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EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into at Las Vegas, Nevada, on the date hereinafter set forth, by and between
XXXXXXX X. XXXXXXX (hereinafter referred to as the "Employee"), and INAMED
CORPORATION, a Florida corporation (hereinafter referred to as the
"Corporation").
The parties hereto, intending to be legally bound, do hereby agree as follow:
1. EMPLOYMENT
1.1 POSITIONS AND DUTIES
The Corporation does hereby employ the Employee and the Employee
hereby accepts such employment as President, Chief Executive Officer and
Chairman upon the terms and provisions set forth in this Agreement. The Employee
shall be the Chairman of the Executive Committee responsible for the management
of the Corporation and all of its worldwide operating subsidiaries. The Employee
shall report to the Board of Directors. The Employee shall be elected as a
member of the Board of Directors and shall be nominated to serve as a director
at each successive annual meeting during the term of this Agreement. The
Employee shall perform all the duties assigned to him by the Corporation,
commensurate with the position as President, Chief Executive Officer, and
Chairman and shall observe and comply with the Corporation's rules and
regulations regarding the performance of his duties, and shall carry out and
perform all orders, directions, and policies stated to him by the Corporation
periodically, either orally or in writing. The Employee shall at all times carry
out the duties assigned to him in a loyal, trustworthy and businesslike manner.
The Employee agrees that this Agreement may be terminated as provided in
Paragraph 7 hereof.
1.2 PLACE OF EMPLOYMENT
Unless the parties agree otherwise in writing, during the term of
this Agreement, the Employee shall perform the services required by this
Agreement at the Corporation's headquarters in Las Vegas, Nevada; it being
understood that the Employee may retain an office in his home in Palm Springs,
California and travel from time to time to the Corporation's offices until such
time he establishes a home in Las Vegas.
2. TERM
This Agreement shall commence as of January 23, 1998 and shall
continue for a period of three (3) years from the date of this Agreement; and at
the end of every month of this Agreement, the term of Employee's employment
shall automatically be extended by one month, unless either party gives 60 days'
prior written notice of its intention to discontinue this automatic extension.
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3. COMPENSATION
3.1 AMOUNT OF COMPENSATION
The Employee's compensation is set forth in Exhibit A hereto. The
Corporation and the Employee may, from time to time, modify the employment
conditions and compensation by mutual agreement. These changes will be recorded
in subsequent amendments.
3.2 REIMBURSEMENTS
The Employee shall be reimbursed by the Corporation only for
amounts actually expended by the Employee in the course of performing duties for
the Corporation where:
3.2.1 AUTHORIZATION
The Employee has been authorized by the Corporation to incur such
expenses that are reasonably consistent with practices or policies of the
Corporation.
3.2.2 DOCUMENTATION
The Employee tenders receipts or other documentation
substantiating the amounts as required by the Corporation.
3.3 FRINGE BENEFITS
The Employee shall be entitled to receive, on the same basis as
the Corporation's other executive employees, all other benefits maintained by
the Corporation for its executive employees generally, including but not limited
to a cellular phone, leased automobile, county club fees, paid leave, medical,
dental, life and disability insurance and any other health and welfare benefit
plans and perquisites, as in effect from time to time. The Employee will be
granted paid leave consistent with the Corporation's paid leave policy in effect
from time to time.
3.4 WARRANTS AND STOCK OPTIONS
(a) WARRANTS. The Employee will, concurrently with the signing of
this Agreement, receive an Executive Officer Warrant ("Warrant") as specified in
Exhibit D hereto. This employment warrant is not a part of the Corporation's
Stock Compensation Plan, and is not transferable and may be exercised only by
the Employee, or by the Employee's estate or personal representative within
three (3) months of the Employee's death. In the event of the termination of
this Agreement pursuant to Paragraph 7.1.2, the Warrants that at the time of
termination have vested may be exercised by the Employee or his estate or
personal representative within twelve (12) months of such termination. Subject
to the foregoing, employment with the Corporation is a condition of exercise of
the Warrant.
(b) LOCK-UP AGREEMENTS. The Employee will execute any other
documents reasonably required by the Corporation in connection with said
Warrants, and hereby
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agrees to execute any lock-up or similar agreements required by the
Corporation's underwriters in connection with an offering or offerings of the
Corporation's securities. Such agreement shall exceed six (6) months in
duration.
