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Exhibit 10.7
ORTHOPAEDIC BIOSYSTEMS LTD., INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 5th day of May, 1997, by and between
ORTHOPAEDIC BIOSYSTEMS LTD., INC., an Arizona corporation with its principal
place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter the "Company"), and D. ▇▇▇▇▇▇ ▇▇▇▇▇▇ (hereinafter the "Employee").
WHEREAS, the Company is engaged in the business of developing and
marketing medical products, including orthopaedic devices and equipment;
WHEREAS, Employee has served as the Company's chief executive officer
since its inception; and
WHEREAS, the Employee desires to be employed by the Company and the
Company desires to employ the Employee in a capacity in which the Employee will
be given access to Confidential Information;
NOW, THEREFORE, in consideration of such employment, and other good and
valuable consideration, it is agreed:
1. DEFINITIONS.
As used in this Agreement:
(a) "Company" means Orthopaedic Biosystems Ltd., Inc. and its
successors and assigns, and any of its present or future subsidiaries, or
organizations controlled by, controlling or under common control with it.
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(b) "Confidential Information" means information developed by, disclosed
to, or otherwise known by the Employee as a consequence of or through his
employment by the Company which is comprised of or relates in any way to (i)
the processes used and to be used in Company's business; (ii) the methods and
results of Company's research and development activities; (iii) any invention,
discovery, technological development, manufacturing design or technique,
process, system, machine, device or improvement, computer software program,
composition, or data and information which Employee, alone or jointly with
others, produces, discovers, compiles, fixes in a tangible medium, or reduces
to practice, and (iv) any other technical and non-technical information and data
relating to Company's business, except such items which Employee can prove by
clear and convincing evidence were (x) publicly and openly known prior to the
date of Employee's initial employment by the Company, and therefore in the
public domain, or (y) subsequent to the date of Employee's initial employment
by the Company became publicly and openly known through no fault or wrongful
act of the Employee.
(c) "Inventions" mean discoveries, concepts, works of authorship, and
ideas, whether or not patentable, copyrightable or subject to any other form of
protection, including but not limited to processes, methods, formulas,
techniques, as well as improvements thereof or know-how related thereto,
concerning any present or prospective activities of the Company with which the
Employee becomes acquainted as a result of his employment by the Company.
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2. Employment.
Commencing on or continuing from the date hereof, the Company shall employ
Employee (or shall continue to employ Employee, as the case may be), and
Employee shall serve as an employee of the Employer upon the terms and
conditions herein set forth.
3. Scope of Employment.
During the term of this Agreement, Employee shall devote such time,
attention and energy to the business of the Company as shall be required for him
to carry out his duties hereunder. He shall serve as President of the Company
and shall have the authority to perform and shall perform all of the duties that
are customary for the office of President, subject at all times to the control
and direction of the Board of Directors of the Company, and shall (i) execute
the Company's strategic business plan to maximize opportunities of the Company's
technology, (ii) provide leadership to raise the required equity funding
necessary to reach the goals set forth in the Company's business plan, and (iii)
perform such services as typically are provided by the chief executive officer
of a corporation and such other services consistent therewith as shall be
assigned to Employee from time to time by the Board of Directors of the Company.
During the term of this Agreement, Employee shall not engage in any other
business activity which, in the reasonable judgment of the Company's Board of
Directors conflicts with the duties of Employee hereunder, whether or not such
activity is pursued for gain, profit or other pecuniary advantage; provided,
however, that it is understood that this Section 3 shall not preclude Employee
from making passive investments in other business entities as long as Employee
notifies the Board of
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Directors in advance in the event that the Employee intends to make a passive
investment in the Company's industry.
4. Term.
4.1 The term of this Agreement shall commence on the date hereof and
continue until December 31, 1997 and shall be automatically renewable
thereafter for consecutive terms of one year each unless and until terminated
as of the end of any such period by either party giving notice of termination
in writing to the other party not less than sixty (60) days before the end of
the period in question and subject, however, to earlier termination pursuant to
Section 4.2 or Section 6 hereof.
