EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of May 12, 2000 between XXXX X. XXXXX,
M.D., residing at 000 Xxxxxxxxxxx Xxxxx Xxxxxx, XX 00000 ("Executive"), and
INTERACTIVE HEART MANAGEMENT CORP., a Delaware corporation having its principal
office at 100 Metro Park South, Third Floor Xxxxxxxx Harbor, NJ 08878
("Company") and;
WHEREAS, Company and Executive desire to provide for the employment of
Executive by the Company on the terms and conditions set forth herein; and
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, it is agreed between the Company and the
Executive as follows:
1. EMPLOYMENT.
The Company, subject to the approval of this Agreement by the board of
directors of Q-med, Inc., a Delaware corporation and the parent of the Company
("Q-med") hereby employs Executive as its "Executive Vice President - Sales,
Marketing and Business Development" to supervise and control the planning,
marketing and sales of the Company's services to managed health care
organizations, insurance companies, provider organizations and others during the
Term hereof, as defined below and Executive herby accepts such employment.
2. EFFECTIVE DATE.
This Agreement shall become effective as of May 12, 2000 (the
"Effective Date"), provided that the duties of Executive and the obligations of
the Company hereunder shall not commence until Executive has complied with all
terms relating to the termination of his present employment and has the
unrestricted right to enter into this Agreement and perform Executive's
obligations hereunder. This Agreement shall be deemed void if Executive does not
assume his responsibilities hereunder on a full time basis on or prior to August
31, 2000.
3. TERM OF EMPLOYMENT.
Unless earlier terminated pursuant to Section 8 hereof, the term of
employment under this Agreement shall be commence upon the date that the
Executive assumes his full time responsibilities as Executive Vice President -
Sales, Marketing and Business Development (the "Start Date") and shall continue
from the Start Date to November 30, 2001 (the "Term"). The Term of this
Agreement shall thereafter be automatically renewed for successive one year
periods. After November 30, 2001, and notwithstanding the automatic renewal of
the Agreement as set forth hereinabove, either party may terminate this
Agreement by giving the other party notice of termination not less than 45 days
prior to the effective date of such termination.
4. DUTIES.
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4.1 In his capacity as "Executive Vice President - Sales, Marketing and
Business Development", Executive shall use his best efforts to see that
all reasonable orders and resolutions of the board of directors of the
Company (the "Company's Board") within the scope of the Executive's
supervision and control (unless any such order or resolution shall
provide otherwise) are carried into, and, in general, shall perform all
duties incident to the office of "Executive Vice President - Sales,
Marketing and Business Development." All of Executive's powers and
authority in any capacity shall at all times be subject to the
reasonable direction and control of the Company's President.
4.2 The Executive, if elected and if covered by officers and directors
liability insurance, shall serve as a member of the Company's Board,
the board of directors of Q-med, or any affiliate of the Company
provided that nothing in this section shall be construed to require the
nomination of Executive as such.
4.3 Executive shall serve Company faithfully and to the best of his
ability and shall devote substantially all of his business time, skill,
efforts and attention during business hours, unless prevented by
illness or incapacitation, to the business affairs of Company.
4.4 Provided the Company's Board has not reasonably determined that
such activities interfere with his duties and responsibilities
hereunder, nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, and/or from managing any
passive investment made by him in publicly traded securities or other
property. For the purposes of the Agreement, passive investment shall
mean the beneficial ownership of not more than 4.9% of the outstanding
voting stock of an entity which is traded on a national securities
exchange or Nasdaq. The Executive may serve as a member of the boards
of directors or as a trustee of any other corporation, association or
entity provided that, in the reasonable judgment of the Executive and
the Company's Board, such activities do not conflict or interfere with
his duties hereunder.
5. COMPENSATION.
For all services to be rendered by the Executive in any capacity during
the Term, including without limitation, services as an executive, officer,
director or member of any committee of the Company, its subsidiaries, joint
ventures, divisions and affiliates, the Executive shall be paid compensation as
follows:
5.1 Salary. Company shall pay Executive a base salary ("Base Salary")
as follows: $205,000 per year for the period beginning on the Start
Date. Executive's Base Salary may be increased, but not decreased by
the Board of Directors. Once increased, such increased amount shall
constitute the Executive's Base Salary. Base Salary shall be payable in
accordance with the regular payroll practices of the Company applicable
to executive officers.