4. NON-COMPETITION
The Employee agrees that during the term of this Agreement, he
shall diligently devote his time and efforts to the duties and responsibilities
assigned to him by the Corporation. In connection therewith:
4.1 Non-Competition
The Employee agrees that during the term of this Agreement,
without the prior express written authorization of the Corporation's Board of
Directors, he shall not compete with the Corporation in any manner whatsoever.
Without limiting the generality of the foregoing, the Employee shall not, during
the term of this Agreement, directly or indirectly (whether for compensation or
otherwise), alone or as an agent, principal, partner, officer, employee,
trustee, director, shareholder or in any other capacity, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of or furnish any capital to or be connected in any manner with or provide any
services as a consultant for any business which competes directly or indirectly
with the business of the Corporation as it may be conducted from time to time;
provided, however, that nothing contained in this Agreement shall be deemed to
preclude the Employee from owning not more than one percent of the capital stock
of a publicly-traded entity which is in competition with such business. In
addition, it is understood and agreed that the Employee may continue to be
active with Xxxx One, DNA Technologies, Inc. and MRI SAVESIGHT to the degree
necessary to wind down his previous responsibilities; provided, however, that
those activities shall not impair the Employee's agreement to devote his
full-time attention to the Corporation.
4.2 Civil and Charitable Activities
The Employee may engage in civic, educational and charitable
activities. The Employee shall be entitled, with the approval of the
Corporation's Board, to serve as a director of any corporation other than a
corporation which, in the good faith opinion of the Corporation's Board, is in
competition with the Corporation. The Employee shall be entitled to receive
compensation from any corporation with respect to which he serves as a director
in accordance with this Section 4.2. Notwithstanding anything to the contrary
set forth herein, the Employee shall not be entitled to engage in any of the
activities set forth in this Section 4.2 if such activities, in the good faith
opinion of the Corporation's Board, interfere or could reasonably be expected to
interfere with the Employee's performance of his duties and activities under
this Agreement.
4.3 Non-Solicitation of Employees
After the termination of the Employee's employment hereunder, the
Employee shall not, either alone or jointly, with or on behalf of others, either
directly or indirectly, whether as principal, partner, agent, shareholder,
director, officer, employee,
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consultant, or otherwise, at any time during a period of one (1) year following
such termination, offer employment to, or solicit the employment or engagement
of, or otherwise entice away from the employment of the Corporation or any
affiliated entity, either for the Employee's own account or for any other
person, firm, or company, any person who is employed by the Corporation or any
such affiliated entity, whether or not such person would commit any breach of
his or her contract of employment by reason of leaving the service of the
Corporation or any affiliated entity.
4.4 Non-Solicitation of Customers
After the termination of the Employee's employment hereunder, the
Employee shall not, either alone or jointly, with or on behalf of others, either
directly or indirectly whether as principal, partner, agent, shareholder,
director, officer, employee, consultant, or otherwise, at any time during a
period of one (1) year following such termination, engage in any activity for
the purpose of influencing or attempting to influence any of the Corporation's
customers, to conduct business with any business enterprise in competition with
the Corporation.
4.5 Separate Covenants
Each of the covenants of this paragraph 4 shall be construed as a
separate covenant covering its subject matter in each of the separate counties
in the States of California, Nevada and Florida (collectively, the "Governmental
Subdivisions"); to the extent that any covenant shall be judicially
unenforceable in any one or more of said Governmental Subdivisions, said
covenant shall not be affected with respect to each other Governmental
subdivision, each covenant with respect to each Governmental Subdivision being
construed as severable and independent.
5. PROHIBITION AGAINST COMPETITION
5.1 Agreement Not To Compete
As a result of the Employee's employment, the Employee will have
access to trade secrets and confidential information about the Corporation, its
products, its services, its customers and its methods of doing business. In
consideration for access to this information and the sale of the Corporation's
stock by the Employee to the Corporation, pursuant to the Repurchase Option, the
Employee agrees that for a period of one (1) year after termination of
employment, the Employee will not, directly or indirectly, compete with the
Corporation without the Corporation's prior express written approval.
