1
EXHIBIT 10.8
SECOND AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT, dated as of September
1, 1997, between INCONTROL, INC., a Delaware corporation (the "Company"), and
XXXX X. XXXXXXX (the "Executive").
RECITALS
A. The Company and the Executive have entered into that certain
Executive Employment Agreement dated as of April 1, 1995, as amended on
September 30, 1996 (the "Agreement").
B. The Company and the Executive desire to amend the Agreement as
hereinafter set forth.
AGREEMENTS
1. RELOCATION LOAN TO EXECUTIVE
Section 5.1 of the Agreement is hereby amended to read in its entirety
as follows:
5.1 MONTHLY ALLOWANCES
(a) As long as the Executive is an employee of the Company, the
Company shall periodically lend to the Executive an aggregate total of
Three Hundred Sixteen Thousand Forty-One and 93/100 Dollars
($316,041.93) as a component of the Executive's relocation package.
(b) As of the date of this Amendment, the Company has made, and
the Executive hereby acknowledges receipt of, advances under Section
5.16(a) hereof in the amount of Two Hundred Eighty-Six Thousand
Forty-One and 93/100 Dollars ($286,041.93). The balance of the advance
shall be disbursed in six (6) equal monthly advances in the amount of
Five Thousand Dollars ($5,000). In the event that this Agreement is
terminated (i) by the Company with Cause or (ii) by the Executive, no
additional advances shall be made under this Section 5.1.
2. NOTE
The Executive shall execute a promissory to evidence the maximum amount
of the Loan (the "Note") in form and substance satisfactory to the Company and
to the Executive.
2
3. CONFIRMATION
Except as expressly modified in this Amendment, all terms, conditions,
representations, warranties and covenants contained in the Agreement are hereby
confirmed and shall remain in full force and effect.
4. COUNTERPARTS
This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original if fully executed, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
INCONTROL, INC.
By: /s/ Xxxxxx X. Xxxxxx, III
--------------------------------------------
Its: Vice President and Chief Financial Officer
EXECUTIVE
/s/ Xxxx X. Xxxxxxx
------------------------------------------------
-2-
3
PROMISSORY NOTE
$816,041.93 Seattle, Washington
September 1, 1997
FOR VALUE RECEIVED, the undersigned XXXX X. XXXXXXX ("Maker"), hereby promises
to pay to the order of INCONTROL, INC. (the "Company"), at its office in
Redmond, Washington, or at such other place as the holder of this Note may
designate in writing from time to time, (a) the principal sum of Eight Hundred
Sixteen Thousand Forty-One and 93/100 Dollars ($816,041.93) or (b) the aggregate
principal amount of all advances made by the Company under this Note and
outstanding on the date of payment, whichever is less.
EXECUTIVE EMPLOYMENT AGREEMENT. This Note is issued pursuant to the
terms and conditions of the Executive Employment Agreement, dated as of April 1,
1995, between the Company and Maker, as amended (the "Employment Agreement"),
and supersedes any and all promissory notes issued pursuant to the Employment
Agreement prior to this Note.
INTEREST. Interest shall accrue on the principal balance until final
maturity with interest compounded semi-annually at the rate of four and 94/100
percent (4.94%) per annum.
PAYMENTS OF PRINCIPAL AND INTEREST. Principal, together with accrued
interest, shall be payable in accordance with the terms of the Employment
Agreement.
PREPAYMENT. Maker may prepay all or any portion of the principal due
under this Note without premium or penalty.
PENALTY INTEREST. In the event Maker fails to pay principal and interest
when due in the manner provided herein, the principal balance of this Note and
accrued but unpaid interest thereon shall thereafter bear interest at a rate
equal to fifteen percent (15%) per annum, until payment in full of the amount
owed. Notwithstanding the foregoing, the interest paid under this Note shall
never be greater than the maximum rate of interest permitted under applicable
law.
LIABILITY AND WAIVER. Maker hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The nonexercise by the holder
of this Note of its rights hereunder in any particular instance shall not
constitute a waiver thereof in that or any subsequent instance.
COSTS OF COLLECTION. Maker agrees to pay all costs of collection and
reasonable attorneys' fees in case of any default in any payment required under
this Note.
APPLICABLE LAW. This Note shall be governed by and construed in
accordance with the laws of the state of Washington.
