Exhibit 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of April 14, 2005, by
and between HeartWare, Inc., a Delaware corporation (the "Company"), having its
principal offices at 0000 Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxx 00000-0000, and Xxxx
Xxxxx (the "Executive"), an individual with an address at 0000 Xxxxxx Xxxxx,
Xxxxxxxxxx, XX 00000.
RECITALS
A. WHEREAS, the Company wishes to hire Executive to serve as Vice President
of Clinical and Marketing; and
B. Executive agrees to be so employed upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties, intending to be legally bound and in
consideration of the agreements and covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, agree as follows:
1. Employment, Duties and Acceptance.
(a) Effective on May 16, 2005 (the "Effective Date"), the Company
employs the Executive to render exclusive and full-time services (subject
to Section 1(b) below) as the Vice President of Clinical and Marketing of
the Company and, in connection therewith, to perform such duties as are
customarily assigned to individuals serving in such positions and such
other duties as the Executive shall reasonably be directed to perform by
the President of the Company. Executive shall report directly to the
President of the Company.
(b) The Executive accepts such employment and shall render the
services referred to above. The Executive shall devote her full working
time and energies (excluding periods of vacation and sick leave to which
she is entitled) to the business and affairs of the Company and agrees to
use her best efforts, skills and abilities to promote the Company's
interests, provided that during the first three months after the Effective
Date, the Executive may devote up to one week per month on her existing
consulting projects with the third parties. Notwithstanding the foregoing,
the Executive may devote such reasonable time as may be necessary, to the
extent that it does not interfere with the performance of her duties and
responsibilities hereunder, to (i) participate in charitable, civic,
educational, professional or community affairs or serve on the board of
directors or advisory committees of non-profit entities; and (ii) manage
her private investments. The Executive shall not serve on the board of
directors or advisory committees of for profit entities or engage in any
consulting activity without the prior written consent of the Chief
Executive Officer of the Company.
2. Compensation and Benefits. Subject to the Executive's substantial
adherence to her responsibilities under this Agreement and all other agreements
with the Company, the Executive shall be entitled to receive the following
compensation and benefits during her employment with the Company:
(a) As compensation for all services to be rendered to the Company by
the Executive, the Company shall pay the Executive a base salary at a rate
of $200,000 per annum (the "Base Salary"). The Executive shall be eligible
to receive an annual bonus with respect to each fiscal year of the Company
during the Term, subject to the attainment of objective performance goals
and other criteria, as determined by the Board in its sole discretion. All
such compensation shall be payable in accordance with the payroll and bonus
policies of the Company as from time to time in effect, less such
deductions as shall be required to be withheld by applicable law and
regulations. The Base Salary shall be reviewed by the Company at least
annually. The Base Salary shall not be subject to reduction without the
consent of the Executive, except that if the Board reduces the salary of
all senior managers of the Company, the Base Salary shall be reduced by the
same percentage as the percentage reduction in salary of such senior
managers.
(b) In addition to any bonuses for which the Executive may be eligible
pursuant to Section 2(a) above, the Executive shall be entitled to receive
a one-time bonus of $40,000, payable on the first regularly scheduled
payroll date following the Effective Date.
(c) The Executive shall be permitted during her employment, if and to
the extent eligible, to participate in all group insurance programs and
other fringe benefit plans that the Company shall make available to its
executive employees. The Executive will be responsible for $163 payment per
month for family health insurance coverage, as such amount may be increased
each year in the ordinary course by the insurer.
(d) The Executive shall be entitled to four (4) weeks of vacation
annually. Vacation time shall accrue in accordance with the Company's
vacation policies as in effect from time to time.
(e) Subject to such policies as may from time to time be established
by the Company, the Company shall pay or reimburse the Executive for all
reasonable and necessary expenses actually incurred or paid by the
Executive in the course of performing her duties hereunder upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require. Without limiting the generality of
the foregoing, the Executive shall be entitled to fly business class on any
international flight that she is requested to make by the CEO.
(f) The Company acknowledges and agrees that the Executive will
continue to reside in the State of California. Notwithstanding her state of
residence, the Executive agrees that she shall spend such time as is
reasonably requested by the CEO, but in no event more than five (5) days
per month, at the Company's offices in Miramar, Florida (the "Miramar
Offices").