4.2 Notwithstanding the term of employment provided for in Section 4.1,
this Agreement shall immediately terminate upon Employee's death or Permanent
Disability. For purposes of this Agreement, Permanent Disability shall mean any
physical or mental condition which materially interferes with the performance
of Employee's customary duties in Employee's capacity as President of the
Company where such disability has continued for a period of one hundred eighty
(180) consecutive days.
5. Compensation.
5.1 Employee shall be paid a base salary in such amounts as shall be
determined by the Company's Board of Directors, in its sole discretion, from
time to time. Such base salary shall be payable no less often than in monthly
installments and shall be subject to withholding and other deductions as
required by law.
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5.2 Employee will be eligible to participate in any group health plan,
life insurance plan and any other employee benefit or incentive compensation
plan or arrangement now in effect or hereafter adopted by the Company;
provided, however, that the Company reserves the right to modify or discontinue
any such plan or arrangement at any time for any reason it deems appropriate,
and the Company may do so for reasons other than financial necessity.
Employee's participation in any such plan or arrangement shall be commensurate
with the Employee's compensation and position with the Company, and will
otherwise be subject to the provisions of any document setting forth the terms
and conditions of any such plan or arrangement. Notwithstanding any contrary
provision hereof, this Agreement does not modify the provisions of any such
plan or arrangement.
5.3 Employee shall be entitled to a number of paid vacation days as shall
be determined by the Company in its sole discretion.
5.4 Company will reimburse the Employee, in accordance with its policies
in effect from time to time, for reasonable business expenses incurred by
Employee in promoting the business of the Company upon presentation by Employee
of an itemized account of such expenses.
5.5 Company will provide Employee with an automobile allowance of Five
Hundred Dollars ($500.00) per month.
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6. Discharge by Company.
The Company shall be entitled to terminate this Agreement and to discharge
the Employee at any time, but only for "cause." The term "cause" shall be
limited to the following grounds:
(a) The Employee's failure (for reasons other than disability) or
refusal to perform the Employee's duties and responsibilities as set forth
in Section 3 hereof, continuing after written warning from the Company;
(b) Dishonesty affecting the Company;
(c) Excessive use of illegal drugs, or excessive use of alcohol that
is not being medically treated as alcoholism, which materially interferes
with performance of the Employee's obligations under this Agreement and
which continues after written warning from the Company;
(d) Conviction of a felony or of any crime involving moral turpitude,
fraud or misrepresentation;
(e) The commission by the Employee of any willful or intentional act
which could reasonably be expected to materially injure the reputation,
business or business relationships of the Company; and
(f) Any material breach (not covered by any of the clauses (a)
through (e)) of any of the provisions of this Agreement, if such breach is
not cured within ten (10) days after written notice thereof to the Employee
by the Company.
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7. Severance Pay.
In the event (a) the Board of Directors shall terminate this Agreement
pursuant to Section 4.1 (unless such termination is for cause) or (b) this
Agreement is terminated because of Employee's Permanent Disability under
Section 4.2 hereof, Employee shall be paid a Severance Payment equal to
eighteen (18) months salary at the rate payable as of such date of termination.
Such Severance Payment shall be paid in equal monthly installments commencing
on the first day of the month following the date of termination.
8. Employee's Representations and Warranties.
Employee covenants, represents and warrants to the Company that (i)
Employee has not entered into, and will not enter into, any agreement or
obligation that may interfere with Employee's full compliance with the terms of
this Agreement, and (ii) Employee currently has no property rights or claims
relating to any invention, discovery, concept or idea, or any improvement
thereof, or know-how related thereto, acquired at any time which has not been
disclosed to the Company in writing by the Employee prior to the date hereof.
9. Inventions.
With respect to Inventions made or conceived by the Employee, whether or
not during the hours of his employment or with the use of the Company
facilities, materials, or personnel, either solely or jointly with others
during his employment by the Company, or within two (2) years after termination
of such employment if based on or related to Confidential Information:
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(a) The Employee shall inform the Company promptly and fully of such
Inventions by a written report, setting forth in detail a description of the
Invention and any processes associated with its promotion. A detailed written
report also will be submitted by the Employee upon completion of any studies or
research projects undertaken on the Company's behalf, whether or not in the
Employee's opinion a given project has resulted in an Invention.
