EXHIBIT 10.11
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into to be
effective on November 15, 1997 between Integrated Orthopaedics, Inc., f/k/a DRCA
Medical Corporation, a Texas corporation (the "Company"), and Xxxx X. Xxxxxxx an
individual resident of the State of Texas (the "Executive").
W I T N E S S E T H
WHEREAS, the Company and the Executive are currently parties to an
Executive Employment Agreement dated November 15, 1994 (the "1994 Agreement");
WHEREAS, the Company and the Executive desire to replace the 1994 Agreement
with this Agreement and provide for the continued employment of the Executive by
the Company upon the terms and subject to the conditions set forth herein;
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which hereby are acknowledged, the parties
agree as follows:
1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts such employment upon the terms and subject to the
conditions set forth in this Agreement. During the term of his employment, the
Executive shall perform such duties and services as the Chairman of the Board of
Directors of the Company (the "Board") and Chief Executive Officer of the
Company (the "CEO") as shall be lawfully prescribed by the Board in connection
with the business and operations of the Company.
2. Term.. The Executive shall be employed by the Company for a period
commencing on November 15, 1997 and, except as otherwise provided herein, ending
three years from such date; provided. however, that if this Agreement is not
terminated pursuant to the provisions hereof, this Agreement shall be
automatically extended for successive one-year periods. The period of the
Executive's employment hereunder, including any extensions pursuant to the
foregoing sentence, is referred to hereinafter as the "Term of Employment."
3. Nature of Service. During the Term of Employment, the Executive
agrees to perform such services consistent with his position as may from time to
time be assigned to him by the Board. In the event the Executive is removed or
voluntarily resigns as the Chief Executive Officer of the Company and continues
to serve as Chairman of the Board during the term of this Agreement, the
Executive's responsibilities hereunder (hereinafter, the "Executive's
Responsibilities") will include the following: (1) management of the Board's
activities, including dissemination of information to and communications with
the members of the Board, scheduling regular and special meetings of the Board,
review of Board recruitment, expansion, and compensation issues; (2) management
of the Company's
EXECUTIVE EMPLOYMENT AGREEMENT
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investment banking relations, including search, evaluation, and negotiation for
services; (3) participation in the Company's relations with the American Stock
Exchange (and such other securities exchanges in which the Company's securities
are traded); (4) involvement in the Company's merger and acquisition activities;
(5) participation in the formulation of the Company's corporate strategy; (6)
participation in the Company's audit, compensation, and acquisitions committees.
The Executive's level of involvement in the Executive's Responsibilities will be
commensurate with the Executive's experience and seniority. The Executive shall
not, during the Term of Employment, be engaged in, or represent any party other
than the Company in connection with, any sale or provision of any services which
are directly competitive with services provided by the Company, whether or not
during normal business hours. The Executive shall perform his duties under this
Agreement with fidelity and loyalty, and in a manner consistent with the level
of his responsibilities. However, nothing in this Section 3 shall be construed
to prevent the Executive from investing his time or personal assets in such form
or manner in the operation of the affairs of any other companies or enterprises
so long as the Executive fulfills his obligations under this Agreement
(hereinafter referred to as the "Permitted Activities").
4. Compensation.
(a) During the Term of Employment, the Company shall pay to the
Executive a base salary in equal monthly installments to be paid in accordance
with established payroll practices of the Company. The amount of the base
salary for the Term of Employment shall be an aggregate of $300,000.00 per year
commencing November 15, 1997.
(b) The Executive shall be entitled to receive salary increases or other
forms of compensation commensurate with the policies of the Company as
administered and approved by the Board.
(c) The Executive shall be entitled to participate in all plans approved
by the Board for incentive stock options or cash bonuses for executive
employees, at levels not less than those at which the Executive is currently
participating, based upon the business, operations, affairs and condition
(financial or otherwise) of the Company.
(d) The Executive will retain all rights to options or warrants granted
by the Company to the Executive under any previous option, warrant or
compensation plans of the Company.
5. Benefits. The Executive shall receive the employee benefits set forth
on Exhibit A attached hereto as well as such other reasonable insurance
(including directors and officers liability insurance if obtained for any
officer or director), pension and other employee benefits as may be provided by
the Company from time to time to employees of the Company holding executive
offices and positions, all as approved by the Board of Directors of the Company.
