EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 14th day of
May, 1999, is entered into by BioSepra Inc., a Delaware corporation with its
principal place of business at 000 Xxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx
(the "Company"), and Xxxx-Xxxxx Xxxxx, residing at 00 Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Employee").
In consideration of the mutual covenants and promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Employee
in the capacity set forth herein, and the Employee hereby accepts such
employment with the Company, upon the terms set forth in this Agreement, for
the period commencing on May 18, 1999 (the "Commencement Date") and ending on
May 18, 2001 (such period, as it may be extended, the "Employment Period");
provided, however, that commencing on May 19, 2001 and each May 19
thereafter, the term shall automatically extend for one additional year
unless, not later than 90 days prior to May 19 of any such year, either party
elects not to extend the Agreement by giving written notice to the other
party; and further provided, that such Employment Period may be sooner
terminated in accordance with the provisions of Section 4.
2. TITLE; CAPACITY. The Employee shall serve as Chairman or in such
other position as in mutually agreeable to the Employee and the Board of
Directors (the "Board"). The Employee shall be based at the Company's
headquarters in such place in the continental United States as the Board
shall determine. The Employee shall be subject to the supervision of, and
shall have such authority as is delegated to him by, the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities commensurate with such position as the Board shall from time to
time reasonably assign to him. The Employee agrees to devote his entire business
time, attention and energies to the business and interests of the Company during
the Employment Period. The Employment agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any reasonable
changes therein which may be adopted from time to time by the Company. The
Employee acknowledges receipt of copies of all such rules and policies committed
to writing as of the date of this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in monthly
installments, an annual base salary of $200,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to increase
based upon annual reviews.
3.2 FRINGE BENEFITS. The Employee shall be entitled to participate
in all bonus and benefit programs that the Company establishes and makes
available to its employees to the extent that Employee's position, tenure,
salary, age, health and other qualifications make him eligible to
participate. Employee shall be eligible to participate in a bonus program
based on quantitative and qualitative goals established by agreement between
the Board and the Employee.
3.3 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred
or paid by the Employee in connection with, or related to, the performance of
his duties, responsibilities or services under this Agreement, upon
presentation by the Employee of documentation, expense
statements, vouchers and/or such other supporting information as the Company
may request, PROVIDED, HOWEVER, that the amount available for such travel,
entertainment and other expenses may be fixed in advance by the Board.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
of the following:
4.1 EXPIRATION OF TERM. Expiration of the Employment Period in
accordance with Section 1;
4.2 CAUSE. At the election of the Company, for Cause, immediately
upon written notice by the Company to the Employee. For purposes of this
Agreement, "Cause" shall mean termination (A) upon Employee's willful and
continued failure to substantially perform his duties with the Company (other
than any such failure resulting from his incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a
notice of termination by the Employee for Good Reason), provided that a
written demand for substantial performance has been delivered to the Employee
by the Company specifically identifying the manner in which the Company
believes that the Employee has not substantially performed his duties and the
Employee has not cured such failure within thirty (30) days after such demand,
or (B) by reason of the Employee's willful engaging in conduct which is
demonstrably and materially injurious to the Company;
4.3 DEATH OR DISABILITY. Upon the death or Disability of the
Employee. For purposes of this Agreement, "Disability" means that as a result
of incapacity due to physical or mental illness, the Employee shall have been
absent from the full-time performance of his duties with the Company for six
(6) consecutive months and, within thirty (30) days after written notice
of termination is given to the Employee, he shall not have returned to the
full-time performance of his duties.
