EXHIBIT 10.24
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), made
this 1st day of July, 2002, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (the "Executive")
and INVIVO CORPORATION, a Delaware corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation considers it essential to the best interests of
the Corporation and its stockholders to take steps to retain key personnel such
as the Executive; and
WHEREAS, the Corporation recognizes particularly that uncertainty might
arise among personnel in the context of any possible or actual Change in
Control, as hereinafter defined, which could result in the departure or
distraction of key personnel to the detriment of the Corporation and its
stockholders;
WHEREAS, the Corporation has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of key
personnel of the Corporation including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from any possible or actual Change in Control;
WHEREAS, the Executive and the Corporation entered into an Employment
Agreement dated October 16, 2001 ("2001 Agreement") and wish to amend and
replace that agreement hereby.
NOW, THEREFORE, in consideration of the covenants, terms, and conditions
contained herein, the Corporation and the Executive agree:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth in this Section 1.
a. "Administrative Committee" shall mean the Board or a
committee appointed by the Board to administer this Agreement.
b. "Affiliate" shall mean, with respect to a first Person, a
second Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, the first Person.
c. "Associate" shall mean, with respect to a Person, (a) any
corporation or organization of which such Person is an officer or partner
or, directly or indirectly, the beneficial owner of ten percent (10%) or
more of any class of equity securities, (b) any trust or other estate in
which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity, and (c)
any relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person.
d. "Benefit Continuation Period" shall mean the period beginning
on the date of the Severance of Employment or Non-Change in Control
Termination, as the case may be, and ending on the earlier to occur of (a)
the one year anniversary of the Severance of Employment, where termination
was a Severance of Employment, and the date six months from the date of
such Non-Change in Control Termination where termination was a Non-Change
in Control Termination, or (b) the date that the Executive and the
Executive's dependents are eligible and elect coverage under the plans of
a subsequent employer that provide substantially equivalent or greater
benefits to the Executive and the Executive's dependents.
e. "Board" shall mean the Board of Directors of the Corporation.
f. "Business Combination" shall mean a merger or consolidation of
the Corporation and one or more other entities in which the Corporation or
a subsidiary of the Corporation is a merging or consolidating party.
g. "Change in Control" shall mean (a) the sale of all or
substantially all of the assets of the Corporation; (b) any change in
ownership or control of the outstanding voting securities of the
Corporation following which any Person beneficially owns, together with
its Affiliates and Associates, fifty percent (50%) or more of the
outstanding voting securities of the Corporation; (c) any change in the
membership of the Corporation's Board following which Continuing Directors
do not constitute a majority of the Board; or (d) a Business Combination
immediately following which the stockholders of the Corporation
immediately prior to such Business Combination do not hold more than fifty
percent (50%) of the outstanding voting securities of the surviving
entity, or the parent company of the surviving entity, of such Business
Combination in the same proportion as such stockholders held Common Stock
of the Corporation immediately prior to such Business Combination.
Notwithstanding the foregoing, the occurrence of any of the events set
forth in the prior sentence shall not constitute a Change in Control
unless such event occurs on or prior to June 30,2003, or such event occurs
on or prior to August 31, 2003 pursuant to the terms of definitive
agreement providing for such Change in Control that is entered into on or
before June 30, 2003.
h. "Code" shall mean the Internal Revenue Code of 1986, as
amended to date.
i. "Constructive Discharge" shall mean (a) without the
Executive's express written consent, the assignment to the Executive of
any duties, or the removal from or reduction or limitation of the
Executive's duties or responsibilities, which is inconsistent with the
Executive's position, organization level, duties, responsibilities or
compensation status with the Corporation immediately prior to such
assignment, removal, reduction or limitation; (b) without the Executive's
express written consent, a substantial reduction of the facilities and
perquisites (including office space and location) available to the
Executive; (c) a reduction by the Corporation in the base cash salary of
the Executive; (d) a material reduction by the Corporation in the kind and
level of employee benefits to which the Executive is entitled, with the
result that the Executive's overall benefit package is materially reduced;
or (e) without the Executive's express written consent, the relocation of
the Executive to a facility or location more than thirty five (35) miles
from the Executive's then present location.
