EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement is effective as of the 1st day of January, 1999, by and
between Xxxxxx X. Xxxxx (the "Executive") and Nitinol Medical Technologies,
Inc., a Delaware corporation (the "Company").
WHEREAS, the Company wishes to employ the Executive as the President and
Chief Executive Officer of the Company under the terms and conditions set forth
below; and
WHEREAS, the Executive wishes to accept such employment under those terms
and conditions;
NOW, THEREFORE, in consideration of the provisions and mutual covenants
contained in this agreement and for other good and valuable consideration, the
Company and the Executive (the "Parties") agree as follows:
1. TERM OF EMPLOYMENT.
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The Company agrees to employ the Executive, and the Executive agrees to
serve, on the terms and conditions of this Agreement, for a period commencing on
January 1, 1999 (the "Effective Date") and ending on December 31, 2001, or such
shorter period as may be provided for herein. If the Executive is employed by
the Company on October 1, 2001, the term of the Executive's employment shall
automatically be extended until December 31, 2002, provided that either the
Company or the Executive may limit such renewal by giving at least three months
notice to the other in writing that the employment term is to end on a date on
or after December 31, 2001 and before December 31, 2002. (The employment term
described above is hereinafter referred to as the "Employment Term").
2. POSITION, DUTIES, RESPONSIBILITIES.
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During the Employment Term, the Executive shall serve as President and
Chief Executive Officer of the Company. In such capacity, the Executive shall
report to the Chairman of the Board and the Board of Directors of the Company
and shall perform such duties and have such responsibilities of an executive
nature as are customarily performed by a person holding such office, it being
recognized that the Executive's duties and responsibilities, consistent with his
titles hereunder, may be changed by the Board of Directors of the Company from
time to time. The Executive shall devote his full business time and attention
to the performance of his duties under this Agreement. The Executive shall
serve without additional compensation as a director of the Company and on any
committees of the Board of Directors, if requested.
3. SALARY.
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During the Employment Term, the Executive shall be paid a base salary
("Salary"), as follows:
(a) From January 1, 1999 until December 31, 1999 - $292,200 per
year;
(b) From January 1, 2000 until December 31, 2000 - $303,600 per year;
(c) From January 1, 2001 until December 31, 2001 - $315,456 per year.
The Executive's Salary shall be payable in accordance with the Company's
standard payroll practice. Consideration of any additional Salary increases
must be made annually by the Board of Directors, upon the anniversary of this
Agreement, provided however that any actual additional Salary increases shall be
in the sole discretion of the Board of Directors. The Executive shall be
entitled to receive bonuses in the sole discretion of the Board of Directors,
determined upon the achievement of goals as the Executive and the Board of
Directors of the Company shall agree.
In addition, the Executive shall receive a lump sum payment of $11,666 upon
signing of this Agreement.
4. STOCK OPTIONS.
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On or after the Effective Date, the Executive shall be issued stock options
to purchase an aggregate of 100,000 shares of the Company's Common Stock, par
value $.001 per share, (the "Options") under the Company's 1998 Stock Incentive
Plan. The exercise price for the Options shall be the closing price ($4.50) of
the Company's Common Stock on the date of grant (January 19, 1999). The Options
shall, to the maximum extent permissible under Section 422 of the Internal
Revenue Code of 1986, as amended, constitute incentive stock options, with any
balance of the Options to be treated as non-statutory stock options. The
Options shall vest in four equal annual installments on the first, second, third
and fourth anniversaries of the date of grant. Once exercisable, all Options
shall remain exercisable for a period of ten (10) years from the date of grant
(the "Final Exercise Date"). Notwithstanding the above, all of the Options
shall become immediately exercisable in the event of a change of control of the
Company. For purposes of this Agreement, a "change of control of the Company"
shall be deemed to have occurred upon (1) any merger, consolidation or
reorganization of the Company in which the Company is not the continuing or
surviving entity, or (2) the sale, lease, exchange or transfer of all or
substantially all of the Company's assets, other than a sale, lease, exchange or
transfer to an entity of
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which the holders of the Company's Common Stock hold
more than 50% of the capital stock of such entity.
5. EMPLOYEE BENEFITS.
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(a) Benefit Programs. During the Employment Term, the Company shall
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provide the Executive and eligible family members with medical, dental, and
disability insurance and such other benefits and perquisites as are provided in
the Company's applicable plans and programs to its employees generally;
provided, that the Executive meets the qualifications therefor ("Benefits").
(b) Life Insurance. During the Employment Term, the Company shall
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provide the Executive with basic term life insurance providing death benefits in
the amount of $1,000,000, or any plan or arrangement providing benefits of equal
value.
(c) Vacation. During each twelve month period of the Employment
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Term, Executive shall be entitled to no less than four weeks of vacation;
provided, however, that any vacation time not taken during any year shall be
forfeited. The Executive shall also be entitled to all paid holidays given by
the Company to its officers and employees.
6. REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVE.
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The Executive represents and warrants to the Company that the Executive is
under no contractual or other restriction or obligation which is inconsistent
with the execution of this Agreement, the performance of his duties hereunder,
or the other rights of the Company hereunder.
