Exhibit 10.41
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EMPLOYMENT AGREEMENT
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THIS AGREEMENT, effective as of the 4th day of November, 1997, by and
between NEUROMEDICAL SYSTEMS, INC., a Delaware corporation with principal
executive offices at Two Executive Boulevard, Suffern, New York 10901-4114
("NSI"), and XXXX XXXXXX residing at ____________________________________
___________ (the "Employee").
W I T N E S S E T H :
WHEREAS, NSI is desirous of employing the Employee as President and Chief
Executive Officer of NSI, and the Employee is desirous to serve NSI in such
capacity, all upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment.
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NSI agrees to employ the Employee, and the Employee agrees to be employed
by NSI, upon the terms and subject to the conditions of this Agreement.
2. Term.
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The employment of the Employee by NSI as provided in Section 1 will be for
the period commencing on the date hereof (the "Commencement Date") and ending on
the third anniversary of the Commencement Date (the "Term"); provided, however,
on the third anniversary of the Commencement Date and on each anniversary
thereafter, the Term shall be automatically extended for an additional period of
one (1) year, unless either party gives written notice to the other at least
ninety (90) days prior thereto that the Term of this Agreement shall not be so
extended, provided, further, however, that the Term may be earlier terminated as
hereinafter provided.
3. Duties; Best Efforts; Indemnification.
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The Employee shall serve as the President and Chief Executive Officer of
NSI and shall perform and discharge well and faithfully the duties which may
from time to time be prescribed by the Board of Directors of NSI ( the "Board").
During the Term, NSI shall nominate the Employee for election to, and use its
best efforts to cause the Employee to be
elected to the Board. The Employee shall devote all of his business time,
attention and energies to the business and affairs of NSI, shall use his best
efforts to advance the best interests of NSI and shall not during the Term be
actively engaged in any other business activity, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage.
Subject to the provisions of NSI's Certificate of Incorporation and Bylaws,
each as amended from time to time, NSI shall indemnify the Employee to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, for all amounts (including without
limitation, judgments, fines, settlement payments, expenses and attorney's fees)
incurred or paid by the Employee in connection with any action, suit,
investigation or proceeding arising out of or relating to the performance by the
Employee of services for, or the acting by the Employee as an officer or
employee of, NSI, or any other person or enterprise at NSI's request; provided,
however, that NSI shall not be required to indemnify the Employee against any
liability resulting from conduct which is willful, intentional or grossly
negligent. NSI shall use its best efforts to obtain and maintain in full force
and effect during the Term directors' and officers' liability insurance policies
providing full and adequate protection to the Employee for his capacities,
provided that the Board shall have no obligation to purchase such insurance if,
in its opinion, coverage is available only on unreasonable terms.
4. Compensation and Benefits.
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(a) Base Salary. NSI shall pay to the Employee a base salary (the "Base
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Salary") at a rate of not less than $350,000 per annum, payable in accordance
with NSI's ordinary payroll practices as in effect from time to time during the
Term. The Board at least annually will review the Base Salary and other
compensation during the Term with a view to the increase thereof based upon the
Employee's performance, the performance of NSI, inflation, then prevailing
industry salary scales and other relevant factors. Base Salary will not include
any bonus paid to the Employee from time to time.
(b) Bonus. In respect of each fiscal year beginning during the Term, the
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Employee shall have the opportunity to earn a bonus of up to 50% of his annual
Base Salary (the "Bonus") upon the attainment of financial or other performance
goals mutually agreed to by the Employee and the Board not later than 90 days
after the commencement of the applicable fiscal year; provided, however, that
for the 1998 fiscal year, the Employee shall be entitled to receive a Bonus of
$175,000 without regard to performance; provided, further, however, that any
bonus payable in respect of a fiscal year that ends after the Term shall be
prorated based on the portion of the fiscal year that has elapsed during the
Term. Any bonus payable hereunder shall be paid in accordance with NSI's
practice with respect to the payment of bonuses to its other senior executives.