4.4 GOOD REASON. At the election of the Employee for Good Reason,
ten days after written notice of such election is given by the Employee to the
Company. For purposes of this Agreement, "Good Reason" shall mean, without the
Employee's written consent, the occurrence of any of the following
circumstances unless such circumstances are fully corrected within thirty (30)
days of notice thereof:
(a) any significant diminution in Employee's position, duties,
responsibilities, power, title or office;
(b) any reduction in Employee's annual base salary as in effect
on the date of this Agreement or as the same may be increased from time to
time;
(c) the failure by the Company to continue to provide Employee
with benefits substantially similar to those enjoyed by Employee, under any
of the Company's life insurance, medical, health and accident, or disability
plans in which Employee is participating on the date of this Agreement, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits, or the failure by the Company to
provide Employee with the number of paid vacations days to which he is
entitled on the basis of years of service with the Company in accordance with
the Company's normal vacation policy in effect on the date of this Agreement;
(d) any requirement by the Company or of any person in control
of the Company that the location at which Employee performs his principal
duties for the Company be changed to a new location that is not at the United
States headquarters of the Company or the
United States headquarters of the division of the Company in which Employee
performs his assigned duties;
(e) the failure of the Company to obtain a reasonably
satisfactory agreement from any successor to assume and agree to perform this
Agreement;
(f) the failure by the Company to make bonus programs available
to the Employee in the amount and in the manner substantially consistent with
the past practice in light of the Company's financial performance; or
(g) any purported termination of Employee's employment which is
not effected pursuant to a notice of termination satisfying the requirements
of this Agreement, which purported termination shall not be effective for
purposes of this Agreement.
4.5 ELECTION OF EITHER PARTY. At the election of either party, upon
not less than thirty (30) days' prior written notice of termination.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the event
the Employee's employment is terminated because Employee elects not to renew
the Employment Period pursuant to Section 1, for Cause pursuant to Section
4.2, or at the election of the Employee pursuant to Section 4.5, the Company
shall pay to the Employee the compensation and benefits otherwise payable to
him under Section 3 through the last day of his actual employment by the
Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's
employment is terminated by death or because of Disability pursuant to
Section 4.3, the Company shall pay to the estate of the Employee or to the
Employee as the case may be, the compensation which
would otherwise be payable to the Employee up to the end of the month in
which the termination of his employment because of death or Disability occurs.
5.3 TERMINATION FOR CAUSE, GOOD REASON OR AT ELECTION OF COMPANY.
In the event the Employee's employment is terminated because the Company
elects not to renew the Employment Period pursuant to Section 1, for Good
Reason pursuant to Section 4.4, or at the election of the Company without
Cause pursuant to Section 4.5, then provided that the Employee is not in
violation of the provisions of Section 6 of this Agreement, the Employee
shall be entitled to receive the following:
(a) The Employee will be entitled to:
(i) an amount in cash equal to (x) 200% of the annual base
salary of the Employee in effect on the date of termination and (y) two times
the average cash bonus paid to or earned by the Employee in the twenty-four
(24) month period prior to the date of termination, such amount to be paid to
the Employee in twenty-four (24) equal monthly installments, beginning at the
end of the first full month subsequent to the date of termination;
(ii) for a twenty-four (24) month period after such
termination, the Company shall arrange to provide the Employee with life,
disability, dental, accident and group life insurance benefits substantially
similar to those such benefits which the Employee is receiving from the
Company immediately prior to the date of termination. Notwithstanding the
foregoing, the Company shall not provide to Employee any benefit otherwise
receivable by him pursuant to this paragraph (ii) if any substantially
equivalent benefit is actually received by the Employee from a third party
during the twenty-four (24) month period following such termination. The
Employee shall be obligated to promptly report to the Company any such
benefit actually received by him; and
(iii) all vested stock options to purchase shares of the
Company's Common Stock held by the Employee on the date of termination shall
be exercisable for a period of thirty-six (36) months from the date of such
termination, notwithstanding anything to the contrary set forth in any
agreement(s) evidencing such stock option; provided, however, that no option
shall be exercisable after the final expiration date of such option.