5.2 Bonuses.
(a) For the initial period of the term beginning on the Start Date and
ending
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November 30, 2001, the Company shall pay Executive all or any part of a
bonus which has been earned as a result of Executive's having met the
goals set forth in Schedule 1 attached hereto (the "First Period
Bonus"). The determination as to whether the goals requisite to earn
all or any portion of the First Period Bonus were attained, shall be
made in the good faith assessment of the President of the Company and,
shall be made by the 15th of each calendar month beginning the second
full month after the Start Date. Any amounts determined to be due
Executive under this provision shall be paid in a lump sum no later
than the 90th calendar day following such determination.
(b) In addition, during the term of this Agreement and commencing
November 30, 2001, and for each successive year ending November 30, the
Executive and the Company's President shall develop a bonus plan,
acceptable to the board of directors of Q-Med, whereby the Executive
may earn an annual bonus equal to 40% of the Executive's Base Salary
for such year. The bonus plan for each such year shall have minimum and
maximum measurable performance goals in up to five categories
reasonably related to the Executive's duties and responsibilities under
this Agreement and will provide for payment in a lump sum not later
than February 28 of the year following the year in which such bonus was
earned.
(c) In addition, Executive shall receive such additional bonuses as may
from time to time be approved by the Company's Board of Directors.
5.3 Stock Options.
Executive will be granted the following stock options pursuant to
Q-med's 1997 or 1999 Equity Incentive Plans (the "Plans"):
(a) An initial ten-year option (the "Bonus Option") to purchase up to
100,000 shares of Q-med common stock at an exercise price of $7.00 per
share. This initial option shall vest and shall be exercisable by
Executive in accordance with the Plans as follows: 33,333 on and after
May 12, 2001; 33,333 on and after May 12, 2002; and 33,334 on and after
May 12, 2003.
(b) An additional ten year option (the "Performance Option") to
purchase up to 60,000 shares of Q-med common stock at an exercise price
of $7.00 per share which shall immediately vest and be exercisable in
accordance with the Plans and upon the occurrence of following events:
i. the option to purchase 25,000 shares of Q-med common stock
shall immediately vest in the event the Company signs a letter
of intent and/ or contract with a California health care plan
or provider system for the management of more than 50,000
Senior Equivalent Lives (defined below) by
December 31, 2000, provided a binding contract for such
services is executed on or prior to March 31, 2001.;
ii. the option to purchase 15,000 shares of Q-med common stock
shall immediately vest on the date it is determined that the
Company reported
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Adjusted Net Earnings (defined on Schedule 2) for the fiscal
year ending November 30, 2001 exceeded $1.4 million; and
iii. the option to purchase 20,000 shares of Q-med common
stock shall immediately vest on the date it is determined that
the Company reported Adjusted Net Earnings (defined on
Schedule 2) for the fiscal year ending November 30, 2002
exceeded $2.6 million.
(c) Each of the criteria set forth in Sections 5.3 (i), (ii) and (iii)
shall be independent and shall provide an opportunity for vesting
separate from each other.
(d) None of the above described options shall vest and said options
will not be exercisable unless Executive begins full time employment on
or before August 31, 2000.
(e) The board of directors of Q-med, in its sole discretion, may grant
such additional options to Executive as it deems appropriate.
5.4 Other Compensation Plans and Programs. Executive shall be eligible
to participate in any compensation plan or program, annual or long
term, maintained by Company in which other senior executives of Company
participate on terms comparable to those applicable to such other
senior executives.
5.5 Guaranty by Q-med. As further and material inducement for Executive
to enter into this Agreement:
(a) Q-med hereby unconditionally guarantees the full and
prompt payment of all amounts which are due to Executive and
all amounts which shall in the future become due and owing to
Executive (or his estate) under this Agreement including,
without limitation, sums due under Sections 5 and 8
(collectively the "Guaranteed Obligations").
(b) Q-med's guaranty shall not be released, impaired or
affected by any modification, extension, amendment, release or
other alteration of any of the Guaranteed Obligations of this
Agreement, nor by any agreements or arrangements whatever with
the Company or any one else, and the liability of Q-med
hereunder shall apply to the Guaranteed Obligations as may
subsequently be altered or modified by the mutual agreement of
the Executive and the Company.
