EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 6th day of December 1996, by and between TRIAD MEDICAL, INC., a California
corporation (the "Company"), and XXXX SALADOW, an individual (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to employ Executive as the Company's Vice
President of Marketing and Technology and the Executive desires to accept such
employment and serve in such position with the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and the Executive,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Executive is hereby employed by the Company as Vice
President of Marketing and Technology of the Company, and Executive hereby
accepts such employment, on the terms and conditions set forth in this
Agreement, which shall become binding on the parties as of the date of its
execution. Notwithstanding the foregoing, however, Executive's employment by the
Company hereunder shall not become effective until January 6, 1997 (the
"Effective Date") and Executive shall have no obligation to perform any
employment services, and no compensation or benefits and no rights as an
employee under applicable laws shall accrue to Executive, under this Agreement
during the period from the date of this Agreement to the Effective Date,
provided that no further action on the part of the Company or the Executive
shall be required for Executive's employment hereunder to become effective on
January 6, 1997.
2. AT-WILL EMPLOYMENT. This Agreement and Executive's employment
hereunder shall continue indefinitely, but may be terminated at any time by the
Company or Executive as provided in Section 5 hereof. The parties acknowledge
that this Agreement creates an at-will employment relationship between the
parties.
3. POSITION AND DUTIES.
3.01 SERVICE WITH THE COMPANY. During the Executive's employment
hereunder, the Executive agrees to devote all of his skills and efforts
to the performance of, and to perform diligently and on a timely basis,
such duties as shall be assigned to him from time to time by the
Company's Chief Executive Officer (the "CEO") or by the Board of
Directors of the Company.
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3.02 NO CONFLICTING DUTIES; CONTINUING CONSULTING ASSIGNMENTS.
(a) NO CONFLICTING DUTIES. During the Executive's
employment hereunder, the Executive shall not serve as an
officer, director, employee, consultant or advisor to any other
business or otherwise engage in any business activities;
PROVIDED, HOWEVER, that Executive may serve as a director of one
or more corporations so long as (i) such other corporation does
not compete, directly or indirectly, with the Company or any of
its Affiliates (as defined in Subsection 14.07 hereof), (ii)
such service as a director of such other corporations does not
adversely affect Executive's ability to perform his duties under
this Agreement, and (iii) such service as a director to another
corporation is first approved by the Board of Directors of the
Company.
(b) EXCEPTIONS FOR CONTINUING CONSULTING ASSIGNMENTS.
Notwithstanding the foregoing provisions of Paragraph (a) of this
Subsection 3.02, during the remainder of calendar year 1996, Executive
shall be permitted to complete certain consulting assignments and
responsibilities that he had previously undertaken with the companies
listed on Schedule A hereto (the "Continuing Consulting Assignments");
except that Executive may continue his Continuing Consulting Assignment
for Becton Xxxxxxxxx until April 30, 1997, provided that, commencing
January 1, 1997 he shall perform such consulting services for Becton
Xxxxxxxxx in his capacity as an employee and exclusively for the benefit
of the Company, he shall so notify Becton Xxxxxxxxx in writing thereof
and shall use his best efforts to have Becton Xxxxxxxxx consent to the
assignment of the consulting agreement Executive has with Becton
Xxxxxxxxx to the Company and to pay all fees and any other compensation
earned from, and all reimbursements of expenses incurred in connection
with, such engagement after December 31, 1996 directly to the Company
and he shall not accept any prepayments from Becton Xxxxxxxxx of fees or
other compensation or reimbursements that are attributable or relate to
services that will be performed or expenses to be incurred subsequent to
December 31, 1996. In the event that Becton Xxxxxxxxx refuses to consent
to such assignment and to agree to make post-December 31, 1996
compensation and expense reimbursement payments to the Company,
Executive shall be entitled to continue to provide consulting services
to Becton Xxxxxxxxx until April 30, 1997; provided that all fees and
other compensation received by Executive for such services rendered
after December 31, 1996 to Becton Xxxxxxxxx shall be paid by Executive
to the Company. Executive further agrees that, except as otherwise
provided hereinabove with respect to the Becton Xxxxxxxxx Continuing
Consulting Assignment, (x) he will complete his duties under the
Continuing Consulting Assignments by no later than December 31, 1996,
(y) in performing the Continuing Consulting Assignments he will not hold
himself out as an officer or employee of the Company, and (z) he will
not undertake any new or additional consulting assignments or
responsibilities with any third parties, including, without limitation,
any of the companies listed on Schedule A or Schedule B hereto, unless
he first submits a proposal to provide such consulting services, in his
capacity as an employee and solely for the benefit of the Company, to
the Company's CEO, the CEO approves, in writing, the acceptance of such
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proposal by the Company, which approval the CEO may withhold in his
absolute discretion, and the third party agrees that the Company will be
the provider of such consulting services to and shall be entitled to
receive all fees and other compensation for such services directly from,
such third party.
(c) NO INCONSISTENT AGREEMENTS. Executive represents and
warrants that, with the exception of the Continuing Consulting
Assignments, Executive is under no agreements or commitments (written or
oral) that are inconsistent with his obligations set forth in this
Agreement or which would be breached by his execution of this Agreement
or the performance of his obligations or duties hereunder. Executive has
disclosed to the Company that, prior to the date hereof, he entered into
confidentiality agreements with the companies identified on Schedule B
hereto, which consist of the companies for which he has Continuing
Consulting Assignments and former consulting clients of Executive (the
"Third-Party Confidentiality Agreements"). Executive represents and
warrants that, to the best of his knowledge, such Third-Party
Confidentiality Agreements do and will not conflict with or interfere
with the performance of his duties hereunder and he agrees that he will
not take any actions within the scope of his employment or when
performing his duties with the Company that would violate or constitute
a breach of any of the Third-Party Confidentiality Agreements. Based on
the foregoing representations and warranties and agreements of Executive
with respect to the Third-Party Confidentiality Agreements, the Company
acknowledges that Executive shall not be in breach of this Agreement as
a result of his being a party to such Third-Party Confidentiality
Agreements.
4. COMPENSATION.
4.01 BASE SALARY. As compensation for all services to be
rendered by the Executive to the Company or any of its Affiliates under
this Agreement, the Company shall pay to the Executive a base annual
salary of One Hundred Twenty-Five Thousand Dollars ($125,000) (the
"Annual Base Salary"). The Annual Base Salary shall be paid in
installments in accordance with the Company's normal payroll procedures
and policies, provided that such installments shall be paid no less
frequently than twice per month. The amount of the Executive's Annual
Base Salary shall be reviewed annually by the CEO of the Company and,
after giving due consideration to recommendation of the CEO, the
Company's Board of Directors or the Compensation Committee thereof shall
determine whether Executive's Annual Base Salary shall be increased,
such determination to be made on the basis of an evaluation of the
Executive's performance, the performance of the Company and such other
factors as the CEO or the Company's Board of Directors or its
Compensation Committee shall deem appropriate.
4.02 INCENTIVE COMPENSATION. Executive shall be considered for
discretionary bonus compensation once each year, commencing in 1997, by
the Company's Board of Directors or the Compensation Committee thereof.
The determination of whether or not any bonus compensation will be
awarded, the amount thereof, if any, and the terms and
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conditions on which any bonus award will be made payable, shall be
determined in the sole and absolute discretion of the Board of Directors
of the Company or any Compensation Committee thereof authorized to make
such determinations, provided that the President of the Company shall
submit his views to the Board of Directors or any Compensation Committee
thereof (as the case may be) with respect to the awarding of bonus
compensation to Executive.
4.03 PARTICIPATION IN BENEFIT PLANS. The Executive shall be
entitled to participate in all employee benefit plans or programs
(including vacation time, sick leave and holidays) generally available
to other executives of the Company, to the extent that Executive's
position, title, tenure with the Company, salary, age, health and other
qualifications make him eligible to participate therein. Schedule C
hereto contains a list of the benefit plans and programs in effect on
the date hereof in which Executive shall be eligible to participate,
provided that nothing in this Agreement shall obligate the Company to
continue such plans or programs and the Company shall be entitled, in
its sole and absolute discretion, to terminate, modify or replace any or
all of such plans and programs at any time. The Executive's
participation in any such plans or programs shall be subject to the
provisions, rules and regulations thereof that are generally applicable
to all participants therein. Set forth in Schedule D hereto is the
amount of paid vacation to which Executive shall be entitled during his
employment with the Company. Executive agrees that he will schedule his
vacations at times reasonably acceptable to the Company's CEO.
4.04 EMPLOYEE STOCK OPTIONS. Concurrently herewith, Triad
Holdings, Inc., which is the owner of 100% of the outstanding shares of
common stock of the Company ("Triad Holdings"), and Executive are
entering into an Employee Stock Option Agreement in the form of Schedule
E hereto (the "Option Agreement"), which provides for the grant by Triad
Holdings to Executive, under Triad Holdings' 1992 Stock Option and
Restricted Stock Purchase Plan, as amended and restated effective May
14, 1996 (the "Option Plan"), of options which will entitle him to
purchase up to an aggregate of thirty thousand (30,000) shares of common
stock of Triad Holdings (the "Stock Options"), on the terms and subject
to the conditions contained in the Option Agreement and the Option Plan.
