1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement is made by and between Xxxxx Medical
Acquisition Co., a Nevada corporation (the "Company"), and Xxxxxxx X. Xxxxx
("Employee").
ARTICLE 1
COMPENSATION AND TERM
1.01 Basic Compensation. As compensation for the services
to be rendered hereunder, the Company shall pay Employee a salary of $125,000
per year, which shall be payable in at least monthly installments during the
term of this Agreement. In addition, LifeQuest Medical, Inc. and the Employee
have entered into a Non-Qualified Stock Option Agreement of even date herewith
pursuant to which LifeQuest Medical, Inc. has granted to Employee non-qualified
stock options to receive up to 60,000 shares of Common Stock, $.001 par value,
of LifeQuest Medical, Inc. upon the terms and conditions set forth in such
agreement.
1.02 Additional Compensation. As additional compensation,
the Company shall pay to Employee, within 90 days following the end of each
calendar year during the term of this Agreement after January 1, 1997, cash in
an amount equal to (i) 1% of Net Sales, as hereinafter defined, up to
$2,500,000, (ii) 2% of Net Sales from $2,500,001 up to $5,000,000, and (iii) 3%
of Net Sales in excess of $5,000,000 during each such calendar year. "Net
Sales" shall be defined as (i) gross sales of the products marketed by the
Company, as reflected in the Company's financial statements prepared in
accordance with generally acceptable accounting principles consistently
applied, plus, (ii) to the extent not included in such gross sales, sales of
the products marketed by the Company as to which the Company is entitled to
commission income (net of such commission income); less sales returns,
discounts, taxes and bad debts written off.
1.03 Term. Subject to earlier termination pursuant to
Article V hereof, this Agreement shall have a term commencing as of the
execution date of this Agreement and ending on December 31, 1999.
ARTICLE 2
DUTIES OF EMPLOYEE
2.01 Duties. The Company hereby employs Employee to serve
as President of Xxxxx Medical Acquisition Co. or in such other capacities as
the respective Boards of such companies may direct from time to time, and
Employee agrees to perform the duties of such offices as set forth in the
bylaws of the Company and LifeQuest Medical, Inc. or as the respective Boards
of such companies may direct from time to time.
2
2.02 Other Activities. During the term of this Agreement
Employee shall devote his full-time efforts to his duties hereunder, provided,
however, that the foregoing shall not prohibit Employee from manufacturing,
marketing, selling or distributing the product which is covered by the Right of
First Refusal Agreement dated November 25, 1996 (the "First Refusal
Agreement"), between Employee and LifeQuest Medical, Inc. ("LifeQuest").
ARTICLE 3
EMPLOYEE BENEFITS
3.01 Medical and Dental Benefits. The Company agrees to
include Employee in any life, hospital, surgical, medical, disability and
dental benefit plan(s) that it or LifeQuest may adopt for their respective
employees.
3.02 Other Benefits. Employee shall be entitled to
reasonable and customary holidays and other benefits that are available to
senior management or key employees.
ARTICLE 4
OBLIGATIONS OF THE COMPANY
4.01 Office and Support Staff. The Company shall provide
Employee with such support services as are reasonable to Employee's position
and reasonably required for the performance of his duties and to achieve the
annual milestones described in Section 3(b) of the Non-Qualified Stock Option
Agreement dated November 25, 1996, between LifeQuest and Employee.
ARTICLE 5
TERMINATION OF EMPLOYMENT
5.01 Termination by the Company for Cause. The Company
may at its option terminate this Agreement for "Cause" (as hereinafter defined)
by giving ten (10) days written notice of termination to Employee.
