Exhibit 10.23
XXXXXXX INSTRUMENT COMPANY
0000 XXXXX XXXXX XXXXXXX
XXXXXXX, XXXXXXXXXX 00000
October 30, 2000
Xx. Xxxxxxx X. Xxxxxxxx
000 0xx Xxxxxx, X000
Xxxxxxxx, XX 00000
Dear Xxxx,
This letter sets forth the substance of the separation agreement ("Agreement")
that Xxxxxxx Instrument Company ("Company") is offering you to aid in your
employment transition.
1. SEPARATION. Your last day as an employee, officer and director
of the Company will be October 31, 2000 ("Separation Date"),
pursuant to the letter of resignation (Exhibit A hereto),
which we ask you to execute by that date.
2. ACCRUED SALARY AND VACATION. On the first regular pay date
following your Separation Date, the Company will pay you all
accrued salary, and all accrued and unused vacation totaling
eight (8) weeks, earned and unused through the Separation
Date, subject to standard payroll deductions and withholding.
You are entitled to these payments whether or not you sign
this Agreement.
3. SEVERANCE PAYMENT PERIOD. The Company will continue your
regular pay, at your current biweekly salary rate, paid in
regular payroll intervals, from November 1, 2000 through and
including September 30, 2001, ("Severance Payment Period")
subject to standard payroll deductions and withholding. You
acknowledge and agree that by the payment of this severance
amount as set forth in this Paragraph 3 (subject to certain
provisions as set forth in Paragraph 5, Stock Options), the
Company will have satisfied all of its obligations as set
forth in Paragraphs 3-Compensation and 5-Performance Bonus of
your employment agreement dated August 8, 1998 from the
Company to you ("Offer Letter") and you have no other rights
to salary, bonuses,
benefits, or other compensation after the Separation Date,
except as otherwise noted elsewhere in this Agreement.
Further, subject to certain provisions as set forth under
Paragraph 5, Stock Options, if you obtain full time employment
prior to the conclusion of the Severance Payment Period, the
severance payment amount will terminate as of the last day of
the month in which you obtain full time employment and the
Company will in exchange increase the amount of your vested
stock options as set forth in Paragraph 5(d), below.
Further, if you engage in any activity that is competitive
with the Company during the Severance Payment Period, the
Company shall have no further payment obligations under this
Agreement; provided however that your engagement as a
consultant to a person or entity that does not compete or seek
to compete with the Company is permissible under this
Agreement.
You agree to notify the Company, in writing, upon your
acceptance of full time employment or engagement in any
consultative activity that may be deemed a competitive
activity.
4. LIFE AND HEALTH CARE INSURANCE. To the extent permitted under
terms of the basic and voluntary Life Insurance policies, you
will be eligible for continued coverage under the Company's
Life Insurance program for the duration of your Severance
Payment Period, and if provided under such policies you may
elect to convert to an individual policy on the coverage
cancellation date.
You will be provided with a separate notice of your COBRA
rights and to the extent permitted by federal COBRA law and
terms of the Company's health care plans, you will be offered
an opportunity to continue your coverage under the Company's
Medical, Prescription Drug and Dental Plan(s). If you elect to
continue coverage under COBRA, the Company, as part of this
Agreement, will continue to pay the amount previously paid on
your behalf by the Company during the term of your employment
and you agree to withholding of the standard employee
contribution amount during the Severance Payment Period on the
same basis as has been applicable to you during the term of
your employment with the Company. Upon the termination of the
Severance Payment Period, you may elect to continue your
coverage for the
-2-
remainder of your eligible COBRA coverage period by payment of
100% of the COBRA premiums either until you obtain coverage
under new employment or termination of your COBRA eligibility
period, whichever occurs first.
5. STOCK OPTIONS: CANCELLATION; STOCK VESTING; STOCK AS
COMPENSATION.
a) You hereby agree, as of the Separation Date, that you
are vested in 326,136 shares of your Initial stock
option grant ("Initial Grant"), and 40,767 shares of
your second and last stock option grant, for a total
vested stock option grant holding of 366,903 shares.
b) You hereby agree to the cancellation of all
non-vested stock options granted to you by the
Company under the QIC Holding Corp. 1998 Equity
Incentive Plan or otherwise (collectively, the
"Option"), and you agree that all of your rights to
the non-vested portion of your stock option(s) and
the Company's obligations under the Option are hereby
extinguished.
c) Whereas you have exercised the full amount of your
vested and non-vested Option under terms set forth in
the Early Exercise Stock Purchase Agreement, the
Company will exercise its Repurchase Option as set
forth in that agreement. The repurchase process will
be concluded if at all possible prior to December 31,
2000.
d) Whereas the Company has agreed in Paragraph 3, to
certain periodic severance payments; and whereas you
may obtain other employment during the severance
period which may cause a termination of severance
payments, the Company agrees in exchange for each
full calendar month for which a severance payment is
NOT made, that the company will increase the amount
of fully vested shares in your Initial Grant by
twenty thousand (20,000) shares.