(c) No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations (including, without
limitation, as a result of the Company's bankruptcy,
reorganization or insolvency, or pursuant to any assignment
for the benefit of creditors, receivership, or similar
proceeding under any law or with respect to any party, or by
any actions of a trustee in any said proceeding) shall affect,
impair or be a defense to this guaranty, and this guaranty
shall be a primary obligation of Q-med and nothing shall
discharge or satisfy the liability of Q-med hereunder except
the full payment and performance of the Guaranteed
Obligations.
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(d) This guaranty is a continuing guaranty, which shall remain
effective until the Guaranteed Obligations have been satisfied
in full.
6. BENEFITS.
6.1 Benefit Programs. Executive shall be eligible to participate in,
under the same or similar terms as are generally available to the
Company's senior executives and to the same extent as any and all
executive benefit programs of the Company from time to time in effect
are generally available to the Company's senior executives, including,
but not limited to, health (which shall include an annual physical and
which shall cover the Executive's dependents), a policy of term life
insurance (with a minimum death benefit of $25,000), and disability
insurance (guaranteeing not less than sixty percent (60%) of
Executive's then current Base Salary (adjusted for inflation during the
time benefits are payable) upon Executive's occupational or functional
disability). The waiting period for health insurance will be waived, or
if it can not under the terms of the Company's plan be waived, the
Company will bear the cost of continuing Executive's former employer's
coverage pursuant to COBRA. In addition, the Company will contribute to
its 401(k) Plan, for the benefit of Executive's account, at the rate of
$.25 per $1.00 contributed by Executive up to a maximum of 6% of Base
Salary or the maximum amount permitted under the terms of the Company's
401(k) Plan, whichever is lower.
6.2 Vacation and Sick Pay. Executive is entitled to up to four weeks of
paid vacation each calendar year. Executive shall not utilize his
vacation time in periods longer than 10 consecutive days without
obtaining the consent of the Company. In the event the Executive does
not utilize all of the vacation time to which he is entitled in any
given year, the unused portion, at the option of the Executive, may be
carried over to any succeeding year or years. In the event Executive
carries forward any unused vacation time, he shall be entitled to use
up to two weeks of carried forward vacation time per year in addition
to the four weeks of vacation time he is entitled to in each calendar
year for a total of up to six (6) weeks of paid vacation time. In
addition to paid vacation time, the Executive will be paid for sick,
personal and floating days up to a maximum of nine days per calendar
year.
6.3 Fringe Benefits. Executive shall be entitled to the perquisites and
other fringe benefits made available to senior executives of the
Company.
6.4 Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel, cellular telephone
(including access charges and business calls), state medical licensure,
Drug Enforcement Administration permits and. up to $1,000 annual
tuition for continuing education. Additionally, Executive shall, after
having obtaining the approval of the Company's Chief Executive Officer,
be authorized to incur reasonable expenses for such periodicals and
memberships in professional organizations such as the DMAA, ACPE and
AMa and similar items related to Executive's duties and
responsibilities as Executive deems necessary. Company will reimburse
Executive for all such expenses upon presentation by Executive of
appropriately itemized accounts of such expenditures.
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6.5 Automobile. Company shall pay Executive for all reasonable expenses
(including, but not limited to, lease payments, liability insurance and
fuel costs), of up to $325 per month incurred in operating an
automobile for Executive's use in the performance of his duties
hereunder and in the conduct of Company's affairs, which automobile
shall also be available to Executive and his spouse for personal use.
6.6 Perquisites. During the Term, Executive shall be provided with
computing hardware and software tools, office facilities and a
qualified and experienced administrative assistant as is deemed
appropriate by the Executive and approved by the Company's Chief
Executive Officer.
7. INDEMNIFICATION.
Executive shall be indemnified by the Company against all liability
incurred by the Executive in connection with any proceeding, including, but not
necessarily limited to, the amount of any judgment obtained against Executive,
the amount of any settlement entered into by the Executive and any claimant with
the approval of the Company, attorneys' fees, actually and necessarily incurred
by him in connection with the defense of any action, suit, investigation or
proceeding or similar legal activity, regardless of whether criminal, civil,
administrative or investigative in nature ("Claim"), to which he is made a party
or is otherwise subject to, by reason of his being or having been a director,
officer or employee of Company, to the full extent permitted by applicable law
and the Certificate of Incorporation of Company. Such right of indemnification
will not be deemed exclusive of any other rights to which Executive may be
entitled under Company's Certificate of Incorporation or By-laws, as in effect
from time to time, any agreement or otherwise.