(b) Payments under this Section 5.3 shall be made without
regard to whether the deductibility of such payments (or any other payments
to or for the Employee's benefit) would be limited or precluded by Section
280(G) of the Internal Revenue Code of 1986, as amended (the "Code") and
without regard to whether such payments (or any other payments) would subject
the Employee to the federal excise tax levied on certain "excise parachute
payments" under Section 4999 of the Code; provided, that if the total of all
payments to or for the Employee's benefit, after deduction of all federal
taxes (including the tax set forth in Section 4999 of the Code, if
applicable) with respect to such payments (the "total after-tax payments"),
would be increased by the limitation or elimination of any payment under this
Section 5.3, amounts payable under this Section 5.3 shall be reduced to the
extent, and only to the extent, necessary to maximize the total after-tax
payments. The determination as to whether and to what extent payments under
this Section 5.3 are required to be reduced in accordance with the preceding
sentence shall be made by agreement between the Employee and the independent
public accounting firm of the Company. To the extent that any elimination or
reduction of payments is made in accordance with this Section 5.3(b), the
determination as to which payments shall be eliminated or reduced shall be
made by the Employee.
5.4 SURVIVAL. The provisions of Sections 6 and 7 shall survive the
termination of this Agreement.
6. NON-COMPETE.
(a) During the Employment Period and during any period after
the Employment Period during which the Employee is accepting payments or
benefits under Section 5.3(a)(i) and/or (ii) above, the Employee will not
directly or indirectly:
(i) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or in any
other capacity whatsoever (other than as the holder of not more than one
percent (1%) of the total outstanding stock of a publicly held company),
engage in the business of developing, producing, marketing or selling
products of the kind or type developed or being developed, produced, marketed
or sold by the Company from and after May 18, 1999; or
(ii) recruit, solicit or induce, or attempt to induce, any
employee or employees of the Company to terminate their employment with, or
otherwise cease their relationship with, the Company or hire any person who
was an employee of the Company after May 18, 1999 and during the Employment
Period; or
(iii) solicit, divert or take away, or attempt to divert
or to take away, the business or patronage of any of the clients, customers
or accounts, or prospective clients, customers or accounts, of the Company
which were contacted, solicited or served by the Employee while employed by
the Company.
(b) If any restriction set forth in this Section 6 is found by
any court of competent jurisdiction to be unenforceable because it extends
for too long a period of time or over too great a range of activities or in
too broad a geographic area, it shall be interpreted to
extend only over the maximum period of time, range of activities or
geographic area as to which it may be enforceable.
(c) The restrictions contained in this Section 6 are necessary
for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of this Section 6 will cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Company shall
have the right to seek specific performance and injunctive relief.
7. PROPRIETARY INFORMATION AND DEVELOPMENTS. The Employee shall be bound
by the terms and conditions of the Nondisclosure and Assignment of Inventions
Agreement dated May 13, 1999 by and between the Employee and the Company, a
copy of which is annexed hereto as EXHIBIT A.
8. TERMINATION OF SENIOR MANAGEMENT RETENTION AGREEMENT. The Company
and the Employee hereby agree that upon their execution of this Employment
Agreement, the Senior Management Retention Agreement dated October 3, 1997 by
and between the Company and the Employee shall be terminated in its entirety
and shall have no further force or effect.
9. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or
upon deposit in the United States Post Office, by registered or certified
mail, postage prepaid, addressed to the other party at the address shown
above, or at such other address or addresses as either party shall designate
to the other in accordance with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may
be merged or which may succeed to its assets or business, provided, however,
that the obligations of the Employee are personal and shall not be assigned
by him.
15. MISCELLANEOUS.
15.1 No delay or omission by the Company or the Employee in
exercising any right under this Agreement shall operate as a waiver of that
or any other right. A waiver or consent given by the Company or the Employee
on any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion.
15.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope
or substance of any section of this Agreement.
15.3 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.
(Rest of Page Intentionally Left Blank)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
BIOSEPRA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chairman of the Board
EMPLOYEE
/s/ Xxxx-Xxxxx Xxxxx
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Xxxx-Xxxxx Xxxxx
