EMPLOYMENT AGREEMENT
Exhibit
10.5
This
sets forth the terms of the Employment Agreement made effective as of January
20, 2009 between ANGIODYNAMICS, INC., a Delaware corporation with its
principal office located at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx
00000 (the "Employer"), and XXXXXX X. XXXXX, an individual currently
residing at 0 Xxxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx
12804("Employee").
W
I T N E S S E T H
IN
CONSIDERATION of the promises and mutual agreements and covenants contained
herein, and other good and valuable consideration, the parties agree as
follows:
1. Employment.
a. Term as Chief Executive
Officer. Employer shall employ Employee, and Employee shall
serve, as Chief Executive Officer and President for Employer until such time as
a new Chief Executive Officer and President begins employment with
Employer.
b. Term as Vice
Chair. At the time that a new Chief Executive Officer and
President begins employment with Employer, Employer shall employ Employee, and
Employee shall serve, as Vice Chair of Employer until the earlier of:
(i) October 20, 2009 (the date of Employer’s 2009 shareholders’ meeting) or (ii)
the date that Employee accepts full-time employment elsewhere, at which earlier
time his employment will terminate.
c. Salary. Employer
shall continue to pay Employee the same annual base salary ("Base Salary"),
which Employee was receiving at the time of execution of this Agreement.
Employee's Base Salary is payable in accordance with Employer's regular payroll
practices for executive employees.
d. Incentive
Compensation. Except as otherwise set forth in this section,
Employee shall retain the same eligibility for annual bonuses and other
incentive compensation pursuant to the Company’s then current plans and
policies, including performance based awards of stock or options, as he had at
the time of execution of this Agreement. Any such performance based award of
stock or options will be pro-rated through the earlier of: (i) May 31, 2009 or
(ii) the date that Employee’s employment with Employer terminates. Any such
performance based award of stock or options will have a three year vesting
schedule (with 1/3 of such award of stock or options vesting per year), and any
such options that become vested must be exercised within six months of the date
of the termination of Employee’s consulting agreement with Employer dated as of
the date of this Agreement (the “Consulting Agreement”).
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2. Duties During
Employment. While serving as Chief Executive Officer and
President, Employee’s duties shall be those assigned by Employer’s Board of
Directors, including, without limitation, assisting in the transition to a new
Chief Executive Officer and President. While serving as Vice Chair, Employee’s
duties shall be only those assigned by Employer’s Board of Directors. Employee
will report to the Chairman of the Board of Directors during the term of his
employment with Employer.
3. Employer’s
Policies. Employee shall abide by and comply in all respects with
all of the rules, regulations, policies and procedures of Employer that may be
in effect and amended from time to time, including without limitation Employer’s
human resources, personnel and benefits policies and policies related to trading
in Employer stock. If Employee fails to comply with any such policy,
rule, regulation or procedure, Employer will give Employee written notice of
such failure. If Employee fails to cure such failure within the
fifteen (15) days of such notice, such failure shall constitute “cause” as
defined in section 4, below.
4. Termination. Employee's
employment by Employer shall be subject to termination as follows:
a. Termination Upon
Death. This Agreement shall terminate upon Employee's
death.
b. Termination for
Cause. Employer may terminate Employee's employment
immediately for "cause" by written notice to Employee. For purposes
of this Agreement, a termination shall be for "cause" if the termination results
from any of the following events:
i. The
material breach of any provision of this Agreement, which breach Employee shall
have failed to cure within fifteen (15) days following Employer’s written notice
to Employee specifying the nature of the breach;
ii. Any
misconduct by Employee, which is materially adverse to the interests, monetary
or otherwise, of Employer;
iii. Failure
to perform the duties assigned to Employee under or pursuant to this Agreement,
unless cured within fifteen (15) days following Employer’s written notice to
Employee;
iv. Failure
to cure within fifteen (15) days of receipt of written notice any failure to
comply with Employers’ written policies, rules, regulations or procedures,
including those related to ownership or trading of Employer stock;
v. Conviction
of a crime involving any act of dishonesty, acts of moral turpitude, or the
commission of a felony; or
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vi. Failure
to follow the written instructions of the Employer’s Chairman of the Board,
provided that the instructions do not require Employee to engage in unlawful or
unethical conduct.
vii. Failure
to comply with Section 9 of this Agreement.
Notwithstanding
any other term or provision of this Agreement to the contrary, if Employee's
employment is terminated for cause, Employee shall forfeit all rights to
payments and benefits otherwise provided pursuant to this Agreement; provided,
however, that Base Salary shall be paid through the date of
termination.