5.2 Competition Defined
"Competition" shall mean any participation in, assistance of,
employment by, ownership of any interest in, acceptance of business from or
assistance, promotion or organization of any person partnership, corporation,
firm, association or other business organization, entity or enterprise which,
directly or indirectly, is engaged in, or hereinafter engages in, research on,
or development, production, marketing, leasing or selling of, any
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product, process or service which is the same as, similar to, or in competition
with, any line of business or research in which the Corporation, its parent,
subsidiary or affiliated company, is now engaged or hereinafter engages, whether
as an agent, consultant, employee, officer, director, investor, partner,
shareholder, proprietor or in any other individual or representative capacity,
but excluding the holding for investment of less that 5% of the outstanding
securities of any corporation which are regularly traded on a recognized stock
exchange.
5.3 Further Employee Agreements
For a period of one (1) year after the termination of the
Employee's employment, the Employee will not undertake any employment or
activity competitive with the Corporation wherein the loyal and complete
fulfillment of the duties of the competitive employment or activity would call
upon the Employee to make judgements on or otherwise to use any confidential
business information concerning the Corporation. The Employee will not, directly
or indirectly, either for himself or for any other person, firm or corporation,
divert or take away (or attempt to divert or take away), any of the
Corporation's present, former or prospective customers, including, but not
limited to, those upon whom he called, met with or became acquainted with while
engaged as an employee of the Corporation. The Employee will not interfere with
the contractual or business relationships of the Corporation, will not solicit
or attempt to solicit any employees or clients of the Corporation, nor slander
or disparage the Corporation, or undertake any activity which adversely impacts
the goodwill of the Corporation and its business opportunities.
5.4 Separate Covenants
Each of the convenants of Paragraph 5 shall be construed as
separate convenants covering their subject matter in each of the separate
counties, countries and states in the United States and governmental
subdivisions outside of the United States (collectively, the "Governmental
Subdivisions"); to the extent that any covenant shall be judicially
unenforceable in any one or more of said counties, states or countries, said
covenant shall not be affected with respect to each other Governmental
Subdivision, each covenant with respect to each Governmental Subdivision being
construed as severable and independent.
6. INTELLECTUAL PROPERTY AND CONFIDENTIALITY AGREEMENT
The Employee has executed or will concurrently execute the
Corporation's Intellectual Property and Confidentiality Agreement, the terms of
which are incorporated herein by reference. The terms of this Employment
Agreement shall prevail in the case of any discrepancy between the Corporation's
Intellectual Property and Confidentiality Agreement and this Agreement. The
Corporation's Intellectual Property and Confidentiality Agreement is attached
hereto as Exhibit C.
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7. TERMINATION OF AGREEMENT
7.1 Grounds
This Agreement shall terminate upon the occurrence of any of the
following events:
7.1.1 Expiration of Term
At any time upon expiration of the terms specified in Paragraph 2
hereof.
7.1.2 Thirty (30) Day Termination by Employee
By the Employee, upon thirty (30) days' prior written notice to
the Corporation.
7.1.3 Termination by Employer (For Cause)
This Agreement may be immediately terminated by the Corporation
for the following causes: The Employee's personal dishonesty, lack of
trustworthiness, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than minor misdemeanors such as
minor traffic violation) or a material breach of any provision of this
Agreement, or any other agreement between the Employee and the Corporation.
7.2 Disability
7.2.1 Termination
In the event that the Employee is unable to perform his assigned
duties and responsibilities due to illness, physical or mental disability or any
other reason, and such disability continues for a period of six (6) consecutive
months after all available sick leave has been utilized, the Corporation may
terminate this Agreement upon ten (10) days' written notice.
7.2.2 Death
Upon the death of the Employee.
8. SEVERANCE COMPENSATION
If the Corporation should terminate the Employee's employment
hereunder during the Term (as defined in Section 2) for reasons other than cause
(as defined in Section 7.1.3) or Employee's death or disability (as defined in
Section 7.2), or if Employee should resign his employment for Good Reason, as
defined below, the Employee shall be entitled to the following Severance
compensation:
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(a) Payment of his base salary in effect at the time of
termination from the date of termination until the expiration date of this
Agreement under Paragraph 2.
(b) Continuation of all benefits, including without limitation
medical, dental and life insurance, during the Post-Termination Period or until
the date on which the Employee first becomes eligible for insurance coverage of
a similar nature provided by a firm that employs him following termination of
employment by the Corporation, whichever occurs first.
