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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of May 5, 1997,
by and between XXXXXX X. XXXXXX, XX., PH.D. ("Executive") and APACHE MEDICAL
SYSTEMS, INC., a Delaware corporation ("Company").
1. EMPLOYMENT TERM. The Company will employ Executive for a term
commencing on January 1, 1997 and ending on December 31, 1997 ("Employment
Term"). The Employment Term shall be automatically extended for additional
one-year terms, unless Executive or the Company's Board of Directors ("Board")
provides 90 days' advance written notice to the other of his/its intention not
to renew.
2. EMPLOYMENT DUTIES. Executive will serve as Chief Executive Officer
of the Company and Chairman of the Board subject to the direction and control
of the Board. Executive shall perform such duties as may be assigned from time
to time by the Board, and shall, on a full-time basis, serve the Company
faithfully, diligently and competently and to the best of his ability and in
accordance with this Agreement and applicable law.
3. COMPENSATION. In exchange for Executive's services under this
Agreement, the Company shall pay Executive as salary $205,000 per annum, which
shall be reviewed annually by the Compensation Committee of the Board during
its annual year-end compensation review ("Salary"). Salary shall be payable in
24 equal bi-monthly installments and otherwise in accordance with the Company's
ordinary payment practices. Any payments made to Executive pursuant to this
Section 3 shall be treated as wages for withholding and employment tax
purposes. Executive shall participate in the Company's short-term cash
incentive plan or any successor thereto (the "short-term plan") and any stock
option or stock incentive plan generally available to executives pursuant to
the applicable plan documents.
4. BENEFITS.
(a) Executive shall be entitled during the Employment Term to
participate in such employee benefit plans and programs as are
offered from time to time to employees of the Company to the
extent that his position, tenure, compensation, age, health and
other qualifications make him eligible to participate. The Company
does not promise the adoption or continuance of any particular
plan or program during the Employment Term, and Executive's (and
his dependents') participation in any such plan or program shall
be subject to the provisions, rules, regulations and laws
applicable thereto.
(b) Executive shall be entitled to paid vacation in accordance with
the Company's vacation policy applicable to senior executives.
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(c) The Company shall provide directors and officers liability
insurance coverage for Executive, which shall be pursuant to a
"claims arising" policy covering senior executives generally.
(d) The Company shall reimburse Executive for his reasonable legal
expenses in connection with the initial execution of this
Agreement and its termination, as applicable.
5. REIMBURSEMENT OF EXPENSES. Executive shall be entitled to
reimbursement for ordinary, necessary and reasonable out-of-pocket business
expenses which he incurs in connection with performing his duties hereunder.
The reimbursement of all such expenses shall be made upon presentation of
satisfactory evidence of the amounts and nature of such expenses and shall be
subject to the Company's policies regarding business expenses and to the
reasonable approval of the Company's Chief Financial Officer.
6. NON-COMPETITION, NON-SOLICITATION. Executive agrees to
continue to be bound by the terms of his Proprietary Information, Inventions,
Non-Competition and Non-Solicitation Agreement executed on April 19, 1996.
7. TERMINATION FOR CAUSE. Notwithstanding any other provision of
this Agreement, Executive's employment with the Company and this Agreement may
be terminated by the Board (excluding Executive for this purpose) at any time
for Cause which shall include his (i) commission of an action against or in
derogation of the interests of the Company which constitutes an act of fraud,
dishonesty or moral turpitude or which, if proven in a court of law, would
constitute a violation of a criminal code or similar law, (ii) material breach
of any material duty or obligation imposed upon him pursuant to this Agreement,
(iii) breach of his Proprietary Information, Inventions, Non- Competition and
Non-Solicitation Agreement, and (iv) performance of any similar action that the
Board, in its sole discretion, may deem to be sufficiently injurious to the
interests of the Company so as to constitute substantial cause for termination.
If Executive is terminated for Cause as defined in (ii) or (iv) above and if
such Cause could be cured, the Company will give Executive notice of
termination stating the reason therefor and Executive may cure the Cause during
the 30 days following receipt of notice, which cure may not be unreasonably
rejected by the Board. The Company may suspend Executive with pay during the
cure period. In all other cases, Executive's employment with the Company shall
be terminated immediately and Executive may arbitrate pursuant to Section 12(g)
whether or not Cause existed. In the event of termination under this Section
7, the Company's obligations under this Agreement shall cease and, except as
required by applicable law, Executive shall forfeit all rights to receive any
other compensation or benefits under this Agreement, except that he shall be
entitled to his Salary for services performed through the date of such
termination. Without limitation, termination of Executive pursuant to this
Section 7 shall not relieve him of his obligations under Section 6.
