Exhibit 10.45
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of February 23, 2004 by and between ENDOLOGIX, INC., a Delaware corporation (the
"Company"), and Stefan Schreck, Ph.D., an individual (the "Executive").
R E C I T A L
The Company desires to employ Executive in the capacity hereinafter
stated, and the Executive desires to enter into the employ of the Company in
that capacity pursuant to the terms and conditions set forth herein.
A G R E E M E N T
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 Company hereby agrees to employ the Executive as the
Vice President of Research and Development of the Company, reporting to the
President and Chief Executive Officer of the Company, and the Executive accepts
such employment and agrees to devote substantially all his business time and
efforts and skills on such reasonable duties as shall be assigned to him by the
Company commensurate with such position. The term of this Agreement shall
commence on February 23, 2004 and expire on October 18, 2005, unless sooner
terminated pursuant to the terms and provisions herein stated. This Agreement
shall automatically be extended for additional one (1) year renewal terms
(unless sooner terminated pursuant to the terms and provisions herein) unless
either party gives written notice to the other to terminate this Agreement at
least thirty (30) days prior to the end of the preceding term.
2. STOCK OPTIONS: ACCELERATION OF OPTIONS. Notwithstanding any
provisions of the Company's option or stock incentive plan, or of the
Executive's stock option or restricted stock agreements, in the event of a
"Corporate Transaction" or "Change in Control," as defined below, during the
period of the Executive's employment with the Company, all of the Executive's
stock options shall vest in full and all rights of the Company to repurchase
restricted stock of the Executive shall terminate.
For purposes hereof, "Change in Control" shall mean a change in
ownership or control of the Company effected through the acquisition, directly
or indirectly, by any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
pursuant to a tender or exchange offer made directly to the Company's
stockholders which the Board does not recommend such stockholders to accept.
For purposes hereof, "Corporate Transaction" shall mean either of the
following stockholder-approved transactions to which the Company is a party:
(A) A merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such transaction; or
(B) The sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or
dissolution of the Company.
3. TERMINATION.
3.1 TERMINATION BY THE COMPANY FOR CAUSE. Any of the following acts or
omissions shall constitute grounds for the Company to terminate the Executive's
employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Executive causing material harm to the
Company but only if Executive shall not have discontinued such misconduct within
30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this Agreement,
(b) Any material act or omission by the Executive involving gross
negligence in the performance of the Executive's duties to, or material
deviation from any of the policies or directives of, the Company, other than a
deviation taken in good faith by the Executive for the benefit of the Company,
(c) Any illegal act by the Executive which materially and adversely
affects the business of the Company, provided that the Company may suspend the
Executive with pay while any allegation of such illegal act is investigated, or
(d) any felony committed by Executive, as evidenced by conviction
thereof, provided that the Company may suspend the Executive with pay while any
allegation of such felonious act is investigated.
Termination by the Company for cause shall be accomplished by written notice to
the Executive and, in the event of a termination pursuant to Sections 3.1(a),
3.1(b), and/or 3.1(c) above, shall be preceded by a written notice providing a
reasonable opportunity for the Executive to correct his conduct.
3.2 TERMINATION FOR DEATH OR DISABILITY. In addition to termination for
cause pursuant to Section 3.1 hereof, the Executive's employment pursuant to
this Agreement shall be immediately terminated without notice by the Company (i)
upon the death of the Executive or (ii) upon the Executive becoming totally
disabled. For purposes of this Agreement, the term "totally disabled" 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 one
hundred eighty (180) or more consecutive days, as determined by a competent
physician selected by the Company's Board of Directors and reasonably agreed to
by the Executive, following such one hundred eighty (180) day period.
3.3 TERMINATION FOR GOOD REASON. Executive's employment pursuant to
this Agreement may be terminated by the Executive for "good reason" if the
Executive voluntarily terminates his employment as a result of any of the
following:
(a) Without the Executive's prior written consent, a reduction in his
then current Base Salary; or
(b) Without the Executive's prior written consent, the assignment to
Executive of duties substantially and materially inconsistent with the position
and nature of Executive's employment as set forth in Section 1 of this
Agreement, or
(c) Without Executive's prior written consent, a relocation of the
Executive's place of employment outside of Orange County, California.
3.4 TERMINATION WITHOUT CAUSE. The Company may terminate this
Agreement, and the employment of the Executive under this Agreement, without
cause, at any time upon at least thirty (30) days' prior written
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notice to the Executive. This Section 3.4 shall not apply to a termination of
the Executive by the Company as a result of a "Corporate Transaction" or "Change
in Control", but, instead, the provisions of Section 3.5 below shall apply.
