Exhibit 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
(Xxxx X. Xxx)
This Executive Employment Agreement ("Agreement"), effective as of
February 4, 1998, by and between Xxxx X. Xxx (the "Executive") and Procept,
Inc., a Delaware corporation ("Procept").
Procept desires to employ the Executive as President and Chief
Executive Officer of Procept for the period and upon the terms and conditions
hereinafter set forth.
Executive desires to serve in such capacities for such period and upon
such terms.
Accordingly, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF EXECUTIVE.
1.1 EMPLOYMENT. Subject to the terms and conditions of this Agreement,
Procept agrees to employ Executive as President and Chief Executive Officer of
Procept. Executive shall perform such specific duties as are commensurate with
such positions, and as may reasonably be assigned to the Executive from time to
time by the Board of Directors of Procept, for the period commencing on the date
hereof and continuing until terminated as provided in Section 4 hereof.
Executive hereby accepts such employment.
SECTION 2. COMPENSATION.
For all services to be rendered by Executive to Procept during the term
of this Agreement, Procept shall pay to, and provide the Executive with, the
following compensation and benefits:
2.1 BASE SALARY AND BONUS. For the period from the date hereof until
February 4, 1999, Procept shall pay to Executive (i) a base salary of not less
than $200,000 per annum and payable in substantially equal installments in
accordance with Procept practice as in effect from time to time, and (ii)
incentive and compensatory bonuses in an amount up to $200,000 per annum and not
less than $25,000, as may be awarded by Procept's Compensation Committee based
on the achievement of milestones to be agreed upon by Procept and the Executive.
With respect to subsequent periods during the term of this Agreement, Procept
will review Executive's base salary and bonus semi-annually and may make
adjustments to such base salary and determine such bonus based upon, among other
factors: (a) Executive's performance, (b) Procept's performance, (c) changes in
costs of living, (d) changes in Executive's responsibilities, and (e) the
benefit to Procept of Executive's efforts on its behalf; provided that during
the term of this Agreement Executive's base salary shall not be less than
$200,000 per annum and his maximum annual bonus opportunity shall not be less
than $200,000.
2.2 PARTICIPATION IN BENEFIT PLANS. Executive shall be entitled to
participate in all employee benefit plans or programs of Procept. For the
purpose of determining Executive's eligibility for such plans and programs,
Executive's tenure shall be calculated from Executive's
original date of hire at Procept (or any affiliate. or predecessor of
Procept). In addition to the stock option granted pursuant to Section 2.3
hereof, Procept may, from time to time, grant Executive stock options under
Procept's stock option plans. Procept does not guarantee the adoption or
continuance of any particular employee benefit or stock plan or other program
during the term of this Agreement, and Executive's participation in any such
plan or program shall be subject to the provisions, rules and regulations
applicable thereto. Executive shall be entitled to not less than three weeks
paid vacation each year in accordance with applicable Procept policy. Health
and dental plans shall cover Executive and his dependents as they do for
other Procept executives. Such health and dental plans comply with ERISA and
COBRA to the extent applicable. Under current health insurance policies, such
COBRA rights will commence on termination of the period over which severance
payments are made under Section 4.2. Procept shall provide long term
disability insurance covering the Executive and life insurance coverage
payable to the Executive's named beneficiaries of not less than $200,000.
2.3 INITIAL OPTION GRANT. The Compensation Committee of the Board of
Directors has approved the grant to you of options (the "Initial Options") to
purchase an aggregate of 415,000 shares (after giving effect to the reverse
split of Procept's Common Stock effected June 1, 1998) of the Company's Common
Stock at a price of $5.00 per share (after giving effect to the reverse split of
Procept's Common Stock effected June 1, 1998). Such options shall vest at the
rate of 6.25% on each April 30, July 31, October 31 and January 31, commencing
with April 30, 1998. Upon exercise of the Initial Options, the Executive shall
be entitled to the contractual rights set forth in Article VI of the
Subscription Agreements executed in connection with Procept's 1998 private
placement (the "Article VI Rights") to the same extent as if the shares issued
in exercise of the options had been purchased by the Executive in such 1998
private placement, it being understood and agreed that the Executive shall
receive additional shares of Common Stock upon the exercise of the Initial
Options which would have been issued to the Executive pursuant to the Article VI
Rights as if the Executive had held the shares of Common Stock issued under the
Initial Options since the final closing date of the 1998 private placement, with
a corresponding reduction in the exercise price equal to the Dilution Value as
defined in the Article VI Rights.
2.4 EXPENSES. Procept shall reimburse Executive for all ordinary and
necessary business expenses incurred in the performance of Executive's duties
under this Agreement, provided that Executive accounts properly for such
expenses to Procept in accordance with the general corporate policies of Procept
and in accordance with the requirements of the Internal Revenue Service
regulations relating to substantiation of expenses.
SECTION 3. CONFIDENTIAL INFORMATION AND
NON-COMPETITION AGREEMENTS.
As a condition to Procept's obligations hereunder, the Executive will
execute a confidentiality agreement pertaining to the intellectual property and
confidential information of Procept and Procept's standard form of a
non-competition agreement for executive officers and key employees.
The obligations of Executive under this section and the agreements
referenced in the preceding paragraph shall survive termination of this
Agreement for any reason.
SECTION 4. TERMINATION AND SEVERANCE PAYMENT.