8. TERMINATION OF EMPLOYMENT.
8.1 Termination Without Cause or for Good Reason.
(a) Company may terminate Executive's employment at any time for any
reason. If Executive's employment is terminated by the Company other
than for Cause (as defined in Section 8.4 hereof) or as a result of
Executive's death or Permanent Disability (as defined in Section 8.2
hereof) or if Executive terminates his employment for Good Reason (as
defined in Section 8.1 (b) hereof) prior to the end of the, Executive
shall receive or commence receiving in accordance with the terms of
this Agreement:
(i) such payments under applicable plans or programs,
including but not limited to those referred to in Section 5.4
hereof, to which he is entitled pursuant to the terms of such
plans or programs through the date of termination within
thirty (30) days of the date of termination ;
(ii) any earned but unpaid Bonus which amount shall be paid in
a cash lump sum within thirty (30) days of the date of
termination;
(iii) a severance payment (the "Severance Payment"), which
amount shall be paid in a cash lump sum equal to nine months
of the Executive's Base Salary within thirty (30) days of the
date of termination;
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(iv) immediate vesting of all unvested stock options which by
their terms vest only with the passage of time;
(v) payment in respect of accrued by unused vacation days (the
"Vacation Payment") and compensation earned but not yet paid
(the "Compensation Payment") which amount shall be paid in a
cash lump sum within thirty (30) days of the date of
termination; and
(vi) continued coverage, at the Company's expense, for the
longer of 18 months from the date of termination or such
periods as are required under federal or applicable state law,
under all Executive health, dental, disability and life
insurance plans in which the Executive participates as of the
date of termination in accordance with the respective terms
thereof.
(b) For purposes of this Agreement, "Good Reason" for Executive's
decision to terminate this Agreement shall mean any of the following
unless waived by Executive, in writing, prior to its occurrence:
(i) Any material breach by Company of any provision of this
Agreement, including any material reduction by Company of
Executive's duties or responsibilities (except in connection
with the termination of Executive's employment for Cause, as a
result of Permanent Disability, as a result of Executive's
death or by Executive other than for Good Reason);
(ii) A reduction by the Company in Executive's Base Salary;
(iii) The failure by the Company to obtain the specific
assumption of this Agreement by any successor or assign of
Company as provided for in Section 11 hereof; or
(iv) Upon a Change of Control of Company or Q-med (as such
term is hereinafter defined).
8.2 Permanent Disability. If Executive becomes totally and permanently
disabled (as defined in the Company's disability benefit plan
applicable to senior executive officers as in effect on the date
thereof) ("Permanent Disability"), Company or Executive may terminate
Executive's employment on written notice thereof, and Executive shall
receive or commence receiving :
(i) any and all amounts payable to Executive pursuant to the
terms of the disability insurance policy or similar
arrangement which Company maintains during the term hereof;
(ii) any and all Vacation Payment and/or Compensation Payment
due Executive under this Agreement. Such amounts shall be paid
to Executive as a cash lump sum within 30 days of such
termination;
(iii) such payments under applicable plans or programs,
including but not limited to those referred to in Section 5.3
hereof, to which Executive is entitled pursuant to the terms
of such plans or programs through the date of
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termination. Such amounts shall be paid to Executive within 30
days of such termination; and
(iv) the immediate vesting of all unvested stock options which
by their terms vest only with the passage of time.
8.3 Death. In the event of Executive's death during the Term of his
employment hereunder, Executive's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable in
accordance with the terms of this Agreement:
(i) compensation equal to 75% of one year's Base Salary which
shall be paid within 45 days of Executive's death;
(ii) any death benefits provided under the Executive benefit
programs, plans and practices referred to in Sections 5.4 and
6.1 hereof, in accordance with their respective terms;
(iii) the Vacation Payment and the Compensation Payment which
shall be paid to Executive as a cash lump sum within 45 days
of Executive's death; and
(iv) such other payments under applicable plans or programs,
including but not limited to those referred to in Section 5.4
hereof, to which Executive's estate or designated
beneficiaries are entitled pursuant to the terms of such plans
or programs; and
(v) immediate vesting of all stock options, which by the terms
of their grant, vest only with the passage of time, which may
be exercised up to one year after Executive's demise.