5. Fringe
Benefits.
a. Benefit
Plans. Employee shall be eligible to participate in any
employee pension benefit plans (as that term is defined under Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended), Employer-paid
group life insurance plans, medical plans, dental plans, long-term disability
plans, business travel insurance programs and other fringe benefit programs
maintained by Employer for the benefit of (or which are applicable to) its
executive employees. Participation in any of Employer's benefit plans
and programs shall be based on, and subject to satisfaction of, the eligibility
requirements and other conditions of such plans and programs.
b. Expenses. During
the term of employment, upon submission to Employer of vouchers or other
required documentation, Employee shall be reimbursed for (or Employer shall pay
directly) Employee's travel and other expenses reasonably incurred and paid by
Employee in connection with Employee's duties hereunder pursuant to the terms of
Employer’s travel and expense policies.
c. Other
Benefits. During employment, Employee also shall be entitled
to the same customary benefits of employment that he received from Employer at
the time of execution of this Agreement.
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6. Signing Incentive
Payment.
a. Options. Upon the
full execution of this Agreement, Employee shall be granted options to purchase
75,000 shares of Employer stock, which will become exercisable on
October 31, 2009 provided that Employee has executed and not revoked the
release described in Section 6(b), remain exercisable until January 31, 2010, be
priced in accordance with Employer’s policies and be subject to the terms of a
separate grant agreement, which shall provide for forfeiture of the options if
Employee’s employment or consulting agreement is terminated for
cause.
b. Release. Employee
agrees to sign a release (in the form attached as Exhibit A) of any potential
claims against the Employer that he may have at the time of execution of this
Agreement; such release will be revocable for seven days after it is
executed.
c. Payment. Upon
the end of the seven day revocation period for the above-referenced release,
Employee will receive a “Signing Incentive Payment” of $400,000 from Employer,
which will be treated as wages and will be subject to customary
withholding and taxes.
7. Transition Incentive
Payment.
a. Subject
to Sections 7(b), 7(c) and 9 below, following Employee’s termination of
employment with Employer (which termination shall occur no later than October
20, 2009), Employee will be entitled to receive 8,000 restricted shares of
Employer common stock (1/3 of which will vest on each anniversary of the date of
termination of Employee’s employment)
and the sum of (i) two (2) times his then “current compensation” minus
$400,000 and (ii) if the date of Employee’s termination of employment is earlier
than October 20, 2009, unpaid Base Salary plus unpaid incentive compensation, if
any, that Employee would have actually received from Employer through October
20, 2009, if his employment had continued through that date. For purposes of
this Agreement, Employee’s “current compensation” will mean the total of
Employee’s then current salary, plus the average of the last two annual cash
bonuses Employee received.
b. Employee’s
right to receive the payments described in this Section 7 are subject to the
determinations of the Chairman of the Board of Directors of the Employer that
(i) Employee satisfactorily assisted in the transition of the new Chief
Executive Officer and President into his position with the Employer prior to
Employee’s termination of employment, and (ii) Employee’s termination of
employment was not for “cause” as defined in Section 4(b) of this
Agreement.
c. The
lump sum amount described in 7(a)(i) above shall be paid in a single sum on
November 17, 2009, provided that Employee has provided Employer with another
valid, binding release (in the form attached as Exhibit A) of any potential
claims that Employee may have against Employer as of October 20, 2009. Base
Salary and incentive compensation payable pursuant to 7 (a)(ii) above will be
paid not later than October 31, 2009, in accordance with Employer’s regular
payroll practices for executive
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employees.
All payments described in this Section 7 will be treated as wages and will be
subject to customary withholding and taxes.
8. Benefits Upon
Termination.
a. COBRA benefits.
Employer agrees to offer continuation of the group health, dental, vision, and
prescription drug coverages in which Employee is enrolled upon the end of his
employment, pursuant to the continuation coverage requirements of the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Employer
agrees to subsidize 100% of the cost of such COBRA coverage until the twelve
month anniversary of the termination of Employee’s employment or until Employee
obtains full time employment elsewhere, whichever is earlier.
b. Automobile. Upon
the termination of his employment, Employee may purchase from Employer the
automobile provided to him during his employment for the then-current fair
market value, consistent with Employer policies.
c. Laptop Computer. Upon
the termination of his employment, Employer will provide Employee, without
charge, the laptop computer provided to him during his employment,
after Employer removes from the laptop any proprietary information of Employer
and any software licensed to Employer.