7. NON-COMPETITION; NON-SOLICITATION.
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In view of the unique and valuable services it is expected Executive will
render to the Company, Executive's knowledge of the customers, trade secrets,
and other proprietary information relating to the business of the Company and
its customers and suppliers and similar knowledge regarding the Company it is
expected Executive will obtain, and in consideration of the compensation to be
received hereunder, Executive agrees that he will not, during the period he is
employed by the Company under this Agreement or otherwise, and for a period of
one year after he ceases to be employed by the Company under this Agreement or
otherwise, compete with or be engaged in, or Participate In (as defined below)
any other business or organization (which shall not include a university,
hospital, or other non-profit organization) which during such one year period is
or as a result of the Executive's engagement or participation would become
competitive with the Company's business of designing, developing, manufacturing,
marketing and selling
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neurosurgical devices, xxxx xxxx filters, stents, septal repair devices or other
medical devices designed and manufactured using nitinol, with respect to any
product or service sold or activity engaged in by the Company up to the time of
such cessation; provided, however that the provisions of this Section 7 shall
not be deemed breached merely because the Executive owns less than 1% of the
outstanding common stock of a corporation, if, at the time of its acquisition by
the Executive such stock is listed on a national securities exchange. The term
"Participate In" shall mean: "directly or indirectly, for his own benefit or
for, with, or through any other person (including the Executive's immediate
family), firm, or corporation, own, manage, operate, control, loan money to, or
participate in the ownership, management, operation, or control of, or be
connected as a director, officer, employee, partner, consultant, agent,
independent contractor, or otherwise with, or acquiesce in the use of his name
in."
The Executive will not, directly or indirectly, solicit or interfere with,
or endeavor to entice away from the Company any of its suppliers, customers, or
employees. The Executive will not directly or indirectly employ any person who
was an employee of the Company within a period of one year after such person
leaves the employ of the Company.
If any restriction contained in this Section 7 shall be deemed to be
invalid, illegal, or unenforceable by reason of the extent, duration, or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form such restriction
shall then be enforceable in the manner contemplated hereby.
8. INTELLECTUAL PROPERTY RIGHTS.
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Any interest in patents, patent applications, inventions, technological
innovations, copyrights, copyrightable works, developments, discoveries,
designs, and processes which the Executive during the period he is employed by
the Company under this Agreement or otherwise may acquire, conceive of or
develop, either alone or in conjunction with others, utilizing the time,
material, facilities, or information of the Company ("Inventions") shall belong
to the Company; as soon as the Executive owns, conceives of, or develops any
Invention, he agrees immediately to communicate such fact in writing to the
Chairman of the Company, and without further compensation, but at the Company's
expense, forthwith upon request of the Company, the Executive shall execute all
such assignments and other documents (including applications for patents,
copyrights, trademarks, and assignments thereof) and take all such other action
as the Company may reasonably request in order (a) to vest in the Company all of
the Executive's right, title, and interest in and to such Inventions, free and
clear of liens, mortgages, security interests, pledges, charges, and
encumbrances and (b), if patentable or copyrightable, to obtain patents or
copyrights
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(including extensions and renewals) therefor in any and all countries in such
name as the Company shall determine.
9. NONDISCLOSURE.
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The Employee Nondisclosure and Secrecy Agreement dated as of September 1,
1995 between the Company and the Executive shall remain in full force and
effect.
10. INJUNCTIVE RELIEF.
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Since a breach of the provisions of Section 7 or 8 could not adequately be
compensated by money damages, the Company shall be entitled, in addition to any
other right and remedy available to it, to an injunction restraining such breach
or a threatened breach, and in either case no bond or other security shall be
required in connection therewith. The Executive agrees that the provisions of
Sections 7 and 8 are necessary and reasonable to protect the Company in the
conduct of its business.
11. TERMINATION OF THE EXECUTIVE UPON DEATH OR DISABILITY.
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(a) The term of the Executive's employment shall terminate
automatically upon his death. In addition, the Company shall have the right to
terminate the Term of Employment upon the Disability (as defined below) of the
Executive. If the Executive's employment is terminated by the Company due to
the Executive's death or due to the Disability of the Executive, then the
Executive, his guardian or his estate, as applicable, shall be entitled to:
(i) Salary and Benefits earned to the date of termination of
employment;
(ii) other benefits as are provided under the applicable plans
and programs of the Company as then in effect.
(b) In addition, if the Executive's employment is terminated due to
his death or disability prior to the Final Exercise Date, and the Company has
not terminated the Executive's employment for cause pursuant to Section 13
below, the Options shall remain exercisable to the extent that the Options were
exercisable on the date of the Executive's death or disability for a period of
one year following termination of employment pursuant to this Section, and shall
thereafter expire.
(c) For purposes of this Agreement, "Disability" shall mean any
physical or mental disability or incapacity that renders the Executive incapable
of performing his duties hereunder for a period of 180 consecutive calendar days
or for shorter periods aggregating 210 calendar days during any consecutive
twelve-month period.
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12. TERMINATION BY THE COMPANY WITHOUT CAUSE.