EXECUTIVE EMPLOYMENT AGREEMENT
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6. Reimbursement of Expenses. The Company shall reimburse the Executive
for all reasonable and proper travel and out-of-pocket expenses incurred by him
for the purposes of and in connection with the performance of his duties
pursuant to this Agreement, all in accordance with the policies relating to the
allowable amount of such expenses and the provision of itemized reports with
respect thereto that may from time to time be adopted by the Board.
7. Automobile and Phone. During the Term of Employment, the Executive
shall have the full use of an automobile and wireless telephone provided by the
Company for the performance of the Executive's duties hereunder. The Company
shall reimburse the Executive for the costs and expenses incurred in connection
with the operation of such automobile and telephone upon presentation by the
Executive to the Company of an itemized account of such costs and expenses, to
be rendered to the Company in accordance with established reporting procedures
of the Company.
8. Termination.
(a) Termination for Cause.
(1) The Executive's employment under this Agreement may be
terminated for cause at any time, effective upon ten (10) days prior written
notice after formal action by the Board at a special meeting duly called for the
purpose of considering the termination of the Executive for cause where the
Board decides to terminate for cause, as defined herein. The Executive shall
have the right to receive notice of and appear at such meeting to respond to any
allegations made against him concerning the contemplated termination. As used in
this Agreement, "cause" shall be deemed to mean one or more of the following:
(i) the Executive's embezzlement or misappropriation of funds, (ii) the
Executive's conviction of a felony involving moral turpitude, (iii) the
Executive's commission of material acts of dishonesty, fraud, or deceit, (iv)
the Executive's breach of any material provision of this Agreement, (v) the
Executive's habitual or willful neglect of his duties, (vi) the Executive's
breach of fiduciary duty to the Company involving personal profit, or (vii) the
Executive's material violation of any other material duty to the Company or its
shareholders imposed by law or by the Board.
(2) In the event that the Board acts to terminate the Executive
for cause in accordance with subsection (1) above, the Executive shall be paid
all compensation and other sums due to him through the date of such termination,
including, without limitation, reimbursements for allowable expenses incurred by
the Executive.
(b) Termination Without Cause.
(1) The Company may, at any time, terminate this Agreement without
cause upon at least sixty (60) days prior written notice to the Executive. The
effective date of any such termination without cause shall be the last day of a
calendar month (hereinafter, the "Without Cause Termination Date"). As used in
this Agreement,
EXECUTIVE EMPLOYMENT AGREEMENT
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termination out cause" means termination of employment other than as follows:
(i) termination pursuant to Section 8 (a) of this Agreement; (ii) termination
pursuant to Section 8(c) of this Agreement; or (iii) termination pursuant to
Section 8(d) of this Agreement. Termination of employment without cause also
includes any change, without the Executive's prior written consent, in the
Executive's positions or titles with the Company on the date of this Agreement,
including, without limitation, the removal of the Executive, by either the vote
of the shareholders or the Board, as a director or as Chairman of the Board, or
any material change in the Executive's duties and responsibilities or benefits
or compensation as they exist on the date of this Agreement, including, without
limitation, a material change in the Executive's Responsibilities following
removal or voluntary resignation of the Executive as CEO.
(2) Commencing with the date immediately subsequent to the Without
Cause Termination Date and continuing until the later of (i) November 15, 2001
or (H) one year following the Without Cause Termination Date (the "Severance
Period"), the Executive shall be paid $300,000 per year payable in accordance
with normal payroll practices of the Company, but no less frequently than in
monthly installments, plus any cash or property approved for payment by the
Board under any plans for incentive stock options or cash bonuses to executive
employees with duties and responsibilities comparable to those held by the
Executive immediately prior to the Severance Period (the "Severance Payments").
(3) During the Severance Period, the Executive shall be entitled
to continued coverage under any health and life insurance plans or policies
maintained by the Company for the Executive individually or as a Company benefit
for some or all employees of the Company. Such coverage shall be on the same
terms and conditions as are in effect on the effective date of the Executive's
termination without cause. In addition, during the first year of the Severance
Period, the Executive shall be entitled to the automobile and related expenses
benefits on the terms described in Section 7 of this Agreement. If the Executive
is a participant in an incentive stock option or other equity participation
plan, his unvested stock options will be deemed vested on the Without Cause
Termination Date and thereafter exercisable as provided for in such plan.
(4) If the Executive's employment with the Company is terminated
without cause, the Company shall release the Executive from liability for any
and all acts or omissions of the Executive except for the Executive's gross
negligence or willful misconduct.