9. Non-Compete. In
exchange for the payments described in Section 7 and the consulting
agreement between the parties hereto, Employee agrees, for a period beginning
upon the full execution of this Agreement and ending on October 31, 2011, not to
work for or with, or enter into negotiations over terms of employment with, or
enter into any consulting agreement with, or form or otherwise own more than a
20% interest in, any organization, venture or individual that promotes,
manufactures or sells a technology or product that directly competes with
Employer’s (a) IRE technology, or (b) existing products or products currently
under development that Employer reasonably anticipates will be brought to market
on or before October 31, 2011.
10. Directorship.
a. Vice Chairman.
Employee is currently a director of Employer. Upon becoming Vice Chair, Employee
will become Vice Chairman of the Board of Directors but will not be entitled to
any additional compensation or stock options for his service on the
Board.
b. Term. Employee’s
current term as a member of the Board of Directors expires in October of 2009;
the parties acknowledge that it will be solely within the Board’s discretion as
to whether it will re-nominate him as a director.
11. Cooperation in Ongoing
Litigation Matters. Employee agrees to cooperate fully
in any litigation matter involving Employer, including but not limited to the
litigation involving Biolitec, Inc. Employee’s cooperation shall
include, but shall not be limited to, participating as a witness at depositions
or in court. Such cooperation up until October 20, 2009 will not
entitle Employee to any additional payments from Employer.
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12. Withholding. Employer
shall deduct and withhold from compensation and benefits provided under this
Agreement all required income and employment taxes and any other similar sums
required by law to be withheld.
13. Covenants.
a. Confidentiality. Employee
shall not, without the prior written consent of Employer, disclose or use in any
way, either during his employment by Employer or thereafter, except as required
in the course of his employment by Employer, any confidential business or
technical information or trade secret acquired in the course of Employee's
employment by Employer. Employee acknowledges and agrees that it
would be difficult to fully compensate Employer for damages resulting from the
breach or threatened breach of the foregoing provision and, accordingly, that
Employer shall be entitled to temporary preliminary injunctions and permanent
injunctions to enforce such provision. This provision with respect to
injunctive relief shall not, however, diminish Employer's right to claim and
recover damages. Employee covenants to use his best efforts to
prevent the publication or disclosure of any trade secret or any confidential
information that is not in the public domain concerning the business or finances
of Employer or Employer's affiliates, or any of its or their dealings,
transactions or affairs which may come to Employee's knowledge in the pursuance
of his duties or employment.
b. Non-Disparagement.
i. Except
to the extent necessary to enforce Employee’s rights due to a breach of any
obligation of Employer, or to prosecute or defend any claims brought in an
arbitration with Employer, Employee agrees that he shall not utter, write, or
otherwise make or publish any disparaging remarks, comments, or statements
concerning Employer or its directors, officers or employees, other than as
required by law or subpoena, except that he shall not be prevented from filing a
charge with the Equal Employment Opportunity Commission (the “EEOC”) or
participating in any investigation or proceedings conducted by the
EEOC.
ii. Except
to the extent necessary to enforce Employer’s rights due to a breach of any
obligation of Employee, or to prosecute or defend an claims brought forth in an
arbitration with Employee, Employer (through its Board of Directors and Section
16 officers) agrees that it shall not utter, write, or otherwise make or publish
any disparaging remarks, comments, or statements concerning Employee, other than
as required by law or subpoena.
c. Non-Solicitation. Employee
will not, at any time prior to October 31, 2011, either individually or through
any person, firm, corporation or other entity for which he performs services or
in which he has any interest, solicit or attempt to solicit any then current
employee of Employer to leave employment with Employer to become employed by any
person, firm, corporation or other entity.
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d. Interactions with
Others.
i. Unless
expressly directed to do so by the Chairman of the Board, Employee will not, at
any time prior to October 31, 2012, provide any strategic, operational,
confidential or proprietary information regarding Employer to any investment
bankers, Employer’s shareholders or any other parties.
ii.
This provision will not limit Employee in providing nonconfidential operational
information to any of Employer’s current ten largest institutional shareholders,
in response to a request from the shareholder, so long as he remains CEO and
President of Employer.
iii. In
the absence of the prior express permission of the Chairman of the Board to
participate in a conversation of this nature, all other inquiries are to be
referred to the Chairman of the Board.
iv. Nothing
in this subsection, however, is intended to prohibit Employee from fully
participating in the Employer’s quarterly earnings calls in the usual and
customary manner while he is CEO and President of Employer.
