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Exhibit 10.31
MEDSTONE INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
CHIEF FINANCIAL OFFICER
(Xxxx Xxxxxxxx)
This Employment Agreement is entered, effective August 13, 1998 (the
Commencement Date), by and between Medstone International, Inc., a Delaware
Corporation (Medstone), and Xxxx Xxxxxxxx (Employee) in order to secure his
[her] services in the future and in recognition of his [her] past services.
1. EMPLOYMENT
Employee shall be employed as Medstone's Chief Financial Officer for
the term of this Agreement. If his [her] title or responsibilities are
materially diminished without Employee's consent, such act shall be considered a
termination of this Agreement by Medstone.
2. DEVOTION OF TIME
Employee shall devote his [her] full working time and energy to his
[her] responsibilities as Chief Financial Officer and shall fulfill those
responsibilities in good faith and in accordance with the terms of this
Agreement.
3. TERM
Unless earlier terminated in accordance with Section 7, the term of
Employee's employment by Medstone under this Agreement shall commence on the
date set forth in the first paragraph and shall continue for three (3) full
years thereafter.
4. BASE SALARY
The Employee's base salary shall be a minimum of $ 100,000 per year
unless increased from time to time during the term of this Agreement by
Medstone's Board of Directors.
5. STOCK OPTIONS
Effective the Commencement Date, the exercise prices of the Employee's
existing stock options to purchase up to 80,000 shares of Medstone's Common
Stock at from $ 7.13 to $ 9.68 per share are reduced to equal $ 6.37 per share,
the closing price per share of Medstone's Common Stock on the Commencement Date
as reported on the NASDAQ National Market System. In addition, such options are
amended to provide that they shall become fully exercisable, regardless of any
otherwise applicable vesting requirements, (a) concurrently with any termination
of Employee's employment by the Company without Good Cause (as defined in
Section 7) or (b) if there is an Asset Acquisition (as defined in Section 7)
while Employee continues to be employed by Medstone and Employee does not
immediately enter into an employment agreement with a buying or surviving party
in the Asset Acquisition. In all other respects, the options shall remain
unchanged.
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6. OTHER BENEFITS
Employee shall receive such other employee benefits as are generally
available to other employees of Medstone such as group health and dental
insurance, extended long-term disability insurance, etc. Employee shall be
reimbursed for reasonable business related expenses.
7. TERMINATION
(a) Employee's employment under this Agreement shall automatically
terminate upon Employee's death, which shall not be deemed to be a termination
without Good Cause.
(b) Medstone may at any time terminate Employee's employment by
Medstone under this Agreement by giving notice of such termination to the other
party. If such termination is without Good Cause, Employee shall be entitled to
the remedies and benefits set forth in this Section 7 and in Section 5 of this
Agreement. Such remedies and benefits shall be in lieu of any other damages or
payments, and shall be deemed to be agreed liquidated damages, for such a
termination. "Good Cause" for Medstone to terminate Employee's employment shall
mean (i) willful and habitual breach of Employee's duties or obligations under
the terms of this Agreement, (ii) habitual gross neglect of his [her] duties or
obligations, (iii) his [her] commission of fraud, embezzlement or
misappropriation, or other willful acts of dishonesty or willful misconduct, or
commission of a crime of moral turpitude whether or not a criminal or civil
charge is filed in connection therewith, (iv) his [her] willful unauthorized
disclosure of Medstone's confidential information, or (v) his [her] failure, due
to physical or mental disability, to effectively perform his [her] duties for a
period of ninety (90) days during any consecutive period of twelve (12) months.
(c) If during the term of Employee's employment hereunder either (i)
Employee's employment is terminated by Medstone without Good Cause or (ii) there
is an Asset Acquisition while Employee continues to be employed by Medstone and
Employee does not immediately enter into an employment agreement with a buying
or surviving party in the Asset Acquisition, Employee shall receive a severance
payment equal to two (2) times the amount of Employee's then current annual base
salary. Any such severance payment shall be paid fully in cash to Employee on
the date of the termination or closing of the Asset Acquisition, as the case may
be. As used in this paragraph, an "Asset Acquisition" means the sale, transfer
or other disposition in one or in a series of transactions, including (without
limitation) a merger or consolidation of Medstone in which it is not the
surviving party, of all or substantially all of the assets or business of
Medstone to another person or entity or to persons or entities which are
affiliated or acting in concert with respect to such sale, transfer or other
disposition, other than the sale of Medstone's products in the ordinary course
of its business or a contribution of its assets to a partnership, limited
liability company or other entity which is controlled by Medstone.
(d) The termination of Employee's employment pursuant to this Section 7
shall not release either party from any accrued obligation to pay any sum to the
other party (whether then or thereafter payable) or operate to discharge any
liability incurred prior to the termination date.
(e) If (i) Medstone terminates Employee's employment and claims that
such termination is for Good Cause, and (ii) an arbitrator or court determines
that such termination was without Good Cause, upon such determination Medstone
shall pay to Employee, in addition to amounts otherwise payable under this
Agreement, a special additional payment equal to the severance payment otherwise
payable to Employee on account of such termination under Section 7(c).
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8. WAIVER
No waiver by either of the parties of any failure by the other party to
keep or perform any provision, covenant or condition of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same, or of
any provision, covenant or condition. All rights and remedies herein granted or
referred to are cumulative; resort to one shall not preclude resort to any other
or any other right or remedy provided by the law.
9. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement
or the breach hereof shall be settled by arbitration before a single arbitrator
in Orange County, California. The arbitration shall be administered by and held
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The costs of the arbitration,
including any AAA administration fee, the arbitrator's fee, and costs for the
use of facilities during the hearings, shall initially be borne equally by the
parties to the arbitration. However, reimbursement for such fees and costs and
such party's attorneys' fees shall be awarded to the prevailing or most
prevailing party by the arbitrator.
10. ENFORCEABILITY
The invalidity or enforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision.
11. ATTORNEYS FEES
In any arbitration or other legal proceeding to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs in addition to any other relief to which it
or he may be entitled.
12. CHOICE OF LAW
This Agreement shall be construed and governed by the laws of the State
of California.
13. ENTIRE AGREEMENT
This Agreement may be executed in counterparts and the counterparts
read together, together with the option agreements referred to in Section 5,
shall constitute the complete and entire agreement between the parties regarding
the subject matter hereof, superseding all prior agreements, representations,
proposals and negotiations, either oral or in writing, between the parties with
respect to the subject matter hereof.
14. MODIFICATIONS
This Agreement shall not be modified or amended except by a written
document executed by both parties to this Agreement.
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15. SUCCESSORS
This Agreement will be binding upon the heirs, executors,
administrators, successors, assignees, and other legal representatives of the
parties to this Agreement.
16. DRAFTING
This Agreement has been negotiated at arm's length and between persons
sophisticated and knowledgeable in the matters dealt with. Accordingly, any rule
of law (including California Code of Civil Procedure Section 1654) or legal
decision that would require interpretation against the drafter of this Agreement
is not applicable and is waived.
The parties have entered into this Agreement as of the date set forth
in the first paragraph above.
Medstone International, Inc., Employee
a Delaware corporation
By:
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Xxxxx X. Xxxxxxxxx, Xxxx Xxxxxxxx
Chairman and CEO
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