2
j. "Continuing Director" shall mean, at any given time, a member
of the Board who was (a) a member of the Board on August 31, 2000, (b)
elected to the Board by the Board after August 31, 2000, provided that a
majority of the Continuing Directors voted in favor of such election, or
(c) nominated to the Board by the Board after August 31, 2000, provided
that a majority of the Continuing Directors voted in favor of such
nomination, and subsequently elected to the Board by the stockholders of
the Corporation.
k. "Just Cause Termination" shall mean a termination by the
Corporation of the Executive's employment in connection with the good
faith determination of the Corporation's Board of Directors that the
Executive has engaged in:
(i) any material breach of any written agreement between
Executive and the Corporation, if such breach causes material
harm to the Corporation;
(ii) any gross negligence or willful misconduct by Executive
in performance of duties to the Corporation that causes material
harm to the Corporation;
(iii) the substantial and repeated failure of Executive to
follow the lawful written directions of the Board or to the person
whom Executive reports;
(iv) commission of a felony under the laws of the United
States or any state thereof;
(v) commission of any material act of fraud, embezzlement
or dishonesty; or
(vi) the abuse of alcohol or controlled substances that has a
materially detrimental effect upon Executive's performance of his
duties.
l. "Non-Change in Control Termination" shall mean that either (i)
the Executive's employment is terminated by the Corporation and the
termination is not a Just Cause Termination and is not by reason of the
Executive's death or disability, or (ii) the Executive terminates his or
her employment with the Corporation by resignation following a
Constructive Discharge, and, in either event, no Change in Control has
occurred prior to such termination or resignation.
m. "Person" shall mean any individual, corporation, partnership,
limited liability company, sole proprietorship, joint venture or other
organization.
n. "Severance of Employment" shall mean (a) the termination of
the Executive's employment with the Corporation within two (2) years after
the date of a Change in Control by (i) discharge by the Corporation or
(ii) resignation of the Executive following a Constructive Discharge, or
(b) the termination of the Executive's employment with the Corporation by
resignation of the Executive within the thirty (30) day period immediately
following the first anniversary of a Change in Control. Despite the
foregoing, neither of the following will constitute a Severance of
Employment:
i. The termination of the Executive's employment by reason
of death or disability.
3
ii. A Just Cause Termination of the Executive's employment.
2. 2001 AGREEMENT; POSITION.
The 2001 Agreement is hereby superceded by this Agreement and shall be of
no further force and effect. During the term of this Agreement, Corporation will
employ the Executive, and the Executive will serve the Corporation, in the
capacity of President of Invivo Research.
3. TERM OF EMPLOYMENT.
The Corporation agrees to continue the Executive's employment, and the
Executive agrees to remain in the employ of the Corporation, for a period of one
(1) year from the date hereof unless the Executive's employment is earlier
terminated pursuant to the provisions of this Agreement.
4. COMPENSATION AND BENEFITS.
a. The Corporation agrees to pay the Executive a minimum annual
salary of $220,000, or in the event of any portion of a year, a pro rata
amount of such annual salary. The Executive's salary will be payable as
earned in accordance with Corporation's customary payroll practice.
b. The Executive will be eligible to receive an annual cash bonus
in the discretion of the Corporation's Board of Directors.
c. The Executive will be eligible to participate in Corporation's
employee benefit plans of general application, including without
limitation pension and profit-sharing plans, deferred compensation,
supplemental retirement or excess-benefit plans, stock option, incentive
or other bonus plans, life, health and dental insurance programs, 401(k)
plan, paid vacations and sabbatical leave plans, and similar plans or
programs, in accordance with the rules established for individual
participation in any such plan. The Executive shall be entitled each year
to three (3) weeks leave for vacation at full pay. The Executive shall
also be entitled to reasonable holidays and illness days with full pay in
accordance with the Corporation's policy from time to time in effect.
d. The Corporation will reimburse the Executive for all
reasonable and necessary expenses incurred by the Executive in connection
with the Corporation's business.
5. ADMINISTRATION.
The Administrative Committee shall administer this Agreement and shall
have the power and the duty to make all determinations necessary for the
implementation of this Agreement, including by way of example and not as a
limitation, the occurrence of a Change in Control and the date of such change.
Any such determination (a) shall be made on the basis of all information known
to the persons making the determination, after reasonable inquiry, (b) may be
made prospectively and subject to one or more contingent events, and (c) will be
binding on the Corporation but not the Executive. Any disagreement between the
Corporation and the Executive concerning any such determination or the
administration, implementation or interpretation of this Agreement shall be
subject to the claims and arbitration procedures set forth in Section 16
hereunder.