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If the Company terminates the Executive's employment at any time without
Cause (as defined below), the Executive shall be entitled to:
(i) Salary and Benefits earned to the date of termination of
employment; and
(ii) Continued Salary for a period of one year from the date of
termination of employment.
In addition, all exercisable Options shall expire 90 days after the
termination of employment.
13. TERMINATION BY THE COMPANY FOR CAUSE.
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(a) GENERAL.
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The Company shall have the right to terminate the Executive's employment
for Cause, as defined in subsection (b) below; and the Executive shall be
entitled only to Salary and Benefits earned to the date of termination of
employment.
In addition, all exercisable Options shall expire 90 days after termination
of employment.
(b) CAUSE.
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For purposes of this Agreement, "Cause" means:
(i) fraud, embezzlement or gross insubordination on the part
of the Executive;
(ii) conviction of or the entry of a plea of nolo contendere by
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the Executive to any felony or crime of moral turpitude;
(iii) a material breach of, or the willful failure or refusal by
the Executive to perform and discharge, his duties,
responsibilities or obligations under this Agreement that
is not corrected within 20 days following written notice
thereof to the Executive by the Company, such notice to
state with specificity the nature of the breach, failure
or refusal; provided, that if such breach, failure or
refusal cannot reasonably be corrected within 20 days of
written notice thereof, correction shall be commenced by
the
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Executive within such period and shall be corrected as
soon as practicable thereafter; or
(iv) any act of willful misconduct by the Executive which is
intended to result in substantial personal enrichment of
the Executive at the expense of the Company or any of its
subsidiaries or affiliates.
14. WITHHOLDING.
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Anything to the contrary notwithstanding, all payments required to be made
by the Company under this Agreement to the Executive, his spouse, his estate or
beneficiaries, shall be subject to withholding of such amounts relating to taxes
as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In addition, in the event that the Company
reasonably determines that it is required to make any payments of withholding
taxes as a result of Executive's receipt of any other income pursuant to the
terms of this Agreement, the Company may, as a condition to such receipt,
require that the Executive provide the Company with an amount of cash sufficient
to enable the Company to pay such withholding taxes.
15. LOCK-UP AGREEMENT.
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In the event that the Company seeks to consummate a public offering of its
securities during the Employment Term, the Executive shall execute an agreement
in form and substance satisfactory to the managing underwriter or underwriters
of the Company's securities, not to sell, pledge, contract to sell, grant any
option or otherwise dispose of any shares of stock owned or acquired by the
Executive for such period of time as requested by such underwriter of all other
executive officers of the Company.
16. ASSIGNABILITY; BINDING NATURE.
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This Agreement and all rights of the Executive shall inure to the benefit
of and be enforceable by the Executive's personal or legal representatives,
estates, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive hereunder shall be paid, in the event of the
Executive's death, to the Executive's estate, heirs and representatives. This
Agreement shall inure to the benefit of, be binding upon, and be enforceable by,
any successor, surviving or resulting Company or other entity to which all or
substantially all of the Company's business and assets shall be transferred.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company.
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17. ENTIRE AGREEMENT.
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This Agreement, together with the Employee Nondisclosure and Secrecy
Agreement, contains the entire agreement between the Parties concerning the
subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations, and undertakings, whether written or oral, between
the Parties with respect thereto.
18. AMENDMENTS AND WAIVERS.
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This Agreement may not be modified or amended except by a writing signed by
both Parties. A Party may waive compliance by the other Party with any term or
provision of this Agreement, or any part thereof, provided that the term or
provision, or part thereof, is for the benefit of the waiving Party. Any waiver
will be limited to the facts or circumstances giving rise to the noncompliance
and will not be deemed either a general waiver or modification with respect to
the term or provision, or part thereof, being waived, or as to any other term or
provision of this Agreement, nor will it be deemed a waiver of compliance with
respect to any other facts or circumstances then or thereafter occurring.
19. NOTICE.
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Any notice given under this Agreement shall be in writing and shall be
deemed given when delivered personally or by courier, or five days after being
mailed, certified or registered mail, duly addressed to the Party concerned at
the address indicated below or at such other address as such Party may
subsequently provide, in accordance with the notice and delivery provisions of
this Section 19:
To the Company: Nitinol Medical Technologies, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
ATTN.: Chairman
with a copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
To the Executive: Xxxxxx X. Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
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20. SEVERABILITY.
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In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement will be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
21. SURVIVORSHIP.
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The respective rights and obligations of the Parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
22. REFERENCES.
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In the event of the Executive's death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his legal representative or, where appropriate,
to his beneficiary or beneficiaries.
23. GOVERNING LAW.
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This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts without reference
to the principles of conflicts of law.
24. HEADINGS.
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The headings of sections contained in this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.
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THE UNDERSIGNED have executed this Agreement effective as of the date first
written above.
NITINOL MEDICAL TECHNOLOGIES,
INC.
By: /s/ Xxxxxxx X. Xxx, M.D.
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Name: Xxxxxxx X. Xxx, M.D.
Title: Chairman of the Board of
Directors
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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