EXHIBIT 10.3
EMPLOYMENT AGREEMENT (XXXX X. XXXXXX, III)
THIS AGREEMENT, dated as of March 22, 1999, is made between Xomed
Surgical Products, Inc., a Delaware corporation (the "Company"), and Xx. Xxxx X.
Xxxxxx, III (the "Employee").
1. EMPLOYMENT. The Company hereby employs the Employee and the Employee
hereby accepts employment all upon the terms and conditions herein set forth.
2. DUTIES. The Employee is engaged as Vice President, Research and
Development of the Company and hereby promises to perform and discharge well and
faithfully the duties which may be assigned to him from time to time by the
Company in connection with the conduct of the Company's businesses.
3. EXTENT OF SERVICES. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not, during the
term of this Agreement, be engaged in any other business activity, regardless of
whether such business activity is pursued for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing the Employee from
investing his personal assets in businesses which do not compete with the
Company in such form or manner as will not require any services on the part of
the Employee in the operation of the affairs of the companies in which such
investments are made and in which his participation is solely that of an
investor, and except that the Employee may purchase securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in his collectively owning beneficially at any time one percent
(1%) or more of the equity securities of any corporation engaged in a business
competitive to that of the Company.
4. COMPENSATION.
(a) For services rendered under this Agreement, the Company
shall pay the Employee an aggregate salary of $151,000 per
annum (the "Base Salary"), payable (after deduction of
applicable payroll taxes) in equal installments on every
other Friday of each month or on the preceding business day
if such day is a holiday.
(b) In addition to salary payments under paragraph 4(a) above,
the Employee shall be eligible for and participate in the
Key Executive Bonus Program adopted by the Company, which
program provides for a bonus in an amount up to 30% of the
Employee's salary upon attainment of the bonus criteria. The
Employee shall also be eligible for and participate in such
fringe benefits as shall be generally provided to executives
of the Company, including medical insurance and retirement
programs which may be adopted from time to time during the
term hereof by the Company. The Employee shall be
responsible for making any generally applicable employee
contributions required under such fringe benefit programs.
(c) During the term of this Agreement, the Employee shall be
eligible for participation in the Company's 1996 Stock
Option Plan, which plan is administered by the Company's
Compensation Committee.
(d) The Compensation Committee of the Company shall review the
Employee's compensation at least once per year and award
such bonuses or make such increases to the Base Salary as
the Compensation Committee, in its sole discretion,
determines are merited, based upon the Employee's
performance and consistent with compensation policies of the
Company.
5. SICK LEAVE AND VACATION. During the term of this Agreement, the
Employee shall be entitled to annual vacation of at least three (3) weeks in
length each year, or such greater time period if permitted by Company policy.
The Employee shall also be entitled to sick leave consistent with Company
policy.
6. EXPENSES. During the term of this Agreement, the Company shall
reimburse the Employee for all reasonable out-of-pocket expenses incurred by the
Employee in connection with the business of the Company and in performance of
his duties under this Agreement upon the Employee's presentation to the Company
of an itemized accounting of such expenses with reasonable supporting data.
7. TERM.
(a) The Employee's employment under this Agreement shall
commence on the date first set forth above and shall expire
on the first anniversary of such date. Notwithstanding the
foregoing, the parties hereto may, subject to paragraph 7(b)
below, terminate the Employee's employment under this
Agreement as follows:
(i) by the Company upon 30 days' notice if the Employee
becomes physically or mentally incapacitated or is
injured so that he is unable to perform the services
required of him hereunder and such inability to
perform continues for a period in excess of six months
and is continuing at the time of such notice; or
(ii) by the Company for "Cause" upon notice of such
termination to the Employee. For purposes of this
Agreement, the Company shall have "Cause" to terminate
its obligations hereunder upon (A) the determination
by the Board of Directors of the Company (the "Board")
that the Employee has ceased to perform his duties
hereunder (other than as a result of his incapacity
due to physical or mental illness or injury), which
failure amounts to an intentional and extended neglect
of his duties hereunder, (B) the Employee's death, (C)
the Board's determination that the Employee has
engaged or is about to engage in conduct materially
injurious to the
Company, (D) the Employee's having been convicted of a
felony, or (E) the Employee's participation in
activities proscribed by the provisions of paragraphs
9 or 10 hereof or material breach of any of the other
covenants herein; or
(iii) (A) by the Company without Cause upon 30 days' notice
of such termination to the Employee or (B) by the
Employee for "Good Reason" (as defined below) within
twelve (12) months following a Change of Control (as
defined below) upon 30 days' notice of such
termination to the Company. For purposes of this
Agreement, "Good Reason" shall mean (a) the assignment
to the Employee by the Company of duties inconsistent
with the Employee's position, authority, duties,
responsibilities or status with the Company as in
effect immediately after the date of execution of this
Agreement, including, but not limited to, any
reduction whatsoever in such position, authority,
duties, responsibilities or status, or a change in the
Employee's titles or offices, as then in effect, or
any removal of the Employee from, or any failure to
reelect the Employee to, any of such positions, except
in connection with the termination of his employment
on account of his death, disability, or for Cause, (b)
the failure by the Company to pay to the Employee the
Base Salary and bonus, if any, in accordance with
paragraphs 4(a) and 4(b) hereof, (c) the failure by
the Company to allow the Employee to participate in
the Company's employee benefit plans generally
available from time to time to senior executives of
the Company or (d) the failure of the Company to have
any successor to the Company assume this Agreement.