Notwithstanding the foregoing, nothing in this Employment Agreement shall
require the Corporation to make any payment or to provide any benefit to the
Employee that the Corporation is otherwise required to provide under any other
contract, agreement or arrangement, including, without limitation, the Employee
Severance Agreement between the Corporation and the Employee, attached hereto as
Exhibit F, and the Employee Retention Agreement between the Corporation and the
Employee, attached hereto as Exhibit G, both incorporated by reference herein.
8.1 Termination by Employee for Good Reason
The Employee shall have Good Reason for terminating his
employment with the Corporation under this Employment Agreement if one or more
of the following occurs:
(a) an involuntary change in the Employee's status or position
with the Corporation which constitutes a demotion from the Employee's then
current status or position;
(b) layoff or involuntary termination of the Employee's
employment, except in connection with the termination of the Employee's
employment for Cause or as a result of the non-renewal of this Agreement or of
the Employee's disability, death or retirement;
(c) a reduction by the Corporation in the Employee's base salary,
excluding bonuses, other than in the case of reductions in salary with respect
to the Corporation's other executive officers generally;
(d) any action or inaction by the Corporation that would
adversely affect the Employee's continued participation in any Benefit Plan on
at least as favorable basis as was the case at the time of such action or
inaction, or that would materially reduce the Employee's benefits in the future
under the Benefit Plan or deprive him of any material benefits that he then
enjoyed, except to the extent that such action or inaction by the Corporation
(i) is also taken or not taken, as the case may be, in respect of all employees
generally; (ii) is required by the terms of any Benefit Plan as in effect
immediately before such action or inaction; or (iii) is necessary to comply with
applicable law or to preserve the qualification of any Benefit Plan under
section 401(a) of the Internal Revenue Code;
(e) the Corporation's failure to obtain express assumption of
this Employment Agreement by any successor to the Corporation; and
(f) any material violation by the Corporation of any agreement,
including this Employment Agreement, between the Corporation and the Employee.
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Notwithstanding the foregoing, no action by the Corporation shall give rise to a
Good Reason if it results from the Employee's termination for Cause, death or
retirement, and no action by the Corporation specified in paragraphs (a) through
(c) of this section shall give rise to a Good Reason if it results from the
Employee's disability.
For purposes of this Section 8, "Benefit Plan" shall mean any compensation plan,
such as an incentive or stock option plan, or any employee benefit plan, such as
a thrill, pension, profit-sharing, stock bonus, long-term performance award,
medical disability, accident or life insurance plan, or any other plan, program
or policy of the Corporation that is intended to benefit employees.
9. MISCELLANEOUS
9.1 Notices
Any notice required to be given pursuant to this Agreement shall
be effective only if in writing and delivered personally or by mail. If given by
mail, such notice must be sent by registered or certified mail, postage prepaid,
mailed to the parties at the addresses set forth on the signature page hereof,
or at such other addresses as the parties may designate, from time to time, by
written notice. Mailed notices shall be deemed received two (2) business days
after the date of deposit in the mail.
9.2 Equitable Remedies
The Employee acknowledges and agrees that in the event of any
breach, violation or evasion of the terms, conditions and provisions of Sections
4, 5, 7, and 8 above, or this Section 9, such breach, violation or evasion shall
result in immediate and irreparable injury and harm to the Corporation and shall
entitle the Corporation to injunctive relief, as well as to all other legal or
equitable remedies to which the Corporation may be entitled.
9.3 Partial Invalidity
If any term or provision of this Agreement or the application
thereof to any person or circumstance shall be held to be invalid or
unenforceable to any extent, the remainder of this Agreement or application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable shall not be affected thereby, and each term
and provision of the Agreement shall be valid and be enforced to the fullest
extent permitted by law.
9.4 Waiver
No waiver of any right hereunder shall be effective for any
purpose unless in writing, signed by the party hereto possessing said right, nor
shall any waiver be construed to be a waiver of any subsequent right, term or
provision of this Agreement.
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9.5 Assignment; Effect on Agreement
It is hereby acknowledged and agreed that the Employee's rights
and obligations under this Agreement are personal in nature and shall not be
assigned or delegated. This agreement shall be binding on and inure to the
benefit of the heirs, personal representatives, successors and assigns of the
parties, subject, however, to the restrictions on assignment and delegation
contained herein.
9.6 Disputes and Arbitration
Any dispute arising in connection with the interpretation or
enforcement of the provisions of this Agreement, or its application or validity,
will be submitted to arbitration. Such arbitration proceedings will be held in
Las Vegas, Nevada, in accordance with the rules then existing of the American
Arbitration Association. This agreement to arbitrate is specifically
enforceable.