COLLATERAL. This Note is secured by 88,312 shares of Common Stock issued
by the Company, together with all proceeds thereof (the "Collateral"). Except
for the Collateral, this Note shall be nonrecourse to Maker.
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
4
INCONTROL, INC.
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of September 1, 1997, between
INCONTROL, INC., a Delaware corporation (the "Company"), and Xxxx X. Xxxxxxx
("Employee").
RECITALS
A. In connection with the Executive Employment Agreement dated as of
April 1, 1995 between the Company and Employee, as amended ("Employment
Agreement"), the Company has made certain loans to Employee as evidenced by a
promissory note dated September 1, 1997 in the principal amount of $813,041.93,
a copy of which is attached hereto as Exhibit A (the "Employment Agreement
Note").
B. In connection with the exercise of options to purchase shares of the
Company's Common Stock under the Company's Restated 1990 Stock Option Plan,
Employee was required to recognize and pay alternative minimum tax in the amount
of approximately $167,000 (the "AMT").
C. In order to facilitate Employee's payment of the AMT, the Company
made a loan to Employee as evidenced by a promissory note dated April 13, 1995
in the principal amount of $167,000, a copy of which is attached hereto as
Exhibit B (the "AMT Note").
D. In consideration for certain amendments to the Employment Agreement
and in order to secure the payment of the Employment Agreement Note and the AMT
Note (collectively, the "Notes"), Employee has agreed to pledge to the Company
88,312 shares of the Company's Common Stock owned by Employee (the "Shares").
AGREEMENTS
1. SECURED OBLIGATIONS
This Agreement is made in order to secure the due and timely payment and
performance of any and all obligations of Employee pursuant to the Notes,
including, without limitation, any and all amounts payable to the Company
hereunder or thereunder, and prompt observance and performance by Employee of
all of his obligations hereunder and thereunder (collectively, the "Secured
Obligations").
5
2. PLEDGE
To secure the payment and performance in full of the Secured
Obligations, Employee hereby grants, pledges, assigns, transfers and delivers to
the Company a first-priority security interest in Employee's right, title and
interest in, to and under (a) the Shares and all rights and privileges of
Employee with respect thereto, (b) all cash dividends, noncash dividends, stock
dividends, interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Shares, (c) any and all certificates or other instruments or
documents representing any of the foregoing, and (d) all proceeds of any of the
foregoing and any property of any character whatsoever into which any of the
foregoing may be converted (all such property, collectively, the "Pledged
Collateral").
3. REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to the Company as follows:
(a) The Shares are legally and beneficially owned by Employee on
the date hereof.
(b) Employee has all requisite power and authority and full legal
right to execute, deliver and perform all of Employee's obligations under this
Agreement and to pledge and grant a first-priority security interest in the
Pledged Collateral in the manner and for the purpose contemplated by this
Agreement.
(c) This Agreement has been duly executed and delivered by
Employee and constitutes the legal, valid and binding obligation of Employee,
enforceable against Employee in accordance with its terms.
(d) The pledge of, and the grant of a first-priority security
interest in, the Pledged Collateral by Employee in the manner and for the
purpose contemplated by this Agreement do not and will not (i) violate any law,
rule, regulation, order, judgment or decree applicable to Employee or (ii)
result in (except as contemplated by this Agreement), or require, the creation
or imposition of any lien, security interest, encumbrance or right of others of
any nature upon or with respect to any of the Pledged Collateral.
4. VOTING RIGHTS
(a) Subject to Section 4(b) hereof, Employee shall exercise all
voting and consensual rights and powers with respect to the Pledged Collateral.
-2-
6
(b) If an Employee Default (as defined below) has occurred and
the Company provides notice to Employee that it intends to exercise any or all
voting and consensual rights and powers with respect to the Pledged Collateral,
such rights of Employee to exercise the voting and consensual rights and powers
which Employee is entitled to exercise with respect to the Pledged Collateral
shall cease, and such rights shall thereupon become vested in the Company.
Thereafter, and until such time as any such Employee Default shall no longer be
continuing, the Company shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers.
5. DELIVERY OF PLEDGED COLLATERAL
The Company hereby acknowledges receipt of the Shares. Employee shall
promptly deliver or cause to be delivered to the Company all other Pledged
Collateral. At the time of any such delivery, Employee shall deliver to the
Company duly executed stock transfer powers in blank with respect to any Pledged
Collateral the transfer of which would require such powers.