8.4 Voluntary Termination by Executive; Discharge for Cause. The
Company shall have the right to terminate the employment of Executive
for Cause (as hereinafter defined). In the event that Executive's
employment is terminated by Company for Cause, as hereinafter defined,
or by Executive other than for Good Reason or other than as a result of
the Executive's Permanent Disability or death, prior to the date of
termination, Executive shall be entitled only to receive, as a cash
lump sum within 30 days of such termination (a) the Compensation
Payment and the Vacation Payment; and (b) earned but unpaid Bonus
attributable to a fiscal year prior to the fiscal year in which such
termination occurs. As used herein, the term "Cause" shall be defined
as:
(i) habitual absence from work by the Executive, including
without limitation, habitual absence from the Company's
offices on non-Company matters that interferes with the
Executive's duties. Absences resulting from a verified illness
or temporary disability of the Executive shall not constitute
"cause" for termination;
(ii) habitual drunkenness by the Executive;
(iii) habitual drug abuse or drug addiction by the Executive;
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(iv) the Executive maliciously denigrating in public, the
Company or any officer, director or affiliate thereof;
(v) sexual harassment by the Executive which has been
reasonably substantial and in violation of the Company's then
existing policy regarding sexual harassment and substantiated
by an independent investigation of an investigator mutually
selected by the Company and the Executive. In the event the
parties are unable to mutually agree upon an investigator to
conduct the investigation, then the Company shall select an
investigator, the Executive shall select and investigator and
the investigators selected by the Company and the Executive
shall mutually select a third investigator. The mutually
selected investigator selected by the Company and the
Executive, or in the event the Company and Executive were
unable to agree on an investigator, the three investigators
shall cause to be conducted a full and complete investigation
into the allegations of sexual abuse, using generally accepted
investigatory procedures, to determine the validity of the
sexual harassment allegations and render a written report to
both the Company and the Executive. In the event the
independent investigation determines that the Executive
engaged in reasonably substantial sexual harassment in
violation of the Company's then existing policy regarding
sexual harassment, such determination shall constitute "cause"
for termination;
(vi) the willful and malicious physical destruction of
substantial property or asset(s) of the Company by, or caused
by, the Executive;
(vii) appropriation of business opportunities of the Company
by the Executive for the direct or indirect personal gain of
the Executive or members of his family without the prior
written consent of the Board;
(viii) the Executive causing the Company to enter into
transactions or arrangements with the Executive, in his
capacity as an individual and not as an employee of the
Company, or a person or entity affiliated therewith, which
results in direct or indirect personal gain to the Executive
or members of his family without the prior written consent of
the Board, provided, however, that this shall not include the
employment of the Executive by the Company or its affiliates;
(ix) willful and malicious interference with the Company's
operations by the Executive;
(x) engagement by the Executive in any act of fraud, material
misappropriation of funds or assets, or embezzlement,
including without limitation, theft, bribery or the receipt of
kickbacks;
(xi) a conviction of the Executive for, or a plea of nolo
contendere by the Executive to, a felony or other criminal act
for which the possible penalties include a prison sentence of
at least 1 year;
(xii) a material breach by the Executive of the restrictive
covenants
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contained in Section 9 this Agreement;
(xiii) a material breach of this agreement by the Executive,
provided the Executive has been notified of such breach, given
a period of not less than 30 days to remedy such breach, and
an independent arbitrator determines that such breach is
"material" under the terms of this Agreement;
(xiv) if, within 30 days after having received written notice
from the Company, Executive fails to comply with the
reasonable directions or instructions of the Board or the
Company's President which are consistent with the Executive's
position and responsibilities, provided an independent
arbitrator, mutually agreed upon by the parties hereto,
determines that such directions were reasonable and consistent
with the Executive's position and responsibilities.
