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EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is
entered into as of the 1st day of April, 1998, by and between Integrated
Orthopaedics Inc., a Texas corporation (the "Company"), and Xxxx Xxxxxxxx (the
"Executive").
WHEREAS, the Chief Executive Officer and Board of Directors of
the Company recognize that the Executive's contribution to the growth and
success of the Company is expected to be substantial and desires to assure the
Company of the Executive's employment in an executive capacity and to compensate
him therefor; and
WHEREAS, the Executive desires to commit himself to serve the
Company on the terms and subject to the conditions herein provided;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to be employed exclusively by the Company, for a
period commencing on March 17, 1998 (the "Commencement Date") and ending upon
the termination of this Agreement pursuant to Section 5 hereof (the "Employment
Period").
2. Position and Duties. The Executive, during the Employment Period,
shall serve as the Executive Vice President and Chief Operating Officer of the
Company, reporting to the Chief Executive Officer. The Executive shall have such
powers and duties as may from time to time be prescribed by the Chief Executive
Officer so long as such duties are consistent with the Executive's positions on
the date hereof. The Executive shall devote substantially all of his working
time and efforts to the business and affairs of the Company, shall perform his
duties hereunder diligently and in a prudent and businesslike manner, and shall
act in the best interest of the Company.
3. Compensation and Benefits:
(a) Base Salary. During the Employment Period (subject to Section 5
(c) hereof), the Executive shall receive an annual base salary of
$200,000 ("Base Salary"), subject to annual review by the Compensation
Committee of the Board of Directors (the "Compensation Committee"). The
Base Salary may be increased, but not decreased, during the Employment
Period upon recommendation of the Compensation Committee and approval
by the Board of Directors, which recommendation and approval may be
withheld at the sole discretion of the Compensation Committee and the
Board of Directors, respectively. The Base Salary shall be payable in
installments in accordance with the Company's customary payroll
practices but not less frequently than monthly.
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(b) Bonus. In addition to the Base Salary, the Executive shall be
eligible to receive bonus compensation, up to fifty percent (50%) of
base salary, in such amounts and payable at such times as determined by
recommendation of the Compensation Committee and approval by the Board
of Directors, which recommendation and approval may be withheld at the
sole discretion of the Compensation Committee and the Board of
Directors, respectively, at all times during the Employment Period.
(c) Stock Option Eligibility. During the Employment Period, the
Executive shall be eligible to receive additional stock option grants,
including annual performance stock option grants, pursuant to Company's
stock option plans in effect from time to time, all at the discretion
of the Compensation Committee and the Board of Directors.
(d) Fringe Benefits. During the Employment Period (subject to
Section 5(c) hereof), the Executive shall receive the fringe benefits
described on Exhibit A attached hereto. In addition, during the
Employment Period, the Executive shall be eligible to participate in
such retirement, profit sharing and pension plans and life and other
insurance programs, as well as other benefit programs, which are
available to senior executive officers of the Company, subject to the
Company's policies with respect to all of such benefits or insurance
programs or plan; provided, however, that except as expressly set forth
herein, the Company shall not be obligated to institute or maintain any
particular benefit or insurance program or plan or aspect thereof.
4. Expenses. Upon submission of properly documented expense account
reports, the Company shall reimburse the Executive for all reasonable travel,
entertainment and work-related expenses incurred by the Executive in connection
with the performance of his duties as Chief Operating Officer of the Company,
all subject to and in accordance with the expense and reimbursement policies
that may be adopted by the Company from time to time.
5. Termination. This Agreement shall terminate on the anniversary of
the Commencement Date (the period from the Commencement Date to and including
the anniversary of the Commencement Date being referred to herein as the "Base
Term"), unless earlier terminated pursuant to any one or more of the following
provisions:
(a) Death or Disability. This Agreement shall terminate
automatically upon the death or total disability of Executive. For
purposes of the Agreement, "total disability" shall be deemed to have
occurred if Executive shall have been unable to perform his duties
hereunder for a period of three (3) consecutive months or for any sixty
(60) working days out of any period of six (6) consecutive months. Upon
such termination for death or total disability, the Company shall pay
to the Executive or his estate, heirs or legal representative, as the
case may be, all compensation of the Executive accrued disability and
the Company shall have no further obligations to pay the Executive or
his estate, heirs or legal representative any other compensation or
provide any other benefits pursuant to this Agreement.
(b) Termination for Cause. The Company may terminate this Agreement
for Cause upon ten (10) days' written notice to the Executive. For
purposes of this Agreement, "Cause" shall be deemed in include (i)
material acts of fraud, dishonesty or
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deceit, (ii) competition with the Company or its subsidiaries, (iii)
unauthorized use of any of the Company's or its subsidiaries' trade
secrets or Confidential Information, (iv) conviction of a felony
involving moral turpitude, (v) any material violation of any other
material duty to the Company or its shareholders imposed by law or the
Board of Directors, or (vi) any material breach of Executive's
representations, covenants, duties and responsibilities hereunder. Upon
such termination for Cause, the Company shall pay to the Executive, as
soon as practicable after such termination, all compensation of the
Executive accrued but unpaid in respect of periods ending on or prior
to such termination and the Company shall have no further obligations
to pay the Executive any other compensation or provide any other
benefits pursuant to this Agreement.