The Option Agreement and Option Plan, and not this Agreement, shall
govern all of the respective rights and obligations of Triad Holdings
and Executive with respect to the Options, including, without
limitation, the respective rights and obligations of Triad Holdings and
Executive with respect to the Options in the event of a termination of
Executive's employment with the Company.
4.05 EXPENSES. In accordance with the Company's policies
established from time to time, the Company will pay or reimburse the
Executive for all reasonable and necessary out-of-pocket expenses
incurred by him in the performance of his duties under this Agreement,
subject to the presentment of appropriate vouchers and expense reports
substantiating the amount thereof and the business purposes for which
such expenses were incurred. Such expense reimbursement shall include a
mileage allowance to reimburse
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Executive for the expense incurred in utilizing his personal automobile
on Company business of $0.10 for each mile of such usage. In addition,
during his employment with the Company, Executive shall be entitled to
an automobile allowance in the amount of $650.00 per month, payable
monthly, commencing in January 1997.
5. TERMINATION OF THE EXECUTIVE'S EMPLOYMENT.
5.01 DISABILITY. In the event the Executive becomes totally
disabled, this Agreement and Executive's employment may be terminated by
the Company, in its sole discretion, effective on written notice thereof
to the Executive that shall specify that such termination is due to the
Executive's total disability (as hereinafter defined). For purposes of
this Agreement, the term "totally disabled" or "total disability" means
an inability of Executive, due to a physical or mental illness, injury
or impairment, to perform a substantial portion of his duties for a
period of 180 consecutive days, as determined by the Company's Board of
Directors. If there is a dispute between Executive and the Company as to
whether or not the Executive is totally disabled, the matter shall be
determined by a licensed physician who shall be selected by the Company
and approved by the Executive and whose determination as to whether or
not the Executive is totally disabled shall be final and binding on both
the Company and the Executive. Executive agrees that he will not
unreasonably withhold or delay his approval of the physician selected by
the Company and if he does unreasonably withhold or delay such approval,
or fails to cooperate fully with such physician, the determination of
the Board of Directors as to whether the Executive is totally disabled
shall be final and binding on the Executive. The fees and expenses of
the physician selected by the Company and approved by Executive, for
services rendered in determining whether or not Executive is totally
disabled, shall be borne by the Company. In the event of a termination
pursuant to this Subsection 5.01, the Company's sole liability to
Executive shall be (i) to pay Executive the installments of his then
Annual Base Salary accrued hereunder and unpaid for services rendered by
Executive up to the date of such termination, together with any accrued
but unused vacation, (ii) to pay the unpaid portion, if any, of any
bonus that was previously awarded to him but which is unpaid as of the
effective date of such termination of employment, provided the payment
of such bonus is not dependent on his continued employment with the
Company or the satisfaction of any other conditions that had not been
satisfied at the time of the termination of his employment, and (iii) to
provide for the continuation, for a period of one (1) year following the
termination of Executive's employment pursuant to this subsection 5.01,
of health and dental insurance for Executive and his dependents
comparable to the health and dental insurance coverage being provided by
the Company to Executive and his dependents on the day immediately prior
to the date of termination of his employment, at the sole expense of the
Company, or, to the extent such continuation is not permitted or
practicable under the Company's health and dental insurance plans,
reimbursement by the Company for such reasonable and comparable coverage
as Executive is able to obtain for such one (1) year period, provided
that such reimbursement shall not exceed the premiums which the Company
was paying for health and dental
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coverage for Executive and his dependents on the day prior to such
termination of employment (hereinafter, the "Disability Health Insurance
Continuation Benefit").
5.02 DEATH OF EXECUTIVE. This Agreement and Executive's
employment shall terminate immediately, without notice, upon the death
of Executive. In such event, the Company's sole liability shall be (i)
to pay Executive's estate the installments of his Annual Base Salary
accrued hereunder and unpaid for services rendered by Executive up to
the date of such termination, together with any accrued but unused
vacation, (ii) to pay the unpaid portion, if any, of any bonus that was
previously awarded to him but which is unpaid as of the effective date
of such termination of employment, provided the payment of such bonus
was not dependent on his continued employment with the Company any or
any other conditions that had not been satisfied at the time of the
termination of his employment, and (iii) to provide for the
continuation, for a period of one (1) year following the termination of
Executive's employment pursuant to this Subsection 5.02, of health and
dental insurance for Executive's dependents comparable to the health and
dental insurance coverage being provided to them by the Company on the
day immediately prior to the date of such termination of employment, at
the sole expense of the Company, or, to the extent such continuation is
not permitted or practicable under the Company's health and dental
insurance plans, reimbursement by the Company for such reasonable and
comparable health and dental insurance coverage as Executive's
dependents are able to obtain, provided that such reimbursement shall
not exceed the amount which the Company was paying for health and dental
coverage for Executive's dependents on the day prior to such termination
of employment.
5.03 TERMINATION FOR JUST CAUSE. The Company may terminate this
Agreement and Executive's employment at any time for "Just Cause" (as
hereinafter defined) immediately upon written notice to Executive. As
used herein, the term "Just Cause" shall mean (i) habitual neglect or a
repeated failure of Executive to perform his duties under this
Agreement, provided that he had received at least one notice in writing
from the Company prior to such termination, concerning any neglect of or
failure to perform such duties under this Agreement; (ii) Executive's
willful misconduct in or in connection with the performance of his
duties to the Company, which would include, but would not be limited to,
engaging in discriminatory acts or practices or in acts constituting
sexual harassment; (iii) Executive's commission of any act of fraud or
embezzlement against the Company, Triad Holdings or any of their
respective subsidiaries or Affiliates or any conviction or admission of
a felony or other offense involving dishonesty or moral turpitude; (iv)
Executive's willful, knowing or reckless unauthorized dissemination of
Confidential Information concerning either of the Company, Triad
Holdings or any of their Affiliates; and (v) any willful or reckless
breach by Executive of Sections 6, 7, 8 or 9 of this Agreement or a
material breach of his duty of loyalty to the Company which applicable
corporate law imposes on executive officers of corporations. The notice
of termination to Executive shall specify that the termination is for
Just Cause and whether such termination is based on events or
circumstances falling under Clause (i), (ii), (iii), (iv) or (v) of the
immediately preceding sentence hereof. In the event
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of a termination hereunder for Just Cause, the Company's sole liability
to Executive shall be to pay Executive the installments of his then
Annual Base Salary accrued hereunder and unpaid for services rendered by
Executive up to the date of such termination, together with any accrued
but unused vacation.
5.04 TERMINATION WITHOUT JUST CAUSE: TERMINATION BY EXECUTIVE
FOR GOOD REASON.
(a) The Company may terminate this Agreement and Executive's
employment for any reason other than Executive's total disability or
death or an event or circumstance constituting Just Cause (as defined in
Subsection 5.03 above), or for no reason (a "Termination without Just
Cause"), at any time effective on thirty (30) days prior written notice
to Executive specifying that such termination is a "Termination without
Just Cause" and the effective date of such termination. The Executive
may terminate this Agreement for Good Reason in the manner and on the
terms and conditions set forth in Subsection 5.05 hereof. In the event
of any Termination without Just Cause by the Company pursuant to this
Section 5.04, or in the event of a Termination for Good Reason pursuant
to Subsection 5.05 hereof, the Company's sole liability to Executive
shall be (i) to pay to Executive the installments of his then Annual
Base Salary accrued hereunder but unpaid for services rendered by
Executive up to the effective date of such termination, together with
any accrued but unused vacation, (ii) subject to the terms and
conditions contained in Paragraph 5.04(b) hereof, to pay to Executive
the unpaid portion, if any, of any bonus that was previously awarded to
him and is unpaid at the effective date of such termination of
employment, (iii) to pay to Executive severance compensation in an
amount equal to one and one-half (1 1/2) years' of the Executive's
Annual Base Salary then in effect (the "Severance Compensation"), which
shall be paid in thirty-six (36) equal twice-monthly installments over
that one and one-half (1 1/2) year period (the "Severance Period"),
commencing not later than on the next succeeding date, following the
effective date of termination of Executive's employment pursuant to this
Subsection 5.04 or Subsection 5.05 (as the case may be), on which
Executive would otherwise have received his twice-monthly installment of
his Annual Base Salary had such termination not occurred, and (iv) the
continuation, for a period of one (1) year following the termination of
Executive's employment pursuant to this Subsection 5.04 or Subsection
5.05, as the case may be (the "Benefit Continuation Period"), of
disability insurance for Executive and health and dental insurance for
Executive and his dependents that are comparable to the disability
insurance being provided by the Company to Executive, and the health and
dental insurance that was being provided by the' Company to Executive
and his dependents, on the day immediately prior to the date of
termination of his employment either by the Company or Executive
pursuant to this Subsection 5.04 at the sole expense of the Company, or,
to the extent such continuation is not permitted or practicable under
the Company's disability or health and dental insurance plans,
reimbursement by the Company for such reasonable and comparable
insurance coverage as Executive is able to obtain for the one (1) year
Benefit Continuation Period, provided that such reimbursement shall not
exceed the amount which the Company was paying for such disability and
health and dental insurance coverages on the day prior to such
termination of employment. For
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ease of reference, the insurance benefits described above that Executive
becomes entitled to receive during the Benefit Continuation Period
pursuant to the provisions of this Subsection 5.04 or the provisions of
Subsection 5.05 shall sometimes be referred to as the "Post-Termination
Insurance Benefits."