9. RESTRICTIVE COVENANTS.
9.1 Confidentiality. Executive recognizes that, by reason of his
employment hereunder, he may acquire confidential information and trade
secrets concerning the operation of Company, the unauthorized use or
disclosure of which could cause Company substantial loss and damages
which could not be readily calculated and for which no remedy at law
would be adequate. Accordingly, Executive covenants and agrees with
Company that he will not, either during the term of his employment
hereunder and for a period of one (1) year after the expiration or
termination of this Agreement, disclose, furnish or make accessible to
any person, firm or corporation (except (i) in the ordinary course of
business in performance of Executive's obligations to Company hereunder
or (ii) when required to do so by a court of competent jurisdiction, by
any governmental, administrative or legislative agency having
supervisory authority over the business of Company or (iii) with the
prior written consent of Company pursuant to authority granted by a
resolution of the Board of Directors) any confidential information that
Executive has learned or may learn by reason of his association with
Company. As used herein, the term "confidential information" shall
include, without limitation, proprietary information not previously
disclosed to the public or to the trade by Company with respect to the
business or affairs of Company or which is otherwise made public or
disclosed to a third party by persons other than Executive; or of which
disclosure is compelled by judicial or governmental process, including,
without limitation, information relating to business opportunities,
customer lists, price lists, trade secrets, systems, techniques,
procedures, methods, inventions, facilities, financial information,
business plans or prospects.
9.2 Non-Competition. During the period of his employment hereunder and
, for nine months thereafter, Executive agrees that, without first
obtaining the prior written consent of Company, (A) he will not,
directly or indirectly, either as principal, manager, agent, officer,
stockholder, partner, investor, lender or Executive or in any other
similar capacity, carry on, be engaged in, or have any financial
interest in, any business which is directly in competition with the
business of Company and/or its subsidiaries or affiliates and (B) he
shall not, on his own behalf or on behalf of any person, firm or
company, directly or indirectly, solicit or offer employment to any
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person who has been employed by Company or any of its affiliates at any
time during the nine months immediately preceding such solicitation.
For the purposes of this provision, employment by a health maintenance
organization or provider organization that develops, owns or operates a
disease management system which is used by or for its own members or
membership and is not sold to other HMOs or provider systems, shall not
be deemed directly nor indirectly "competitive" with the Company's
business. Further, following the termination of this Agreement,
Executive shall not be prohibited from providing consulting services to
other HMOs, provider systems and/or trade organizations provided that
such consulting services do not result directly in the offering or sale
of disease management services to persons other than the consulting
client's own members or membership.
10. INJUNCTIVE RELIEF.
Without intending to limit the remedies available to Company, Executive
acknowledges that a breach of the covenants contained in Section 9 of this
Agreement may result in material irreparable injury to Company for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely. Accordingly, it is acknowledged that, upon adequate
proof of Executive's violation of any legally enforceable provision of Section 9
above, the Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining Executive from engaging
in activities prohibited by such Section or such other relief as may be required
to specifically enforce any of the covenants in such Section.
11. ASSIGNMENT.
This contract shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of
Company, but neither this Agreement nor any rights or obligations hereunder
shall be assignable or otherwise subject to hypothecation by Executive (except
by will or by operation of the laws of intestate succession) or by Company,
except that Company may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of Company, if such successor expressly agrees to assume the
obligations of Company hereunder.
12. CHANGE IN CONTROL.
12.1 Definition. For purposes of this Agreement, a "Change in Control"
of the Company or Q-med (the "Entity") shall be deemed to have occurred
if (i) there shall be consummated (A) any consolidation or merger of
the Entity in which the Entity is not the continuing or surviving
corporation or pursuant to which shares of the Entity's Common Stock
would be converted into cash, securities or other property, other than
a merger of the Entity in which the holders of the Entity's Common
Stock immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B)
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any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets
of the Entity, or (ii) the stockholders of the Entity shall approve any
plan or proposal for the liquidation or dissolution of the Entity, or
(iii) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Exchange Act")), other
than the Entity or any Executive benefit plan sponsored by the Entity,
shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Entity representing 50% or
more of the combined voting power of the Entity's then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors,
as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, or (iv) at any time during
a period of two consecutive years, individuals who at the beginning of
such period, constituted the Board of Directors of the Entity shall
cease for any reason to constitute at least a majority thereof, unless
the election or the nomination for election by the Entity's
stockholders of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then still
in office, who were directors at the beginning of such two-year period.
12.2 Rights and Obligations. If a Change in Control of the Company or
Q-med shall have occurred while the Executive is an employee of the
Company, the Executive shall be entitled to the compensation provided
in Section 8.1 of this Agreement upon the subsequent termination of the
Executive's employment with the Company by either the Company, or the
Executive within one year of the date upon which the Change in Control
shall have occurred, unless such termination is a result of (i) the
Executive's death; (ii) the Executive's Disability; (iii) the
Executive's Retirement; or (iv) the Executive's termination for Cause
(as defined in paragraph 8.4 above).