(c) Termination Without Cause. The Company may terminate this
Agreement without Cause upon 30 days' written notice to Executive. Upon
such termination without Cause, the Company shall pay to the Executive
a termination fee equal to the amount of compensation and benefits that
would otherwise be payable or provided to the Executive pursuant to
Section 3(a) and the first sentence of Section 3(d) hereof through the
later of (i) the remainder of the Base Term as if this Agreement had
remained in full force and effect for the remainder of the Base Term
(payable or provided in accordance with Section 3 (a) or Exhibit A
hereof, as the case may be) and (ii) one year after the effective date
of the termination without Cause; plus the cash replacement value of
benefits described in the first sentence of Section 3(d) hereof,
through the later of (i) the remainder of the Base Term as if this
Agreement has remained in full force and effect for the remainder of
the Base Term and (ii) one year after the effective date of the
termination without Cause. In addition, upon such termination without
Cause, all options to purchase capital stock of the Company and all
restricted stock of the Company held by the Executive at the time of
such termination without Cause shall be deemed vested immediately prior
to such termination without Cause. The Executive shall have 90 days
after such termination to exercise any such stock options. All such
stock options that are not exercised within such 90-day period shall be
forfeited and canceled.
(d) Termination by Executive. The Executive may terminate this
Agreement upon thirty (30) days' written notice to the Company. Upon
termination by the Executive, the Company shall pay to the Executive,
as soon as practicable after such termination, all compensation of the
Executive accrued but unpaid in respect of periods ending on or prior
to such termination and the Company shall have no further obligations
to pay the Executive any other compensation or provide any other
benefits pursuant to this Agreement.
6. Representations by the Executive. The Executive hereby represents
and warrants to the Company that (a) the Executive's execution and delivery of
this Agreement and his performance of his duties and obligations hereunder will
not conflict with, cause a breach or default under, or give any party a right to
damages under (or to terminate) any other agreement to which the Executive is a
party or by which he is bound, and (b) there are no restrictions, agreements or
understanding that would make unlawful the Executive's execution or delivery of
this Agreement or the performance of his obligations hereunder.
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7. Confidentiality.
(a) Non-Disclosure Obligation. During the Employment Period or at
any time thereafter, irrespective of the time, manner or cause of the
termination of this Agreement, the Executive will not directly or
indirectly reveal, divulge, disclose or communicate to any person or
entity, other than authorized officers, directors, and employees of the
Company, in any manner whatsoever, any Confidential Information (as
hereinafter defined) without the prior written consent of the Company.
(b) Definition. As used herein, "Confidential Information" means
information disclosed to or known by the Executive as a direct or
indirect consequence of his employment hereunder about the Company or
its subsidiaries or their respective businesses, products and practices
which information is not generally known in the business in which the
Company or its subsidiaries, as the case may be, is or may be engaged.
However, Confidential Information shall not include under any
circumstances any information with respect to the foregoing matters
which is (i) available to the public from a source other than the
Executive or persons who are not under similar obligations of
confidentiality to the Company and who are not parties to this
Agreement, (ii) required to be disclosed by any court process or any
government or agency or department of any government, or (iii) the
subject of a written waiver executed by the Company for the benefit of
the executive.
(c) Return of Property. Upon termination of this Agreement, the
Executive will surrender to the Company all Confidential Information,
including without limitation, all lists, charts, schedules, reports,
financial statements, books and records of the Company and its
subsidiaries, and all copies thereof, and all other property belonging
to the Company.
8. Non-Competition.
(a) Term and Scope. Subject to the other provisions of this Section
9, from and after the date hereof until the date which is one year
after the expiration or earlier termination of this Agreement in
accordance with the terms hereof (the "Noncompetition Term"), without
the prior written consent of the Board of Directors of the Company, the
Executive shall not directly or indirectly participate as a
stockholder, proprietor, partner, trustee, consultant, employee,
director, officer, lender, or investor in any corporation, business or
professional enterprise that provides management services to medical
practices within the musculoskeletal specialty or other specialties
practiced by any medical practice subject to a management services
contract or arrangement during the Noncompetition Term with the Company
or any of its subsidiaries, in each case within a thirty mile radius of
(i) any location in which the Company or its subsidiaries presently
conducts business or (ii) any location in which the Company or its
subsidiaries, during the Noncompetition Term, (x) has initiated
business acquisition or affiliation discussions with physician groups,
(y) has expressed a bona fide interest to conduct business or (z)
conducts business.