6. CONSULTING ENGAGEMENT. At no additional consideration than
provided under Paragraph 3 above, and certain Stock Option
vesting provisions noted in Paragraph 6(a) below, you agree to
serve as a consultant to the Company under terms specified
below ("Consulting Engagement"). The Consulting Engagement
will commence on November 1, 2000 and
-3-
continue for the duration of the Severance Payment Period,
unless earlier terminated by the Company.
a) You agree to provide specific consulting services
during the next three (3) months (the "Initial
Consulting Engagement") to continue negotiations with
Philips Medical Systems regarding a Q-Cath
distribution agreement. If an agreement satisfactory
to the Company is signed between Philips and the
Company by January 31, 2001, the Company will
increase the amount of the fully vested shares in
your Initial Grant by sixty thousand (60,000) shares.
b) You agree to provide from time to time other general
consulting services to the Company in any area of
your expertise upon the request of the CEO, and will
report directly to the CEO, or as otherwise specified
by the CEO. You agree to exercise the highest degree
of professionalism and utilize your expertise and
creative talents in performing these services. You
agree to make yourself available to perform such
consulting services throughout the Severance Payment
Period up to a maximum of 40 hours per month,
exclusive of travel time.
c) You will have no responsibility or authority as a
consultant to the Company and agree not to represent
or purport to represent the Company in any manner
whatsoever to any third party unless authorized by
the CEO, in writing, to do so.
d) Pursuant to regular business practice, the Company
will reimburse you for documented business expenses
incurred during a consulting engagement, provided
that these expenses have been pre-approved by the
CEO, President or CFO, in writing, or are expenses
which the Company would reasonably expect you to
incur in carrying out a consulting engagement in a
manner otherwise customary for employee's under the
Company's standard travel and expense policy.
7. LEASED VEHICLE. You will retain use of your company-leased
vehicle, a 1999 Ford Explorer, through January 31, 2001 under
the same terms as you have had use of this vehicle while an
employee of the Company, including insurance, fuel,
maintenance and related operating costs. By January 31, 2001
you may elect to return the vehicle to the Company or
-4-
purchase the vehicle at the then remaining lease termination /
buy-out price.
8. RELOCATION EXPENSE. The Company will pay the cost to relocate
your household effects from your Kirkland, Washington
residence to your residence in Alamo, California, plus sales
commissions and escrow expenses incurred in connection with
the sale of your Kirkland, Washington residence in an amount
up to but not exceeding $10,000.
9. FEDERAL INCOME TAX FILING. The Company will provide assistance
in filing your Year 2000 Federal Income tax return, and an
amended 1999 tax return, through use of the Company tax
advisor for this purpose.
10. RELEASE OF CLAIMS. In exchange for the payments and other
considerations under this Agreement to which you would not
otherwise be entitled, you hereby release, acquit and forever
discharge the Company, its affiliates, and their officers,
directors, employees, shareholders and agents, of and from any
and all claims, liabilities, demands, causes of action, costs,
expenses, attorney's fees, damages, indemnities and
obligations of every kind and nature, in law, equity or
otherwise, known or unknown, suspected or unsuspected,
disclosed or undisclosed, arising out of or in any way related
to agreements, events, acts or conduct at any time prior to
and including the date you execute this Agreement, including
(but not limited to): all claims and demands directly or
indirectly arising out of or in any connection with the Offer
Letter, your employment with the Company or the termination of
your employment; all claims or demands related to salary,
bonuses, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits,
severance benefits, or any other form of compensation; and all
claims and demands pursuant to any federal, state or local
law, including (but not limited to) the federal Civil Rights
Act of 1964, as amended, the federal Age Discrimination in
Employment Act of 1967, as amended ("ADEA"), the federal
Americans with Disabilities Act of 1990, the Washington Law
Against Discrimination in Employment, tort law and contract
law, including (without limitation) chime for wrongful
discharge, discrimination, fraud, defamation, harassment,
emotional distress, and breach of the implied covenant of good
faith and fair dealing; provided however, that the foregoing
release of claims shall not apply to any right of
indemnification that you may have pursuant to the Bylaws of
the Company as a consequence of your service as an officer,
director or employee of the Company.
-5-
11. ADEA WAIVER. You acknowledge that you are knowingly and
voluntarily waiving and releasing any rights you may have
under the ADEA. You also acknowledge that the consideration
given for the waiver and release in the preceding Paragraph is
in addition to anything of value to which you were already
entitled. You further acknowledge that you have been advised
by this writing, as required by the ADEA, that: (a) your
waiver and release do not apply to any rights or claims that
may arise after the execution date of this Agreement; (b) you
should consult with an attorney prior to executing this
Agreement; (c) you have twenty-one (21) days to consider this
Agreement (although you may choose to voluntarily execute this
Agreement earlier); (d) you have seven (7) days following your
execution of this Agreement to revoke the Agreement; and (e)
this Agreement will not be effective until the date upon which
the revocation period has expired, which will be the eighth
day after this Agreement is executed by you ("Effective
Date").
