EXHIBIT 10.16
EMPLOYMENT CONTRACT
THIS CONTRACT, dated as of April ___, 1997, is entered by and between
CHRONIMED INC., a Minnesota corporation (the "COMPANY"), and XXXXX X.
XXXXXXXXXXX (the "EMPLOYEE").
WHEREAS, the Company desires to employ the Employee as its President
and Chief Operating Officer in accordance with the following terms, conditions
and provisions; and
WHEREAS, the Employee desires to perform such services for the Company,
all in accordance with the following terms, conditions and provisions;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. ENGAGEMENT. The Company agrees to engage the Employee and the
Employee agrees to serve the Company as President and Chief Operating Officer.
The Employee shall remain a member of the Company's Board of Directors subject
to election by the shareholders of the Company.
2. TERM. The term of this Contract and Employee's employment shall
commence on May 1, 1997 and shall continue thereafter for a period of three
years. Upon the expiration of the original term of this Contract, this Contract
shall automatically renew for successive one year terms, subject to termination
as provided in Section 10.
3. SERVICES. The Employee shall apply his best efforts and devote
substantially all of his time and attention to the Company's affairs. The
Employee shall perform those duties as may from time to time be assigned to him
by the Company's Chief Executive Officer or Board of Directors, consistent with
the offices held by Employee.
4. COMPENSATION. The Company shall pay the Employee for his services
the following salary, bonuses and benefits:
A. SALARY. The Employee shall be paid a base salary of
$200,000.00 per year, payable on the 15th and last days of each month
by direct deposit to a bank account designated by Employee. Employee
shall receive an annual performance review and, contingent upon
satisfactory review results, shall be eligible for increase of such
base salary.
B. BONUS. The Employee shall participate in a Company
management incentive plan, commencing July 1, 1997, which is designed
to
deliver an annual bonus targeted at 40% of base salary and up to 60% of
base salary. Employee shall meet with the Company's Chief Executive
Officer, upon commencement of employment and thereafter at the
beginning of every Company fiscal year, to establish qualitative
initiatives and objectives for the purpose of assessing the amount of
bonus to be paid Employee at the end of the associated bonus period.
C. STOCK OPTIONS. Employee shall be granted, or be eligible to
participate in, as the case may be, the following stock option plans:
(i) Employee shall be awarded, upon commencement of his
employment, a stock option grant of 50,000 shares of the Company's
common stock. The stock option awarded shall be immediately vested
and will permit the Employee to purchase Company stock, for a
period of seven years, at the closing market price of the
Company's stock on the date of commencement of Employee's
employment. In the event, during the first sixth months following
commencement of Employee's employment, the total market value of
the 50,000 shares of Company stock subject to this option fails to
reach a price at least $200,000.00 greater than the option
exercise price, the Company shall pay to Employee on the six month
anniversary of his employment, a lump sum equal to the difference
between $200,000.00 and the highest point of gain in market price
over the exercise price during the preceding six months. Such
payment shall be net of any withholding taxes. The stock option
plan identified above shall be reduced to a separate written
agreement, consistent with these terms and to be executed by the
parties.
(ii) Employee shall be eligible to participate in additional
annual stock options consistent with option plans made available
to the executive officers of the Company and pursuant to the
Board's discretion. The terms of future stock options, including
the number of shares available, exercise price, and vesting
provisions shall be determined pursuant to each option agreement.
D. EMPLOYEE BENEFIT PLANS. During the term of his employment,
Employee shall be entitled to participate in any employee benefit plan
or plans established and maintained by the Company for its employees,
in accordance with the eligibility requirements and other terms and
provisions of such plan or plans. Employee acknowledges and agrees that
the Company is under no obligation to Employee to establish or maintain
any employee benefit plan in which Employee may participate, and that
the terms and provisions of any employee benefit plan of the Company
are matters solely within the exclusive province of the Board of
Directors.
5. VACATION AND TIME OFF. Employee shall be entitled to four (4) weeks
of vacation in each year of employment under the terms of this Agreement without
reduction of salary. Unused vacation time may be carried over to future years of
employment consistent with Company policies affecting use of employee vacation
time. In addition, Employee shall be entitled to such additional time off from
work, without loss of compensation, for attendance at professional meetings,
conventions, approved "other business activities" as per section 13 and
educational courses in accordance with the Company's general policies in this
regard, as from time to time determined by its Board of Directors.
6. EXPENSES. The Company will reimburse Employee for reasonable
expenses incurred by Employee in connection with the business of the Company
according to policies promulgated from time to time by the Board of Directors
upon presentation by Employee of appropriate substantiation for such expenses.
The Company will further reimburse Employee for Employee's monthly dues to the
Wayzata Country Club in the event Employee becomes a member of that club.