6. OBLIGATIONS OF THE CORPORATION UPON CHANGE IN CONTROL.
a. Within fifteen (15) days after a Change in Control or at such
earlier time as may be required by law, the Corporation shall pay to the
Executive:
4
i. The full amount of any earned but unpaid base salary
through the date of the Change in Control, plus a cash payment for
all reasonable travel, entertainment and other expenses properly
incurred by the Executive in connection with his or her employment
by the Corporation to the extent the Executive has not already been
reimbursed for such expenses.
ii. The full amount of any unpaid annual cash bonus for any
fiscal year of the Corporation prior to the year in which the Change
in Control occurs, and a pro rata amount of any unpaid annual cash
bonus for the fiscal year in which the Change in Control occurs
calculated by multiplying (A) the number of full calendar months
that the Executive was employed by the Corporation in such fiscal
year divided by 12 and (B) the amount of $65,000, representing the
target annual cash bonus amount.
b. In the event that the Executive is employed by the Corporation
on the date of a Change in Control, then on the earlier to occur of (i)
ninety (90) days after the date of the Change in Control or (ii) three (3)
business days after the date that the Executive ceases to be employed by
the Corporation, then the Corporation shall pay to the Executive the
amount of $297,000, representing an amount equal to the aggregate of the
Executive's annual base salary and target bonus plus other benefits and
expenses, unless the Executive ceases to be employed by the Corporation
for either of the following reasons prior to the date which is ninety (90)
days after the date that the Change in Control occurs, in which event no
amount shall be due under this Section 6.b.: (1) a Just Cause Termination
of the Executive prior to ninety (90) days after the date of a Change in
Control or (2) the voluntary resignation of the Executive prior to ninety
(90) days after the date of a Change in Control, other than a resignation
following a Constructive Discharge. The Executive shall be eligible to
make contributions to the Corporation's Section 401(k) plan, to the extent
allowed under the plan, from amounts payable to the Executive under this
Section 6.
c. If and to the extent that the Executive continues to be
employed by the Corporation following a Change in Control, the Executive
shall continue to receive his salary and be eligible for bonus
notwithstanding the payment of the amounts provided herein.
d. Immediately prior to a Change in Control, any unvested stock
options to purchase shares of Common Stock from the Corporation then held
by the Executive shall become fully vested and exercisable at the time of
the Change in Control.
7. OBLIGATIONS OF THE CORPORATION UPON NON-CHANGE IN CONTROL TERMINATION.
a. Within fifteen (15) days after a Non-Change in Control
Termination that occurs during the term of this Agreement, or at such
earlier time as may be required by law, the Corporation shall pay to the
Executive:
i. The full amount of any earned but unpaid base salary
through the date of the Non-Change in Control Termination, plus a
cash payment for (a) all unused vacation time which the Executive
has accrued as of the Non-Change in Control Termination, and (b) all
reasonable travel, entertainment and other expenses properly
incurred by the Executive in connection with his or her employment
by the Corporation to the extent the Executive has not already been
reimbursed for such expenses.
ii. The full amount of any unpaid annual cash bonus for any
fiscal year of the Corporation prior to the year in which the
Non-Change in Control Termination occurs, and a pro rata amount of
any unpaid annual cash bonus for the fiscal year in which the
Non-Change in Control Termination occurs calculated by multiplying
(A) the number of full calendar months that the Executive was
employed by the
5
Corporation in such fiscal year divided by 12 and (B) the amount of
$65,000, representing the target annual cash bonus amount.
b. In addition to any payment required by subsection a above,
within 30 days after a Non-Change in Control Termination, the Corporation
shall pay to the Executive the amount of $148,500 and no further payments
(other than as provided in this Agreement) shall be due in respect of the
Executive's salary or bonus for such year.
8. TERMINATION DUE TO DEATH OR DISABILITY.
If Executive is terminated during the term of this Agreement due to death
or disability, within 15 days of such termination, or at such earlier time as
may be required by law, the Corporation shall pay (a) to the Executive, if the
Executive has been terminated due to disability, or (b) if the Executive has
died, to the Executive's surviving spouse, issue by right of representation or
estate, in that order:
a. The full amount of any earned but unpaid base salary through
the date of termination, plus a cash payment for (a) all unused vacation
time which the Executive has accrued as of the date of termination, and
(b) all reasonable travel, entertainment and other expenses properly
incurred by the Executive in connection with his or her employment by the
Corporation to the extent the Executive has not already been reimbursed
for such expenses.