12. RETURN OF COMPANY PROPERTY. Subject to certain exceptions
noted below and elsewhere within this Agreement, on the
Separation Date, you agree to return to the Company all
Company documents (and copies thereof) and other Company
property that you have in your possession or control,
including, but not limited to, Company files, notes, drawings,
records, business plans and forecasts, financial information,
specifications, training materials, computer-recorded
information, tangible property including, but not limited to,
entry cards, identification badges and keys, and any materials
of any kind that contain or embody any proprietary or
confidential information of the Company (and all reproductions
thereof).
You may retain the use of certain property, including your
laptop computer, software, e-mail access, cell phone, pager
and documents or materials necessary to supporting your
Initial Consulting Engagement through January 31, 2001. You
agree to return the aforementioned property immediately upon
the conclusion of your Initial Consulting Engagement or upon
written request from the Company, whichever occurs first.
13. PROPRIETARY INFORMATION OBLIGATIONS. You acknowledge your
continuing obligations under your Offer Letter and the Company
Non-Disclosure Agreement (Exhibit B hereto) both during and
after your employment with the Company and the Consulting
Engagement period. You agree not to use or disclose any
confidential or proprietary
-6-
information of the Company without prior written authorization
from a duly authorized representative of the Company.
14. NO SOLICITATION. You agree that for one year following the
Separation Date you will not, either directly or indirectly,
solicit or attempt to solicit any employee, consultant,
independent contractor or customer of the Company to terminate
his or her relationship with the Company in order to become an
employee, consultant, independent contractor or customer of or
to any other person or entity; provided however, that the
prohibition in this Paragraph 14 against your solicitation of
customers of the Company shall be in effect for so long as you
are receiving compensation under the Severance Payment Period.
15. COMMUNICATIONS.
a) You and the Company agree that the content of any
announcement regarding your separation shall be
substantially as follows:
"After completing the work of reestablishing Xxxxxxx
as an independent cardiology company, Xxxx Xxxxxxxx
has elected to return to California to be with his
family. He will continue to serve as a consultant
with the Company."
b) The Company agrees that upon your request, the
Company will provide a mutually agreed upon verbal or
written recommendation to your prospective employers.
c) Both you and the Company agree not to disparage the
other party, and the other party's officers,
directors, employees, shareholders, affiliates and
agents, in any manner likely to be harmful to them
and their business reputation or personal reputation;
provided that both you and the Company shall respond
accurately and fully to any question, inquiry or
request for information when required by legal
process.
16. CONFIDENTIALITY. The provisions of this Agreement will be held
in strictest confidence by you and the Company and will not be
publicized or disclosed in any manner whatsoever, provided,
however, that: (a) you may disclose this Agreement to your
immediate family, attorney, accountant and financial advisor,
and as necessary in seeking consulting work or employment; (b)
the Company may disclose this Agreement as
-7-
may be necessary in the conduct of its business; and (c) the
parties may disclose this Agreement as may be necessary to
enforce its terms or as otherwise required by law. In
particular, and without limitation, you will not disclose the
provisions of this Agreement to any current or former employee
of the Company, except as required by law.
17. MISCELLANEOUS. This Agreement represents a compromise
resolution of disputed claims, and the promises and payments
in consideration of this Agreement shall not be construed to
be an admission of any liability or obligation by either party
to the other party or to any other person. This Agreement,
including Exhibits A and B, constitutes the complete, final
and exclusive embodiment of the entire agreement between you
and the Company with regard to the subject matter hereof and
supersedes any and all other agreements entered into by and
between you and the Company. This Agreement is entered into
without reliance on any promise or representation, written or
oral, other than those expressly contained herein. Each party
has carefully read this Agreement, has been afforded the
opportunity to be advised of its meaning and consequences by
his or its attorney, and signed the same of his or her own
free will. This Agreement will bind the heirs, personal
representatives, successors and assigns of each party, and
inure to the benefit of each party, its heirs, personal
representatives, successors and assigns. This Agreement may
not be modified except in writing signed by you and a duly
authorized officer of the Company.
18. GOVERNING LAW. This agreement, and all of its exhibits, shall
be governed by the laws of the state of California.
If this Agreement is acceptable to you, please so indicate by countersigning the
enclosed copy of this letter and returning it to me.
I sincerely wish you good fortune in your future endeavors.
Respectfully,
XXXXXXX INSTRUMENT COMPANY
/s/ Xx. Xxxxxxxx Xxxxxxx-Xxxxxxx
-------------------------------------
By: Xx. Xxxxxxxx Xxxxxxx-Xxxxxxx
-8-
Exhibit A - Letter of Resignation
Exhibit B - Non Disclosure Agreement
UNDERSTOOD AND AGREED:
/s/ Xxxxxxx X. Xxxxxxxx Date October 31, 2000
---------------------------------------
Xxxxxxx X. Xxxxxxxx
-9-