7. MEDICAL AND DENTAL COVERAGE. Employee shall be entitled to medical
and dental coverage provided by the Company as offered to other employees of the
Company. Employee shall also be covered by a Diagnostic Services Plan, made
available to Company officers, which provides for annual physical exams beyond
those available under the company's routine employee medical plan.
8. INSURANCE. Employee agrees that the Company, in the discretion of
its Board of Directors, may apply for and procure on its own behalf, life
insurance on the life of Employee, for the purpose of protecting the Company
against loss caused by the death of the Employee. Employee agrees to submit to
medical examination and to execute or deliver any documentation reasonably
required by the Company's insurer in order to effectuate such insurance.
9. SICK LEAVE AND DISABILITY.
A. SICK LEAVE. Employee shall be entitled to ten (10) calendar
days of sick leave in each year of employment without loss of
compensation. Unused sick leave shall not be carried over to future
years of employment.
B. DISABILITY. Notwithstanding any other provision of this
Contract, if Employee is totally disabled, as defined below, for an
aggregate of 180 calendar days in any one calendar year of employment,
the Company shall not be obligated to pay Employee the compensation
provided in this Contract for any period of total disability during
such year in excess of 120 days. In such event, Employee's salary under
Section 4 shall be prorated for such year
of employment in the same manner as if this Contract had been
terminated at the end of such 120th day.
For purposes of this Contract, Employee shall be considered to
be totally disabled when he is considered to be totally disabled by any
insurance company used by the Company to provide disability benefits
for the Employee, and Employee shall continue to be considered totally
disabled until such insurance company ceases to recognize him as
totally disabled for purposes of disability benefits. If no such
disability policies are in effect for the benefit of Employee, or if
for any reason an insurance company fails to make a determination of
the question of whether Employee is totally disabled, Employee shall be
considered to be totally disabled if, because of mental or physical
illness or other cause, he is unable to perform the majority of his
usual duties on behalf of the Company. the existence of a total
disability of the Employee, the date it commenced, and the date it
ceases, shall be determined by the Board of Directors and the Employee.
If, the parties cannot agree on the foregoing questions of disability,
then any such determination shall be made after examination of Employee
by a medical doctor selected by the Board of Directors and a medical
doctor selected by the Employee. If the medical doctors so selected
cannot agree on the foregoing questions of disability, a third medical
doctor shall be selected by the two and the opinion of a majority of
all three shall be binding.
10. TERMINATION. This Contract shall terminate upon the occurrence of
any of the following:
A. Written agreement of the parties to terminate;
B. Employee's death;
C. Upon the expiration of the initial or any renewal term of
this Contract, following 120 days written notice by one party to the
other indicating the party's intention not to renew;
D. At the Company's option, if Employee shall be totally
disabled, as defined above, for a continuous period in excess of nine
months. The Company's option to terminate in such event shall be
exercised upon at least thirty (30) days written notice to Employee;
E. Termination by the Company for Cause. Cause shall be
defined as (i) the failure of Employee to substantially perform any
duties reasonably required by the Company that are consistent with
Employee's position (except as the result of any disabling injury for
which Employee is then receiving benefits under a short-term or
long-term disability program); (ii)
the commission by Employee of any criminal act, or act of fraud or
dishonesty by Employee related to, or in connection with his employment
by the Company;
F. Change of Employment or Termination Without Cause By The
Company. A Change in Employment shall be deemed to have occurred if,
without Employee's consent (i) Employee's position, duties, or title
are materially, adversely changed without Cause; or (ii) Employee's
salary or benefits are reduced without Cause, or (iii) the location of
performance of most of Employee's duties is moved from the general
geographic location in which Employee performed such duties prior to
the move. The effective date of a Change in Employment shall be the
date Employee elects, by written notice to the Company, to treat such
termination as a Change in Employment, provided it occurs within 90
days of the date Employee is notified of the change in Employment.
Failure to treat a particular Change in Employment as a termination of
employment shall not preclude Employee from treating a subsequent
Change in Employment as a termination of employment.
In the event Employee's employment with the Company is
terminated without Cause, or a Change in Employment occurs and employee
elects to treat the Change in Employment as a termination of employment
and so notifies the Company of such election within 90 days following
the Change of Employment (with the date of notice to be deemed the
effective date of termination) or the geographic location changes as
defined above, then:
(a) Employee shall receive payment equal to 12 months of (i)
Employee's then-current annualized salary; plus (ii) the average of any
bonus or incentive compensation paid or payable for the most recent two
calendar years, or other period generally used by the Company to
determine such bonus or incentive compensation, with such salary and
bonus or incentives to be paid over a period of one year consistent
with the Company's routine employee payment schedules; plus (iii) all
unvested options held by Employee shall immediately vest.
