EMPLOYMENT AGREEMENT
Exhibit 10.30
This Employment Agreement (the “Agreement”), entered into effective as of June 15, 2006 (the
“Effective Date”), by and between Cyberonics, Inc. (the “Company”) and Xxxxxxx X. Xxxxxx
(“Employee”)
WITNESSETH:
WHEREAS, the Company desires to secure the experience, abilities and service of Employee by
employing Employee upon the terms and conditions specified herein; and
WHEREAS, Employee is willing to enter into this Agreement upon the terms and conditions
specified herein;
NOW, THEREFORE, in consideration of the premises, terms and provisions set forth herein, the
mutual benefits to be gained by the performance thereof and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Employment. The Company hereby employs Employee, and Employee hereby
accepts such employment, all upon the terms and conditions set forth herein.
SECTION 2. Term. Subject to the terms and conditions of this Agreement, unless sooner
terminated pursuant to Section 5 of this Agreement, Employee shall be employed by the Company
commencing on the Effective Date and terminating on June 1, 2009 (the “Term”). Termination of this
Agreement shall not alter or impair any rights of Employee (or his beneficiaries or heirs) with
respect to payments, benefits or other rights provided by the terms of this Agreement, arising
before or after the end of the Term.
SECTION 3. Duties. Responsibilities and Location.
A. Capacity. Employee shall serve as the Vice President, Marketing of the
Company and shall report to the Chief Executive Officer of the Company.
B. Full-Time Duties. Employee shall devote his full business time,
attention and energies to the business of the Company. Notwithstanding anything
herein to the contrary, Employee shall be allowed to (i) manage Employee’s
personal investments and affairs and, (ii) with the written consent of the Chief
Executive Officer of the Company, serve on boards or committees of civic or
charitable organizations or trade associations, provided that such activities do
not materially interfere with his performance of the duties and responsibilities of
his position specified in Section 3 A.
C. Offices. Employee’s primary place of work shall be at the principle
executive offices of the Company located in the greater Houston, Texas
metropolitan area, but Employee shall be required to travel on a basis consistent
with his position
SECTION 4. Compensation.
A. Base Salary. During the Term, Employee shall receive an
annual salary of $320,000 (the “Base Salary”) payable in accordance with
the Company’s general payroll practices. Employee’s Base Salary shall be
reviewed prior to the beginning of each fiscal year of the Company for
increase in the discretion of the Compensation Committee of the Board of
Directors (“Compensation Committee”); provided, however, that the Base
Salary, as it may be increased at any time, may not thereafter be
decreased,
B. Annual Incentive Bonus. During the Term, Employee shall
be eligible to participate in the Annual CEO Direct Reports Bonus Plan,
with a target bonus of 50% of Employee’s annual Base Salary. A bonus, if
earned, shall be payable as soon as reasonably practical following the
completion of the applicable fiscal year. Bonuses for Employee shall be
based on the achievement of such Company, departmental and/or individual
performance goals that may be established for the applicable bonus year
by the Compensation Committee.
C Annual Overachievement Bonus. During the Term, Employee
shall be eligible to participate in the Annual CEO Direct Reports
Overachievement Bonus Plan as determined by the Compensation
Committee. Overachievement Bonuses shall be based on the Company’s overachievement
of such Company, departmental and/or individual performance goals that
may be established for the applicable bonus year by the Compensation
Committee.
D. Equity Compensation. Employee will be eligible for
grants of Company stock options (the “Options”) and other equity awards in
the discretion of the Compensation Committee.
E. General Benefits. Upon satisfying applicable eligibility requirements, if any, Employee will be eligible to participate in
the Company’s qualified 401(k) plan, group health, group life insurance,
accidental death and dismemberment, travel accident, long-term disability and short-term
disability plans and other welfare and similar plans and vacation policies
under terms generally applicable to other similarly situated employees of the
Company and shall be eligible to receive all perquisites and other benefits
provided or made available by the Company to other similarly situated executives of
the Company.
F. Reimbursements. Employee shall be entitled to receive
prompt reimbursement by the Company in accordance with its business
reimbursement policy in effect from time to time for all reasonable,
out-of-pocket business expenses incurred by him in performing his duties
under this Agreement upon the submission by Employee of such accounts
and records as may be reasonably required under the Company’s business
reimbursement policy.
SECTION 5. Termination of Employment. Notwithstanding the provisions
of Section 2, Employee’s employment hereunder may terminate under any of the
following conditions:
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A. Death. Employee’s employment under this Agreement
shall terminate automatically upon his death.
