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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of June 1996 by and
between Interact Medical Technologies Corporation (the "Company"), and Xxxxx X.
Xxxxxxx ("Executive").
WHEREAS, the Company and Executive desire to enter into an employment
contract that will govern the terms and conditions of Executive's employment
with the Company and will provide certain severance benefits to Executive upon
his termination of employment.
NOW, THEREFORE, the parties hereto agree as follows:
1. TITLE. Executive shall serve as President and Chief Executive
Officer of the Company and shall in such capacity report directly to the Board
of Directors of the Company ("Board").
2. DUTIES AND RESPONSIBILITIES. Executive hereby agrees to remain as
President and Chief Executive Officer of the Company during the Employment
Period and to perform in good faith and to the best of his ability all services
which may be required of Executive in such position and to be available to
render such services at all reasonable times and places in accordance with such
reasonable directions and requests as the Board may from time to time reasonably
specify. Executive shall, during the Employment Period, devote substantially all
of his time, ability, energy and skill to the performance of his duties and
responsibilities hereunder.
3. PERIOD OF EMPLOYMENT. The period of Executive's employment with
the Company pursuant to the provisions of this Agreement shall commence as of
June 1, 1996 and shall, unless sooner terminated in accordance with Paragraph 10
hereof, continue through June 1, 1999 ("Employment Period").
4. COMPENSATION.
A. During the Employment Period, Executive shall receive an
annualized base salary of $190,000, less all applicable withholdings and
deductions, which salary shall be reviewed by the Compensation Committee of the
Board, and subject to upward adjustment only, no less frequently than annually,
with the first such review to occur on or prior to January 15, 1997.
B. Executive shall be eligible to earn a bonus during each year
of service during the Employment Period and said annual bonus may amount to up
to half of Executive's then current salary, less all applicable withholdings and
deductions. Said annual bonus shall be based on Executive's job performance and
the Company's achievement of certain financial and performance objectives. The
specific terms and conditions of the
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annual bonus plan for Executive shall be determined solely by the Compensation
Committee of the Board. The objectives contained in such bonus plan shall be
established by mutual agreement of Executive and the Compensation Committee of
the Board, and such objectives shall include such key initiatives as the parties
deem important and reasonably achievable, which may include, without limitation,
profit objectives, earnings goals and market share performance. Bonus payments
under such bonus plan shall be payable only if such objectives are achieved.
C. Executive's base salary shall be paid at semimonthly
intervals over the Employment Period, in accordance with the Company's standard
payroll practices. The Company shall deduct and withhold from Executive's
compensation payable hereunder any and all applicable federal, state and local
income and employment withholding taxes (if any) and any other amounts required
to be deducted or withheld by the Company under applicable statutes,
regulations, ordinances or orders governing or requiring the withholding or
deduction of amounts otherwise payable as compensation or wages to employees.
5. BUSINESS EXPENSE REIMBURSEMENT. Executive shall be entitled, in
accordance with the reimbursement policies in effect from time to time, to
receive reimbursement from the Company for all travel, entertainment and other
business expenses incurred by Executive in the performance of his duties
hereunder, provided Executive furnishes the Company with vouchers, receipts and
other details in accordance with the Company's policies applicable to other
senior management executives.
6. BENEFITS. The Company shall provide Executive and his dependents
with coverage under all medical, dental and/or vision plans and other welfare or
retirement benefit programs available to the Company executives and their
dependents, to the extent Executive and his dependents satisfy the applicable
eligibility requirements.
7. RESTRICTIVE COVENANT. During the Employment Period:
A. Executive shall devote substantially all of his time and
energy to the performance of Executive's duties described herein, except during
periods of illness or vacation.
B. Except for Maxal Capital Corporation ("Maxal"), Executive
shall not directly or indirectly provide services to or through any person, firm
or other entity except the Company, unless otherwise authorized by the Company
in writing.
C. Except for Maxal, Executive shall not render any services of
any kind or character for Executive's own account or for any other person, firm
or entity without first obtaining the Company's written consent.
D. Notwithstanding the foregoing, Executive shall have the right
to perform such incidental services as are necessary in connection with (i) his
private passive investments, but only if Executive is not obligated or required
to (and shall not in fact) devote any managerial efforts which significantly
interfere with the services required to be
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performed by him hereunder, (ii) his charitable or community activities or (iii)
participation in trade or professional organizations, but only if such
incidental services do not significantly interfere with the performance of
Executive's services hereunder.
8. NON-COMPETITION. During the Employment Period, Executive shall
not directly or indirectly:
A. actively own, manage, operate, join, control or participate
in the ownership, management, operation or control of, or be employed by or
connected in any manner with, any enterprise which is engaged in any business
competitive with that which the Company is at the time conducting or proposing
to conduct; provided, however, that such restriction shall not apply to any
passive investment representing an interest of less than two percent (2%) of an
outstanding class of publicly traded securities of any corporation or other
enterprise which is not, at the time of such investment, engaged in a business
geographically competitive with the Company's business;
B. encourage or solicit any Company employee to leave the
Company's employ for any reason or interfere in any material manner with
employment relationships at the time existing between the Company and its
current employees; or
C. solicit any customer of Company, induce any the Company
customer to terminate its existing business relationship with the Company or
interfere in any material manner with any existing business relationship between
the Company and any customer or other third party.