(c) Termination Upon Death or Disability, If the Executive dies or
becomes permanently disabled to the extent that he is unable to perform his
duties under this Agreement, at such time as he is determined to be permanently
disabled or upon his death (hereinafter, the "Death or Disability Date"), his
employment shall be deemed terminated; provided, however, the Executive, his
heirs, or assigns, as applicable, shall receive a death or disability benefit
(hereinafter, the "Death or Disability Benefit") equal to all amounts the
Executive would be entitled to receive, including, without limitation, Base
EXECUTIVE EMPLOYMENT AGREEMENT
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Salary (as in effect on the date immediately prior to the Death or Disability
Date), incentive stock options, and cash bonuses that would have been payable,
if the Agreement had not terminated, from the Death or Disability Date through
the later of (i) November 15, 2000 or (ii) one year following the Death or
Disability Date. The Death or Disability Benefit shall be paid in accordance
with the normal payroll practices of the Company, but no less frequently than
monthly, commencing with the date of termination. Additionally, if the
Executive is a participant in an incentive stock option or other equity
participation plans, his unvested stock options will be deemed vested on the
Death or Disability Date and thereafter exercisable as provided for in such
plans. Except as provided herein, the Executive or his heirs or assigns, as
applicable, shall be entitled to no other benefits following the Death or
Disability Date. For purposes of this Agreement the term "permanently disabled"
shall mean the Executive's inability to perform services by reason of illness or
incapacity for a period of more than two (2) consecutive fun calendar months,
established by medical evidence reasonably satisfactory to the Company.
(d) Voluntary Termination by Executive. The Executive may terminate his
employment hereunder by giving the Company at least thirty days' prior written
notice of the effective date of his termination of employment. The Executive
shall be paid all compensation and other sums due to him through the date of
termination under this Section 8(d), including, without limitation,
reimbursements for allowable expenses incurred by the Executive.
9. Certain Covenants of the Executive.
(a) Except for the Permitted Activities, the Executive agrees that
during the Term of Employment and for a period of one year thereafter (the
"Prohibited Period") he will not (i) engage pr invest in any business in direct
competition with the business of the Company, or (ii) otherwise act as a
director, officer, employee, agent, owner, partner or consultant to any such
business that is in direct competition with the Company. By way of example and
without in any way limiting the Permitted Activities, it is understood and
agreed that the Executive shall not be deemed to be in default with respect to
this Section 9 as a result of any investment he may make in not more than one
percent of the outstanding shares or other units of any security registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. As
used in this Section 9, "competition" shall mean the act of providing services
that directly or indirectly relate to the acquisition and management of
orthopaedic medical practices.
(b) During the Prohibited Period, neither the Executive nor any business
in which he serves as a director, officer, employee, agent, owner, partner or
consultant will (i) employ any person who possesses Proprietary Information (as
hereinafter defined) and who is then an employee of the Company, (ii) engage in
any action intended to influence or result in the employment of any such person
by the Executive or any such business or (iii) solicit the business of persons
or entities that were customers, patients or clients of the Company during the
Prohibited Period for the same or similar services that the Executive or
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the Company provided to such customers, patients or clients during the Term of
Employment.
(c) During the Term of Employment or at any time thereafter, the
Executive shall not disclose or permit or cause to be disclosed, either directly
or indirectly, to any person any Trade Secrets (as defined below) without first
obtaining the written consent of the Company. During the Term of Employment and
the Prohibited Period, the Executive shall not disclose or permit or cause to be
disclosed, either directly or indirectly, to any person any Proprietary
Information. Notwithstanding the foregoing, (i) if any such Trade Secret or
Proprietary Information is or becomes generally available to the public (other
than as a result of disclosure directly or indirectly by the Executive), or (ii)
if any such Trade Secret or Proprietary Information is required to be disclosed
by any federal or state law, rule or regulation or by any applicable judgment,
order or decree or any court or governmental body or agency having jurisdiction
in the premises, the Executive shall be under no obligation of confidentiality
with respect to such information. Upon termination of this Agreement, the
Executive promptly shall return all originals and copies of such papers, lists,
documents and records of the Company that are in his possession, custody or
control. As used herein 'Trade Secrets" shall mean the whole or any portion or
phrase of technical information, design, process, procedure, formula or
improvement known or used by the Company or any of its affiliates that is
valuable and secret (in the sense that it is not generally known to competitors
of the Company). To the extent consistent with the foregoing, Trade Secrets
include (without limitation) the specialized information and technology that
provide the Company with an advantage over competitors or potential competitors
in its industry. As used herein, "Proprietary Information!" shall mean any and
all general and specific knowledge, experience and information and rights with
respect thereto, other than Trade Secrets, including, without limitation, know-
how, technical data, data bases, computer programs, processes, methods, plans,
customers, patient and client fists, designs, inventions, discoveries,
specifications, characteristics and technical information (patentable or
unpatentable), that is confidential or proprietary of the Company or any of its
affiliates.