B Disability. Employee’s employment under this Agreement
may be terminated due to his Disability. “Disability” shall mean
Employee’s inability to substantially perform his duties hereunder for
any period of at least 180 consecutive days due to a physical or
mental incapacity. The date of termination due to Disability shall be
the date Employee elects to terminate his employment service due to
such Disability or, if earlier, the date the Board determines that
Employee has met the definition of Disability and given written notice
of such termination to Employee,
C.
Termination by Company without Cause. “The Company may
terminate Employee’s employment hereunder without Cause (as
hereinafter defined) on 30 days’ prior written notice to Employee.
D.
Termination by Company for Cause. Employee’s
employment hereunder may be terminated for Cause by the Company. For
purposes of this Agreement, “Cause” shall mean (i) the willful and
continued failure by Employee to substantially perform Employee’s
duties with the Company (other than any such failure resulting from
Employee’s incapacity due to physical or mental illness), (ii) an act
or acts of dishonesty taken by Employee and intended to result in
personal enrichment of Employee at the expense of the Company, (iii)
willful violation by Employee of Employee’s material obligations under
this Agreement, (iv) willful violation by Employee of a material
policy of the Company, including its policies regarding professional
and ethical conduct, (v) Employee’s commission of one or more acts
that constitute a felony, (vi) Employee is publicly censured by the
Securities Exchange Commission, or (vii) Employee commits one or more
acts of fraud as regards the Company. For purposes of clause (i) of
this definition, no act, or failure to act, on Employee’s part shall
be deemed “willful” unless done, or omitted to be done, by Employee
not in good faith and without reasonable belief that Employee’s act,
or failure to act, was in the best interest of the Company. The
determination of whether Cause exists must be made by a resolution
duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Directors of the Company.
E. Termination by Employee. Employee may
terminate his employment hereunder at any time on 30 days’ prior
written notice to the Board.
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SECTION 6. Payments Upon Termination.
A. Upon termination of Employee’s employment for any reason prior to
the expiration of the Term, the Company shall be obligated to pay,
and Employee shall be entitled to receive:
1. all accrued and unpaid Base Salary to the date of termination;
2. any earned, but unpaid, bonuses for the bonus year ending
prior to the date of termination;
3. all incurred but unreimbursed business expenses for which
Employee is entitled to reimbursement; and
4. any benefits to which he is entitled under the terms of
any applicable employee benefit plan or program, or applicable
law.
B. Upon termination of Employee’s employment pursuant to Section 5.C., the Company shall be obligated to pay or provide, and
Employee’s estate or beneficiary shall be entitled to receive:
1. all of the amounts and benefits described in Section 6. A.; and
2.
either (a) a lump sum payment equal to 1.5 times the sum of
(i) Employee’s Base Salary, plus (ii) the most recent annual
bonus earned by Employee or (b) a lump sum payment equal to 1.5 times
Employee’s Base Salary and, solely for purposes of determining Employee’s
vesting under any Options, the number of shares that would become vested
under such Options during the 12-month period following Employee’s
termination date if Employee’s employment had continued during such
period shall become vested on his termination of employment date,
whichever of (a) or (b) is elected by Employee in writing to the Company within
five days of his termination date.
C. In the event of any termination of employment under Section 5,
Employee shall be under no obligation to seek other employment and there
shall be no offset against amounts due Employee under this Agreement on
account of any remuneration attributable to any subsequent employment or
self-employment that he may obtain.
D. The Company and Employee have previously or contemporaneously
with this Agreement entered into a Severance Agreement which provides
certain payments and benefits to Employee upon a qualified termination of
employment in connection with a change of control of the Company.
Notwithstanding anything in this Agreement to the contrary, to the extent
Employee is entitled to receive any severance payment or benefits under
the Severance Agreement any
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severance payment or benefits to which Employee is otherwise entitled
to receive under this Agreement shall be reduced or offset by the
severance payment or benefit payable under the Severance Agreement in
such manner as is appropriate, as determined in good faith by the
Board, to prevent a duplication of such payment and benefits.
SECTION 7. Indemnification. The Company agrees to indemnify Employee
to the fullest extent permitted by applicable law with respect to any acts or
non-acts he may have committed during the period which he was an officer, director
and/or employee of the Company or any subsidiary or affiliate thereof, or of any
other entity of which he served as an officer, director or employee at the request
of the Company.