14. Notices. Any
notice which may be given hereunder shall be sufficient if in writing and mailed
by overnight mail, or by certified mail, return receipt requested, to Employee
at his residence and to Employer at the address set forth above, or at such
other addresses as either Employee or Employer may, by similar notice,
designate.
15. No Prior
Restrictions. Employee affirms and represents that Employee is
under no obligations to any former employer or other third party which is in any
way inconsistent with, or which imposes any restriction upon, the employment of
Employee by Employer, or Employee's undertakings under this
Agreement.
16. Return of Employer's
Property. Upon termination of Employee’s employment with
Employer, Employee shall promptly return to Employer all documents and other
property in his possession belonging to Employer, except as set forth in
paragraph 8 of this Agreement.
17. Construction and
Severability. The invalidity of any one or more provisions of
this Agreement or any part thereof, all of which are inserted conditionally upon
their being valid in law, shall not affect the validity of any other provisions
to this Agreement; and in the event that one or more provisions contained herein
shall be invalid, as determined by a court of competent jurisdiction, the court
shall have authority to modify such provision in a manner that most closely
reflects the intent of the parties and is valid. This Agreement shall
be interpreted and applied in all circumstances in a
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manner
that is consistent with the intent of the parties that amounts earned and
payable pursuant to this Agreement shall not be subject to the premature income
recognition or adverse tax provisions of Internal Revenue Code Section
409A. Accordingly, notwithstanding any other term or provision in
this Agreement to the contrary, distributions of benefits payable following
Employee’s termination of employment shall commence as of the date required by
this Agreement or, if later and to the extent required, the earliest date
permitted by Internal Revenue Code Section 409A (generally six months after
termination, if Employee is a “specified employee” within the meaning of
Internal Revenue Code Section 409A).
18. Governing
Law. This Agreement was executed and delivered in New York and
shall be construed and governed in accordance with the laws of the State of New
York.
19. Assignability and
Successors. This Agreement may not be assigned by Employee or
Employer, except that this Agreement shall be binding upon and shall inure to:
(i) the benefit of the successor of Employer through merger, acquisition, or
corporate reorganization and (ii) in the event of Employee’s death, to his
successors, assigns, estate, heirs or personal
representatives. Employer shall require, as a condition of sale, that
such purchaser or successor assumes this Agreement. Any attempted
assignment in violation of this paragraph 19 shall be null and void and of no
effect.
20. Miscellaneous.
a. This
Agreement constitutes the entire understanding and agreement between the parties
with respect to the subject matter hereof and shall supersede all prior
understandings and agreements; provided, however, that the Severance Agreement
between Employee and Employer (the “Change in Control Agreement”) shall remain
in effect during the term of Employee’s employment pursuant to this
Agreement. The Change in Control Agreement shall expire at the time
Employee’s employment with Employer ends pursuant to this
Agreement. Such termination of employment shall not be considered a
“Compensable Termination” under the Change in Control Agreement.
b. This
Agreement cannot be amended, modified, or supplemented in any respect, except by
a subsequent written agreement entered into by the parties hereto.
c. The
services to be performed by Employee are special and unique; it is agreed that
any breach of this Agreement by Employee shall entitle Employer (or any
successor or assigns of Employer), in addition to any other legal remedies
available to it, to apply to any court of competent jurisdiction to enjoin such
breach.
d. The
provisions of paragraphs 8, 9, 11, 13, 16, 18, 20 and 22 hereof shall survive
the termination of this Agreement.
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21. Counterparts. This
Agreement may be executed in counterparts (each of which need not be executed by
each of the parties), which together shall constitute one and the same
instrument.
22. Arbitration. Any dispute or claim arising
out of or in connection with any provision of this Agreement will be finally
settled by binding arbitration in
Albany County, New York in accordance with the
rules of the American Arbitration Association by one arbitrator appointed in accordance
with said rules. The arbitrator shall apply New York law, without reference to
rules of conflicts of law or rules of statutory arbitration, to the resolution
of any dispute and shall have the authority to award reasonable attorneys’ fees,
costs and expenses to the party that substantially prevails. Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, the parties may apply to any
court of competent jurisdiction for preliminary or interim equitable relief, or
to compel arbitration in accordance with this paragraph, without breach of this
arbitration provision.
The
foregoing is established by the following signatures of the
parties.
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ANGIODYNAMICS,
INC.
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Date:
January 20,
2009
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By:
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/s/
Xxxxxxx X. Xxxxx
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Date:
January 20,
2009
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/s/
Xxxxxx X. Xxxxx
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XXXXXX
X. XXXXX
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