(c) Stock Options. As of the Commencement Date, NSI shall grant the
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Employee stock options to acquire (i) an aggregate of 750,000 shares of NSI
common stock (the "Common Stock") at an exercise price equal to the closing
price of the Common Stock on
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the last trading day prior to the Commencement Date; and (ii) an aggregate of
250,000 shares of Common Stock at an exercise price of $10.00 per share. The
stock options shall become vested and exercisable with respect to 25% of the
aggregate number of shares of Common Stock covered by each stock option as of
the first, second, third and fourth anniversaries of the date of grant and shall
be subject to such other terms and conditions as set forth in the stock option
agreements attached hereto as Exhibits A and B.
(d) Out-of-Pocket Expenses. NSI shall promptly pay to the Employee
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the reasonable expenses incurred by him in the performance of his duties
hereunder, including, without limitation, those incurred in connection with
business related travel or entertainment, or, if such expenses are paid directly
by the Employee, shall promptly reimburse him for such payment, provided that
the Employee properly accounts therefor in accordance with NSI's policy.
(e) Relocation Expenses. In accordance with NSI's relocation policy, NSI
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shall reimburse the Employee for up to $75,000 in moving expenses incurred by
him in his relocation to the Suffern, New York area, closing costs in connection
with the sale of his residence in Phoenix, Arizona and reasonable air travel for
the Employee to and from Phoenix, Arizona.
(f) Housing Allowance. NSI shall pay to the Employee a housing allowance
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in the amount of $2,500 per month through June 30, 1998.
(g) Participation in Benefit Plans. The Employee shall be entitled to
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participate in or receive benefits under any pension plan, profit sharing plan,
health and accident plan or any other employee benefit plan or arrangement made
available in the future by NSI to its executives and key management employees,
subject to the terms and conditions applicable to executives and key management
generally.
(h) Vacation. The Employee shall be entitled to such paid vacation
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days in each calendar year as determined by NSI from time to time, but not less
than three (3) weeks in any calendar year, prorated in any calendar year during
which the Employee is employed hereunder for less than an entire year in
accordance with the number of days in such year during which he is so employed.
The Employee shall also be entitled to all paid holidays given by NSI to its
executives and key management employees. Such vacation and holiday allowance
shall otherwise be subject to the policies and practices of NSI.
5. Termination.
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The Employee's employment hereunder shall be terminated upon the
Employee's death and may be terminated as follows:
(a) By NSI for "Cause." A termination for Cause is a termination upon
a finding by NSI that the Employee has (i) intentionally failed to perform
reasonably assigned duties, (ii) engaged in dishonest or willful misconduct in
the performance of his duties,
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(iii) engaged in a transaction in connection with the performance of his duties
to the Company or any of its Subsidiaries thereof which transaction is adverse
to the interests of the Company or any of its Subsidiaries and which is engaged
in for personal profit by the Employee or (iv) willfully violated any law, rule
or regulation in connection with the performance of his duties (other than
traffic violations or similar offenses).
(b) By NSI due to the Employee's "Disability." For purposes of this
Agreement a termination for Disability shall occur (i) upon the thirtieth (30th)
day after the issuance of a written termination notice to the Employee in the
event that the Employee shall have become so incapacitated as to be unable to
resume, within the ensuing six (6) months, his employment hereunder by reason of
physical or mental illness or injury, or (ii) upon the issuance of a written
termination notice after the Employee has been unable to substantially perform
his duties hereunder for three (3) consecutive months by reason of any physical
or mental illness.
(c) By NSI without Cause.
6. Compensation Upon Termination.
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(a) In the event of the termination of the Employee's employment as a
result of the Employee's death, NSI shall (i) pay to the Employee's estate his
Base Salary through the date of his death, and (ii) for the shorter of one (1)
year following his death or the balance of the Term (as if such termination had
not occurred) provide continuation coverage to the members of the Employee's
family under all Blue Cross/Blue Shield, major medical and other health,
accident, life or other disability plans and programs in which such family
members participated immediately prior to his death.