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4.1 TERMINATION. The employment of the Executive by Procept may be
terminated as follows:
(a) Executive's employment hereunder shall terminate upon
Executive's death or inability, by reason of physical or mental impairment, to
perform substantially all of Executive's duties as contemplated herein for a
continuous period of 120 days or more;
(b) Executive's employment hereunder may be terminated by
Procept or Executive without Cause (as hereinafter defined);
(c) Executive's employment hereunder may be terminated by
Procept in the event of Executive's breach of any material duty or obligation
hereunder, or intentional or grossly negligent conduct that is materially
injurious to Procept, as reasonably determined by Procept's Board of Directors,
or willful failure to follow the reasonable directions of Procept's Board of
Directors (any such event herein to be referred to as "Cause"); and
(d) Executive's employment hereunder may be terminated by
Executive for good reason, as defined below. For purposes of this Agreement,
"good reason" shall mean the following involuntary circumstances:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position
(including titles and reporting requirements), authority, duties
or responsibilities as contemplated by the job description of the
Executive's position, or any other action by Procept or its
successor, which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in
bad-faith and which is remedied by Procept promptly after receipt
of notice thereof given by the Executive; or
(ii) the requirement by Procept or its successor that the
Executive be based at any office or location more than 40 miles
away from the office or location where Executive was performing
services immediately prior to such requirement or that the
Executive relocate his personal residence.
For purposes of this Section, any good faith determination of "good
reason" as defined above made by the Executive shall be conclusive.
4.2 SEVERANCE PAYMENT; BENEFITS.
(a) TERMINATION EVENTS RESULTING IN SEVERANCE PAYMENTS. In the
event of the termination of the Executive's employment:
(i) by Procept under Section 4.1(b), or
(ii) by Executive under Section 4.1(d),
then Procept shall make severance payment(s) to Executive equal to (A) twelve
(12) months of the Executive's base salary (the "Base Salary Payment") at the
time of such termination [and (B)
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an amount equal to the Executive's incentive bonus that would next be payable to
him and would otherwise be due to Executive if such termination had not occurred
and the amount of such bonus had been fully earned, pro rated on the basis of
the number of days that have elapsed between the beginning of the bonus period
in which such termination occurs and the termination date, together payable in a
lump sum within ten (10) days after the termination date.] The payment specified
in the foregoing sentence shall be reduced to the extent that the Executive
actually receives income from a subsequent employer during the 12 month period
after his termination, and any such income actually received by the Executive
shall be reported to Procept. No severance shall be payable in the event that
Executive's employment is terminated pursuant to Section 4.1(a) or (c), or by
Executive pursuant to Section 4.1(b).
(b) BENEFITS. Executive's coverage under Procept's life, health
and dental insurance plans will remain in effect and Executive will be entitled
to continue to participate in Procept's retirement plans, all at Procept's
expense, during the period following termination that has the duration of the
time period used to determine the Base Salary Payment, unless Executive notifies
Procept in writing that such coverage is no longer necessary. If, because of
limitations required by third parties or imposed by law, Executive cannot be
provided such benefits through Procept's plans, then Procept will provide
Executive with substantially equivalent benefits on an aggregate basis, at its
expense.
4.3 [ACCELERATED VESTING OF OPTIONS UPON A CHANGE OF CONTROL]. If this
Agreement is terminated by Executive pursuant to Section 4.1(d) or if Procept
terminates the Employee without Cause, any options then held by Executive to
purchase shares of the Common Stock of Procept (including, but not limited to,
the Initial Options) which options are then subject to vesting, shall,
notwithstanding any contrary provision in the agreement or plan pursuant to
which such options had been granted, be fully vested and exercisable on the date
immediately preceding the effective date of such termination for the shorter of
five years or the duration of the term of such options as if such termination of
employment had not occurred.]
SECTION 5. MISCELLANEOUS.
5.1 "MARKET STAND-OFF" AGREEMENT. The Executive agrees, if requested
by Procept and an underwriter of Common Stock (or other securities) of the
Company, not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by him during the 12 month period
following the effective date of a registration statement filed under the
Securities Act of 1933, as amended. Such agreement shall be in writing in a form
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of the 12 month period.
5.2 ASSIGNMENT. This Agreement may not be assigned, in whole or in
part, by any party without the prior written consent of the other party, except
that Procept may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity with or into which Procept may merge or consolidate, or to which Procept
may sell or transfer all or substantially all of its assets, or of which 50% or
more of the equity investment and of the voting control is owned, directly or
indirectly, by, or is under common ownership with, Procept. After any such
assignment by Procept, Procept shall be
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discharged from all further liability hereunder and such assignee shall have all
the rights and obligations of Procept under this Agreement.
5.3 NOTICES. All notices, requests, demands and other communications
to be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given if delivered by hand or mailed by registered or
certified mail, return receipt requested, postage prepaid, to the addresses set
forth at the beginning of this Agreement or such other address as a party shall
have designated by notice in writing to the other party, provided that notice of
any change in address must actually have been received to be effective
hereunder.
5.4 INTEGRATION. This Agreement is the entire agreement of the parties
with respect to the subject matter hereof and supersedes any prior agreement or
understanding relating to Executive's employment with or compensation by
Procept. This Agreement may not be amended, supplemented or otherwise modified
except by a writing signed by Executive and Procept.
5.5 BINDING EFFECT. Subject to Section 5.2, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their successors,
assigns, heirs and personal representatives.
5.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and shall together
constitute one and the same instrument.
5.7 SEVERABILITY. If any provision hereof shall, for any reason, be
held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed as if such invalid or unenforceable provision had not been
included herein. If any provision hereof shall for any reason be held by a court
to be excessively broad as to duration, geographical scope, activity or subject
matter, it shall be construed by limiting and reducing it to make it enforceable
to the extent compatible with applicable law as then in effect.
5.8 GOVERNING LAW. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts, without regard to its conflict of law
provisions.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first written above.
EXECUTIVE
/s/Xxxx X. Xxx
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Xxxx X. Xxx
PROCEPT, INC.
By: /s/Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Chairman
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