(d) If the provisions contained in this Section 9 are more restrictive
than permitted by applicable law, the parties agree that the covenants contained
in this Section 9 shall be enforceable and in force to the extent permitted by
law.
10. Indemnification. The Company will indemnify, the Executive (and his
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the jurisdiction of incorporation of the Company, as in effect at
the time of the subject acts or omission, or by the Articles of Incorporation
and Bylaws of the Company, as in effect at such time or on the effective date of
this Agreement, or by the terms of any indemnification agreement between the
Company and the Executive, whichever affords or afforded greatest protection to
the Executive, and the Executive, shall be entitled to the protection of any
insurance policies
EXECUTIVE EMPLOYMENT AGREEMENT
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the Company may elect to maintain generally for the benefit of its directors and
officers (and to the extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by him or his legal representatives at the time such costs, charges
and expenses are incurred or sustained, in connection with any action, suit or
proceeding to which he (or his legal representatives or other successors) may be
made a party by reason of his being or having been a director, officer or
employee of the Company, or any of its affiliates, or his serving or having
served any other enterprise as a director, officer, or employee at the request
of the Company.
11. Specific Performance. The Executive acknowledges and agrees that any
breach of his agreements or covenants contained in this Agreement would cause
irreparable injury to the Company for which the Company would have no adequate
remedy at law. In addition to any other remedy to which the Company may be
entitled, the Executive agrees that temporary and permanent injunctive relief
and other equitable relief and specific performance may be granted without proof
of actual damages or inadequacy of legal remedy in any proceeding that may be
brought by the Company to enforce any of the provisions of this Agreement.
12. Amendment. This Agreement may not be modified or amended except by a
written instrument executed by or on behalf of each of the parties.
13. Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if in a writing signed by the party or parties against which
such waiver is to be asserted. Unless otherwise expressly provided herein, no
delay or omission on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of any party of any right, power or privilege hereunder operate as a
wavier of any other right, power or privilege hereunder nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any right, power or privilege
hereunder. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
14. Entire Agreement. This Agreement and the documents expressly referred
to herein constitute the entire agreement between the parties with respect to
the matters covered hereby, and any other prior or contemporaneous oral or
written understandings or agreements with respect to the matters covered hereby
are expressly superseded by this Agreement. There are no unwritten or oral
agreements between the parties.
15. Severability. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be declared judicially to
be invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect the
application of such provision to other persons or circumstances, and the parties
agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom and the
EXECUTIVE EMPLOYMENT AGREEMENT
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remainder of this Agreement will have the same force and effect as if such part
or parts had never been included herein. Any such finding of invalidity or
unenforceability shall not prevent the enforcement of such provision in any
other jurisdiction to the maximum extent permitted by applicable law.
16. Notices. Unless otherwise expressly provided herein, all notices,
requests, demands, consents, waivers, instructions, approvals and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered to or mailed, certified mail, return receipt
requested, first-class postage paid, addressed as follows:
If to the Company: Integrated Orthopaedics, Inc.
0000 Xxxxxxxxxx, Xxx. 000
Xxxxxxx, Xxxxx 00000
Attn: Board of Directors
If to the Executive: Xxxx X. Xxxxxxx
0000 Xxxx Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
or to such other address or to such other individual as any party shall have
last designated by notice to the other party. All notices and other
communications given to any party in accordance with the provisions of this
Agreement shall be deemed to have been given when delivered or sent to the
intended recipient thereof in accordance with the provisions of this Section 16.
17. Governing Law: Forum: Consent to Jurisdiction. This Agreement shall
be construed in accordance with, and the rights of the parties governed by, the
laws of the State of Texas without regard to the principles of conflict of laws.