(b) In the event of the termination of the Employee's employment by
NSI for Cause or by the Employee for any reason NSI shall pay to the Employee
his Base Salary through the date of his termination, and the Employee's
entitlement to any other compensation or benefits shall be determined in
accordance with NSI's plans, policies and practices as in effect from time to
time.
(c) In the event of the termination of the Employee's employment by
NSI due to Disability, NSI shall pay to the Employee his Base Salary through the
date of his termination. In addition, for the shorter of one (1) year following
any such termination or the balance of the Term (as if such termination had not
occurred), NSI shall (i) continue to pay the Employee the Base Salary in effect
at the time of such termination less the amount, if any, then payable to the
Employee under any disability benefits of NSI and (ii) provide the Employee
continuation coverage under all Blue Cross/Blue Shield, major medical and other
health, accident, life or other disability plans and programs in which the
Employee participated immediately prior to such termination, to the extent that
such benefits continue to be made available to active employees of NSI.
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(d) In the event that the Employee's employment is terminated by NSI
other than for Cause or Disability, for a period of eighteen (18) months
following any such termination, NSI shall (i) continue to pay the Employee the
Base Salary in effect at the time of such termination and (ii) provide
continuation coverage under all Blue Cross/Blue Shield, accident, life or other
disability plans and programs in which the Employee participated immediately
prior to such termination, to the extent such benefits continue to be made
available to active employees of NSI. The continuation of Base Salary provided
for in clause (i) of the preceding sentence shall not be reduced by any
compensation or other income that the Employee may earn from subsequent
employment or otherwise.
(e) The continuation coverage under any Blue Cross/Blue Shield, major
medical and other health, accident, life or other disability plans and programs
for the periods provided in Sections 6(a), 6(c) and 6(d) shall be provided (i)
at the expense of NSI and (ii) in satisfaction of NSI's obligation under Section
4980B of the Code (and any similar state law) with respect to the period of time
such benefits are continued hereunder. Notwithstanding anything to the contrary
contained herein, NSI's obligation to provide such continuation coverage under
Sections 6(a), 6(c) or 6(d) shall cease immediately upon the date any covered
individual becomes eligible for similar benefits under the plans or policies of
another employer.
(f) This Section 6 sets forth the only obligations of NSI with respect
to the termination of the Employee's employment with NSI and the Employee
acknowledges that upon his termination of employment he shall not be entitled to
any payments or benefits which are not explicitly provided herein.
7. Covenant Regarding Inventions and Copyrights.
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The Employee shall disclose promptly to NSI any and all inventions,
discoveries, improvements and patentable or copyrightable works initiated,
conceived or made by him, either alone or in conjunction with others, during the
Term and related to the business or activities of NSI and he assigns all of his
interest therein to NSI or its nominee; whenever requested to do so by NSI, the
Employee shall execute any and all applications, assignments or other
instruments which NSI shall deem necessary to apply for and obtain letters
patent or copyrights of the United States or any foreign country or otherwise
protect NSI's interest therein. These obligations shall continue beyond the
conclusion of the Term with respect to inventions, discoveries, improvements or
copyrightable works initiated, conceived or made by the Employee during the Term
and shall be binding upon the Employee's assigns, executors, administrators and
other legal representatives.
8. Protection of Confidential Information.
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The Employee acknowledges that he will be provided with information
about, and his employment by NSI will, throughout the Term, bring him into close
contact with, many confidential affairs of NSI and its subsidiaries, including
proprietary information about costs, profits, markets, sales, products, key
personnel, pricing policies, operational methods,
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technical processes and other business affairs and methods, plans for future
developments and other information not readily available to the public, all of
which are highly confidential and proprietary and all of which were developed by
NSI at great effort and expense. The Employee further acknowledges that the
services to be performed by him under this Agreement are of a special, unique,
unusual, extraordinary and intellectual character, that the business of NSI will
be conducted throughout the world (the "Territory"), that its products will be
marketed throughout the Territory, that NSI competes and will compete in nearly
all of its business activities with other organizations which are located in
nearly any part of the Territory and that the nature of the relationship of the
Employee with NSI is such that the Employee is capable of competing with NSI
from nearly any location in the Territory. In recognition of the foregoing, the
Employee covenants and agrees during the Term and thereafter:
(i) That he will keep secret all confidential matters of NSI and not
copy them or disclose them to anyone outside of NSI, either during or after the
Term, except with NSI's prior written consent or, if during the Term, in the
performance of his duties hereunder, the Employee makes a good faith
determination that it is in the best interest of NSI to disclose such matters;
(ii) That he will not make use of any of such confidential matters for
his own purposes or the benefit of anyone other than NSI; and
(iii) That he will deliver promptly to NSI on termination of this
Agreement, or at any time NSI may so request, all confidential memoranda, notes,
records, reports and other confidential documents (and all copies thereof)
relating to the business of NSI, which he may then possess or have under his
control.