b. The full amount of any unpaid annual cash bonus for any fiscal
year of the Corporation prior to the year in which the termination due to
death or disability occurs, and a pro rata amount of any unpaid annual
cash bonus for the fiscal year in which the termination due to death or
disability occurs calculated by multiplying (A) the number of full
calendar months that the Executive was employed by the Corporation in such
fiscal year divided by 12 and (B) the amount of $65,000, representing the
target annual cash bonus amount.
c. If the termination due to death or disability occurs after the
date of a Change in Control and prior to ninety (90) days after the date
of a Change in Control, the full amount otherwise payable to the Executive
under Section 6.b. hereof.
9. OTHER TERMINATION.
Within fifteen (15) days after (a) a Just Cause Termination of the
Executive or (b) the voluntary resignation of the Executive, other than a
resignation following a Constructive Discharge or at such earlier time as may be
required by law, the Corporation shall pay to the Executive the full amount of
any earned but unpaid base salary through the date of such termination or
resignation, plus a cash payment for (i) all unused vacation time which the
Executive has accrued as of date of such termination or resignation, and (ii)
all reasonable travel, entertainment and other expenses properly incurred by the
Executive in connection with his or her employment by the Corporation to the
extent the Executive has not already been reimbursed for such expenses.
10. CONTINUATION OF BENEFITS AFTER TERMINATION.
a. After a Severance of Employment or a Non-Change in Control
Termination, the Executive and the Executive's eligible dependents shall
continue to be eligible to participate during the Benefit Continuation
Period in the medical, dental, vision, health, disability, life and other
similar plans and arrangements applicable to the Executive immediately
prior to the Severance of Employment or Non-Change in Control Termination.
The
6
Executive shall participate on the same terms and conditions in effect
throughout the Benefit Continuation Period for active employees of the
Corporation.
b. If, at the conclusion of the Benefit Continuation Period, the
Executive is not eligible to receive coverage under the plans of a
subsequent employer that provide substantially equivalent or greater
benefits to the Executive and the Executive's dependents, the Executive
may exercise his or her right under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), to continue to
participate in the Corporation's medical, dental, vision, health,
disability, life and other similar plans and arrangements applicable to
the Executive, subject to the terms and conditions set forth in COBRA and
any rules and regulations promulgated thereunder.
11. FEDERAL EXCISE TAX.
a. If any amounts payable to the Executive under this Agreement
are characterized as excess parachute payments pursuant to Section 4999 of
the Code and Executive thereby would be subject to any United States
federal excise tax due to that characterization, then Executive may elect,
in Executive's sole discretion, to reduce the amounts payable under this
Agreement or to have any portion of applicable options not vest in order
to avoid any "excess parachute payment" under Section 280G(b)(1) of the
Code.
b. Unless the Corporation and Executive otherwise agree in
writing, any determination required under this Section 11 shall be made in
writing by independent public accountants for the Corporation (the
"Accountants"), whose determination shall be conclusive and binding upon
Executive and the Corporation for all purposes. For purposes of making the
calculations required by this Section 11, the Accountants may rely on
reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Corporation and Executive shall
furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make the required
determinations. The Corporation shall bear all fees and expenses the
Accountants may reasonably charge in connection with the services
contemplated by this Section 11. The Corporation shall pay all reasonable
legal fees and expenses incurred in defending against any claim by the
Internal Revenue Service that would require payment of any tax under
Section 4999 of the Code and shall promptly reimburse them for the
reasonable expenses incurred by Executive in connection with defending
such claim provided that Executive: (i) give the Corporation any
information reasonably requested by the Corporation relating to the claim;
(ii) accept legal representation with respect to such claim by an attorney
reasonably selected by the Corporation and reasonably acceptable to
Executive; (iii) cooperate with the Corporation in good faith in
contesting the claim; and (iv) permit the Corporation to participate in
and control any proceedings relating to the claim.
12. TAXES.
The Corporation shall deduct from any payments to the Executive under this
Agreement amounts that the Corporation is required to withhold and pay either to
government agencies on behalf of the Executive or under court order to any
Person.
13. DEATH PRIOR TO PAYMENT OF AMOUNTS DUE.
In the event of the Executive's death after a Change in Control, Severance
of Employment or Non-Change in Control Termination but prior to payment to the
Executive of amounts due under this Agreement, such payment shall be made to the
Executive's surviving spouse, issue by right of representation or estate, in
that order.