(b) For purposes of this Subsection 5.04 and also Subsection
5.05 of this Agreement, a bonus shall be deemed awarded to Executive at
such time as the Board of Directors, or the Compensation Committee
thereof (if it has been delegated authority by the Board to make such
determinations) has determined that Executive has earned his bonus,
either in whole or in part, and determined the amount thereof that is
payable to him; and a bonus that has been awarded to Executive in the
manner herein provided, but which has not been paid in whole or in part
to him, prior to a termination of Executive's employment pursuant to
this Subsection 5.04 or Subsection 5.05 hereof, shall be payable to him
on the date or dates on which such awarded bonus would otherwise have
been paid to him but for such termination of employment, PROVIDED,
HOWEVER, that, notwithstanding the foregoing, no such bonus, or any
portion thereof, that has not been paid as of the date of any such
termination of Executive's employment, whether pursuant to this
Subsection 5.04 or Subsection 5.05 hereof, shall be payable to
Executive, if the plan or program, or terms and conditions, under or
pursuant to which such bonus is payable:
(i) Makes it a condition precedent to Executive's right
to receive payment of the awarded bonus (or portion thereof)
that (A) the Executive remain in the employ of the Company for a
period of more than six (6) months after the date on which the
bonus was awarded, or (B) the Company or the Executive, or both,
achieve specified performance goals or targets in any fiscal
period or year of the Company subsequent to the year or other
fiscal period for which the bonus was awarded, and either of
those conditions was not satisfied prior to the date of the
termination of his employment, or
(ii) Provides for a vesting schedule, pursuant to which
some or all of the bonus will become payable (either in whole or
in installments) and which requires the Executive to have
continued in the Company's employ throughout one or more of the
periods set forth in such vesting schedule (a "Vesting Period"
or "Vesting Periods") as a condition of receiving the unpaid
bonus, or any installment or installments thereof, and
Executive's termination of employment has occurred prior to the
expiration of such Vesting Period or Vesting Periods (as the
case may be), or
(iii) Requires the satisfaction of any other condition
precedent which was not satisfied prior to the date of
termination of Executive's employment, other than a condition
which requires no more than that Executive remain in the
Company's employ for a period of not more than six (6) months
following the date on which the bonus was awarded.
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5.05 EVENTS CONSTITUTING GOOD REASON.
(a) Unless initiated or concurred in by Executive, each of the
following events shall constitute an event of "GOOD REASON" the
occurrence of any of which, without the written consent of Executive,
shall entitle Executive to terminate his employment with the Company for
Good Reason: (i) a decrease in Executive's Annual Base salary, (ii) a
material reduction in Executive's duties or authority as Vice President
of Marketing, (iii) a change in the location at which Executive
customarily performs his duties as Vice President of Marketing of more
than fifty (50) miles from the present location in Laguna, Hills
California, or (iv) the acquisition of all or substantially all of the
Business of the Company (whether by sale of stock, sale of assets,
merger, or consolidation or otherwise) in connection with which the
purchaser(s) thereof do not either confirm, in writing, the continued
effectiveness of this Agreement or assume this Agreement, (v) the
material and disproportionate (as compared to other senior managers)
reduction by the Company of benefits available to Executive under
employee benefit plans or programs (other than stock option or purchase
plans or programs), that either are in effect on the date hereof or
which are hereafter adopted by the Company and in which Executive is
eligible to participate, it being understood that no such reduction
shall be deemed to have occurred if the Company adopts or implements a
substitute plan or program for Executive that provides substantially
comparable benefits at no materially greater cost to the participants,
(vi) a breach by the Company of any of its material obligations to
Executive under this Agreement which continues unremedied for thirty
(30) days following receipt of a written notice thereof from Executive
that specifies in detail the nature of such breach, or (vii) the
resignation or termination of employment by Executive, for any reason or
no reason, upon the occurrence of, or at any time within twelve (12)
months following, a Change in Control of the Company (as defined in
Paragraph 5.05(b) hereof).
(b) A termination of employment by Executive for Good Reason
shall become effective ten (10) business days following the delivery by
Executive to the Company of written notice ("Good Reason Notice")
stating that Executive is terminating his employment for Good Reason and
specifying the event or circumstance constituting the same, if the
Company does not, within such ten (10) business day period, inform
Executive of its intent to remedy or rescind the event or circumstance
giving rise to such notice of termination; or thirty (30) days following
delivery of the Good Reason Notice, if such notice of intent is given by
the Company, but the event or circumstance giving rise to the Good
Reason Notice is not remedied or rescinded within such thirty (30) day
period.
(c) In the event of the occurrence of, and the Company's failure
to remedy or rescind, an event or action by the Company that would
entitle Executive to terminate his Employment for Good Reason, the
Executive's sole right and remedy shall be to terminate his employment
with the Company, in the manner and within the time period as
hereinafter set forth and, in the event Executive so terminates his
employment, to receive, and the Company's sole liability to Executive,
in the event of such a termination of employment by Executive for Good
Reason, shall be limited to, the payment, on the terms and subject to
the
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conditions set forth in Subsection 5.04(a) and (b) hereof, of
Executive's remaining unpaid salary and unused vacation accrued to the
date of such termination of employment, any awarded but unpaid bonuses
and the Severance Compensation specified, respectively, in Clauses (i),
(ii) and (iii) of Subsection 5.04 hereof and the Post-Termination
Insurance Benefits that are set forth in Clause (iv) of Subsection 5.04
hereof, as if such termination of employment by Executive for Good
Reason had been a termination of his employment by the Company without
Just Cause.
(d) The Executive shall be deemed to have consented to an event
that would otherwise entitle him to terminate his Employment for Good
Reason, if he fails to exercise his termination right under this
Subsection 5.05 within thirty (30) days following the earlier of (i) his
receipt of written notice from the Company that it intends to proceed
with an action that constitutes an event of Good Reason (as hereinabove
defined) or (ii) the actual happening or occurrence of such event and,
in the event of such failure, any subsequent termination by Executive of
his employment hereunder shall constitute a termination of employment by
Executive without Good Reason pursuant to Subsection 5.06 below.
(e) For purposes hereof, a "CHANGE IN CONTROL OF THE COMPANY"
shall be deemed to have occurred upon (A) the sale or issuance of
capital stock of Triad Holdings or the Company (other than as a result
of a public offering of the securities of the Company or Triad
Holdings), or any merger, consolidation or combination to which Triad
Holdings or the Company is a party if, as a result thereof, the persons
or entities that were the holders of Triad Holdings' outstanding capital
stock or the person or persons who were the holders of the Company's
outstanding capital stock (as the case may be) immediately prior
thereto, or their Affiliates, do not possess voting power (under
ordinary circumstances) to elect a majority of the Triad Holdings Board
of Directors or the Company's Board of Directors (as the case may be)
after such transaction, or (B) the sale to any person or entity that is
not an Affiliate of Triad Holdings or the Company, of all or
substantially all of the assets of Triad Holdings, determined on a
consolidated basis.
5.06 TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Executive shall be
entitled to terminate his employment in the absence of an event constituting
Good Reason at any time, effective on thirty (30) days prior written notice to
the Company. In the event of any such termination of employment by Executive,
this Agreement also shall terminate and the Company's sole liability to
Executive shall be to pay Executive the installments of his then Annual Base
Salary accrued hereunder and unpaid for services rendered by Executive up to the
date of such termination, together with any accrued and unused vacation. In the
event Executive gives such written notice of such termination to the Company,
the Company shall be entitled to terminate Executive's employment and this
Agreement effective on the 10th day after the date of such notice rather than
having to wait for the expiration of the thirty (30) days following Executive's
notice of termination, provided that such earlier termination by the Company
shall not affect Executive's right to receive the remaining installments of his
then Annual Base Salary and unused vacation accrued to the thirtieth (30th) day
following notice by Executive of his termination of employment to the Company.
Notwithstanding
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anything to contrary contained in this Agreement, Executive's notice of
termination of employment given more than thirty (30) days following the
occurrence of an event that would constitute Good Reason, as defined in
Subsection 5.05 hereof, shall constitute a termination of employment by
Executive without Good Reason pursuant to this Subsection 5.06.