The parties agree that all disputes in any way relating to, arising under,
connected with, or incident to this Agreement, and over which the federal courts
have subject matter jurisdiction, shall be litigated, if at all, exclusively in
the United States District Court for the Southern District of Texas, Houston
Division, and, if necessary, the corresponding appellate courts. The parties
further agree that all disputes in any way relating to, arising under, connected
with, or incident to this Agreement, and over which the federal courts do not
have subject matter jurisdiction shall be litigated, if at all, exclusively in
the Courts of the State of Texas, in Xxxxxx County, and, if necessary, the
corresponding appellate, courts. The parties expressly submit themselves to the
personal jurisdiction of the State of Texas.
18. Successors and Assigns.
(a) Except as otherwise expressly provided herein, the Executive
agrees on behalf of himself and his executors and administrators, heirs,
legatees, distributees and any other person or persons claiming any benefit
under him by virtue of this Agreement, that this Agreement and the rights,
interests and benefits hereunder shall not be assigned,
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transferred, pledged or hypothecated in any way by the Executive or any
executor, administrator, heir, legatee, distributee or person claiming under the
Executive by virtue of this Agreement and shall not be subject to execution,
attachment or similar process. Any attempt at assignment, transfer, pledge or
hypothecation or other disposition of this Agreement or of such rights, interest
and benefits contrary to the foregoing provision, or the levy of any attachment
or similar process thereupon, shall be null and void and without effect.
(b) The Company's covenants and agreements hereunder shall inure to the
benefit of and be enforceable by or against the Company's successors or assigns.
The terms "successors" and "assigns" shall include the Company or any person
that owns or operates the business of the Company after a change of control.
The term "change of control" shall mean: (i) the acquisition by another person
or group of persons of 35% of shares of common stock of the Company (other than
through a merger, consolidation, or business combination with another physician
practice or management company), (ii) a majority change in the Board, (iii) a
merger, consolidation, or similar transaction with another entity in which the
Company is not the surviving entity or in which the Company's shareholders do
not own a majority of the shares in the combined entity, or (iv) a sale or all
or substantially all of the Company's assets.
19. Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person or entity not
a party to this Agreement (except as provided in Section 18).
20. Obligations of the Company. Subject to Section 18, the Executive
agrees to look solely to the Company for the performance of all of the Company's
obligations under this Agreement, and no other person or entity, including
without limitation any shareholder or creditor of the Company, shall, have any
liability for the performance of any of the obligations of the Company under
this Agreement.
21. Headings. The section headings in this Agreement are for convenience
of reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument. I
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to
be effective as of the date first above written.
THE COMPANY:
Integrated Orthopedics, Inc.
By:______________________________
Name:____________________________
Title:___________________________
THE EXECUTIVE
_________________________________
Xxxx X. Xxxxxxx
EXECUTIVE EMPLOYMENT AGREEMENT
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EXHIBIT A
EXECUTIVE BENEFITS
During the Term of Employment, the Executive shall be entitled to the
following benefits, in addition to those provided for elsewhere in this
Agreement:
1. Major medical health insurance coverage as provided by the Company to all
of its employees, but in addition coverage on the same terms for the
members of the immediate family of the Executive.
2. Long-term disability insurance coverage equal to 50% of the annual Base
Salary of the Executive.
3. $1,000,000 term life insurance coverage on the life of the Executive, with
the Executive having the sole right to name the beneficiary.
4. The Executive will have the unlimited right to "piggyback" on any public
registration statement filed by the Company. Whenever the Company shall
propose to file a registration statement under the Securities Act of 1933,
as amended, ("Securities Act") relating to the public offering of
securities of the Company, including, without limitation, in connection
with any stock option plan or stock purchase, savings or similar plan, or
an acquisition, merger or exchange of common stock, or the public offering
of any security convertible into common stock the Company shall (a) give
written notice at least thirty (30) days prior to the filing thereof to the
Executive, specifying the date on which the Company proposes to file such
registration statement and advising the Executive of his right to have any
or all of the Executive's securities included, and (b) at the written
request of the Executive given to the Company prior to the proposed filing
date (which request shall specify the securities to be registered and/or
sold), include among the securities covered by such registration statement
the securities which the Executive shall have requested be so included,
without expense to the Executive (except for the fees and expenses of
consultants to the Executive and any underwriters, or brokers, commissions,
SEC filing fees or expenses applicable to the securities being sold by the
Executive), for sale in the same manner and under the same terms and
conditions as contemplated for the securities originally to be included in
such registration statement.
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