The term "Cause" shall be limited to the occurrence of the following
events: (i) Employee breaches any of the terms of this Agreement, and fails to
cure such breach within 20 days after written notice by the Company to Employee
of such breach; (ii) Employee is convicted of a felony; (iii) Employee fails,
after at least one warning, to perform duties assigned under this Agreement
(other than a failure due to death or physical or mental disability), and fails
to cure such breach within 20 days after written notice by the Company to
Employee of such breach; (iv) Employee intentionally engages in conduct which
is demonstrably and materially injurious to the Company, and fails to cure such
breach within 20 days after written notice by the Company to Employee of such
breach; (v) Employee commits fraud or theft of personal or Company property
from Company premises; (vi) Employee falsifies Company documents or records;
(vii) Employee engages in acts of gross carelessness or willful negligence to
endanger life or property on Company premises; (viii) Employee engages in
sexual
-2-
3
harassment; (ix) Employee uses, distributes, possesses or is under the
influence of illegal drugs, alcohol or any other intoxicant on Company
premises; or (x) Employee intentionally violates state, federal or local laws
and regulations.
5.02 Termination on Grounds Other Than for Cause. This
Agreement shall terminate immediately on the occurrence of any one of the
following events:
(a) The occurrence of circumstances that make it
impossible or impracticable for the business of the
Company to be continued.
(b) The death of Employee.
(c) Insolvency of the Company.
5.03 Option to Terminate if Employee Permanently Disabled.
If Employee becomes permanently disabled because of sickness, physical or
mental disability, or any other reason, so that it reasonably appears that
Employee will be unable to perform the essential aspects of his duties under
this Agreement, the Company shall have the option to terminate this Agreement
immediately by giving written notice of termination to Employee.
5.04 Effect of Termination on Compensation. In the event
of the termination of this Agreement prior to the completion of the term of
employment specified in it, pursuant to Section 5.01, 5.02 or 5.03, Employee
shall be entitled to the basic compensation earned by Employee under Section
1.01 to the date of termination as provided in the Agreement, computed pro rata
up to and including that date, and Employee shall be entitled to no further
compensation, including any compensation under Section 1.02, after the date of
such termination.
ARTICLE 6
PROPRIETARY PROPERTY; CONFIDENTIAL
INFORMATION; NON-COMPETITION
6.01 Duties. Employee understands and agrees that during
the term of this Agreement Employee's duties will include the conception of
improvements and inventions (whether or not ultimately issuing as Letters
Patent in any country), the creation of confidential information protected by
the Company as trade secrets and the authoring of "works" as defined under the
copyright laws of the United Xxxxxx xx Xxxxxxx xxxxx xx 00 Xxxxxx Xxxxxx Code
in connection with minimally invasive surgery products. Such information is
collectively referred to in this Agreement as "Proprietary Information".
6.02 Ownership. Employee understands and agrees that for
all Proprietary Information created within the scope of Employee's employment,
the Company shall own all right, title and interest thereto. In the case of
works authored or created by Employee, such works are considered a "work made
for hire" under 00 Xxxxxx Xxxxxx Code Section 101 - the copyright laws. All
Proprietary Information, if any, created by Employee prior to his employment
with
-3-
4
the Company, and in which Employee claims ownership, is shown in Schedule 6.2
attached hereto.
6.03 Notice and Assistance. Employee shall give adequate
written notice to the Company as soon as practicable of all Proprietary
Information created by Employee during Employee's employment with the Company,
assist the Company in evaluating the Proprietary Information for patent, trade
secret and copyright protection and sign all documents and do all things
necessary at the expense of the Company to assist the Company in the
protection, development, marketing or transfer of such Proprietary Information.
6.04 Assignment. Employee hereby assigns and agrees to
assign all right, title and interest into such Proprietary Information to the
Company or its nominee. At the request of the Company, whether during or after
the termination of Employee's employment, Employee shall timely execute or join
in executing all papers or documents required for the filing of patent
applications and copyright registrations in the United States of America and
such foreign countries as the Company may in its sole discretion select, and
shall assign all such patent applications and copyrights to the Company or its
nominee, and shall provide the Company or its agent or attorneys with all
reasonable assistance in the preparation and prosecution of patent application
and copyright registrations, including drawings, specifications, and the like,
all at the expense of the Company, and shall do all that may be necessary to
establish, protect or maintain the rights of the Company or its nominee in the
inventions, patent applications, Letters Patent and copyrights in accordance
with the spirit of this Agreement.