For purposes of this Agreement, "Change of Control"
shall mean the occurrence of any of the following
events:
(i) The approval by the stockholders of the
Company of a merger or consolidation of the
Company with any other corporation, other than a
merger or consolidation which would result in the
voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total
voting power represented by the voting securities
of the Company or such surviving entity
outstanding immediately after such merger or
consolidation;
(ii) Any approval by the stockholders of the
Company of a plan of complete liquidation of the
Company or an agreement for the sale or
disposition by the Company of all or substantially
all of the Company's assets; or
(iii) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934), other than Warburg, Xxxxxx
Investors, L.P., becoming the "beneficial owner"
(as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the
Company representing 50% or more of the total
voting power represented by the Company's then
outstanding voting securities.
(b)
(i) If this Agreement is terminated pursuant to paragraph
7(a)(i) above, the Employee shall receive salary
continuation pay from the date of such termination
until the first anniversary of the date hereof at the
rate of 75% of the Base Salary, reduced by applicable
payroll taxes and further reduced by the amount
received by the Employee during such period under any
Company-maintained disability insurance policy or plan
or under Social Security or similar laws. Such salary
continuation payments shall be paid periodically to
the Employee as provided in paragraph 4(a) for the
payment of the Base Salary.
(ii) If this Agreement is terminated pursuant to paragraph
7(a)(ii) above, the Employee shall receive no salary
continuation pay or severance pay.
(iii) If this Agreement is terminated pursuant to paragraph
7(a)(iii) above, the Employee shall (A) receive salary
continuation pay for a period equal to the greater of
(1) six (6) months or (2) the applicable period under
the Company's then-current severance policy from and
after the date of such termination (the "Salary
Continuation Period") at a rate equal to the Base
Salary and (B) during the Salary Continuation Period
remain eligible for other benefits normally available
to executives of the Company, including, but not
limited to, health insurance and the monthly car
allowance payable to the Employee hereunder. Such
payments (less applicable payroll taxes) shall be paid
periodically to the Employee as provided in paragraph
4(a) for the payment of the Base Salary.
(c) During the Salary Continuation Period, the Employee shall be
under no obligation to mitigate the costs to the Company of
the payments under paragraph 7(b)(iii) above.
(d) Not later than ninety (90) days prior to the expiration of
the stated term of the Agreement, the parties shall begin to
negotiate in good faith the terms of any extension of this
Agreement, provided that no party shall be under any
obligation to enter into such an extension.
8. REPRESENTATIONS. The Employee hereby represents to the Company that
(a) he is legally entitled to enter into this Agreement and to perform the
services contemplated herein, and (b) he has the full right, power and
authority, subject to no rights of third parties, to grant to the Company the
rights contemplated by paragraph 10 hereof.
9. DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that the Company's and its predecessors' trade secrets, know-how and proprietary
processes as they may exist from time to time are valuable, special and unique
assets of the Company's businesses, access to and knowledge of which are
essential to the performance of the Employee's duties hereunder. The Employee
will not, during or after the term of his employment by any of the Company, in
whole or in part, disclose such secrets, know-how or processes to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, nor shall the Employee make use of any such property for his own
purposes or for the benefit of any person, firm, corporation or other entity
(except the Company) under any circumstances during or after the term of his
employment, provided that after the term of his employment these restrictions
shall not apply to such secrets, know-how and processes which are then in the
public domain (provided further that the Employee was not responsible, directly
or indirectly, for such secrets, know-how or processes entering the public
domain without the Company's consent).