7
14. ASSIGNMENT.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and the successors and assigns of the Corporation, including any
successor or assign pursuant to a Change in Control.
15. NON-ASSIGNMENT BY THE EXECUTIVE.
The Executive shall not assign, hypothecate, or transfer any of the rights
herein to any Person other than pursuant to the laws of descent and
distribution. Any attempt to assign, hypothecate or transfer the rights
hereunder shall immediately terminate all of the Executive's rights under this
Agreement.
16. CLAIMS PROCEDURE AND ARBITRATION.
a. In the event of a disagreement between the Corporation and the
Executive on any matter arising under this Agreement, the Executive, in
claiming a benefit or requesting an interpretation or ruling under this
Agreement, shall submit the claim or request in writing to the
Administrative Committee, which shall respond in writing as soon as
practicable.
b. If a claim or request is denied, the Administrative Committee
shall prepare and deliver to the Executive a written notice of denial
which shall state (a) the reason for denial, with specific reference to
the provisions of this Agreement on which denial is based; (b) a
description of any additional material or information required to prevail
with the claim or request and an explanation of why it is necessary; and
(c) an explanation of the Agreement's claim review procedure.
c. If the Administrative Committee fails to respond in writing to
any claim or request within thirty (30) days of the date such claim or
request is submitted, such failure to respond shall constitute a denial of
the claim or request.
d. If a claim or request is denied, the Executive may submit the
claim or request to mandatory and binding arbitration (an "Arbitration").
The Executive may initiate an Arbitration by sending the Corporation an
Arbitration demand in writing. The Arbitration shall be presided over by a
single arbitrator (the "Arbitrator") selected in accordance with the
Commercial Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association. Any Arbitration shall be conducted in San
Francisco, California in accordance with the Arbitration Rules and the
substantive law of the State of California; provided, however, that the
Arbitrator will have no power or authority, under the Arbitration Rules or
otherwise, to relieve the parties from their obligation hereunder to
arbitrate, or otherwise to amend or disregard any provision of this
Agreement. Judgment upon any award rendered in an Arbitration may be
entered in any court of competent jurisdiction.
17. ATTORNEYS' FEES.
In the event that any Arbitration, suit, action or proceeding (including
any appeal therefrom, but excluding any and all proceedings before the
Administrative Committee) is brought by the Executive to review any decision of
the Administrative Committee pertaining to this Agreement or to enforce any
right hereunder, and the Executive is the prevailing party in such Arbitration,
suit, action or proceeding, the Executive shall be entitled to recover from the
Corporation his or her attorneys' fees and other reasonable costs incurred in
connection therewith. During the
8
pendency of any such Arbitration, suit, action or proceeding, the Corporation
shall promptly pay all of the Executive's attorneys' fees and reasonable costs
incurred by the Executive with respect to such Arbitration, suit, action or
proceeding, subject to the Executive's obligation hereunder to repay all such
sums if the Corporation is the prevailing party in such Arbitration, suit,
action or proceeding.
18. PARTIAL INVALIDITY.
Invalidity of any part or provision of this Agreement shall not affect the
enforceability of any other part or provision of this Agreement.
19. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing herein shall confer, nor shall it be construed to confer, on the
Executive any right to, guarantee of, or contract for a continued employment by
the Corporation, or in any way limit the right of the Corporation to terminate
the employment of the Executive.
20. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, as applied to contracts executed and performed
entirely in California.
21. NOTICES.
Any notices given hereunder must be in writing and may be delivered in
person or by certified or registered mail, return receipt requested, postage
prepaid. Notices to the Corporation should be delivered to Invivo Corporation,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: President, or to such
other address as Corporation from time to time furnishes to the Executive in a
notice. Notices to Executive should be delivered to the address shown beneath
Executive's signature below, or to such other address as the Executive from time
to time furnishes to the Corporation in a notice.
22. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the parties hereto.
This Agreement fully supersedes any and all prior agreements or understandings
pertaining to similar benefits.
23. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which, taken together, constitute
one and the same agreement.
24. AMENDMENTS.
9
This Agreement may not be modified except by a writing signed by both
parties.
[The remainder of this page is intentionally left blank.]
10
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the day and year first above written.
EXECUTIVE INVIVO CORPORATION
______________________________________ By: __________________________________
(signature)
Street Address (One of Two Required and
City, State and Zip Code Authorized Signatures)
And By: ______________________________
11