2
3. Equity Grants.
(a) The Executive is granted options (the "Options") to purchase
1,146,306 ordinary shares of HeartWare Limited, an Australian public
company (the "Parent") of which the Company is a subsidiary (the "Option
Shares"), representing three-fourths of one percent (0.75%) of the Parent's
issued and outstanding voting capital stock as of the date of the grant to
the Executive. The exercise price for the Options shall be AUD 0.50. The
Options will expire 10 years from the date of grant. The Option Shares will
vest in four (4) equal annual installments beginning on the first
anniversary of the Effective Date and continuing in each of the three (3)
years thereafter, in each case subject to the Executive's continued
employment with the Company through each vesting date.
(b) If, within the twelve (12) month period following any Change of
Control Transaction (as defined below), the Company (or its successor in
interest) terminates the Executive other than for Cause, or the Executive
terminates her employment for Good Reason, twelve (12) months of vesting
regarding the unvested Option Shares that the Executive holds, on the date
of and immediately prior to the consummation of such Change of Control
Transaction, shall accelerate and become immediately exercisable. For
purposes of this Agreement, "Change in Control Transaction" means the
occurrence in a single transaction or in a series of related transactions
of any one or more of the following events:
1. any person (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the owner,
directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company's
then outstanding securities other than by virtue of a merger,
consolidation or similar transaction;
2. there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after
the consummation of such merger, consolidation or similar transaction,
the stockholders of the Company immediately prior thereto do not own,
directly or indirectly, outstanding voting securities representing
more than fifty percent (50%) of the combined outstanding voting power
of the surviving entity in such merger, consolidation or similar
transaction or more than fifty percent (50%) of the combined
outstanding voting power of the parent of the surviving entity in such
merger, consolidation or similar transaction, provided, however, that
any merger, consolidation or similar transaction undertaken by the
Company in connection with or in contemplation of a Public Offering
shall not be deemed a Change in Control Transaction hereunder; or
3. there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of
the Company and its subsidiaries, other than a sale, lease, license or
other disposition of all or substantially all of the consolidated
assets of the Company and its subsidiaries to an entity, more than
fifty percent (50%) of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same
3
proportions as their ownership of the Company immediately prior to
such sale, lease, license or other disposition.
(c) Notwithstanding anything to the contrary contained in this Section
7, in no event shall the Executive receive any stock or option acceleration
benefits described herein unless she has executed and delivered to the
Company the Release (as defined in Section 4(b) hereof).
4. Employment at Will.
(a) This Agreement describes the compensation and benefits that the
Executive is entitled to receive for so long as she remains employed by the
Company, but is not a guarantee of employment for any particular period of
time. At all times the Executive will remain an employee at will, and she
and the Company are free to terminate her employment at any time for any
reason. Except as specifically set forth in this Section 4, should the
Executive's employment with the Company terminate for any reason, she shall
be entitled to receive only the pro rata portion of her Base Salary through
the date of such termination, together with such other compensation or
benefits to which the Executive may be entitled by law or under the terms
of the Company's compensation and benefit plans then in effect.
(b) If (i) the Company terminates the Executive's employment other
than for "Cause" (as hereinafter defined) or (ii) the Executive terminates
her employment for "Good Reason" (as hereinafter defined), all of the
Executive's compensation and benefits (except as otherwise provided in the
Company's benefit plans) shall terminate on the date of termination of her
employment, and subject to the Executive executing and delivering to the
Company a general release and waiver (in a form reasonably satisfactory to
the Company) of all claims against the Company, its parent, subsidiaries
and their respective shareholders, officers and directors (the "Release")
and subject to the Executive's compliance with the terms and conditions
contained in this Agreement and the Proprietary Information Agreement, the
Company shall pay to the Executive severance compensation for twelve (12)
months following the termination of her employment at a rate per annum
equal to her annualized Base Salary as of the date of termination, minus
withholdings as required by law or as authorized by the Executive, such
severance compensation to be payable monthly or more frequently in
accordance with the payroll policies of the Company for members of the
management team as in effect from time to time.