13. NOTICES.
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed sufficiently given if delivered in person, or
mailed by certified first class mail, postage prepaid, or sent by a reputable
overnight courier service, addressed to the party to be notified at the
address(es) specified below (or such other address as may be specified by notice
in this manner):
Notice to Company:
Interactive Heart Management Corp.
000 Xxxxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000
Attention: Board of Directors
With a required copy to:
Q-Med, Inc.
000 Xxxxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000
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Attention: Board of Directors
Notice to Executive:
Xxxx X. Xxxxx, M.D.
000 Xxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Notices shall be deemed given as of the date delivered or the date
entrusted to the United States postal service or courier service.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
15. HEADINGS.
The headings in this Agreement are for convenience only and in no way
define, limit, or describe the scope or intent of any provision of this
Agreement.
16. WAIVER.
The waiver by either party of noncompliance by the other party of any
term or provision of this Agreement shall not be construed as a waiver of any
other non-compliance.
17. DISPUTE MEDIATION.
If a dispute arises out of or relates to this Agreement, or the breach
thereof, and if the dispute cannot be settled through negotiation, the parties
agree first to try in good faith to settle the dispute by mediation administered
by the American Arbitration Association under its Employment Mediation Rules
before resorting to arbitration, litigation or some other dispute resolution
procedure. The fees of the mediator and the expenses of mediation shall be paid
equally by the parties.
18. ARBITRATION.
In the event that any dispute(s) arising out of or relating to this
Agreement, or the breach thereof, has not been able to be settled through
mediation as set forth hereinabove, such dispute(s) either party to this
Agreement may, elect to have said dispute(s) be resolved by binding arbitration,
to be held in Chicago, Illinois in accordance with the rules and procedures of
the American Arbitration Association. If arbitration is elected, the Executive
and the Company shall mutually select the arbitrator. If the Executive and the
Company cannot agree on the selection of an arbitrator, each Party shall select
an arbitrator and the two arbitrators shall select a third arbitrator, and the
three arbitrators shall form an
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arbitration panel which shall resolve the dispute by majority vote. Judgment
upon the award rendered by the arbitrator or arbitrators may be entered in any
court having jurisdiction thereof. Costs of the arbitrator or arbitrators, legal
fees and expenses, and other similar costs in connection with arbitration shall
be paid by the Party that does not prevail at such arbitration.
19. SEVERABILITY.
If any one or more of the provisions contained in this Agreement shall
be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions hereof.
20. MITIGATION OF DAMAGES.
Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise after the termination of his employment hereunder.
21. GOVERNING OF LAW.
This agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey without regard to its conflicts of laws
rules or principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
INTERACTIVE HEART MANAGEMENT CORP.
By: /s/ Xxxxxxx X. Xxx
-------------------------------
Xxxxxxx X. Xxx, President
EXECUTIVE
/s/ Xxxx X. Xxxxx, M.D.
-------------------------------
Xxxx X. Xxxxx, M.D.
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Agreed as to Sections , 5,6 ,7 and 8 only:
Q-MED, INC.
By: /s/ Xxxxxxx X. Xxx
----------------------------
Xxxxxxx X. Xxx, President
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Schedule 1
----------------------------- ----------------------------- ------------------------------ ----------------------------
Goal Bonus Maximum Target Minimum Threshold
----------------------------- ----------------------------- ------------------------------ ----------------------------
Sales One or more contract Subject to meeting the 100,000 or more "Senior 50,000 Senior Equivalent
has been signed by November Minimum Threshold, the Equivalent Lives" by the Lives by the Goal Date.
30, 2001 covering the target Executive will earn a Sales Goal Date. A Senior
number of Senior Equivalent Bonus calculated as follows: Equivalent Life means one
Lives and the Company is (1) Managed Care enrollee,
receiving revenue for such Sales Bonus = Maximum Sales 65 years old or older, or
Senior Equivalent Lives by Bonus x (Actual Senior four (4) such enrollees,
February 28, 2002. Equivalent lives / 100,000) under the age of 65 years
old.