(b) The Employee shall apply, at the Company's request and expense, for
United States and foreign letters patent either in the Employee's name or
otherwise as the Company shall desire.
(c) The Employee hereby assigns and agrees to assign to the Company or its
nominee, without further consideration, all of Employee's rights to such
Inventions, and to applications for United States and/or foreign letters patent
and to United States and/or foreign letters patent granted upon such Inventions.
Any copyrightable works involving Employee (including separate contributions by
Employee to collective works) will be deemed to be "works for hire" under the
copyright laws of the United States.
(d) The Employee shall acknowledge and deliver promptly to the Company,
without charge to the Company but at its expense, such written instruments and
do such other acts, such as giving testimony in support of any patent
application, as may be necessary in the opinion of the Company to obtain and
maintain United States and/or foreign letters patent and to vest the entire
right and title thereto in the Company.
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(e) The Company shall also have the royalty-free right to use in its
business, and to make, use and sell products, processes and/or services derived
from any inventions, discoveries, concepts, and ideas, whether or not
patentable, including but not limited to processes, methods, formulas, and
techniques, as well as improvements thereof or know-how related thereto, which
are not within the scope of Inventions as defined herein but which are
conceived or made by the Employee during the hours which he is employed by the
Company or with the use or assistance of the Company's facilities, materials or
personnel.
10. Restrictive Covenants.
10.1 Employee agrees that he will not, either during his employment or
at any time after cessation of such employment, impart or disclose any of the
Confidential Information to any person, firm or corporation other than Company,
or use any of such Confidential Information, directly or indirectly for the
Employee's own benefit or for the benefit of any person, firm or corporation
other than Company or its affiliates. Employee's obligations under this Section
10.1 shall cease with respect to any such Confidential Information if such
information (i) was already known to Employee at the time of disclosure, free
of any obligation to keep it confidential, or (ii) was subsequently disclosed
to Employee without breach of this Agreement by a third person who rightfully
received and disclosed it without breaching any confidentiality obligation to
the Company. It is also understood by the parties that Employee may be required
to disclose Confidential Information (a) pursuant to subpoena or other court
process, (b) at the express direction of any other authorized government agency
or (c) otherwise
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as required by law or regulation. Disclosure of Confidential Information or any
part thereof in such circumstances will not constitute a breach of the
confidentiality provisions set forth in this Agreement, provided that Employee
notifies Company in advance of any such disclosure and cooperates with Company
in any efforts that Company may make to seek a protective order with respect to
such disclosure.
10.2 In addition to the foregoing agreements relating to the Company's
Confidential Information, during the term of this Agreement (including any
renewals thereof) and during the term of the "Post-Employment Period" (as
defined herein), Employee will not, without the Company's prior written
consent, (i) solicit any of the employees of the Company for the purpose of
hiring or retaining any such employees, (ii) hire or retain or cause to be
hired or retained any of the employees of Company or (iii) become involved
in any manner, including without limitation as an officer, director, employee,
consultant, representative, partner, owner or shareholder (except as a holder
of less than a two percent (2%) equity interest in a public entity) in any
business located in the United States which is in the business of inventing,
developing, manufacturing, marketing, providing or selling products competitive
with the products that the Company has developed, manufactured, marketed,
produced or sold, or is in the process of developing (and reasonably expect to
bring to market within one (1) year after the expiration of the Post-Employment
Period or longer if required by the U.S. Food and Drug Administration clearance
or approval process), manufacturing, marketing, producing or selling as of the
date that Employee's employment terminates. For purposes of this Agreement,
the term "Post-
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Employment Period" shall mean the period commencing in the date that this
Agreement is terminated for any reason and ending two (2) years from the date
of such termination.
10.3 Employee agrees that all memoranda, lab books, notes, records,
charts, formulae, specifications, lists and other documents made, compiled,
received, held or used by Employee while employed by Company, concerning any
phase of Company's business or its Confidential Information, shall be Company's
property and shall be delivered by Employee to Company upon termination of
Employee's employment or at any earlier time on the request of Company.