10. INVENTIONS. The Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, during the term
hereof which relate to methods, apparatus, designs, products, processes or
devices, sold, leased, used or under consideration or development by the Company
or any of its predecessors, or which otherwise relate to or pertain to the
business, functions or operations of the Company or any of its predecessors or
which arise from the efforts of the Employee during the course of his employment
for the Company or any of its predecessors. The Employee shall communicate
promptly and disclose to the Company, in such form as the Company requests, all
information, details and data pertaining to the aforementioned inventions,
ideas, disclosures and improvements; and the Employee shall execute and deliver
to the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Employee to permit the Company
or any person or entity designated by the Company to file and prosecute the
patent applications and, as to copyrightable material, to obtain copyright
thereof. Any invention relating to the business of the Company and disclosed by
the Employee within one year following the termination of this Agreement shall
be deemed to fall within the provisions of this paragraph unless proved to have
been first conceived and made following such termination.
11. COVENANTS NOT TO COMPETE OR INTERFERE. For a period ending six (6)
months from and after the termination of the Employee's employment hereunder,
the Employee shall not (whether as an officer, director, owner, employee,
partner or other direct or indirect participant) engage in any Competitive
Business. "Competitive Business" shall mean the manufacturing, supplying,
producing, selling, distributing or providing for sale of (A) any product,
device or instrument manufactured from or using polyvinal acetal (PVAc) material
or technology or (B) any eye, ear, nose or throat product, device or instrument
(x) of a type manufactured or sold by the
Company or its subsidiaries or (y) in clinical development sponsored by the
Company or its subsidiaries, in each case, as of the date of termination of the
Employee's employment. For such period, the Employee shall also not interfere
with, disrupt or attempt to disrupt the relationship, contractual or otherwise,
between the Company or its subsidiaries and any customer, supplier, lessor,
lessee or employee of the Company or its subsidiaries. It is the intent of the
parties that the agreement set forth in this paragraph 11 apply in all parts of
the world.
Employee agrees that a monetary remedy for a breach of the
agreement set forth in this paragraph 11 will be inadequate and impracticable
and further agrees that such a breach would cause the Company irreparable harm,
and that the Company shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event of such a
breach, Employee agrees that the Company shall be entitled to such injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions as a court of competent jurisdiction shall determine.
It is the desire and intent of the parties that the provisions
of this paragraph 11 shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular portion of this paragraph 11 shall be
adjudicated to be invalid or unenforceable, this paragraph 11 shall be deemed
curtailed, whether as to time or location, to the minimum extent required for
its validity under the applicable law and shall be binding and enforceable with
respect to the Employee as so curtailed, such curtailment to apply only with
respect to the operation of this paragraph in the particular jurisdiction in
which such adjudication is made. If a court in any jurisdiction, in adjudicating
the validity of this paragraph 11, imposes any additional terms or restrictions
with respect to the agreement set forth in this paragraph 11, this paragraph 11
shall be deemed amended to incorporate such additional terms or restrictions.
12. INJUNCTIVE RELIEF. If there is a breach or threatened breach of the
provisions of paragraphs 9, 10 or 11 of this Agreement, the Company shall be
entitled to an injunction restraining the Employee from such breach. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies for such breach or threatened breach.
13. CAR ALLOWANCE. The Employee shall be entitled to a monthly
allowance of $650.00, which the Employee may utilize to cover expenses relating
to the use of his personal automobile. The Employee shall be responsible for all
expenses related to the ownership and operation of such automobile, including,
but not limited to, insurance, repairs, registration fees and maintenance costs.
The Company shall not be responsible for any costs, expenses or other
obligations related to such automobile other than the monthly allowance payable
hereunder.
14. INSURANCE. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith.
15. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail to
Xxxx X. Xxxxxx, III, 0000 Xxxxxxxxx Xxxx Xxxxx X., Xxxxxxxxxxxx, Xxxxxxx 00000,
in the case of the Employee, or to Xomed Surgical Products,
Inc., 0000 Xxxxxxxxxx Xxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, in the case of
the Company, or to such other officer or address as the Company shall notify the
Employee.
16. WAIVER OF BREACH. A waiver by the Company or Employee of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
17. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida.
18. ASSIGNMENT. This Agreement may be assigned, without the consent of
the Employee, by the Company to any person, partnership, corporation, or other
entity which has purchased substantially all the assets of such Company,
provided such assignee assumes all the liabilities of such Company hereunder.
19. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and supersedes any and all agreements, letters of intent or
understandings between the Employee and the Company, its subsidiaries or any of
the Company's principal shareholders. It may be changed only by an agreement in
writing signed by a party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first hereinabove written.
XOMED SURGICAL PRODUCTS, INC.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: President, CEO
EMPLOYEE
/s/ XXXX X. XXXXXX, III
-----------------------
Xxxx X. Xxxxxx, III