9. Restriction on Competition, Interference and Solicitation.
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In recognition of the considerations described in Section 8 hereof,
the Employee covenants and agrees that, during the Term and for a period of two
(2) years after the termination of his employment hereunder, the Employee will
not, directly or indirectly, (A) enter into the employ of, or render any
services to, any person, firm or corporation engaged in any business competitive
with the business of NSI in any part of the Territory; (B) engage in any such
business for his account; (C) become interested in any such business as an
individual, partner, shareholder, creditor, director, officer, principal, agent,
employee, trustee, consultant advisor, franchisee or in any other relationship
or capacity; or (D) interfere with NSI's relationship with, or endeavor to
employ or entice away from NSI any person, firm, corporation, governmental
entity or other business organization who or which is or was an employee,
customer or supplier of, or maintained a business relationship with, NSI at any
time (whether before, during or after the Term), or which NSI has solicited or
prepared to solicit; provided, however, that nothing contained in this Section 9
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shall be deemed to prohibit the Employee from acquiring or holding, solely for
investment, publicly traded securities of any corporation some of the activities
of which are competitive with the business of NSI so
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long as such securities do not, in the aggregate, constitute more than five
percent (5%) of any class or series of outstanding securities of such
corporation.
10. Specific Remedies.
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For purposes of Sections 7, 8 and 9 of this Agreement, references to
NSI shall include all current and future majority-owned subsidiaries of NSI and
all current and future joint ventures in which NSI may from time to time be
involved. It is understood by the Employee and NSI that the covenants contained
in this Section 10 and in Sections 7, 8, and 9 hereof are essential elements of
this Agreement and that, but for the agreement of the Employee to comply with
such covenants, NSI would not have agreed to enter into this Agreement. NSI and
the Employee have independently consulted with their respective counsel and have
been advised concerning the reasonableness and propriety of such covenants with
specific regard to the nature of the business conducted by NSI and the interests
of NSI and its stockholders. The Employee agrees that the covenants of Sections
7, 8, and 9 are reasonable and valid. If the Employee commits a breach of any
of the provisions of Sections 7, 8, or 9, such breach shall be deemed to be
grounds for termination for Cause. In addition, the Employee acknowledges that
NSI may have no adequate remedy at law if he violates any of the terms hereof.
The Employee therefore understands and agrees that NSI shall have (i) the right
to have such provisions specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach will cause
irreparable injury to NSI and that money damages will not provide an adequate
remedy to NSI, and (ii) the right to require the Employee to account for and pay
over to NSI all compensation, profits, monies, accruals, increments and other
benefits (collectively, the "Benefits") derived or received by the Employee as a
result of any transaction constituting a willful breach of any of the provisions
of Sections 7, 8, or 9 and the Employee hereby agrees to account for and pay
over such Benefits to NSI.
11. Independence, Severability and Non-Exclusivity.
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Each of the rights enumerated in Section 10 hereof shall be
independent of the others and shall be in addition to and not in lieu of any
other rights and remedies available to NSI at law or in equity. If any of the
covenants contained in Sections 7, 8, or 9, or any part of any of them, is
hereafter construed or adjudicated to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions. The parties intend to and do hereby confer jurisdiction to enforce
the covenants contained in Sections 7, 8, or 9 and the remedies enumerated in
Section 10 upon the federal and state courts of New York sitting in New York
County. If any of the covenants contained in Sections 7, 8, or 9 is held to be
invalid or unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form said provision shall then be enforceable. No such holding of
invalidity or unenforceability in one jurisdiction shall bar or in any way
affect NSI's right to the relief provided in Section 10 or otherwise in the
courts of
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any other state or jurisdiction within the geographical scope of such covenants
as to breaches of such covenants in such other respective states of
jurisdictions, such covenants being, for this purpose, severable into diverse
and independent covenants.