Any award rendered in any such arbitration proceeding will be
final and binding on each of the parties, and judgment may be entered thereon in
any court of competent jurisdiction. The costs and fees of any such arbitration
proceeding (including the legal fees incurred by the Employee) will be borne by
the Corporation. The arbitrators may in their discretion award costs and
reasonable attorneys' fees to the prevailing party.
9.7 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Nevada.
9.8 Entire Agreement
This Agreement (and the Exhibits attached hereto which are part
of this Agreement) contains the entire agreement and understanding between the
parties and supersedes all prior agreements and understandings, oral or written.
No modification, termination or attempted waiver shall be valid, unless in
writing and signed by both parties.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 23rd day of January, 1998.
"CORPORATION"
INAMED CORPORATION
By:/s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Title: Chairman of the Board
ADDRESS:
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxx 00000
"EMPLOYEE"
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
ADDRESS:
00 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
SOCIAL SECURITY NUMBER: ###-##-####
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EXHIBIT A TO EMPLOYMENT AGREEMENT
EMPLOYEE COMPENSATION
1. SALARY
The Employee's Annual Salary shall be FOUR HUNDRED THOUSAND
DOLLARS ($400,000), payable in accordance with the Corporation's pay policy,
with applicable federal, state and local taxes withheld. The Salary shall be
reviewed periodically (but not less than annually) by the Compensation Committee
and approved by the Board of Directors.
2. BONUS
The Employee will be entitled to a bonus based on a yet to be
determined program that will be developed by Management, presented to the
Compensation Committee and approved by the Board of Directors. Employee
understands that the bonus program may not apply to the initial year of
employment or may only apply to a portion of the initial year of employment.
This Exhibit A may only be amended by an Amendment to the
Employment Agreement in the form attached hereto as Exhibit B.
IN WITNESS WHEREOF, the undersigned has executed this Exhibit A
to Employment Agreement this 23d day of January, 1998:
SIGNED BY: ACCEPTED BY:
EMPLOYEE INAMED CORPORATION
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx X. XxXxxx
Xxxxxxx X. Xxxxxxx Xxxxxx X. XxXxxx
Its: Chairman of the Board
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Exhibit F To Employment Agreement
EMPLOYEE SEVERANCE AGREEMENT
January 30, 1998
Xxxxxxx X. Xxxxxxx
00 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Dear Xxxxxxx:
INAMED Corporation and its subsidiaries (the "Corporation") considers it
essential to the best interests of the Corporation and its stockholders to
xxxxxx the continuous employment of key management personnel. In this
connection, the Board of Directors of the Corporation (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist, and that such possibility and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Corporation's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this letter agreement (the "Agreement") in the event your employment with the
Corporation is terminated under the circumstances described below subsequent to
a "change in control of the Corporation" (as defined in Section 2).
1. TERM OF AGREEMENT. This agreement shall commence on January
23, 1998, and shall continue in effect through January 22, 2001. Commencing on
January 23, 2001 and each year thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than ninety
(90) days the preceding year, the Corporation shall have given written notice
that it does not wish to extend this Agreement. If a change in control of the
Corporation, as defined in Section 2, shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect for a
period of not less than twenty-four (24) months beyond the month in which such
change in control occurred.
2. CHANGE IN CONTROL. No benefit shall be payable hereunder
unless there shall have been a change in control of the Corporation, as set
forth below. For purposes of this Agreement, a "change in control of the
Corporation" shall be deemed to have occurred if:
(i) Any "person", as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Corporation, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any corporation owned,
directly or indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of
the Corporation), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation
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representing 20% or more of the combined voting power of the
Corporation's then outstanding securities (except that Appaloosa
Management Company and its affiliates shall not be deemed to be
included within this subsection at such time as its beneficial
ownership is exempted from the Corporation's Shareholder Rights
Plan, as may be amended from time to time);
(ii) During any period of two consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in clause (i),
(iii) or (iv) of this Section) whose election by the Board or
nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved cease for any reason to constitute at
least a majority thereof;
(iii) The stockholders of the Corporation approve
a merger or consolidation of the Corporation with any other
corporation, other than (a) a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 20% of the combined voting power of the
Corporation's then outstanding securities; or
(iv) The stockholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement
for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) General. If any of the events described in
Section 2 constituting a change in control of the Corporation
occurs, you shall be entitled to the benefits provided in Section
4(iii) upon the subsequent termination of your employment during
the term of this Agreement unless such termination is (a) because
of your death or disability, (b) by the Corporation for cause, or
(c) by you other than for good reason. In the event your
employment with the Corporation is terminated for any reason and
subsequently a change in control of the Corporation should occur,
you shall not be entitled to any benefits hereunder.