9. PROPRIETARY INFORMATION. Concurrent with execution of this
Agreement, Executive shall execute the Company's standard form of employee
proprietary information and inventions agreement attached hereto as Exhibit A.
10. TERMINATION OF EMPLOYMENT.
A. The Company may terminate Executive's employment under this
Agreement at any time for any reason, with or without Cause, by giving at least
ninety (90) days prior written notice of such termination to Executive. However,
such ninety (90)-day notice requirement shall not apply to the termination of
Executive's employment for Non-Performance or for Cause under Paragraphs 10.B or
10.C hereof, respectively. Executive may terminate Executive's employment under
this Agreement at any time for any reason by giving at least thirty (30) days
prior written notice of such termination to the Company.
B. The Company may terminate Executive's employment during the
Employment Period for Non-Performance pursuant to a vote of the supermajority of
the Board. For purposes of this Agreement, "Non-Performance" shall mean
Executive's intentional and willful refusal to perform significant or
substantial duties that have a material adverse effect on the Company after
receipt of a written warning regarding his performance and a refusal to conform
to the Company's request as provided in the warning. If Executive's employment
with the Company is terminated because of Non-Performance
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(regardless of whether before, on or after the last day of the Employment
Period), then Executive shall be entitled to receive a lump sum severance
payment equal to twelve (12) months of his base salary then in effect (and
continuation of all benefits then in effect for the twelve (12) months following
such termination), less all applicable withholdings.
C. The Company may at any time, upon written notice, terminate
Executive's employment with the Company hereunder for Cause. Such termination
shall be effective immediately upon such notice. For the purposes of this
Agreement, "Cause" shall mean: (i) intentional dishonesty resulting, or
intending to result, directly or indirectly, in gain or personal enrichment at
the expense of the Company; (ii) intentional and continuous gross misconduct,
including without limitation, fraud, sexual harassment or misappropriation of
Company property or confidential information; (iii) Executive's conviction of a
felony under the laws of the United States or any state thereof involving moral
turpitude; or (iv) an intentional and substantial breach by Executive of
material provisions of this Agreement, which breach continues for a period of
thirty (30) days after written notice of such breach. Upon such termination for
Cause, the Company shall only be required to pay Executive any unpaid
compensation earned by him pursuant to Paragraph 4 hereof for services rendered
through the date of such termination, and reimbursements unpaid to date under
Paragraphs 7 or 8 hereof, and Executive shall not be entitled to receive any
severance benefits or payments.
D. In the event Executive's employment with the Company should
terminate by reason of his death or disability during the Employment Period,
severance benefits shall be payable to Executive's estate.
E. If the Company terminates Executive and such termination is
not for Non-Performance or Cause (regardless of whether before, on or after the
last day of the Employment Period), then, as of the date of such termination,
all of the outstanding unvested options to purchase shares of the Company's
capital stock then held by Executive shall vest and Executive shall be entitled
to receive a lump sum severance payment equal to twenty-four (24) months of his
base salary then in effect not discounted to present value (and continuation of
all benefits then in effect for the shorter of (i) twenty-four (24) months
following such termination or (ii) until June 1, 1999), less all applicable
withholdings.
11. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and shall be binding upon, the Company, its successors
and assigns, and Executive, the personal representative of his estate and his
heirs and legatees.
12. GOVERNING DOCUMENT. This Agreement constitutes the entire
agreement and understanding of the Company and Executive with respect to the
terms and conditions of Executive's employment with the Company and the payment
of severance and disability benefits and supersedes all prior and
contemporaneous written or verbal agreements and understandings between
Executive and the Company relating to such subject matter, other than as
provided herein. This Agreement may only be amended by written instrument signed
by Executive and a representative of the Compensation Committee of the Board.
Any and all prior agreements, understandings or representations relating to
Executive's
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employment with the Company are hereby terminated and cancelled in their
entirety and are of no further force or effect.
13. APPLICABLE LAW AND SEVERABILITY. This Agreement shall, in all
respects, be governed by the laws of the State of California applicable to
agreements executed and to be wholly performed within the State of California.
If any provision of this Agreement becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction by reason of the scope, extent or duration of
its coverage, then such provision shall be deemed amended to the extent
necessary to conform to applicable law so as to be valid and enforceable or, if
such provision cannot be so amended without materially altering the intention of
the parties, then such provision shall be stricken and the remainder of this
Agreement shall continue in full force and effect. Should there ever occur any
conflict between any provision contained in this Agreement and any present or
future statute, law, ordinance or regulation contrary to which the parties have
no legal right to contract, the latter shall prevail, but the provision of this
Agreement affected thereby shall be curtailed and limited only to the extent
necessary to bring it into compliance with the law. All the other terms and
provisions of this Agreement shall continue in full force and effect without
impairment or limitation. Any dispute arising out of this Agreement shall be
decided by a court located in the State of California applying California law.
In the event of any lawsuit arising out of this Agreement, the prevailing party
shall be entitled to all costs and reasonable attorneys' fees.
14. COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year written above.
INTERACT MEDICAL TECHNOLOGIES
CORPORATION
By: /s/ X. X. Xxxxxxxxxx
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Title: V.P. of Finance
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/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