(b) Employee shall be entitled to continue participation in
the health care coverage, life insurance or employee benefit plans of
the Company. The Company shall, for two years following the effective
date of the termination without Cause or Change of Employment or until
Employee becomes eligible for such insurance coverages with another
employer, continue to provide health care coverage (or equivalent
premiums) for Employee and his dependents to the same extent and cost
the Company is then providing for other employees with comparable
coverage during this two year period.
11. COVENANT NOT TO COMPETE. Employee hereby covenants and agrees that
during the initial and any renewal term of this Agreement, and for a period of
one year following the termination of this Contract, Employee shall not be
engaged within the United States, either directly or indirectly, in any manner
or capacity, whether as an advisor, principal, agent, partner, officer,
director, employee, member of an association, or otherwise, in any business or
activity, or own beneficially or of record five per cent (5%) or more of the
outstanding stock of any class of equity securities in any corporation, in
competition with the business then being conducted by the Company. If Employee
should breach the foregoing covenant, the Company will cease making payments
described in paragraph 10.F.(a), remaining unexercised stock options shall
immediately be canceled and benefit plan provisions described in paragraph
10.F.(b) shall be discontinued.
12. CONFIDENTIALITY. Employee will in the course of his employment with
the Company have access to confidential or proprietary data or information
belonging to the Company. Employee will not at any time divulge or communicate
to any person (other than to a person bound by confidentiality obligations to
the Company similar to those contained in this Contract) or use to the detriment
of the Company or for the benefit of any other person such data or information.
The provisions of this Section 12 shall survive Employees' employment hereunder
regardless of the cause of termination of employment or this Contract. The
phrase (confidential or proprietary data or information" shall mean information
not generally available to the public including, without limitation, personal
information, financial information, customer lists, supplier lists, trade
secrets, secret processes, computer data and programs, pricing, marketing and
advertising data. Employee acknowledges and agrees that any confidential or
proprietary data or information that Employee has already acquired was in fact
received in confidence and in Employee's fiduciary capacity with respect to the
Company.
All written materials, records and documents made by Employee or coming
into Employee's possession during the term of employment concerning any product,
processes, information or services used, developed, investigated or considered
by the Company, or otherwise concerning the business or affairs of the Company,
shall be the sole property of the Company and upon termination of Employee's
employment for any reason, or upon request of the Board of Directors during
Employee's employment, Employee shall promptly deliver the same to the Company.
In addition, upon termination of Employee's employment for any reason, or upon
request of the Board of Directors during Employee's employment, Employee shall
deliver to the Company all other property of the Company in Employee's
possession or under Employee's control including, but not limited to, financial
statements, marketing and sales data, and Company credit cards.
13. OTHER BUSINESS ACTIVITIES. Employee shall not serve as an officer
of another company, whether for compensation or otherwise, requiring more than
nominal duties by Employee, during the term of this Contract without the express
prior written consent of the Company's Board of Directors. Employee may serve a
director of other companies, or in similar capacity, provided such other
companies are not in competition with the Company
and Employees duties do not interfere with the performance of his duties and
obligations to the Company.
14. NOTICES. All notices, requests, demands and other communications
provided for by this Contract shall be in writing and shall be deemed to have
been given when mailed at any general or branch United States Post Office
enclosed in a certified postpaid envelope, return receipt requested, and
addressed to the address of the respective party stated below or to such changed
address as the party may have fixed by notice:
If to the Employee:
Xxxxx X. Xxxxxxxxxxx
000 Xxxx Xxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
If to the Company:
Chairman of The Board of Directors
Chronimed Inc.
Suite 250, Ridgedale Office Center
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Any notice of change of address shall only be effective, however, when received.
15. SUCCESSORS AND ASSIGNS. This Contract shall inure to the benefit
of, and be binding upon, the Company, its successors and assigns, including,
without limitation, any corporation which may acquire all or substantially all
of the Company's assets and business or into which the Company may be
consolidated or merged, and the Employee, his heirs, executors, administrators
and legal representatives. The Employee may assign his right to payment, and his
obligations, under this Contract.
16. APPLICABLE LAW. This Contract shall be governed by the laws of the
State of Minnesota.
17. OTHER AGREEMENTS. This Contract supersedes all prior understandings
and agreements between the parties. It may not be amended orally, but only by a
writing signed by the parties hereto.
18. NON-WAIVER. No delay or failure by either party in exercising any
right under this Contract, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.
19. HEADINGS. Headings in this Contract are for convenience only and
shall not be used to interpret or construe its provisions.
20. COUNTERPARTS. This Contract 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.
CHRONIMED INC.
By____________________________
Its___________________________
EMPLOYEE
______________________________
Xxxxx X. Xxxxxxxxxxx