(ii) Disability. If, as a result of your
incapacity due to physical or mental illness, you are absent from
the full-time performance of your duties with the Corporation for
six (6) consecutive months, and within thirty (30) days after
written notice of
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termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability".
(iii) Cause. Termination by the Corporation of
your employment for "Cause" shall mean termination (a) upon the
willful and continued failure by you to substantially perform
your duties with the Corporation (other than any such failure
resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a
Notice of Termination (as defined in Subsection 3(v)) by you for
Good Reason (as defined in Subsection 3(iv)) after written demand
for substantial performance is delivered to you by the Board,
which specifically identifies the manner in which the Board
believes that you have not substantially performed your duties
(for purposes of this Subsection, no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be
done, by you without good faith and without reasonable belief
that your action was in the best interest of the Corporation) or
(b) notwithstanding the foregoing, you shall not be terminated
for Cause unless and until a copy of a resolution duly adopted by
the unanimous affirmative vote of the entire membership of the
Board of Directors (other than yourself) at a meeting of the
Board (after reasonable notice to you and an opportunity for you,
together with counsel, to be heard before the Board), finding
that in the good faith opinion of the Board you were guilty of
conduct set forth above in this Subsection and specifying the
particulars thereof in written detail which has been delivered to
you.
(iv) Good Reason. You shall be entitled to
terminate your employment for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without your express written
consent, the occurrence after a change in control of the
Corporation of any of the following circumstances unless, in the
case of paragraph (a), (e), (f), or (h), such circumstances are
fully corrected prior to the Date of Termination (as defined in
Section 3(vi)) specified in the Notice of Termination (as defined
in Section 3(v)) given in respect thereof:
(a) The assignment to you of any
duties inconsistent with the position in the
Corporation that you held immediately prior to the
change in control of the Corporation, or a
significant adverse alteration in the nature or
status of your responsibilities or the conditions
of your employment from those in effect
immediately prior to such change in control;
(b) A reduction by the Corporation
in your annual base salary as in effect on the
date hereof;
(c) The relocation of the
Corporation's offices at which you are principally
employed immediately prior to the date of the
change in control of the Corporation to a location
more than 50 miles from the principal location of
your employment, or the Corporation requiring you
to be based anywhere other than the Corporation's
offices except for required travel on the
Corporation's business to an extent substantially
consistent with your present business travel
obligations;
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(d) The failure by the Corporation
to pay to you any portion of your current
compensation or to pay to you any portion of an
installment of deferred compensation under any
deferred compensation program of the Corporation
within seven (7) days of the date such
compensation is due;
(e) The failure by the Corporation
to continue in effect any material compensation or
benefit plan in which you participate immediately
prior to the change in control of the Corporation,
unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by
the Corporation to continue your participation
therein (or in such substitute or alternative
plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided,
and other compensation agreements as existed at
the time of the change in control of the
Corporation;
(f) The failure by the Corporation
to continue to provide you with benefits
substantially similar to those enjoyed by you
under any of the Corporation's life insurance,
medical, health and accident, or disability plans
in which you were participating at the time of the
change in control of the Corporation, the failure
by the Corporation to provide you with the number
of paid vacation days to which you are entitled on
the basis of years of service with the Corporation
in accordance with the Corporation's normal
vacation policy, or as stated within your
Employment Agreement, Compensation Agreement or
like same agreements, regardless of the type or
form of said Agreements, in effect at the time of
the change in control of the Corporation;
(g) The failure of the Corporation
to obtain a satisfactory agreement from any
successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(h) Any purported termination of
your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements
of Subsection (v) hereof (and, if applicable, the
requirements of Subsection (iii) hereof), which
purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of, rights with respect
to any circumstances constituting Good Reason hereunder.
(v) Notice of Termination. Any purported
termination of your employment by the Corporation or by you shall
be communicated by written Notice of Termination to the other
party hereto in accordance with Section 6. "Notice of
Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated.