SECTION 8. Covenants of Employee. Employee covenants as follows:
A. Confidentiality. During and after his employment with
the Company and its affiliates, Employee will hold in confidence all
confidential information and will not disclose it to any person other
than in connection with the performance of his duties and obligations
hereunder, except with the specific prior written consent of the Board
of Directors or the Chief Executive Officer; provided, however, that
the parties agree that this Agreement does not prohibit the disclosure
of confidential information where applicable law requires, including,
but not limited to, in response of subpoenas and/or orders of a
governmental agency or court of competent jurisdiction. In the event
that Employee is requested or becomes legally compelled under the
terms of a subpoena or order issued by a court of competent
jurisdiction or by a governmental body to make any disclosure of
confidential information, Employee agrees that he will (i) immediately
provide the Company with written notice of the existence, terms and
circumstances, surrounding such request(s) so that the Company may
seek an appropriate protective order or other appropriate remedy, (ii) cooperate with the Company in its efforts to decline, resist or narrow
such requests and (iii) if disclosure of such confidential information
is required in the opinion of counsel, exercise reasonable efforts to
obtain an order or other reliable assurance that confidential
treatment will be accorded to such disclosed information.
“Confidential information” means any and all intellectual property of
the Company (or any of its affiliates), including but not limited to:
(a) trade secrets concerning the business and affairs of the Company
(or any of its affiliates), product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current, and
planned research and development, current and planned manufacturing or
distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code
and source code), computer software and database technologies,
systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information), and
any other information, however documented, that is a trade secret
under federal, state or other applicable law; and (b) information
concerning
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the business and affairs of the Company (or any of its affiliates) (which
includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and
plans, the names and backgrounds of key personnel, personnel training and
techniques and materials), however documented; and notes, analysis,
compilations, studies, summaries, and other material prepared by or for
the Company (or any of its affiliates) containing or based, in whole or
in part, on any information included in the foregoing.
B. Trade Secrets. Any trade secrets of the Company will be
entitled to all of the protections and benefits under the federal and state
trade secret and intellectual property laws and any other applicable law. If any
information that the Company deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this
Agreement, such information will, nevertheless, be considered confidential
information for purposes of this Agreement, so long as it otherwise meets the
definition of confidential information. Employee hereby waives any requirement
that the Company submit proof of the economic value of any trade secret or
post a bond or other security.
C. Proprietary Items. Employee will not remove from the
Company’s premises (except to the extent such removal is for purposes of the
performance of Employee’s duties at home or while traveling, or except as otherwise
specifically authorized by the Company) any document, record, notebook, plan,
model, component, device, or computer software or code, whether embodied in
a disk or in any other form belonging to the Company or used in the Company’s
business (collectively, the “Proprietary Items”). All of the Proprietary
Items, whether or not developed by Employee, are the exclusive property of the
Company. Upon termination of his employment, or upon the request of the Company
during the Term, Employee will return to the Company all of the Proprietary
Items and confidential information in Employee’s possession or subject to
Employee’s control, and Employee shall not retain any copies, abstracts,
sketches, or other physical embodiment, including electronic or otherwise, of any of
the Proprietary Items or confidential information.
D. Non-Competition and Non-Interference. During the period
of his employment with the Company or its affiliates and for the one-year
period after the termination of his employment with the Company and its
affiliates, Employee will not, directly or indirectly:
1. without the express prior written consent of the Board of
Directors, own an interest in, manage, operate, join, control,
lend money or render financial or other assistance to or
participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any person that
competes with the Company in the field of neurostimulation in a
matter covered by a patent assigned to or held by the Company;
provided, however, that following Employee’s termination of
employment with the Company the foregoing restriction shall apply
only
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to those areas where the Company is actually doing business on
the date of such termination of employment; provided, further,
that Employee may purchase or otherwise acquire for passive
investment up to 3% of any class of securities of any such
enterprise if such securities are listed on any national or
regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934;
2. whether for Employee’s own account or for the account
of any other person, (except for the account of the Company and
its affiliates), solicit Business from any person known by
Employee to be a customer of the Company or its affiliates,
whether or not Employee had personal contact with such person
during Employee’s employment with the Company and its
affiliates;
3. whether for Employee’s own account or the account of
any other person, (i) solicit, employ, or otherwise engage as
an employee, independent contractor, or otherwise, any person
who is an employee of the Company or an affiliate, or in any
manner induce, or attempt to induce, any employee of the
Company or its affiliate to terminate his employment with the
Company or its affiliate; or (ii) interfere with the Company’s
or its affiliate’s relationship with any person who at any time
during the Term, was an employee, contractor, supplier, or
customer of the Company or its affiliate; or
4. at any time after the termination of his employment,
disparage the Company or its affiliates or any shareholders,
directors, officers, employees, or agents of the Company or
any of its affiliates, so long as the Company does not
disparage Employee,
E.