6.05 Confidential Information. The Employee shall not,
without the prior written consent of the Board of Directors of the Company,
disclose or use for any purpose confidential information or proprietary data of
the Company or LifeQuest (or any of their respective subsidiaries), except as
required by applicable law or legal process; provided, however, that
confidential information shall not include any information known generally to
the public or ascertainable from public or published information (other than as
a result of unauthorized disclosure by such Employee) or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that conducted by the Company or LifeQuest
(or any of their respective subsidiaries).
6.06 Publicity. During the term of this Agreement and for
a period of one year thereafter, Employee shall not, directly or indirectly,
originate or participate in the origination of any publicity, news release or
other public announcements, written or oral, whether to the public press or
otherwise, relating to this Agreement, to any amendment hereto, to Employee's
employment hereunder or to the Company, without the prior written approval of
the Company.
6.07 Fiduciary Relationship. Employee, by virtue of his
high position of trust and reliance on him by the Company, understands that
Employee enjoys a fiduciary relationship with the Company in carrying out his
obligations under this Section 6. Accordingly, Employee agrees to honor his
obligations under this Agreement by conducting himself with the highest degree
fairness and trust toward the Company.
-4-
5
6.08 Non-Competition. In consideration of the benefits of
this Agreement, including Employee's access to and limited use of proprietary
and confidential information of the Company, as well as training, education and
experience provided to Employee by the Company directly and/or as a result of
work projects assigned by the Company with respect thereto, Employee hereby
covenants and agrees that, commencing on the date of this Agreement and ending
on the first anniversary of the date of this Agreement, Employee shall not,
directly or indirectly, as proprietor, partner, shareholder, director, officer,
employee, consultant, joint venturer, investor or in any other capacity, engage
in, or own, manage, operate or control, or participate in the ownership,
management, operation or control, of any entity which engages anywhere in the
United States or Canada in the design, manufacturing, marketing, sale or
distribution of minimally invasive surgery products; provided, however, the
foregoing shall not prohibit Employee from purchasing and holding as an
investment not more than 5% of any class of publicly traded securities, or 10%
of any class of other securities, of any entity which is engaged in the design,
manufacturing, marketing, sale or distribution of minimally invasive surgery
products, so long as Employee does not participate in any way in the
management, operation or control of such entity and provided, further, that the
foregoing shall not prohibit Employee from manufacturing, marketing, selling or
distributing the product which is covered by the First Refusal Agreement.
6.09 Judicial Reformation. Employee acknowledges that,
given the nature of the Company's business, the covenants contained in Section
6.08 establish reasonable limitations as to time, geographic area and scope of
activity to be restrained and do not impose a greater restraint than is
reasonably necessary to protect and preserve the goodwill of the Company's
business and to protect their legitimate business interests. If, however,
Section 6.08 is determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of it being too extensive in any other
respect or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographic area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court.
6.10 Customer Lists; Non-Solicitation. Employee hereby
further covenants and agrees that, commencing on the date of this Agreement and
ending on the second anniversary of the date of this Agreement, Employee shall
not, directly or indirectly, in connection with the design, manufacture,
marketing, sale or distribution of minimally invasive surgery products, (a) use
or make known to any person or entity the names or addresses of any clients or
customers of the Company or LifeQuest (or any of their respective subsidiaries)
or any other information pertaining to them, (b) call on, solicit, take away or
attempt to call on, solicit or take away any clients or customers of the
Company or LifeQuest (or any of their respective subsidiaries), nor (c)
recruit, hire or attempt to recruit or hire any employees the Company or
LifeQuest (or any of their respective subsidiaries).