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(vi) Date of Termination, Etc. "Date of
Termination" shall mean (a) if your employment is terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that you have not returned to the full-time performance
of your duties during such thirty-day (30) period), and (b) if
your employment is terminated pursuant to Subsection (iii) or
(iv) hereof or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case
of a termination for Cause shall not be less than sixty (60) days
from the date such Notice of Termination is given, and in the
case of a termination for Good Reason, not less than thirty (30)
nor more than ninety (90) days from the date such Notice of
Termination is given); provided, however, that if within thirty
(30) days after any Notice of Termination is given, or if later,
prior to the Date of Termination (as determined without regard to
this provision), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been
perfected); provided, further, that the Date of Termination shall
be extended by a notice of dispute only if such notice is given
in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
Notwithstanding the fact that any such dispute is pending, the
Corporation will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue you as
a participant in all compensation, benefit and insurance plans in
which you were participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this
Subsection are in addition to all other amounts due under this
Agreement, and shall not be offset against or reduce any other
amounts due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another
employer.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Following
a change in control of the Corporation, you shall be entitled to the following
benefits during a period of disability, or upon termination of your employment,
as the case may be, provided that such period or termination occurs during the
term of this Agreement:
(i) During any period that you fail to perform
your full-time duties with the Corporation as a result of
incapacity due to physical or mental illness, you shall continue
to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation
payable to you under the Corporation's disability plan or program
or other similar plan during such period, until this Agreement is
terminated pursuant to Section 3(ii) hereof. Thereafter, or in
the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Corporation's
retirement, insurance and other compensation programs then in
effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the
Corporation for Cause or by you other than for Good Reason, the
Corporation shall pay you your full base salary
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through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which
you are entitled under any compensation plan of the Corporation
at the time such payments are due, and the Corporation shall have
no further obligations to you under this Agreement.
(iii) If your employment by the Corporation shall
be terminated by you for Good Reason or by the Corporation other
than for Cause or Disability, then you shall be entitled to the
benefits provided below:
(a) The Corporation shall pay to
you your full base salary through the Date of
Termination at the rate in effect at the time
Notice of Termination is given, no later than the
fifth day following the Date of Termination, plus
all other amounts to which you are entitled under
any compensation plan of the Corporation, at the
time such payments are due;
(b) In lieu of any further salary
payment to you for periods subsequent to the Date
of Termination, the Corporation shall pay as
severance pay to you, at the time specified in
Subsection (v), a lump sum severance payment
(together with the payments provided in paragraphs
(c) and (e) below, the "Severance Payments") equal
to 300% of your annual base salary in effect as of
the Date of Termination or immediately prior to
the change in control of the Corporation,
whichever is greater, and 300% of the highest
annual bonus awarded to you pursuant to the
Corporation's Incentive Profit Share Plan or any
successor plan thereto, with respect to three (3)
fiscal years preceding the change in control of
the Corporation;
(c) In lieu of shares of common
stock of the Corporation ("Common Shares")
issuable upon exercise of outstanding options
(other than options qualifying as incentive stock
options ("ISOs") under Section 422A of the
Internal Revenue Code of 1986 (the "Code") which
ISOs were granted on or before the date hereof)
("Options"), and stock appreciation rights
("SARs"), if any, and limited stock appreciation
rights ("LSARs"), if any, granted to you under the
Corporation's 1984 Stock Option Plan, 1986 Stock
Option Plan, or any successor plans (which Options
shall be canceled upon the making of the payment
referred to below), the Corporation shall pay to
you, at the time specified in Subsection (v), an
amount in cash equal to the product of (1) the
excess of, in the case of an ISO granted after the
date hereof, the closing price of the Common Stock
as reported on the NASDAQ on or nearest the Date
of Termination (or on a nationally recognized
exchange or quotation system on which trading
volume in the Common Shares is highest) and, in
the case of all other Options, the higher of such
closing price or the highest per share price for
Common Shares actually paid in connection with any
change in control of the Corporation, over the per
share option price of each Option held by you
(whether or not fully exercisable), and (2) the
number of Common Shares covered by each such
Option;
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(d) The Corporation shall pay to
you all legal fees and expenses incurred by you as
a result of such termination (including all such
fees and expenses, if any, incurred in contesting
or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by
this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the
application of Section 4999 of the Code, to any
payment or benefit provided hereunder); and
(e) For a twenty-four (24) month
period after such termination, the Corporation
shall arrange to provide you with life,
disability, dental, accident and group health
insurance benefits substantially similar to those
which you were receiving immediately prior to the
Notice of Termination. Notwithstanding the
foregoing, the Corporation shall not provide any
benefit otherwise receivable by you pursuant to
this paragraph (e) if an equivalent benefit is
actually received by you during the twenty-four
(24) month period following your termination, and
any such benefit actually received by you shall be
reported to the Corporation.