5.07 PROVISIONS GOVERNING PAYMENTS DUE ON TERMINATION OF EMPLOYMENT. Any
Severance Compensation to which Executive becomes entitled as a result of a
termination of Executive's employment pursuant to Subsection 5.04 or 5.05 hereof
shall not be reduced by any compensation he may receive during the Severance
Period from any alternative employment he obtains during the Severance Period.
If, at any time during the Benefit Continuation Period, Executive obtains
disability or health or dental insurance as a result of obtaining alternative
employment that provides disability, health or dental insurance benefits
comparable or superior to those being provided or otherwise paid by the Company
("Alternative Benefits"), then, the Company's obligation to provide continuation
of, or reimbursement for, whichever of the disability or health or dental
insurance benefits (as the case may be) to which he becomes entitled as a result
of his alternative employment shall terminate at such time as Executive or
Executive and his dependents (as the case may be) become eligible to receive
such Alternative Benefits. Executive shall promptly notify the Company if and
when, during the Benefit Continuation Period, that he obtains any Alternative
Benefits. In the event of any termination of Executive's employment by the
Company without Just Cause or by Executive for Good Reason, Executive shall be
entitled only to the payments and benefits described in Subsection 5.04 and to
any rights he may have under the Option Agreement and shall not be entitled to
receive or obtain from the Company or any Affiliate thereof, nor shall the
Company or any Affiliate thereof have any liability for, any other salary,
benefits or other payments, whether pursuant to this Agreement or otherwise.
Payments made to Executive on or after the effective date of termination of
Executive's employment pursuant to any of the Subsections of this Section 5
shall be subject to withholding as provided in Subsection 14.03 of this
Agreement.
6. CONFIDENTIAL INFORMATION.
6.01 USE AND DISCLOSURE RESTRICTIONS. Executive will hold in
strict confidence and not disclose to any person or entity, without the
express prior written authorization of the CEO or the Board of Directors
of the Company, any financial statements or other financial information
or data (historical or prospective) of or relating to the Company or any
Affiliate that has not been publicly disclosed by the Company, any
manufacturing or marketing data or any information relating to any
technique, process, formula, developmental or experimental work, work in
progress, business methods, trade secrets, any information relating to
customers or clients of the Company or any of its Affiliates (including,
without limitation, any customer or client list or lists of customer or
client sources), acquisition candidates or prospects, or any business or
marketing plans, or any other secret, proprietary or confidential
information of or relating to the Company or any of its Affiliates or
any of their products, services, customers, clients, sales or other
business activities or affairs, including without limitation, any
information relating to inquiries made by the Company or
11
any Affiliate or negotiations with respect to any Venture or Acquisition
(as such terms are defined in Section 8). Executive further agrees that
be will not make use of or disclose to any third party any of the above
at any time after termination of his employment. Upon termination of
employment, Executive shall deliver to the Company all documents,
records, notebooks, work papers and all similar repositories containing
any information concerning the Company or any Affiliate, whether
prepared by Executive, the Company or anyone else, together with any
other assets of the Company in his possession. The foregoing
restrictions shall not apply to (i) information which is or becomes,
other than as a result of a breach of this Agreement, generally
available to the public or (ii) the disclosure of information required
pursuant to a subpoena or other legal process; provided that the
Executive shall notify the Company, in writing, of the receipt of any
such subpoena or other legal process requiring such disclosure
immediately after receipt thereof and shall provide reasonable
cooperation with any efforts by the Company to quash such subpoena or
other legal process or to obtain a protective order with respect
thereto.
6.02 USE OF CONSULTING CLIENT IDENTIFICATION INFORMATION. The
restrictions contained in Subsection 6.01 that prohibit the use by
Executive of lists or identities of clients or customers of the Company
shall be subject to the limited exception set forth hereinafter in this
Subsection 6.02. In the event of any termination of Executive's
employment hereunder for any reason whatsoever, then, at any time after
the effective date of such termination, Executive, and any Controlled
Entity (as hereinafter defined), shall be permitted to use information,
consisting solely of the identities and addresses of Triad Consulting
Clients (as hereinafter defined) and the names of the contact persons at
the Triad Consulting Clients (hereinafter collectively "Client
Identification Information"), solely for the purpose of marketing and
offering to provide, and providing, either in his individual capacity or
as an employee or agent of any Controlled Entity, consulting services
with respect to the marketing of healthcare products and services of the
type and nature that Executive has provided, in his individual capacity
or as an employee or agent of any Controlled Entity, during the past
nine (9) years ("Healthcare Consulting Services"), without thereby
either breaching the provisions of this Subsection 6.01 above, which
would otherwise prohibit or restrict such use by Executive of Client
Identification Information, or affecting any rights Executive may have,
pursuant to Subsection 5.04 or Subsection 5.05 hereof, to receive any
Severance Compensation or Post-Termination Benefits following the
termination of his employment with the Company; PROVIDED, HOWEVER, that:
(a) If within five days (x) after the termination of Executive's
employment hereunder pursuant to Subsection 5.04 or Subsection 5.05
hereof, the Company confirms in writing that Executive is entitled to
receive, and that the Company or any Affiliate thereof will be paying to
him, under the applicable provisions of either such Subsection 5.04 or
Subsection 5.05, Severance Compensation and Post-Termination Benefits
(as defined in Subsection 5.04 above), or (y) after termination of
Executive's employment pursuant to Subsection 5.01, Subsection 5.03 or
Subsection 5.06 hereof, the Company notifies Executive in writing that,
despite the fact that he is not entitled to any Severance
12
Compensation or Post-Termination Benefits it intends to pay such
Severance Compensation and provide such Post-Termination Benefits to
Executive for a period of up to six (6) months, then Executive and any
Controlled Entity shall not make any use of any Client Identification
Information, including, without limitation, any uses that would
otherwise be permitted by the first paragraph of this Subsection 6.02
(the "Permitted Uses"), such as, but not limited to, any use by the
Executive or any Controlled Entity of any Client Identification
Information to seek part-time employment from, to make any offer to
provide any consulting services to, or to solicit or accept any
solicited or unsolicited offer of any part-time employment or any
engagement as a consultant or advisor from, any Triad Consulting
Customer (other than a Prior Consulting Client):
(i) during the six (6) months immediately following the
effective date of the termination of Executive's employment with
the Company pursuant to Subsection 5.04 or Subsection 5.05
hereof, or
(ii) for so long a period (not to exceed six months) as
the Company or any Affiliate is voluntarily paying Severance
Compensation and providing Post-Termination Benefits to
Executive following a termination of his employment pursuant to
Subsection 5.01, Subsection 5.03 or Subsection 5.06 hereof
(hereinafter the "Voluntary Severance Benefits"), which
Voluntary Severance Benefits the Company may terminate at any
time, effective on five (5) days' prior written notice to
Executive, provided that upon such a termination the Executive
and any Controlled Entity may make any Permitted Use of Client
Identification Information pursuant to the initial paragraph of
this Subsection 6.02 above, and provided, further, that if
Executive's termination was due to his total disability pursuant
to Subsection 5.01 of this Agreement, the termination of the
Voluntary Severance Benefits by the Company shall not affect
Executive's rights to the Disability Health Insurance
Continuation Benefit described in Subsection 5.01.
Any breach by Executive, either directly or indirectly through any
Controlled Entity, of any of the covenants of Executive contained in
this Subsection 6.02 shall constitute a breach of Executive's
confidentiality obligations to the Company under this Section 6.
Notwithstanding the foregoing, following any termination of Executive's
employment for any reason, Executive may seek full-time employment from
any Triad Consulting Client.
(b) Nothing in this Subsection 6.02 shall entitle, or be
construed to entitle, Executive to use any Confidential Information or
proprietary information belonging to the Company other than the Client
Identification Information, which Client Identification Information
Executive agrees that he and any Controlled Entity shall use only in
accordance with and subject to the terms and restrictions contained in
this Subsection 6.02 and in no event shall Executive or any Controlled
Entity disclose any such Client Identification Information to any third
party or permit any third party to make any use thereof. Accordingly, it
is hereby expressly agreed that, if Executive accepts employment, or
13
Executive or a Controlled Entity obtains a consulting or advisory
position, with any person or entity, whether with a Triad Consulting
Client as permitted hereunder or with any other person or entity,
including any Prior Consulting Client, following termination for any
reason of his employment with the Company, neither Executive nor any
Controlled Entity shall make any use of any Confidential Information of
the Company in rendering services to such person or entity at any time.