6. REMEDIES UPON DEFAULT
(a) If Employee fails to pay and perform in full any of the
Secured Obligations at any time on or after such Secured Obligations become due,
or if Employee breaches any of his other representations, warranties or
covenants hereunder (any of the foregoing, an "Employee Default"), the Company
may exercise all rights of a secured party under the applicable Uniform
Commercial Code with respect to the Pledged Collateral and, in addition, the
Company may, without being required to give any notice, except as herein
provided or as may be required by applicable law, sell, assign, transfer,
endorse and deliver the whole or, from time to time, any part of the Pledged
Collateral, for cash, upon credit or for other property, for immediate or future
delivery, and for such price or prices and on such terms as the Company in its
reasonable discretion shall deem appropriate.
(b) Upon consummation of any such sale, the Company shall have
the right to assign, transfer, endorse and deliver to the purchaser or
purchasers thereof the Pledged Collateral sold, and all of the voting and
consensual rights and powers granted and reserved to the Company pursuant hereto
shall thereupon become vested in such purchaser or purchasers, subject to any
reservations or qualifications reasonably imposed by the Company as part of such
sale. Each purchaser at any sale shall hold the property sold absolutely free
from any claim or right on the part of Employee, and Employee hereby waives and
releases (to the extent permitted by law) all rights of redemption, stay or
appraisal which Employee now has or may at any
-3-
7
time in the future have under any rule of law or statute now existing or
hereafter enacted.
(c) The Company shall give Employee ten (10) days' written notice
(which Employee agrees is reasonable notification within the meaning of Section
9-504(3) of the Uniform commercial Code) of its intention to sell any of the
Pledged Collateral. The Company shall not be obligated to make any sale of the
Pledged Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of such Pledged Collateral may have been given.
(d) At any sale made pursuant to this Section 6, the Company may
bid for or purchase, free (to the extent permitted by law) from any right of
redemption, stay or appraisal on the part of Employee, the Pledged Collateral or
any part thereof offered for sale, and the Company may upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to Employee therefor. In the event that the Company becomes the
purchaser at any such sale, the Company shall be entitled to credit against the
purchase price the amount then outstanding of the Secured Obligations.
(e) As an alternative to exercising the power of sale herein
conferred upon it, the Company may proceed by a suit or suits at law or in
equity to foreclose this Agreement and to sell the Pledged Collateral, or any
portion thereof.
7. APPLICATION OF COLLATERAL
Any proceeds of any sale of, or realization upon, all or any part of the
Pledged Collateral and cash retained by the Company pursuant to this Agreement
shall be applied by the Company in the following order of priorities:
(a) to the payment of all reasonable costs, expenses, liabilities
and advances made or incurred by the Company, its agents, attorneys and counsel,
in managing and maintaining the Pledged Collateral or in protecting, perfecting,
enforcing or exercising any right or remedy under this Agreement;
(b) to the payment of any and all of the Secured Obligations; and
(c) to the extent of any amounts then remaining from such
proceeds, to Employee, its successors or assigns, or to whosoever may be
lawfully entitled to receive the same, or as a court of competent jurisdiction
may direct.
-4-
8
8. THE COMPANY APPOINTED ATTORNEY-IN-FACT
Upon the occurrence and during the continuance of an Employee Default,
Employee shall be deemed to have appointed the Company as the attorney-in-fact
of Employee, with full authority in the place and stead of Employee and in the
name of Employee or otherwise, for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Company may deem necessary or advisable to accomplish the purposes hereof.
Employee hereby declares that the foregoing powers are granted for valuable
consideration, constitute powers granted as security for the performance of the
Secured Obligations and are coupled with an interest and shall be irrevocable by
Employee.
9. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL
This Agreement and the assignments, pledges and security interests
created or granted hereby shall terminate, and the Company shall release the
Pledged Collateral to Employee, upon payment in full of the Notes.
10. PAYMENT OF COSTS AND EXPENSES
Employee shall pay on demand to or for the account of the Company, on or
before the date such payment is due, or reimburse the Company promptly on demand
for, all reasonable out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and the disbursements of counsel) of the Company
in connection with the exercise or enforcement of any of the rights of the
Company hereunder and the failure by Employee to perform or observe any of the
provisions hereof to be performed or observed by it. The Company shall pay all
reasonable costs and attorneys fees incurred by Employee to enforce the
provisions of Section 9 hereof if the Company breaches its obligations under
such Section 9.
