independence, Severability and Non-Exclusivity.
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Each of the rights enumerated in Section 10 hereof shall be independent of
the others and shall be in addition to and not in lieu of any other rights and
remedies
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available to NSI at law or in equity. If any of the covenants contained in
Sections 7, 8, or 9, or any part of any of them, is hereafter construed or
adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or rights or remedies which shall be
given full effect without regard to the invalid portions. The parties intend to
and do hereby confer jurisdiction to enforce the covenants contained in Sections
7, 8, or 9 and the remedies enumerated in Section 10 upon the federal and state
courts of New York sitting in New York County. If any of the covenants
contained in Sections 7, 8, or 9 is held to be invalid or unenforceable because
of the duration of such provision or the area covered thereby, the parties agree
that the court making such determination shall have the power to reduce the
duration and/or area of such provision and in its reduced form said provision
shall then be enforceable. No such holding of invalidity or unenforceability in
one jurisdiction shall bar or in any way affect NSI's right to the relief
provided in Section 10 or otherwise in the courts of any other state or
jurisdiction within the geographical scope of such covenants as to breaches of
such covenants in such other respective states of jurisdictions, such covenants
being, for this purpose, severable into diverse and independent covenants.
12. Disputes.
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If NSI or the Employee shall dispute any termination of the Employee's
employment hereunder or if a dispute concerning any payment hereunder shall
exist:
(a) either party shall have the right (but not the obligation), in
addition to all other rights and remedies provided by law, to compel arbitration
of the dispute in the City of New York under the rules of the American
Arbitration Association by giving written notice of arbitration to the other
party within thirty (30) days after notice of such dispute has been received by
the party to whom notice has been given; and
(b) if such dispute (whether or not submitted to arbitration pursuant
to Section 12(a) hereof) results in a determination that: (i) NSI did not have
the right to terminate the Employee's employment under the provisions of this
Agreement, or (ii) the
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position taken by the Employee concerning payments to the Employee is correct,
NSI shall promptly pay, or if theretofore paid by the Employee, shall promptly
reimburse the Employee for, all costs and expenses (including attorney's fees)
reasonably incurred by the Employee in connection with such dispute.
13. Successors; Binding Agreement.
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In the event of a future disposition by NSI (whether direct or indirect, by
sale of assets or stock, merger, consolidation or otherwise) of all or
substantially all of its business and/or assets in a transaction to which the
Employee consents, NSI will require any successor, by agreement in form and
substance satisfactory to the Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that NSI would be
required to perform if no such disposition had taken place.
This Agreement and all rights of the Employee hereunder shall inure to the
benefit of, and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, administrators c.t.a., successors,
heirs, distributees, devisees and legatees. Unless otherwise provided herein,
any amounts payable hereunder after the Employee's death shall be paid in
accordance with the terms of this Agreement to the Employee's estate.
14. Notices.
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All notices, consents or other communications required or permitted to be
given by any party hereunder shall be in writing (including telecopy or other
similar writing) and shall be given by personal delivery, certified or
registered mail, postage prepaid, or telecopy (or other similar writing) as
follows:
To NSI:
Attn: General Counsel
Two Executive Xxxxxxxxx
Xxxxxxx, Xxx Xxxx, 00000-0000
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To the Employee:
Xxxxxxx X.X. Xx, M.D.
C/O NSI (Hong Kong) Ltd.
0/x, 0 Xxxxxxxxxxxxx Xxx.
12 Miles, Tai Po Road
Shatin, N.T. Hong Kong
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall be deemed to
have been given on the date of mailing, personal delivery or telecopy or other
similar means thereof (provided the appropriate answer back is received) and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
15. Modifications and Waivers.
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No term, provision or condition of this Agreement may be modified or
discharged unless such modification or discharge is authorized by the Board of
Directors of NSI and is agreed to in writing and signed by the Employee. No
waiver by either party hereto of any breach by the other party hereto of any
term, provision or condition of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
16. Entire Agreement.
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This Agreement constitutes the entire understanding between the parties
hereto relating to the subject matter hereof, superseding all negotiations,
prior discussions, preliminary agreements and agreements relating to the subject
matter hereof made prior to the date hereof.
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17. Law Governing.
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Except as otherwise explicitly noted, this Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
giving effect to conflicts of law).
18. Invalidity.
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Except as otherwise specified herein, the invalidity or unenforceability of
any term or terms of this Agreement shall not invalidate, make unenforceable or
otherwise affect any other term of this Agreement which shall remain in full
force and effect.
19. Headings.
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The headings contained in this Agreement are for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.
20. Counterparts.
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year set forth above.
NEUROMEDICAL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxx, III
Name: Xxxx X. Xxxxxxxx, III
Title: Co-CEO, Vice President of Corporate
Development, Secretary and
General Counsel
/s/ Xxxxxxx X.X. Xx, M.D.
Xxxxxxx X.X. Xx, M.D.
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