(c) As used in this Section 4, the following terms shall mean:
1. "Cause" shall mean any of (A) a material breach by the Executive of
her obligations under this Agreement or any other written agreement
between the Executive and the Company, including the Proprietary
Information Agreement (as defined in Section 5 below); (B) the willful
neglect by the Executive of the duties she is expected to perform
hereunder; (C) the commission by the Executive of AN ACT OF fraud,
misrepresentation, embezzlement, theft or other act of moral
turpitude; (D) conviction of, or the Executive's written admission to,
a felony, or
4
(E) any willful misconduct or any willful act or omission that is
materially injurious to the financial condition or business reputation
of the Company; provided, however, that in the event of a potential
termination for any Cause specified in clauses (A), (B) or (E) above,
such termination shall not be effective unless the Executive shall
have received notice from the Company setting forth in reasonable
detail the basis of the proposed termination and the Executive shall
have been provided a period of ten (10) business days from receipt of
such notice to cure or correct the conduct (if it is susceptible of
cure or correction) giving rise to such potential termination.
2. "Termination For Good Reason" shall mean a termination by the
Executive, upon thirty (30) days' prior written notice to the Company
(the "Termination Notice") stating in reasonable detail the basis for
her termination as a result of (1) the Executive's duties and/or
responsibilities being so materially diminished that they are no
longer consistent with the duties and/or responsibilities of the Vice
President of Clinical and Marketing of the Company or (2) a
substantial reduction of the Executive's salary (regardless of whether
such change in title, duties or responsibilities results from a
merger, change of control of the Company, action by the Board or
otherwise); provided, however, that if, during such thirty (30) day
period, the Company restores the Executive's title or duties and
responsibilities to the level required by this Section 4(c)(2), then
the Executive's Termination Notice shall not be effective; and
provided, further that it shall be a condition to the effectiveness of
a termination for Good Reason that the Company receive a Termination
Notice from the Executive with the time frame set forth above.
5. Proprietary Information Agreement. Concurrently with the execution and
delivery of this Agreement, the Executive shall execute and deliver to the
Company a copy of its standard form of Proprietary Information, Confidentiality
and Inventions Assignment Agreement, in the form attached hereto as Exhibit A
(the "Proprietary Information Agreement").
6. Restrictive Covenants.
(a) During the Term of this Agreement and for a period of one (1) year
after termination of the Executive's employment with Company for any
reason, the Executive shall not, anywhere in the Restricted Area (as
defined in the penultimate sentence of Section 6(b)), directly or
indirectly, for her own account, or on behalf of any other third person or
entity:
1. perform any services of the type she performed for the Company
under this Agreement for any business engaged in whole or in part in
competition with the business in which the Company is engaged or
proposes to be engaged at the time of the Executive's termination of
employment for any reason (a "Competitive Business"), except as set
forth in Section 6(c) below;
2. solicit or accept any business from any client or active prospect
of the Company that was a client or active prospect of the Company
(each, a "Client") at any time during the one (1) year period prior to
the Executive's termination of
5
employment with the Company, provided, however, that (A) if the
Executive had an existing relationship with such Client prior to her
commencement of services for the Company pursuant to the Consulting
Agreement (as defined in Section 9(e) hereof), she may solicit or
accept any such business so long as it would not constitute a
Competitive Business; and (B) in no event shall the Executive solicit
or accept any business under this subsection 6(a).1 if she knows or
has reason to believe that such business would cause the Client to
sever or otherwise materially diminish the level of the existing
business relationship of the Client with the Company; ; or
3. solicit for employment, recruit or hire any person who was an
employee or independent contractor to the Company at any time during
the one (1) year period prior to the Executive's termination of
employment with the Company.
(b) Any investment the Executive may make in a business in competition
with Company shall not be considered to give rise to a violation of this
covenant if the following three conditions are met: (i) the stock of such
business is publicly traded, (ii) the Executive's equity interest in such
business does not exceed three percent (3%) of the aggregate outstanding
equity interests of such business and (iii) the Executive does not
otherwise participate in the management or operational affairs of such
business. For purposes of this Agreement, the Restricted Area shall be the
entire world. In the event of a termination other than for Cause, or the
Executive's termination for Good Reason, the provisions of this Section 6
shall be conditioned upon the Company's compliance with the provisions of
Section 4(b).
(c) Notwithstanding anything to the contrary contained in Section 6(a)
above, the Executive may provide services for a company a division of which
engages in a Competitive Business, provided, however, that the Executive
does not provide services or advice of any sort for such competitive
division.
7. Non-Disparagement.
(a) The Executive agrees, during the Term and thereafter, not to take
any action or make any statement, written or oral, that disparages the
Company or any of the Company's shareholders, directors, officers,
employees or agents, or that has the intended or foreseeable effect of
harming the Company's reputation or the personal or business reputation of
any of the Company's directors, officers, employees or agents.