6.03 CERTAIN DEFINITIONS AND OTHER PROVISIONS. For purposes of
Subsection 6.02 above and this Subsection 6.03 (i) the term "Controlled Entity"
shall mean company, partnership, limited liability company or other business
entity of which Executive owns, directly or indirectly, a number of the
outstanding voting shares or a percentage of the general partnership or other
ownership interests that gives him control over the policies and management of
any such entity; and (ii) the term "Triad Consulting Clients" shall mean any
corporation or other business entity (such as, but not limited to a partnership,
limited liability company or sole proprietorship) or any person to which the
Company, or any Affiliate thereof, provides any consulting services during the
term of this Agreement, but shall not include any corporation or other business
entity or person to which the Company or any Affiliate thereof sells products or
renders non-consulting services, whether or not the Company or any Affiliate
thereof also provides consulting services to such corporation or other business
entity or person, unless the revenues of the Company and/or any Affiliate
thereof from the consulting services rendered to such corporation or other
business entity or person (as the case may be) during the term of this Agreement
represented more than 50% of the total revenues received from such corporation
or other business entity or person during the term of this Agreement. Executive
hereby represents that Schedule F hereto contains an accurate list of the
identities of each corporation or other business entity to which Executive or
any Controlled Entity rendered any Healthcare Consulting Services during the
past nine (9) years (the "Prior Consulting Clients"). Nothing herein or
elsewhere in this Agreement shall restrict or prohibit, or is intended to strict
or prohibit, Executive or any Controlled Entity from accepting employment with
or offering or providing any consulting services to, any Prior Consulting Client
at any time after the termination of Executive's employment hereunder, even if
that Prior Consulting Client becomes a Triad Consulting Client during or after
the term of this Agreement, so long as the Executive does not make use of any
Confidential Information of the Company or any of its Affiliates in connection
with or related to the rendering of services to such Prior Consulting Client.
7. COVENANTS AGAINST ACTIONS DAMAGING THE COMPANY. The Executive agrees
that, during the term of this Agreement or at any time thereafter, he will not
(i) make any claim that the Executive has any right, interest or title, of any
kind or nature whatsoever, in or to any products, methods, practices, processes,
discoveries, ideas, improvements, devices, creations, business plans or systems,
or, subject to applicable labor laws, inventions relating to the business of the
Company or any Affiliate, used, developed or discovered by the Company, any
Affiliate or by Executive at any time during his employment with the Company or
any Affiliate thereof, or (ii) disclose any of such matters to any third party.
Executive further agrees that during the term of this Agreement and for a period
of two (2) years following the termination (whether by the Company or the
Executive) of his employment with the Company, he shall not, whether for himself
or on behalf of or in
14
conjunction with any third party, hire any employee of the Company or any
Affiliate or induce or entice any employee of the Company or any Affiliate to
leave his employment with the Company or any Affiliate.
8. VENTURES AND ACQUISITIONS. If, during the Executive's employment
hereunder, Executive is engaged in or associated with the planning or
implementing of any project, program or venture involving the Company or any
Affiliate and a third party or parties (a "Venture"), or any discussions,
analyses or negotiations with respect to an investment in, merger, acquisition
or purchase, directly or indirectly, of the stock, assets or business of any
entity engaged in an the wholesale distribution of medical products or services
or any other business (an "Acquisition"), all rights in any such Venture or
Acquisition and any opportunity to make any investment in the entity to be so
acquired (the "Target") shall belong to the Company or such Affiliate and shall
constitute a corporate opportunity belonging exclusively to the Company or such
Affiliate. Except as approved in writing by the Board of Directors, the
Executive shall not be entitled to any interest in any such Venture or to invest
or solicit any third party to invest in the Target or consummate the
Acquisition, or to receive any commission, finder's fee or other compensation in
connection therewith.
9. NON-COMPETITION. Executive agrees that during his employment by the
Company (whether under this Agreement or otherwise), or by any Affiliate, he
will not engage or participate (whether as employee, employer, consultant,
agent, principal, partner, stockholder, lender, corporate officer, director or
other representative capacity) in, or otherwise render assistance to, any
business that competes with the business of the Company in any city or county
within the United States in which the Company is then engaging and continues to
engage in its business. In the event any court shall refuse to enforce any
portion of the covenant in this Section 9, then such unenforceable portion shall
be deemed eliminated and severed from said Covenant for the purpose of said
court's proceedings to the extent necessary to permit the remaining portions of
this covenant to be enforced. Notwithstanding the foregoing, Executive may own
up to 1% of the shares of any class of capital stock of any corporation that
engages in any business that is competitive with the Company, provided that such
class of capital stock is listed for trading on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ National Market System and such shares are
held for investment only.
10. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Executive, assign its rights
and obligations under this Agreement to an Affiliate; or to any unaffiliated
corporation, firm or other business entity (i) with or into which the Company
may merge or consolidate, or (ii) to which the Company may sell or transfer all
or substantially all of its assets. After any such assignment by the Company,
the Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be the Company for the purposes of all
provisions of this Agreement including this Section 10.
11. EQUITABLE RELIEF. The Executive agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this Agreement, including, without
15
limitation, the provisions of Sections 6, 7, 8 and 9. Accordingly, the Executive
specifically agrees that the Company shall be entitled to temporary, preliminary
and permanent injunctive relief and to the remedy of specific performance to
enforce the provisions of this Agreement. This provision with respect to
injunctive relief and specific performance shall not, however, diminish the
right of the Company to claim and recover damages in addition to injunctive
relief and specific performance.
12. SURVIVAL. The provisions of Sections 5, 6, 7, 8, 11, 12 and 13 and
Subsections 14.01, 14.02, 14.03, 14.06, 14.07, 14.08 and 14.09 of this Agreement
shall survive termination of this Agreement for any reason whatsoever.
13. NOTICES. Any notice or other communication regarding this Agreement
required to be given pursuant to the terms hereof shall be in writing and shall
be deemed to be received by the party to whom it is addressed (i) on the actual
date of delivery if personally delivered to such party; (ii) on the first
business day after the notice or other communication is sent by facsimile
machine to the addressee at the facsimile phone number set forth below, provided
that (A) an original copy thereof is mailed on the same date by first class
mail, postage prepaid, and (B) in the case of a notice or communication to the
Company, the facsimile copy is addressed to the attention of Company's CEO; and
(iii) two business days following its deposit in the United States Mails, if
sent by postage prepaid certified mail, return receipt requested. For purposes
hereof, a notice personally delivered to the Company shall not be deemed
delivered unless it has been addressed to the attention of the CEO of the
Company. The addresses of the parties hereto for purposes of mailing notices
hereunder are as follows:
The Company: Triad Medical, Inc.
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax No.: (000) 000-0000
The Executive: Xxxx Saladow
0 Xxx Xxxxxx
Xxxxxx Xxxxxx , XX 00000
Fax No.: (000) 000-0000
Any party may change its mailing address or fax number for purposes of
this Section 13, effective five (5) business days after written notice of such
change has been given to the other party.
14. MISCELLANEOUS.
14.01 GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
California.
16
14.02 PRIOR AGREEMENTS. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and
supersedes all prior agreements and understanding (whether written or
oral) with respect to such subject matter (other than the Options, which
shall be governed by the Option Agreement), and the parties hereto have
made no agreements, representations or warranties relating to the
subject matter of this Agreement which are not set forth herein, except
that if there is or hereafter there arises any conflict between (i) any
of the provisions of that certain Shareholders' Agreement dated as of
May 17, 1996 among the Triad Holdings and all of its shareholders, as
such Agreement may be amended from time to time hereafter (the
"Shareholders' Agreement"), relating to any of the obligations of
Executive or any of the rights of Triad Holdings or its other
shareholders with respect to any shares of stock of Triad Holdings, or
any options or rights to purchase or otherwise acquire any shares of
Common Stock of Triad Holdings, which Executive may acquire or own,
whether under the Option Agreement or otherwise, including, without
limitation any of the terms and provisions governing the stock
repurchase rights of Triad Holdings or the stock purchase rights of the
shareholders thereof, and (ii) any provisions of this Agreement or the
Option Agreement, then, the terms and provisions of the Shareholders'
Agreement relating to such obligations of the Executive or rights of
Triad Holdings or the other shareholders thereof under such
Shareholders' Agreement shall be controlling and shall supersede the
conflicting provisions contained in this Agreement or in the Option
Agreement, unless the applicable provision of the Shareholders'
Agreement that is in conflict with this Agreement or the Option
Agreement (i) became applicable to Executive as a result of an amendment
to the Shareholders' Agreement that was adopted after the date hereof
and prior to Executive becoming a shareholder of the Company, and (ii)
such amendment materially reduced the benefits to Executive or
materially increased the obligations of Executive under the
Shareholders' Agreement in a manner that was not also made applicable to
other executives of the Company that, like Executive, are holders of
options to purchase shares of Common Stock of Triad Holdings, but are
not shareholders of Triad Holdings. Executive acknowledges that he has
been furnished with a copy of and has read the Shareholders Agreement
and that Executive understands and accepts the terms and provisions
thereof.
14.03 WITHHOLDING TAXES. The Company may withhold from any
salary and benefits payable under this Agreement, including, without
limitation, from any Severance Compensation and any Post-Termination
Benefits earned by Executive pursuant to any of Subsections 5.01, 5.04,
5.05 or 6.02 hereof, all federal, state, city or other taxes or amounts
as shall be required to be withheld pursuant to any law or governmental
regulation or ruling.
14.04 AMENDMENTS. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the parties
hereto.