6.11 Covenants Independent. The covenants contained in
Sections 6.08, 6.09 and 6.10 of this Agreement will be construed as independent
of any other provision in this Agreement; and the existence of any claim or
cause of action by Employee against the Company will not constitute a defense
to the enforcement by the Company of said provisions. Employee
-5-
6
understands that the provisions contained in Sections 6.08, 6.09 and 6.10 are
essential elements of the employment of Employee, but for the agreement of
Employee to Sections 6.08, 6.09 and 6.10, the Company would not have agreed to
enter into this Agreement. Employee has been advised to consult with counsel
in order to be informed in all respects concerning the reasonableness and
propriety of Sections 6.08, 6.09 and 6.10 with specific regard to the nature of
the business conducted by the Company and Employee acknowledges that Sections
6.08, 6.09 and 6.10 are reasonable in all respects.
6.12 Remedies. In the event of a breach or a threatened
breach by Employee of any of the provisions contained in Sections 6.08, 6.09 or
6.10 of this Agreement, Employee acknowledges that the Company may suffer
irreparable injury not fully compensable by money damages and, in such event,
will not have an adequate remedy available at law. Accordingly, the Company
shall be entitled to obtain such injunctive relief or other equitable remedy
from any court of competent jurisdiction as may be necessary or appropriate to
prevent or curtail any such breach, threatened or actual. The foregoing shall
be in addition to and without prejudice to any other rights that the Company
may have under this Agreement, at law or in equity, including, without
limitation, the right to xxx for damages.
ARTICLE 7
GENERAL PROVISIONS
7.01 Notices. Any notice, report, demand or payment
required, permitted or desired to be given pursuant to any of the provisions of
this Agreement shall be deemed to have been sufficiently given or served for
all purposes if hand delivered or delivered by responsible overnight courier or
sent by certified or registered air mail, return receipt requested, and postage
prepaid as follows:
If to the Company:
Xxxxx Medical Acquisition Co.
0000 XxXxxxxxxx Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
with a copy to: Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No. (000) 000-0000
If to Employee: Xxxxxxx X. Xxxxx
0000 Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000-0000
-6-
7
with a copy to: Vail & Xxxxxxxxx, P.C.
00 X. 00 Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
Facsimile No. (000) 000-0000
7.02 Arbitration. The Company and Employee agree that any
dispute or controversy arising out of or in connection with this Agreement or
any alleged breach hereof shall be settled by arbitration in San Antonio, Texas
pursuant to the rules of the American Arbitration Association. If the two
parties cannot jointly select a single arbitrator to determine the matter, one
arbitrator shall be chosen by each party (or, if a party fails to make a
choice, by the American Arbitration Association on behalf of such party) and
the two arbitrators so chosen will select a third. The decisions of the single
arbitrator jointly selected by the parties, or, if three arbitrators are
selected, the decision of any two of them, will be final and binding upon the
parties and the judgment of a court of competent jurisdiction may be entered
thereon. Fees of the arbitrators and costs of arbitration shall be borne by
the parties in such manner as shall be determined by the arbitrator or
arbitrators.
7.03 Entirety of Agreement. This Agreement supersedes all
other agreements, either oral or in writing, between the parties to this
Agreement, with respect to the employment of the Employee by the Company. This
Agreement contains the entire understanding of the parties and all of the
covenants and agreements between the parties with respect to such employment.
7.04 Governing Law. This Agreement shall be governed by
the laws of the State of Texas and deemed performable in Bexar County, Texas.
EXECUTED effective the 27th day of November 1996.
XXXXX MEDICAL ACQUISITION CO.
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
/s/ XXXXXXX X. XXXXX
--------------------------------------
Xxxxxxx X. Xxxxx
-7-
8
The undersigned hereby guarantees the obligation of the Company under the above
Employment Agreement.
LIFEQUEST MEDICAL, INC.
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
-8-
9
SCHEDULE 6.2
PROPRIETARY PROPERTY CLAIMED BY EMPLOYEE
Proprietary Property Claimed:*
--------------------------------------------------
1. Drug impregnated trocar device to prevent cancer growth.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-------------------------------------------
* None, if left blank