(b) The Company agrees, during the Term and thereafter, not to take
any action or make any statement, written or oral, that disparages the
Executive or that has the intended or foreseeable effect of harming the
personal or business reputation of the Executive.
8. Representation and Warranty of the Executive. The Executive represents
and warrants to the Company that she has the legal right to enter into this
Agreement and the Proprietary Information Agreement and to perform all of the
obligations on her part to be performed hereunder and thereunder in accordance
with its terms, and that she is not a party to
6
any agreement or understanding, written or oral, that could prevent her from
entering into this Agreement or the Proprietary Information Agreement or
performing all of her obligations hereunder and thereunder.
9. General Provisions.
(a) Severability. The invalidity or unenforceability of any provision
of this Agreement shall in no way affect the validity or enforceability of
any other provisions or any part hereof.
(b) Interpretation. The singular includes the plural, and the plural
includes the singular. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"herein", "hereof", "hereunder" and words of like import shall refer to
this Agreement as a whole and not to any particular section or subdivision
of this Agreement.
(c) Governing Law. This Agreement is intended to operate as a contract
under seal and shall be governed by and construed in accordance with the
laws of the State of New York without regard to conflict of laws rules.
EACH PARTY WAIVES ITS RIGHT TO CLAIM A TRIAL BY JURY IN ANY ACTION ARISING
OUT OF THIS AGREEMENT. The parties hereby consent to the exclusive
jurisdiction of the courts of the United States of America and of the State
of New York, both sitting in New York, New York, for any action, suit or
proceeding arising out of or relating to this Agreement, and waive any
objection which they may now or hereafter have to the laying of venue of
any such action brought in such courts.
(d) Enforcement. The Executive recognizes and agrees that enforcement
of this Agreement and the Confidentiality Agreement is necessary to ensure
the preservation, protection and continuity of the business, confidential
and proprietary information and goodwill of the Company, and accordingly
agrees that the covenants, agreements and restrictions set forth herein are
reasonable as to time and scope. The Executive also acknowledges and agrees
that any actual or threatened breach by the Executive of this Agreement
would result in irreparable damage to the Company and that money damages
would not provide an adequate remedy to the Company. Accordingly, the
Executive agrees that in the event of any such breach, the Company shall
have, in addition to any and all remedies of law, the right to have the
provisions of this Agreement and the Confidentiality Agreement specifically
enforced and to obtain injunctive and other equitable relief to enforce the
provisions of this Agreement. Each of the undertakings of the Executive set
forth in this Agreement shall be construed as independent covenants and the
existence of any claim or cause of action by the Executive against the
Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the restrictions
imposed on the Executive by, and the undertakings of the Executive set
forth in, this Agreement.
7
(e) Entire Agreement; No Representations. This Agreement, together
with the Proprietary Information Agreement, constitutes the entire
agreement between the Executive and the Company concerning the terms and
conditions of the Executive's employment with the Company and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, between the Executive and the
Company, including without limitation the consulting agreement, dated
September 23, 2003, between the Company and the Executive, which agreement
is hereby terminated and of no further force or effect.
(f) Consultation with Counsel; No Representations. The Executive
acknowledges and agrees that she has had a full and complete opportunity to
consult with counsel of her own choosing concerning the terms,
enforceability and implications of this Agreement, and that the Company has
not made any warranties, representations or promises to the Executive
regarding the meaning or implication of any provision of this Agreement,
other than as stated herein or therein.
(g) Modification; Waiver. This Agreement may be amended or modified
only by a written instrument signed by the Executive and the Company. The
failure of either party at any time to require the performance of any
provision of this Agreement shall in no manner affect the right of such
party at a later time to enforce the same provision.
(h) Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, successors and assigns and to the benefit of
the Company's directors, officers, employees and agents, provided that the
Executive may not assign this Agreement or any of her rights hereunder to
any other person.
(i) Notices. All notices and other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered in person (including by any commercial courier service) or
five (5) days after mailing by United States certified or registered mail,
return receipt requested, postage prepaid, to a party at her or its address
set forth at the beginning of this Agreement or such other address as
either party may furnish to the other by notice in writing, except that
notices of change of address shall be effective only upon receipt.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same
agreement.
8
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
EXECUTIVE:
/s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx
COMPANY:
HEARTWARE, INC.
By: /s/ Xxxxxx XxXxxxxxx
------------------------------------
Xxxxxx XxXxxxxxx
President and CEO
9