(iv) In the event that you become entitled to the
Severance Payments, if any of the Severance Payments will be
subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar tax that may hereafter be imposed), the
Corporation shall pay to you at the time specified in Subsection
(v) below, an additional amount (the "Gross-Up Payment") such
that the net amount retained by you, after deduction of any
Excise Tax on the Severance Payments and any federal, state and
local income tax and Excise Tax upon the payment provided for by
this Subsection, shall be equal to the Severance Payments. For
purposes of determining whether any of the Severance Payments
will be subject to the Excise Tax and the amount of such Excise
Tax, (a) any other payments or benefits received or to be
received by you in connection with a change in control of the
Corporation or your termination of employment (whether pursuant
to the terms of this Agreement or any other plan, arrangement or
agreement with the Corporation, any person whose actions result
in a change in control of the Corporation or any person
affiliated with the Corporation or such person) shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to you such
other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the
meaning, of Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax, (b) the amount of the Severance
Payments which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (1) the total amount of the
Severance Payments or (2) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) (after applying clause
(a), above), and (c) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the
Corporation's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you
shall be deemed
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to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes
at the highest marginal rate of taxation in the state and
locality of your residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that
the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of
your employment, you shall repay to the Corporation at the time
that the amount of the reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to
such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by you if
such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction) plus interest
on the amount of such repayment at the rate provided in Section
1274(b)(2)(b). In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any
payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Corporation shall make an
additional Gross-Up Payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that
the amount of such excess is finally determined.
(v) The payments provided for in Subsections
4(iii)(b) and (c) and Subsection 4(iv) above shall be made not
later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall
pay to you on such day an estimate, as determined in good faith
by the Corporation, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination. In
the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess
shall constitute a loan by the Corporation to you, payable on the
fifth day after demand by the Corporation (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(vi) In the event of Termination of Employment or
Change of Control, the Corporation shall without contest forgive
any and all Officer and/or Director advancement, loans or draws,
direct or indirect, current, past or future due and payable,
under any and all types of agreement regardless of said amounts,
terms, etc. This shall occur no later than the day following the
Termination Date or Change of Control effective date.
(vii) Except as provided in Subsection (iii)(e)
hereof, you shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any
compensation earned by you as a result of employment by another
employer, by retirement benefits, by offset against any amount
claimed to be owed by you to the Corporation, or otherwise.
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5. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Corporation in the same
amount and on the same terms to which you would be entitled
hereunder if you terminate your employment for Good Reason
following a change in control of the Corporation, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Corporation" shall mean
the Corporation as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of
and be enforceable by you and your personal or legal heirs,
distributees, devisees and legatees. If you should die while any
amount would still be payable to you hereunder had you continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if there is no such
designee, to your estate.
6. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States postage
prepaid, addressed to the respective addresses set forth on the first page of
this Agreement, provided that all notices to the Corporation shall be directed
to the attention of the Board with a copy to the Secretary of the Corporation,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision 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. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be, at your
discretion, governed by the laws of the State of Florida, State of Nevada, or
the State of California without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding
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required under federal, state or local law. The obligations of the Corporation
under Section 4 shall survive the expiration of the term of this Agreement.
8. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement, shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in the State of Nevada, in the
State of California or in the State of Florida, to be at your option, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
Jurisdiction; provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes the provisions of the General Policy as well as all prior
agreements, provisos, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and canceled.
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If this letter sets forth our Agreement on the subject matter hereof, kindly
sign and return to the Corporation the enclosed copy of this letter, which will
then constitute our Agreement on this subject.
Sincerely,
INAMED CORPORATION AND SUBSIDIARIES
By:/s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx
Title: Chairman of the Board
Agreed to this 30th day of January, 1998
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, Employee
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