8. INVOLUNTARY TERMINATION. During the term of this Agreement,
Executive's employment with the Company and this Agreement may be terminated
for any reason or no reason without Cause by the Board, provided that in the
event of such termination or removal, he
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shall be entitled to continuation of his Salary and Company-provided health
benefits, life insurance and other welfare benefits for 24 months, and to a pro
rata payment of the short-term plan award that he would have been entitled to
receive had he been employed for the entire year in which termination occurs,
with pro-ration based on the number of days employed during such year. Such
award shall be paid to Executive at the time that plan payments for the
applicable calendar year are typically paid to senior executives. If the
Company notifies Executive of its intention not to renew this Agreement as
provided in Section 1, Executive shall be deemed to be terminated by the
Company as of the last day of the Employment Term and Executive shall be
entitled to Salary, benefits and a plan award as provided in this Section.
Without limitation, a termination of Executive pursuant to this Section 8 shall
not relieve him of his obligations under Section 6.
9. DISABILITY. If Executive becomes totally disabled during the
Employment Term, his employment and this Agreement may be terminated by the
Board (excluding Executive for this purpose) as of the date such total
disability is determined. Executive shall be considered to be totally disabled
if he is unable by reason of accident or illness (including mental illness) to
perform the material duties of his regular position with the Company and is not
expected to recover from his disability within a period of six months from the
commencement of the disability. If at any time Executive claims or is claimed
by the Board to be totally disabled, a physician acceptable to both Executive
and the Board (which acceptances shall not be unreasonably withheld) shall be
retained by the Company and shall examine him. Executive shall cooperate fully
with the physician. If the physician determines that Executive is totally
disabled, the physician shall deliver to the Board a certificate certifying
both that Executive is totally disabled and the date upon which the condition
of total disability commenced. The determination of the physician shall be
conclusive. Executive's rights to any compensation and benefits under this
Agreement shall cease upon his total disability, except that he shall be
entitled to continuation of his Salary and Company-provided health benefits,
life insurance and other welfare benefits for 12 months, provided, however,
that any such payments shall be reduced by an amount equal to any payments and
health coverage received by Executive under any employment policy, arrangement
or agreement, disability insurance policy or other benefit plan of the Company
or Social Security. Executive also shall receive the short-term plan award
that he would have been entitled to receive had he been employed for the entire
year in which termination occurs and a pro-rated award for the next following
year based on the number of days during the year for which he received
severance pay; provided that Executive's awards for these two years shall be
limited to the award portion(s) based on Company performance, except that, to
the extent Executive was actively employed during a portion of the first year,
such award shall include the award portion(s) based on individual performance
pro-rated for the time of his active employment. Such awards shall be paid to
Executive at the time that plan payments for the applicable calendar year are
typically paid to senior executives. Any termination by the Board pursuant to
this Section 9 shall be made in accordance with all applicable laws. Without
limitation, a termination of Executive pursuant to this Section 9 shall not
relieve him of his obligations under Section 6.
10. CHANGE IN RESPONSIBILITY. During the term of this Agreement,
Executive may terminate his employment with the Company and this Agreement upon
30 days' advance written
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notice in the event of any Change in Responsibility, which shall include a
material change in his duties or authority, a reduction in Salary or material
change in his benefits, or a similar material change in the terms and
conditions of his employment; provided that the Company may cure the Change in
Responsibility during the 30-day notice period which cure may not be
unreasonably rejected by Executive. In the event that the Company fails to
cure, Executive shall be entitled to continuation of his Salary and
Company-provided health benefits, life insurance and other welfare benefits for
24 months, and to a pro rata payment of the short-term plan award that he would
have been entitled to receive had he been employed for the entire year in which
termination occurs, with proration based on the number of days employed during
such year. Such award shall be paid to Executive at the time that plan
payments for the applicable calendar year are typically paid to senior
executives. Notice of termination under this Section 10 shall be valid only if
received by the Company within 120 days after the Change in Responsibility
occurred. Without limitation, a termination pursuant to this Section 10 shall
not relieve Executive of his obligations under Section 6.
11. CHANGE IN CONTROL.
(a) Executive shall give 90 days' written notice in advance of the
12-month anniversary of a Change in Control as to whether he
will terminate voluntarily as of such anniversary date, such
termination would entitle him to continuation of his Salary
and Company-provided health benefits, life insurance and other
welfare benefits for 24 months, and to a pro rata payment of
the short-term plan award that he would have been entitled to
receive had he been employed for the entire year in which
termination occurs, with pro-ration based on the number of
days employed during such year. Such award shall be paid to
Executive at the time that plan payments for the applicable
calendar year are typically paid to senior executives.
(b) Each outstanding option issued to Executive and any future
option issued to Executive during the term of this Agreement
shall be amended to provide or shall provide, as the case may
be, provisions to the effect that (i) such option shall vest
in full upon a Change in Control, and (ii) to the extent that
Executive receives severance benefits under this Agreement,
the exercise period for the portion of any option vested at
the time of termination of employment shall be extended so
that such option may be exercised during a period of at least
30 months; provided, however, in no event shall the exercise
period be longer than the original option period established
in the option agreement.