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(b) Exception. Nothing contained herein shall limit the right of the
Executive to hold and make investments in securities of any corporation
or limited partnership that is registered on a national securities
exchange or admitted to trading privileges there on or actively traded
in a generally recognized over-the-counter market, provided the
Executive's equity interest therein does not exceed 5% of the total
outstanding shares or interest in such corporation or partnership.
(c) Extension for Noncompliance. If, during any period within the
Noncompetition Term, the Executive is not in compliance with the terms
of this Section 8, the Company shall be entitled to, among other
remedies, compliance by the Executive with the terms of this Section 8
for an additional period equal to the period of such noncompliance. For
purposes of this Agreement, the term "Noncompetition Term" shall also
include such additional period.
(d) Reasonableness. The Executive hereby acknowledges that the
geographic boundaries, scope of prohibited activities and the time
duration of the provisions of this Section 8 are reasonable and are not
broader than are necessary to protect the legitimate business interests
of the Company.
9. Non-Solicitation and Non-Interference. During the Noncompetition
Term, the Executive shall not, directly or indirectly, (a) solicit the
employment of any current or future employee for the Company without the prior
written consent of the Board of Directors of the Company, (b) request, induce or
attempt to influence any employee of the Company to terminate his or her
employment with the Company, or (c) request, induce or attempt to influence any
supplier, customer, patient or client of the Company to terminate his, her or
its relationship with the Company.
10. Injunctive Relief. The Executive acknowledges that the breach of
any of the agreements contained herein, including, without limitation, any of
the confidentiality, non-competition and non-solicitation covenants specified in
Section 7 through 9, may give rise to irreparable injury to the Company,
inadequately compensable in money damages. Accordingly, the Company shall be
entitled to injunctive relief to prevent or cure breaches or threatened breached
of the provisions of this Agreement and to enforce specific performance of the
terms and provisions hereof in any court of competent jurisdiction, in addition
to any other legal or equitable remedies which may be available. The Executive
waives any requirements for the posting of a bond in connection with the
issuance of such an injunction necessary for the protection of the Company's
legitimate business interests and are reasonable in scope and content.
11. Assignment. This Agreement will be binding upon the parties hereto
and their respective successors and permitted assignees. Because the Executive's
duties and services hereunder are special, personal and unique in nature, the
Executive may not transfer, sell or otherwise assign his rights, obligations or
benefits under this Agreement (and any attempt to do so will be void).
12. Headings. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
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13. Notices. All notices and other communications required or permitted
hereunder must be in writing and (a) delivered personally, (b) sent by
telefacsimile, (c) delivered by a nationally recognized overnight courier
service, or (d) sent by registered or certified mail, postage prepaid, as
follows:
(i) If to the Company, to:
Integrated Orthopaedics, Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Chief Executive Officer
(ii) To the Executive, to:
Xxxx Xxxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Section 14 will (x) if delivered
personally or by overnight courier service, be deemed given upon delivery; (y)
if delivered by telefacsimile or similar facsimile transmission, be deemed given
when electronically confirmed; and (z) if sent by registered or certified mail,
be deemed given when received. Any party from time to time may change its
address for the purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charges with the
contents thereof.
14. Invalid Provisions. If any provisions of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Agreement. In
lieu of each such illegal, invalid, or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
15. Entire Agreement: Amendments. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. This Agreement may be amended in whole or in part only by
an instrument in writing setting forth the particulars of such amendment and
duly executed by an executive officer of the Company and by the Executive.
16. Waiver. No delay or omission by any party hereto to exercise any
right or power hereunder shall impair such right or power or be construed as a
waiver thereof. A waiver by any party of any of the covenants to be performed by
any other party or any breach thereof shall not be construed to be a waiver of
any succeeding breach or of any other covenant herein contained.
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Except as otherwise expressly set forth herein, all remedies provided for in
this Agreement shall be cumulative and in addition to and not in lieu of any
other remedies available to any party at law, in equity or otherwise.
17. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same agreement.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas, without regard to conflict of
laws principles thereof.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first above written.
COMPANY:
INTEGRATED ORTHOPAEDICS, INC.
By:
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Name: Xxxxxx X. Xxxxxx
Title: President & CEO
EXECUTIVE:
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Xxxx X. Xxxxxxxx
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EXHIBIT A
SCHEDULE OF FRINGE BENEFITS
1. The Company shall provide long-term disability insurance coverage for
the Executive equal to 50% of the Executive's Base Salary payable
pursuant to Section 3(a) of this Agreement.
2. The Company shall provide term life insurance coverage having a death
benefit of $1,000,000, payable, upon the death of the Executive, to the
beneficiary or beneficiaries selected by the Executive.
3. The Company shall provide up to a maximum of $50,000 in reimbursable
relocation expenses. Reimbursable expenses include closing costs to
seller (current home), closing costs to purchaser (new home),
transportation of household goods and temporary living expenses
(inclusive of temporary residence, on-site living expenses such as
meals, and travel from primary residence).