10.4 Employee acknowledges that given his access to information regarding
Company, the provisions of this Section 10 are reasonable and necessary to
protect Company's business. Employee further acknowledges that Employee has
carefully reviewed the provisions of this Section 10, that Employee fully
understands the economic consequences thereof, that Employee has assessed the
respective advantages and disadvantages to Employee of entering into this
Agreement and Employee has concluded that, in light of Employee's education,
skills and abilities, the restrictions set forth in this Section 10 will not
prevent Employee from earning a living after the termination of this Agreement.
Employee agrees that each of the provisions of this Section 10, including,
without limitation, the period of time, geographical area and types and scope of
the restrictions on Employee's activities specified herein, are intended to be
and shall be divisible. Employee further acknowledges that reasonableness of
these provisions as an integral part of the terms of Employee's employment. If
any provision of this Section 10 (including any sentence, clause or part
thereof) shall be adjudicated to be invalid or unenforceable, such
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provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made. In addition, if any particular provision
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing such provision as to such characteristic so that the
provision is enforceable to the fullest extent compatible with the applicable
law as it shall then appear.
10.5 As it would be very difficult to measure the damages which would
result to Employer from a breach of any of the covenants contained in this
Section 10 in the event of such a breach, Company shall have the right to have
such covenants specifically enforced by a court of competent jurisdiction.
Employee hereby recognizes and acknowledges that irreparable injury or damage
shall result to the business of Company in the event of a breach or threatened
breach by Employee of the terms and provisions of this Section 10. Therefore,
Employee agrees that Company shall be entitled to an injunction restraining
Employee from engaging in any activity constituting such breach or threatened
breach. Nothing contained herein shall be construed as prohibiting Company from
pursuing any other remedies available to Company at law or in equity for such
breach or threatened breach, including, but not limited to, recovery of damages
from Employee and, if Employee is still employed by Company, terminating the
employment of Employee in accordance with the terms and provisions hereof.
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11. Notices.
For the purposes of this Agreement, notices and all other communications
provided for or relating to the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by facsimile
with a facsimile confirmation of transmission, delivered by overnight courier,
or mailed by United States certified or express mail, return receipt requested,
postage prepaid, addressed as follows:
If to Employee: At the Employee's most recent residence address
reflected on the Company's records.
If to the Company: Orthopaedic Biosystems Ltd., Inc.
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with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Aronberg Goldgehn Davis & Garmisa
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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
12. General.
12.1 No modification, amendment, extension or waiver of this Agreement
shall be binding upon the Company or Employee unless made in a writing signed
by an officer of the Company and Employee which expressly purports to modify
this Agreement.
12.2 This Agreement is the entire agreement between the parties involving
the subject hereof and supersedes any discussion, negotiations, representations
or prior or similar
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agreements upon the same subject. Company has offered Employee no inducements to
enter into this Agreement other than as fully described herein.
12.3 This Agreement is personal to and not assignable by Employee without
the Company's advance written consent. This Agreement shall inure to the benefit
of, be binding upon and be enforceable by the Company, its successors and
assigns, and shall be binding upon Employee and Employee's heirs, permitted
assigns and legal representatives.
12.4 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Arizona, without reference to principles of
conflicts of law.
12.5 The language set forth in this Agreement shall be deemed to be the
language chosen by both parties to express their mutual intent, and no rule of
strict construction shall be applied against either party hereto.
12.6 If a court of competent jurisdiction determines that any specific
provision hereof is invalid and unenforceable and refuses to any reason to
reform such provision as contemplated by the parties, the validity and
enforceability of the remaining provisions of this Agreement shall not be
affected, and the Agreement shall thereafter be construed as if the invalid
provision had not been included in the Agreement, unless the elimination of such
provision destroys the underlying business purpose of this Agreement.
12.7 In the event a dispute relating to this Agreement is litigated, the
prevailing party shall be entitled to recover the costs and fees incurred in
prosecuting such action, including, but not limited to, reasonable attorneys
fees and the fees of any expert witnesses.
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12.8 This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
ORTHOPAEDIC BIOSYSTEMS LTD., INC.
By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Secretary
EMPLOYEE:
/s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Signature
D. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Printed Name