Where Maximum Sales Bonus =
(.40 x Base Salary from the
Start Date to November 30,
2001) - $41,000
In no case shall the Sales
Bonus exceed the Maximum
Bonus.
For example, if the Start
Date is August 1, 2000, the
Base Salary from August 1,
2000 would be $273,333 and
the Sales Bonus would be as
follows: Maximum $68,333.32
and minimum $34,166
----------------------------- ----------------------------- ------------------------------ ----------------------------
Business Development: Max: $10, 250 CHF and Diabetes ready to CHF ready to implement by
Complete development of or implement by April 30, 2001 April 30, 2001 if purchased
purchase of or outsourcing Min: $5,125 if purchased or outsourced or outsourced or June 30,
contract and ready to or June 30, 2001 if the to 2001 if the Company elects
implement other disease build. Company elects to build.
programs.
----------------------------- ----------------------------- ------------------------------ ----------------------------
Business Development/Sales: Max: $20,500 CAD, CHF and Diabetes sold CHF and CAD sold 11/30/01
by for > 50,000
----------------------------- ----------------------------- ------------------------------ ----------------------------
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----------------------------- ----------------------------- ------------------------------ ----------------------------
Completed sale of xxxxxxxx0 Min: $10,250 12/31/01 for > 50,000 Senior Senior Equivalent Lives
disease management programs. Equiva-lent Lives
----------------------------- ----------------------------- ------------------------------ ----------------------------
Strategic Planning/Business Max: $10,250 Board or CEO approved Board or CEO approved
Development: Complete completed strategic and completed strategic business
business and operational Min: $5,125 business plan for internet plan for internet strategy
plan for 3-year internet strategy and development by June 30, 2001
strategy. phase initiated by August
31, 2001
----------------------------- ----------------------------- ------------------------------ ----------------------------
--------
1 Combined DM programs specifically excludes using LifeMasters and must either
build own program or outsource to another CHF and DM vendor(s).
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Schedule 2
The adjusted consolidated net earnings ("Adjusted Net Earnings") of the Company
and its subsidiaries, for the purpose of computing the Executives' contingent
vesting of stock options under the provisions of paragraph 5.2(a) above, shall
be determined, in accordance with generally accepted accounting principles,
within ninety (90) days after the end of each fiscal year by the independent
accounting firm employed by the Company as its auditors. The computation by such
accounting firm of the Adjusted Net Earnings, made in the manner herein
provided, shall be in all respects final and binding upon the Company, upon the
Executive, and upon all others, and the Company shall pay such compensation to
the Executive within 120 days of the end of the fiscal year in question.
For the purpose of computing the Executive contingent compensation, the
Adjusted Net Earnings of the Company and its subsidiaries for the above
mentioned period shall be the consolidated net earnings of the Company and its
subsidiaries for such period, as audited and reported upon, for the purposes of
the Company's annual report to stockholders for such period, by the Company's
independent auditors, plus all amounts charged against such consolidated net
earnings in respect of the following:
(i) Taxes of the United States and foreign governments
(including, but without limitation, excess profits
taxes) based upon or measured, in whole or in part,
by income of the Company or its subsidiaries but
exclusive of sate and territorial taxes and taxes
imposed by political subdivisions thereof;
(ii) Contingent compensation, if any, which may be payable
by the Company under any plan or agreement, including
this Agreement, other than a profit-sharing plan
qualified under Section 401 of the Internal Revenue
Code or any statutory provision that may hereafter be
enacted to replace such section;
(iii) All items of non-recurring loss or other
extraordinary charge which, by reason of size,
character, or other factors did not, in the sole and
uncontrolled judgment of the Board of Directors,
arise in the ordinary and usual course of the
business of the Company and its subsidiaries,
including expenses properly attributable to such loss
or charge;
less, however, all amounts included in such consolidated net earnings in respect
of items of capital gain, non-recurring profit, or other extraordinary credit
which, by reason of size, character, or other factors did not, in the sole and
uncontrolled judgment of the Board of Directors, arise in the ordinary and usual
course of business of the Company and its subsidiaries, after deducting expenses
properly attributable to such gain, profit, or credit, except and to the extent
that the Board of Directors, in its sole and uncontrolled judgment, shall find
that the Executive was responsible for such gain, profit, or credit and shall
direct the inclusion, in whole or in part, of such gain, profit, or credit in
the computation of consolidated net earnings.
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