(c) A Change in Control is the purchase or other acquisition by
any person, entity or group of persons, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934
or any comparable successor provisions, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
such Act) of 30% or more of either the outstanding shares of
common stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally;
the approval by the stockholders of the Company of a
reorganization,
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merger or consolidation, in each case, with respect to which
persons who were stockholders of the Company immediately prior
to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 30% of the combined
voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated Company's
then outstanding securities; a liquidation or dissolution of
the Company; or the sale of all or substantially all of the
Company's assets.
(d) A Change in Control will not affect or diminish Executive's
rights under any provision of this Agreement, including,
without limitation, Sections 8, 9 and 10. Without limitation,
a termination pursuant to this Section 11 shall not relieve
Executive of his obligations under Section 6.
12. MISCELLANEOUS.
(a) All notices hereunder shall be in writing and shall be deemed
given when delivered in person or when telecopied with hard
copy to follow, or three business days after being deposited
in the United States mail, postage prepaid, registered or
certified mail, or two business days after delivery to a
nationally recognized express courier, expenses prepaid,
addressed as follows:
If to Executive:
Xxxxxx X. Xxxxxx, Xx., Ph.D.
000 Xxxxxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
Telecopy: (000) 000-0000
If to the Company:
Counsel
APACHE Medical Systems, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, XX 00000-0000
Telecopy: (000) 000-0000
and/or at such other addresses as may be designated by notice
given in accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit
of both parties and their respective heirs, successors and
permitted assigns. No party shall assign this Agreement or
its rights hereunder without the prior written consent of the
other party; provided, however, that the Company shall assign
this Agreement to any person or entity acquiring all or
substantially all of the business of the Company (whether by
sale of stock, sale of assets, merger, consolidation or
otherwise).
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(c) This Agreement contains all of the agreements between the
parties with respect to the subject matter hereof, and this
Agreement supersedes all other agreements, oral or written,
between the parties with respect to the subject matter hereof.
(d) No change or modification of this Agreement shall be valid
unless the same shall be in writing and signed by both
parties. No waiver of any provisions of this Agreement shall
be valid unless in writing and signed by the waiving party.
No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a
continuing waiver, unless so provided in the waiver.
(e) If any provisions of this Agreement (or portions thereof)
shall, for any reason, be considered invalid or unenforceable
by any court of competent jurisdiction, such provisions (or
portions thereof) shall be ineffective only to the extent of
such invalidity or unenforceability, and the remaining
provisions of this Agreement (or portions thereof) shall
nevertheless be valid, enforceable and of full force and
effect. The Company's rights under this Agreement shall not
be exclusive and shall be in addition to all other rights and
remedies available at law or in equity.
(f) The section headings or titles herein are for convenience of
reference only and shall not be deemed a part of this
Agreement.
(g) In the event of a dispute between Executive and the Company
that is not resolved after a good faith effort by the parties,
such dispute will be submitted to arbitration. The
arbitration will be conducted in accordance with the rules of
the American Arbitration Association in effect at the time of
the demand for arbitration and will be held in Washington,
D.C. The arbitrator will be selected from an appropriate list
of qualified arbitrators, permit reasonable discovery, and
make written findings of fact and conclusions of law
reflecting the appropriate substantive law. Either party must
deliver a request for arbitration in writing to the other
party within 60 days of the date the aggrieved party first has
knowledge of the event giving rise to the claim, otherwise the
claim will be considered void and waived. The decision of the
arbitrator will be exclusive, final and binding on Executive
and the Company, and Executive is hereby giving up his right
to have any dispute decided in a court and by a jury.
Executive and the Company will share equally the cost of the
arbitrator.
(h) This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect
and in all other respects by the laws of the State of Virginia
applicable to contracts made in that State (other than any
conflict of laws rule which might result in the application of
the laws of any other jurisdiction). Executive expressly
submits and consents in advance to the jurisdiction of the
federal and state courts of the State of Virginia for all
purposes in connection with any action or proceeding arising
out of or relating to this Agreement.
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(i) Any press release concerning termination of Executive's
employment shall be subject to Executive's review at least two
days prior to release. Upon any termination of employment
other than as provided in Section 7, Executive shall be
entitled to retain his personal office and business equipment,
such as his Company-provided computer, cellular phone,
computer printer, facsimile machine, etc.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
XXXXXX X. XXXXXX, XX., PH.D.
/s/ Xxxxxx X. Xxxxxx, Xx., Ph.D.
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APACHE MEDICAL SYSTEMS, INC.
/s/ Xxxxxxxxx X. Xxxxxx
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Xxxxxxxxx X. Xxxxxx, Secretary
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Name and Title
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