14.05 NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce
any provisions of this Agreement, except by a statement in writing
signed by the party against whom enforcement of the waiver
17
or estoppel is sought. Any written waiver shall not be deemed a
continuing waiver unless specifically stated, shall operate only as to
the specific term or condition waived and shall not constitute a waiver
of such term or condition for the future or as to any act other than
that specifically waived.
14.06 SEVERABILITY. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered
deleted herefrom and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full force and
effect. In furtherance and not in limitation of the foregoing, should
the duration or geographical extent of, or business activities covered
by any provision of this Agreement be in excess of that which is valid
and enforceable under applicable law, then such provision shall be
construed to cover only the maximum duration, extent or activities which
may validly and enforceably covered under applicable law. The Executive
acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement shall be given the construction which
renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
14.07 DEFINITIONS: HEADINGS. As used in this Agreement, the term
"Affiliate" (when used with reference to Triad Holdings or the Company)
means any corporation, partnership, joint venture, association or other
business entity (any of the foregoing, an "entity") or any person that
controls, is controlled by, or is under common control with Triad
Holdings or the Company. A person or entity shall be deemed to control
another entity if such person or entity has the right or power, either
directly or indirectly through its control of any other person or
entity, either to select a majority of the directors, managers or
trustees, or to veto any major business decisions, of such other entity.
Section, Subsection and Paragraph headings in this Agreement are solely
for convenience of reference and shall not be considered, nor shall they
affect, the interpretation or application of any of the terms or
provisions of this Agreement.
14.08 ARBITRATION. Except as hereinafter set forth in this
Subsection 14.08, all claims, controversies, differences or disputes
between either of the parties hereto arising from or relating to this
Agreement shall be determined solely and exclusively by arbitration in
accordance with the rules of commercial arbitration then in effect of
the American Arbitration Association, or any successor thereto (the
"AAA"), in Orange County, California (or in the next nearest county in
California to Orange County if the AAA does not then conduct
arbitrations in Orange County). Discovery in any such arbitration
proceeding shall be conducted in accordance with the Civil Discovery Act
of 1986, the applicable provisions of which are set forth at Sections
2016 et seq. of the Code of Civil Procedure in effect in California and
which apply to civil actions brought in Superior Court in the county
where such arbitration is brought. In any such arbitration, the parties
shall jointly select an arbitrator. In the event the parties fail to
agree upon an arbitrator within twenty (20) days, then each party shall
select an arbitrator and such arbitrators shall then select a third
arbitrator to serve as the sole arbitrator, provided that if either
party, in such event, fails to
18
select an arbitrator within seven (7) days, such arbitrator shall be
selected by the American Arbitration Association, or any successor
thereto, upon application of either party. Judgment upon the award of
the agreed upon arbitrator or the so chosen third arbitrator, as the
case may be, shall be binding and shall be entered into by a court of
competent jurisdiction. THE PARTIES AGREE TO ABIDE BY ANY DECISION
RENDERED IN ANY SUCH ARBITRATION AS FINAL AND BINDING AND WAIVE THE
RIGHT TO SUBMIT THE DISPUTE TO A PUBLIC TRIBUNAL FOR A JURY OR NON-JURY
TRIAL OR TO APPEAL THE DECISION OF THE ARBITRATOR. Notwithstanding the
foregoing, any party may bring an action seeking specific performance of
any of the obligations of the other party under this Agreement or
injunctive relief, whether temporary, preliminary or permanent, against
a breach or threatened breach of this Agreement by the other party, in
any court of competent jurisdiction as contemplated by Section 11 of
this Agreement.
14.09 ATTORNEYS FEES. In the event that any party hereto brings
an action in equity or initiates an arbitration proceeding pursuant to
Subsection 14.08 or, despite the provisions of Subsection 14.08, is
required to bring a legal action, to enforce such party's rights or
remedies, or the obligations of the other party, under this Agreement,
the prevailing party in such action or proceeding shall be entitled to
recover its reasonable legal fees and expenses, and court or arbitration
costs, incurred in connection therewith from the non-prevailing party,
including, without limitation, any expert witness fees to the extent
such do not exceed reasonable and customary fees generally charged for
such services.
14.10 COUNTERPART EXECUTION. This Agreement may be executed by
facsimile and in counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute but one and the
same instrument.
14.11 SCHEDULES TO EMPLOYMENT AGREEMENT. Attached hereto are the
following Schedules to this Employment Agreement:
Schedule A: Continuing Consulting Assignments
Schedule B: Confidentiality Agreements to which Executive is Subject
Schedule C: List of Current Employee Benefit Plans or Programs
Schedule D: Vacation Benefits
Schedule E: Form of Employee Stock Option Agreement
Schedule F: List of Prior Consulting Clients of Executive
The aforementioned Schedules are an integral part of this Agreement and
terms in such Schedules with initial capital letters shall have the same
meanings given to them in this Agreement unless otherwise defined in
such Schedules or the context indicates otherwise. Subject to the
exception noted below with respect to Schedule E, if there is any
conflict between any provision of the Employment Agreement and any
provision of any of the Schedules, such provision of the Schedule, in
the instance only of such a conflict, shall
19
govern over the conflicting provision of this Employment Agreement. In
the case of the Employee Stock Option Agreement, the form of which is
set forth in Schedule E, the provisions of Subsection 14.02 of this
Employment Agreement shall supersede any conflicting provision of any
such Employee Stock Option Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
TRIAD MEDICAL, INC.,
a California corporation
By: /S/ X. XXXXXX COOP
X. Xxxxxx Coop, President and
Chief Executive Officer
"Executive"
/S/ XXXX SALADOW
XXXX SALADOW
20
SCHEDULE A
CONTINUING CONSULTING ASSIGNMENTS
Xxxx Saladow and/or Pacific Marketing Resources have continuing
consulting assignments on-going with the following companies, their affiliates,
divisions and/or subsidiaries:
Becton Xxxxxxxxx and Company
Franklin Lakes, NJ
Luxar Corporation
Bothell, WA
National Home Infusion Association
Alexandria, VA
Quest Medical, Inc.
Allen, TX
TRIAD Medical, Inc.
Laguna Hills, CA
A-1
SCHEDULE B
CONFIDENTIALITY AGREEMENTS TO
WHICH EXECUTIVE IS SUBJECT
Consulting Services were provided to the client listed on Schedule F of
this Agreement subject to confidentiality agreements (either written or oral)
except those numbered below:
4, 5, 33, 35, 42, 45
B-1
SCHEDULE D
VACATION BENEFITS
During each successive period of 12 consecutive months of continuous
employment of Executive under the Employment Agreement, commencing from the
Effective Date (each, an "Employment Year"), Executive shall earn twenty (20)
days of paid vacation ("Vacation Days"), which shall accrue ratably based on the
number of days he is employed during each such Employment Year; PROVIDED,
HOWEVER, that accrual of unused Vacation Days shall cease at such time as is
specified in the Company's vacation policy as set forth in its employee handbook
or other written employment policies (as the case may be). Notwithstanding the
foregoing or anything to the contrary contained in the Employment Agreement or
the vacation accrual policy, upon a written request therefor from Executive (an
"Unearned Vacation Request") the Company's CEO may permit Executive to use, in
addition any to accrued but unused vacation days he may have, vacation days that
will accrue thereafter under the Company's vacation accrual policy ("Unearned
Vacation Days"), subject to the following terms and conditions:
(a) The Unearned Vacation Request shall set forth the number of
Unearned Vacation Days being requested and the dates during which he
proposes to such Unearned Vacation Days;
(b) Upon Executive's use of any Unearned Vacation Days, the
accrual of further vacation days shall cease until the number of
Unearned Vacation Days that were used by Executive equals the number of
days of vacation which, but for this provision, would have accrued
following the use of the Unearned Vacation Days (so that, for example,
if Executive uses ten Unearned Vacation Days, which is equal to the
number of vacation days that would accrue over a six month period, the
accrual of further vacation days for the account of Executive shall
cease during and (unless he were to use additional Unearned Vacation
Days prior thereto) shall resume after the end of, the six month period
following his use of those Unearned Vacation Days);
(c) The number of Unearned Vacation Days that Executive may use
at any one time shall be not be greater than the number by which twenty
(20) exceeds the lesser of (i) the number of vacation days that had been
earned by Executive, but are unused, as of the date he commences using
the Unearned Vacation Days approved by the CEO, or (ii) the number of
days of vacation (whether accrued or Unearned) that were used by
Executive in the twelve (12) months immediately preceding the Unearned
Vacation Request; provided that the Company's CEO shall be entitled to
limit the number of Unearned Vacation Days that Executive may use at any
time to a lesser number of days than he would otherwise be entitled
pursuant to this paragraph (c) or to refuse any request for use of any
Unearned Vacation Days, if the CEO believes, in good faith, that the use
of the number of Unearned
D-1
Vacation Days requested, or the use thereof at the time proposed by
Executive, would adversely affect the Company's operations or
Executive's performance of his duties for the Company.