Acknowledgements. The Company acknowledges that it is
providing Employee with confidential information in order for
Employee to perform his duties under this Agreement. Employee
acknowledges that (a) the services to be performed by him under this
Agreement are of a special, unique, unusual, extraordinary, and
intellectual character, and (b) the provisions of this Section 8 are
reasonable and necessary to protect the confidential information,
goodwill and other business interests of the Company. If any covenant
in this Section 8 is held to be unreasonable, arbitrary, or against
public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope,
time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not
against public policy, will be effective, binding, and enforceable
against Employee. Employee hereby agrees that this covenant is a
material and substantial part of this Agreement and that: (i) the
geographic limitations are reasonable; (ii) the term of the covenant
is reasonable; and (iii) the covenant is not made for the purpose of
limiting competition per se and is reasonably related to a
protectable business interest of the Company. The period of time
applicable to any covenant in this Section 8 will be extended by the
duration of any violation
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by Employee of such covenant. The provisions of this Section 8 shall
survive the termination of the Term of this Agreement.
SECTION 9. Injunctive Relief and Additional Remedy. Employee
acknowledges that the injury that would be suffered by the Company as a result of a
breach of the provisions of Section 8 of this Agreement would be irreparable and that
an award of monetary damages to the Company for such a breach would be an inadequate
remedy. Consequently, the Company will have the right, in addition to any other
rights it may have, to obtain a temporary restraining order and/or injunctive relief
to restrain any breach or threatened breach or otherwise to specifically enforce any
provision of this Agreement. Employee waives any requirement for the Company’s
securing or posting of any bond in conjunction with any such remedies. Employee
further agrees to and hereby does submit to in personam jurisdiction before each and
every court for that purpose. Without limiting the Company’s rights under this
Section or any other remedies of the Company, if Employee breaches any of the
provisions of Section 8 and such breach is proven in a court of competent
jurisdiction, the Company will have the right to cease making any payments or
providing other benefits otherwise due Employee under this Agreement.
SECTION 10. Amendment: Waiver. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by each of
the parties hereto, and compliance with the terms and provisions hereof may be waived
only by a written instrument executed by each party entitled to the benefits thereof.
No failure or delay on the part of any party in exercising any right, power or
privilege granted hereunder shall constitute a waiver thereof, nor shall any single
or partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
granted hereunder,,
SECTION 11. Entire Agreement. Except as contemplated herein, this
Agreement constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes any and all prior or contemporaneous written or
oral agreements, arrangements or understandings between the Company and Employee.
SECTION 12. Notices. All notices or communications hereunder shall be in
writing, addressed as follows or to any address subsequently provided to the other
party:
To the Company:
Cyberonics, Inc.
Attention: Vice President of Human Resources
000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Vice President of Human Resources
000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
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To Employee:
Xxxxxxx X. Xxxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
0000 Xxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery or overnight courier, upon receipt, (ii)
if sent by telecopy or facsimile transmission, upon confirmation of receipt by the
sender of such transmission or (iii) if sent by registered or certified mail, on
the fifth day after the day on which such notice is mailed.
SECTION 13. Severability. In the event that any term or provision of tills
Agreement is found to be invalid, illegal or unenforceable, the validity, legality
and enforceability of tine remaining terms and provisions hereof shall not be in
any way affected or impaired thereby, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained therein.
SECTION 14. Binding Effect: Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns (it being understood and agreed that, except as expressly
provided herein, nothing contained in this Agreement is intended to confer upon
any other person or entity any rights, benefits or remedies of any kind or
character whatsoever). No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, provided that the assignee
or transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations and
duties of the Company, as contained in this Agreement, either contractually or as
a matter of law. The Company further agrees that, in the event of a sale of assets
or liquidation as described in the preceding sentence, it shall take whatever
action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of the Company hereunder
SECTION 15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (except that no effect
shall be given to any conflicts of law principles thereof that would require the
application of the laws of another jurisdiction).
SECTION 16, Submission to Jurisdiction. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS IN XXXXXX
COUNTY, TEXAS, FOR THE PURPOSES OF ANY PROCEEDING ARISING OUT OF THIS AGREEMENT.
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SECTION 17. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
SECTION 18. Tax Withholdings. The Company shall withhold from all
payments hereunder all applicable taxes that it is required to withhold with respect
to payments and benefits provided under this Agreement.
SECTION
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of
the date set forth above.
| CYBERONICS, INC. | |||
| By: | /s/ Xxxxxx X. Xxxxxxx |
||
| Xxxxxx X. Xxxxxxx | |||
| Chairman of the Board of Directors | |||
| and Chief Executive Officer | |||
| EMPLOYEE | |||
| By: | /s/
Xxxxxxx X. Xxxxxx June 19,
2006 |
||
| Xxxxxxx X. Xxxxxx | |||
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