11. REASONABLE CARE
All Pledged Collateral at any time delivered to the Company shall be
held by the Company or its nominee in the same manner as that accorded to other
valuable securities subject to the terms, covenants and conditions herein set
forth. Neither the Company nor any director, officer, employee or counsel of the
Company shall be liable for any action taken or omitted to be taken by it or
them relative to any of the Pledged Collateral except for their own gross
negligence or willful misconduct, and the Company shall not be liable for any
action or omission to act on the part of any agent appointed and selected by the
Company with reasonable care to act with respect to the Pledged Collateral (or
any part thereof).
-5-
9
12. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE
No failure on the part of the Company to exercise and no delay in
exercising any right, power, remedy or privilege under this Agreement or the
Notes or provided by statute or at law or in equity or otherwise, including,
without limitation, the right to accelerate the maturity of any of the Secured
Obligations or the power of sale or foreclosure hereunder following any Employee
Default, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any Employee Default
or as an acquiescence therein nor shall any single or partial exercise of any
such right, power, remedy or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, remedy or privilege.
13. NOTICES
All notices, requests and other communications to the Company or
Employee hereunder shall be in writing and shall refer specifically to this
Agreement and shall be personally delivered or sent by telecopy or other
electronic facsimile transmission or by registered mail, or certified mail,
return receipt requested, postage prepaid, in each case to the respective
address below.
To the Company:
InControl, Inc.
0000 - 000xx Xxxxxx X.X.
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
To Employee:
Xxxx X. Xxxxxxx
0000 - 00xx Xxxxx X.X.
Xxxxxx, XX 00000
14. FURTHER ASSURANCES
Employee shall duly execute and deliver (to the Company or otherwise),
or cause to be duly executed and delivered (to the Company or otherwise), such
further instruments and do and cause to be done such further acts that may be
necessary or as the Company may at any time and from time to time reasonably
request in connection with its administration of this Agreement.
15. SUCCESSORS AND ASSIGNS
The terms and provisions of this Agreement shall inure to the benefit of
and be binding upon Employee, the Company and all other persons from time to
time entitled
-6-
10
to the benefit of any of the Secured Obligations, and their respective
successors and assigns; provided, however, that Employee may neither assign or
otherwise transfer any of his rights and interests nor delegate any of his
obligations hereunder, without the prior written consent of the Company. Subject
to the foregoing, any reference to Employee or the Company hereunder shall be
deemed to include the successors thereto and assigns thereof.
16. AMENDMENTS
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure by Employee thereof,
shall in any event be effective unless the same shall be in writing specifically
identifying this Agreement and the provision intended to be amended, modified,
waived, terminated or discharged and signed by the Company and Employee, and
each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement, course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by the Company and Employee.
17. SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable
in any respect, then, to the fullest extent permitted by law, all other
provisions hereof shall remain in full force and effect and shall be liberally
construed in favor of the Company in order to carry out the intentions of the
parties hereto as nearly as may be possible. To the extent permitted by
applicable law, Employee hereby waives any provision of law which would render
any provision hereof prohibited or unenforceable in any respect.
18. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall be deemed to be an original, and
all of which taken together, shall constitute one and the same instrument.
19. ENTIRE AGREEMENT
This Agreement, the Employment Agreement and the Notes constitute, on
and as of the date hereof, the entire agreement of Employee and the Company with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the Company and
Employee with respect to such subject matter are hereby superseded in their
entireties.
-7-
11
20. PRIOR AGREEMENTS
This Agreement is entered into in substitution of, and supersedes in
their entireties, the two prior Stock Pledge Agreements entered into between the
Company and Employee, dated October 1, 1993 and April 13, 1995, respectively.
21. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the state of Washington.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
INCONTROL, INC.
By: /s/ Xxxxxx X. Xxxxxx, III
-------------------------------------------
Its: Vice President and Chief Financial Officer
EMPLOYEE:
/s/ Xxxx X. Xxxxxxx
-----------------------------------------------
Xxxx X. Xxxxxxx
-8-
12
STOCK CERTIFICATES
#397 60,000 7/31/96
#398 28,312 7/31/96
#838 14,062 7/10/97
-9-