In the event of a termination of Executive's employment by the Company
for any reason other than for Just Cause (as defined in Subsection 5.03 of the
Employment Agreement) or a termination by Executive of his employment for Good
Reason (as such term is defined in Subsection 5.05 of the Employment Agreement),
neither the Executive nor his estate (in the event the termination was due to
his death) shall be obligated to pay or reimburse the Company for any Unearned
Vacation Days that he had used prior to such termination.
D-2
SCHEDULE E
TRIAD HOLDINGS, INC.
FORM OF
INCENTIVE STOCK OPTION AGREEMENT
(Granted under the 1992 Stock Option and Restricted Stock Purchase Plan,
as amended and restated effective May 14, 1996)
This Incentive Stock Option Agreement (the "Agreement") is entered into
as of January ___, 1997, by and between TRIAD HOLDINGS, INC., a Delaware
corporation (the "Company"), and XXXX X. SALADOW (the "Optionee"), who is an
employee of Triad Medical, Inc. ("TMI"), which is a wholly-owned subsidiary of
the Company, with reference to the following facts:
R E C I T A L S
WHEREAS, Optionee is employed by TMI as its Vice President of Marketing
pursuant to an Employment Agreement dated as of December ___, 1996 (the
"Optionee Employment Agreement") and Optionee is a valued and key employee of
the TMI; and
WHEREAS, the Company desires, by affording the Optionee an opportunity
to purchase shares of Class B Common Stock of the Company (the "Shares"), as
hereinafter provided, to carry out the purpose of the "Triad Holdings, Inc.,
1992 Stock Option and Restricted Stock Purchase Plan, as amended and restated
(the "Plan");
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, and for good and valuable consideration, the parties hereto have agreed,
and do hereby agree, as follows:
A G R E E M E N T
1. GRANT OF OPTION. The Company irrevocably hereby grants to Optionee an
option (the "Option") to purchase all or any portion of a total of Thirty
Thousand (30,000) Shares at a purchase price of Five Dollars Fifty-one Cents
($5.51) per share (the "Exercise Price"), subject to the terms and conditions
set forth herein. This Option is intended to qualify as an "incentive stock
option" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. VESTING OF OPTION. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any installment that has become vested, as follows:
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THIS OPTION SHALL
ON OR AFTER: BE EXERCISABLE AS TO:
----------- --------------------
(a) ______, 1997: 10,000 shares;
(b) ______, 1998: 10,000 additional shares; and
(c) ______, 1999: 10,000 additional shares.
Subject to the exception set forth hereinafter in this Section 2, no additional
Shares shall become exercisable or vest after the date of termination of
Optionee's "Continuous Employment" (as defied in Section 3 below), but this
Option shall continue to be exercisable in accordance with Section 3 below with
respect to that number of Shares that have become vested as of or prior to the
date of termination of Optionee's Continuous Employment. Notwithstanding the
foregoing, however, if, Optionee's Continuous Employment with TMI is terminated
by TMI without Just Cause pursuant to Section 5.04 of the Optionee Employment
Agreement or by the Optionee for Good Reason (as Good Reason is defined in
Section 5.05 of that Employment Agreement), on a date prior to the vesting of
all of the Options granted hereunder, then, in such event, all unvested Options
hereunder shall automatically be vested effective as of the day prior to such
termination of Optionee's employment with TMI.
3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the earliest of:
(a) the expiration of ten (10) years from the date of this
Agreement;
(b) the expiration of one (1) year from the date Optionee's
"Continuous Employment" (as defined below) is terminated by reason of
the permanent disability of Optionee (as defined in Section 22(e)(3) of
the Code);
(c) the expiration of one (1) year from the date Optionee's
Continuous Employment is terminated by reason of Optionee's death; or
(d) the expiration of three (3) months from the date optionee's
Continuous Employment is terminated for any reason other than permanent
disability or death.
Except as otherwise provided in the last sentence of Section 2 above, on
the earliest date as of which the Optionee's Continuous Employment is
terminated, whether due to the Optionee's death or permanent disability, or for
any other reason, installments of this Option which have not yet become
exercisable shall automatically terminate.
As used in this Agreement, the term "Continuous Employment" means
employment by the Company or any subsidiary or parent of the Company which is
uninterrupted except for vacations,
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illness (except for permanent disability, as defined in Section 22(e)(3) of the
Code), or leaves of absence which are approved in writing by the Company or a
subsidiary or parent of the Company, if applicable. A transfer of employment of
Optionee from the Company to any parent or subsidiary corporation, or from any
parent or subsidiary corporation of the Company to the Company, or between
subsidiary corporations of either the Company or any parent, without an
intervening period during which Optionee is not employed by any of the
foregoing, shall not constitute a cessation of Continuous Employment. In
addition, if the Optionee is an employee of the Company or any parent or
subsidiary thereof and such employment ceases, but he is serving, or within
thirty (30) days after the cessation of employment he is appointed, as a
director of the Company or any parent corporation thereof, such cessation of
employment shall not constitute a termination of Continuous Employment.
4. EXERCISE OF OPTION. Subject to Section 3 above, the portion of this
Option which has vested may be exercised in whole or in part by the Optionee
(or, after his or her death, by the person designated in Section 5 below), by
delivery of the following to the Company at its principal executive offices:
(a) A written notice of exercise which identifies this Agreement
and states the number of whole Shares then being purchased;
(b) Payment of the Exercise Price (i) in cash, (ii) by check,
(iii) if approved by the Board or any committee of the Board of
Directors established to administer the Plan (the "Committee"), a
promissory note of the Optionee having such terms as may be approved by
the Board or Committee, (iv) other shares of Class B Common Stock of the
Company owned by the Optionee having a fair market value on the date of
exercise equal to the aggregate exercise price of the shares as to which
such Option is exercised, PROVIDED, HOWEVER, the prior approval of the
Board or Committee shall be required therefor if no public market for
the shares of Class B Common Stock exists at the time of exercise of the
Option, (v) cancellation of indebtedness of the Company, if any, to the
Optionee, (vi) provided that a public market for the Company's Class B
Common Stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby the
Optionee irrevocably elects to exercise the Option and to sell a portion
of the shares so purchased to pay for the exercise price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward
the exercise price directly to the Company, (vii) provided that a public
market for the Company's Class B Common Stock exists, through a "margin"
commitment room the optionee and an NASD Dealer whereby the optionee
irrevocably elects to exercise the Option and to pledge the shares so
purchased to the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the exercise price, and whereby
the NASD Dealer irrevocably commits upon receipt of such shares to
forward the exercise price directly to the Company, or (viii) any
combination of the foregoing methods of payment and/or any other
consideration or method of payment as shall be permitted by applicable
corporate law and approved by the Board or the Committee;
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(c) A check or cash, or such other lawful consideration as the
Board of Directors or Committee may approve with a fair market value, in
the amount reasonably requested by the Company to satisfy the Company's
withholding obligations under federal, state or other applicable tax
laws with respect to the taxable income, if any, recognized by the
Optionee in connection with the exercise, in whole or in part, of the
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus
or other income paid to Optionee by the Company or any subsidiary or
parent of the Company, provided such arrangements satisfy the
requirements of applicable tax laws); and
(d) A counterpart of and such amendments to the Shareholders'
Agreement referenced in Section 9 hereinbelow, duly executed by
Optionee, as may be required by the Company or the other shareholders of
the Company.
5. DEATH OF OPTIONEE: NO ASSIGNMENT. The rights of the Optionee under
this Agreement may not be assigned or transferred except by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee
should die prior to the termination of this Option, and provided Optionee's
right to purchase any of the Shares subject to the Option shall have vested
pursuant to Section 2 hereof as of the date of death, Optionee's legal
representative, his or her legatee, or the person who acquired the right to
exercise this Option by reason of the death of the Optionee (individually, a
"Successor") shall succeed to the Optionee's rights and obligations under this
Agreement. After the death of the Optionee, only a Successor may exercise this
Option.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
(a) Optionee represents and warrants that this Option is being
acquired by Optionee for his or her personal account, for investment
purposes only, and not with a view to the distribution, resale or other
disposition thereof.
(b) Optionee acknowledges that the Company may issue Shares upon
the exercise of this Option without registering such Common Stock under
the Securities Act of 1933, as amended (the "Act"), on the basis of
certain exemptions from such registration requirement. Accordingly,
Optionee agrees that his or her exercise of the Option may be expressly
conditioned upon his or her delivery to the Company of an investment
certificate or investment agreement including such representations and
undertakings as the Company may reasonably require in order to assure
the availability of such exemptions, including a representation that
Optionee is acquiring the Shares for investment and not with a present
intention of selling or otherwise disposing such Shares and an agreement
by Optionee that the certificates evidencing the Shares may bear a
legend indicating such non-registration under the Act and the resulting
restrictions on transfer. Optionee acknowledges that, because Shares
received upon exercise of an Option may be unregistered, Optionee may be
required
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to hold the Shares indefinitely unless they are subsequently registered
for resale under the Act or an exemption from such registration is
available and that the Company shall have no obligation to register any
resales, except as may otherwise be specifically provided to the
contrary in the Shareholders' Agreement (as hereinafter defined), nor
shall the Company have any obligation to satisfy any conditions to the
availability of any registration exemption. Optionee further
acknowledges that federal securities laws and the securities laws of the
state in which he or she resides may require the placement of certain
restrictive legends upon the Shares issued upon exercise of this Option,
and Optionee hereby consents to the placing of any such legends upon
certificates evidencing the Shares as the Company, or its counsel, may
deem necessary.
7. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. During the term of
the Plan, the Company agrees at all times to reserve and keep available, and to
use its reasonable best efforts to obtain from any regulatory body having
jurisdiction any requisite authority in order to issue and sell, such number of
shares of its Common Stock as shall be sufficient to satisfy its obligations
hereunder and the requirements of the Plan. Inability of the Company to obtain,
from any regulatory body having jurisdiction, authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares of its
Common Stock hereunder and under the Plan shall relieve the Company of any
liability in respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained.
8. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE, MERGER, ETC.
(a) In the event of any changes in the outstanding shares of
Common Stock of the Company resulting from a stock split, reverse stock
split, stock dividend, reclassification or similar change in the capital
structure of the Company, appropriate adjustments shall be made to the
number and kind of Shares subject to this Option and to the Exercise
Price per share, in accordance with the provisions of Section 10 of the
Plan.
(b) In the event of a merger, consolidation or other
reorganization in which the Company is not the surviving corporation, or
in which the Company is the surviving corporation, but it becomes a
subsidiary of another Corporation and its shares are converted into
cash, securities or other property, this Option shall terminate upon the
effective date of such transaction unless a successor corporation, or
the new parent of the Company, assumes this Option, provides
substantially similar consideration to Optionee as was provided to the
shareholders of the Company, or substitutes substantially equivalent
options covering shares of the successor corporation, in accordance with
the provisions of Section 10(b) of the Plan. If no provision is made for
the assumption of or substitution for this Option, or for the payment of
substantially equivalent consideration to Optionee, then the vesting of
this Option shall be accelerated (subject to completion of the proposed
transaction) and shall be exercisable in accordance with the provisions
of Section 10(b) of the Plan.
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9. SHAREHOLDERS' AGREEMENT. In the event Optionee exercises the Option.
or any portion thereof, the Shares acquired by Optionee pursuant to such
exercise shall be subject to the terms and provisions of that certain
Shareholders' Agreement dated as of May 17, 1996 among the Company and all of
its shareholders, as such Agreement may be amended from time to time hereafter
(the "Shareholders' Agreement"). Optionee acknowledges that he has been
furnished with a copy of the Shareholders Agreement and Optionee understands
that such Agreement will, under certain circumstances as set forth therein, (i)
impose restrictions on the transferability of Shares acquired on exercise of the
Option granted hereby, and (ii) require the undersigned Optionee to sell the
Shares either to the Company or to other shareholders of the Company, or to
third parties, on the terms and conditions set forth in the Shareholders
Agreement, including any Shares the Optionee or his Successor may acquire
hereunder following a termination of Optionee's Continuous Employment. Optionee
further agrees that (x) he shall comply with all of the terms and conditions of
the Shareholders' Agreement to the extent that such terms and conditions apply
to him, as a holder of the Options, or to the Options, themselves, (y) it shall
be a condition precedent to Optionee's right to have issued any Shares on
exercise of this Option that, upon request of the Company at any time while any
of the Options are outstanding and, in any event, upon any exercise thereof,
Optionee shall execute and deliver a counterpart of the Shareholders' Agreement
and any amendment to the Shareholders' Agreement which the Company or the other
shareholders of the Company deem necessary or advisable to make the Options or
such Shares and Optionee subject to the Shareholders' Agreement on substantially
the same terms as shares owned by other employees of the Company and (z) if
there is any conflict between any provision of the Shareholders' Agreement and
this Agreement, the provision of the Shareholders Agreement shall govern over
the conflicting provision of this Option Agreement.
10. NO EMPLOYMENT CONTRACT CREATED. Nothing in this Agreement shall be
construed to constitute or be evidence of any right with respect to continuance
of employment with the Company or any subsidiary or parent of the Company, or to
limit in any way the right of the Company or any subsidiary or parent of the
Company to terminate Optionee's employment at any time, with or without cause.
11. RIGHTS AS SHAREHOLDER. The Optionee (or a Successor pursuant to
Section 5 hereof) shall have no rights as a shareholder with respect to any
Shares covered by this Option until the date of the issuance of a stock
certificate or certificates to him or her for such Shares, notwithstanding the
exercise of this Option.
12. INTERPRETATION. This Option is granted pursuant to the terms of the
Triad Holdings, Inc., 1992 Stock Option and Restricted Stock Purchase Plan, as
amended and restated, and shall in all respects be interpreted in accordance
with such Plan, the provisions of which shall supersede any conflicting
provision contained in this Agreement.
13. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid.
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SCHEDULE F
PRIOR CONSULTING CLIENTS OF EXECUTIVE
Xxxx Saladow and/or Pacific Marketing Resources have provided consulting
services to the following companies, their affiliates, divisions and/or their
subsidiaries prior to January 1, 1997:
1. Xxxxxx Laboratories
Xxxxxx Park, IL
2. Xxxxxxx, Xxxxxx (an individual)
Wellesley, MA
3. Advanced Aesthetics, Inc.
Spanish Fork, UT
4. American Society of Health-System Pharmacists
Bethesda, MD
5. American Society of Parenteral and Enteral Nutrition
Silver Spring, MD
6. Becton Xxxxxxxxx and Company
Xxxxxxxx Xxxxx, XX
0. Block Medical, Inc.
Carlsbad, CA
8. Bronson, Bronson, XxXxxxxx
San Francisco, CA
9. Chicago City Capital Group, Inc.
Chicago, IL
10. CompuMed, Inc.
Manhattan Beach, CA
11. Davstar Industries Ltd. (now known as Urohealth, Inc.)
12. Devon Industries
Chatsworth, CA
X-0
00. Disposal Sciences, Inc.
Englewood, CO
14. Elkopast, H.S.
Milan, Italy
15. Fish and Neave
Palo Alto, CA
16. Fresenius AG
Xxxxxxxxx, Xxxxxxx
00. Fresenius, USA, Inc.
Walnut Creek, CA
18. Grasby Medical, Inc.
Arden Hills, MN
19. HealthWatch, Inc.
Vista, CA
20. I-Flow Corporation
Irvine, CA
21. IMS, Inc,
El Monte, CA
22. ITW/Minigrip
San Antonio, TX
23. IMED Corporation
San Diego, CA
24. Implantable Devices, Inc.
Minneapolis, MN
25. Infustek International Ltd.
Xxxxxxx, XX
00. InterCare, Inc.
Irvine, CA
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27. IVAC Corporation
San Diego, CA
28. Xxxxxx Medical, Inc.
Redlands, CA
29. Luxar Corporation
Bothell, WA
30. Management by Information
Little Rock, AR
31. Medical Product Specialists
Brea, CA
32. XxXxx, Inc.
Irvine, CA
33. Medical Data International
Irvine, CA
34. MicroJect
Salt Lake City, UT
35. National Home Infusion Association
Alexandria, VA
36. OmniCare
Cincinnati, OH
37. Quest Medical, Inc.
Allen, TX
38. Safety 0xx Xxxxxxx Xxxxxxxxxxxx
Xxxxxx Xxxxxx, XX
39. Sigma International
Medina, NY
40. Stedim, USA
Pleasant Hill, CA
X-0
00. The Monitor Company
Cambridge, MA
42. The Remington Report
Laguna Niguel, CA
43. TRIAD Medical, Inc.
Laguna Hills, CA
44. US Medical, Inc.
San Diego, CA
45. Vital Care, Inc.
Livingston, AL
46. Winfield Industries
San Diego, CA
47. Zevex, Inc.
Salt Lake City, UT
and addressed, if to the Company, at its principal place of business, Attention:
the Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
14. GOVERNING LAW. The validity, construction, interpretation, and
effect of this Option shall be governed by and determined in accordance with the
laws of the State of Delaware.
15. SEVERABILITy Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument
17. ENTIRE AGREEMENT. This Agreement, together with the Plan,
constitutes the entire agreement between the parties pertaining to, and
supersedes all prior written or oral agreements and understandings (express or
implied) of the parties with respect to, the subject matter of this Agreement,
except for the Shareholders' Agreement referenced in Section 9 hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY: TRIAD HOLDINGS, INC.
By:
Title:
The Optionee hereby accepts this Option subject to all the terms and
provisions hereof. The Optionee hereby acknowledges receipt of a copy of the
Plan and the Shareholders' Agreement referred to in Section 9 of this Agreement.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors of the Company (or the
Committee thereof administering the Plan) regarding any questions arising under
the Plan or this Agreement. The Optionee authorizes the Company to withhold in
accordance with applicable law from any compensation payable to him or her any
taxes required to be withheld by federal, state or local law as a result of the
exercise of this Option.
OPTIONEE: XXXX X. SALADOW
________________
(Signature)
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