12. Disputes.
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If NSI or the Employee shall dispute any termination of the Employee's
employment hereunder or if a dispute concerning any payment hereunder shall
exist:
(a) either party shall have the right (but not the obligation), in
addition to all other rights and remedies provided by law, to compel arbitration
of the dispute in the City of New York under the rules of the American
Arbitration Association by giving written notice of arbitration to the other
party within thirty (30) days after notice of such dispute has been received by
the party to whom notice has been given; and
(b) if such dispute (whether or not submitted to arbitration pursuant
to Section 12(a) hereof) results in a determination that (i) NSI did not have
the right to terminate the Employee's employment under the provisions of this
Agreement or (ii) the position taken by the Employee concerning payments to the
Employee is correct, NSI shall promptly pay, or if theretofore paid by the
Employee, shall promptly reimburse the Employee for, all costs and expenses
(including attorney's fees) reasonably incurred by the Employee in connection
with such dispute.
13. Successors; Binding Agreement.
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This Agreement shall be binding upon and shall inure to the benefit of
NSI, its successors and assigns and NSI shall require any successor or assign to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that NSI would be required to perform it if no such succession
or assignment had taken place. "NSI" as used herein shall include any such
successors and assigns to NSI's business and/or assets. The term "successors
and assigns" as used herein shall mean a corporation or other entity acquiring
or otherwise succeeding to, directly or indirectly, all or substantially all the
stock or assets and business of NSI (including this Agreement) whether by
operation of law or otherwise.
This Agreement and all rights of the Employee hereunder shall inure to
the benefit of, and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, administrators c.t.a., successors,
heirs, distributees, devisees and legatees. Unless otherwise provided herein,
any amounts payable hereunder after the Employee's death shall be paid in
accordance with the terms of this Agreement to the Employee's estate.
14. Notices.
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All notices, consents or other communications required or permitted to
be given by any party hereunder shall be in writing (including telecopy or other
similar writing) and
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shall be given by personal delivery, certified or registered mail, postage
prepaid, or telecopy (or other similar writing) as follows:
To NSI:
Attn: General Counsel
Xxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx, 00000-0000
To the Employee:
Xxxx Xxxxxx
__________________________
__________________________
__________________________
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall be deemed to
have been given on the date of mailing, personal delivery or telecopy or other
similar means thereof (provided the appropriate answer back is received) and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
15. Employee Representation.
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Employee represents and warrants that his execution of this Agreement
and performance of his duties pursuant to this Agreement will not constitute a
breach of any contract or obligation he has or may have to any other party.
16. Modifications and Waivers.
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No term, provision or condition of this Agreement may be modified or
discharged unless such modification or discharge is authorized by the Board and
is agreed to in writing and signed by the Employee. No waiver by either party
hereto of any breach by the other party hereto of any term, provision or
condition of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
17. Entire Agreement.
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This Agreement constitutes the entire understanding between the
parties hereto relating to the subject matter hereof, superseding all
negotiations, prior discussions, preliminary agreements and agreements relating
to the subject matter hereof made prior to the date hereof.
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18. Law Governing.
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Except as otherwise explicitly noted, this Agreement shall be governed
by and construed in accordance with the laws of the State of New York (without
giving effect to conflicts of law).
19. Invalidity.
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Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement shall not invalidate,
make unenforceable or otherwise affect any other term of this Agreement which
shall remain in full force and effect.
20. Headings.
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The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year set forth above.
NEUROMEDICAL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxx, III
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Xxxx X. Xxxxxxxx, III
Vice President and General Counsel
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
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