3.5 TERMINATION DUE TO CORPORATE TRANSACTION OR CHANGE IN CONTROL. The
Company may terminate this Agreement and the employment of the Executive under
this Agreement, upon at least thirty (30) days' prior written notice to the
Executive in the event of a "Corporate Transaction" or "Change in Control," as
defined in Section 2, during the period of the Executive's employment. The
Executive may terminate this Agreement and the employment of the Executive under
this Agreement upon at least thirty (30) days' prior written notice to the
Company upon the occurrence of a "Corporate Transaction" or "Change in Control,"
as defined in Section 2, during the period of Executive's employment if any of
the following occur as a result of the "Corporate Transaction" or "Change in
Control": (i) a reduction in Executive's current Base Salary, (ii) the
assignment to Executive of duties substantially and materially inconsistent with
the position and nature of Executive's employment as set forth in Section 1 of
this Agreement, (iii) the failure by the Company to obtain from any successor an
agreement to assume and perform this Agreement; (iv) Executive is not offered a
new employment agreement; or (v) Executive is not offered a new employment
agreement on substantially the same terms as provided in this Agreement.
3.6 PAYMENTS UPON REMOVAL OR TERMINATION.
(a) If, during the term of this Agreement, the Executive resigns for
one of the reasons stated in Section 3.3, or if the Company terminates
Executive's employment pursuant to Section 3.4 above, the Executive shall be
entitled to the following compensation: (i) the portion of his then current Base
Salary which has accrued through his date of termination, (ii) any payments for
unused vacation and reimbursement expenses, which are due, accrued or payable at
the date of Executive's termination, (iii) severance payment in an amount of
six-months equal to Executive's then-current Base Salary; (the "Severance
Amount"), and (iv) to the extent not already vested under Section 2 or otherwise
all of Executive's options to purchase shares of the Company's common stock and
restricted stock shall vest by six additional months, and such options shall
otherwise be exercisable in accordance with their terms. In addition, in such
event, Executive shall be entitled to (a) a prorated payment equal to the target
bonus amount for which Executive would be eligible for the year in which such
resignation or termination occurred, and (b) continuation of the insurance
benefits set forth in Exhibit A, for six-months. The payments provided by this
paragraph 3.6(a) shall be Executive's complete and exclusive remedy for any such
termination.
(b) If, during the term of this Agreement, the Company terminates
Executive's employment pursuant to Section 3.5 above or the Executive terminates
his employment pursuant to Section 3.5 above, the Executive shall be entitled to
the following compensation: (i) the portion of his then current Base Salary
which has accrued through his date of termination, (ii) any payments for unused
vacation and reimbursement expenses, which are due, accrued or payable at the
date of Executive's termination, (iii) severance payment in an amount of
twelve-months equal to Executive's then-current Base Salary (the "Severance
Amount"); and (iv) to the extent not already vested under Section 2 or otherwise
all of Executive's options to purchase shares of the Company's common stock and
restricted stock shall accelerate and automatically vest, and such options shall
otherwise be exercisable in accordance with their terms. In addition, in such
event, Executive shall be entitled to (a) a prorated payment equal to the target
bonus amount for which Executive would be eligible for the year in which such
resignation or termination occurred, and (b) continuation of the insurance
benefits set forth in Exhibit A, for twelve-months. The payments provided by
this paragraph 3.6(b) shall be Executive's complete and exclusive remedy for any
such termination.
(c) All payments required to be made by the Company to the Executive
pursuant to this Section 3 shall be paid on a regular basis in accordance with
the Company's normal payroll procedures and policies, including, without
limitation, the Severance Amount which shall be paid at such times and in such
amounts consistent with the Company's normal payroll procedures and policies
over the number of months immediately succeeding the date of termination that is
equal to the number of months of Base Salary payable as the
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Severance Amount. If the Company terminates the Executive's employment pursuant
to Sections 3.1 or 3.2, or if the Executive voluntarily resigns (except as
provided in Section 3.3 or Section 3.5), then the Executive shall be entitled to
only the compensation set forth in items (i) and (ii) of Section 3.6(a).
(d) To the extent that any or all of the payments and benefits provided
for in this Agreement constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code (the "Code") and, but for this
paragraph, would be subject to the excise tax imposed by Section 4999 of the
Code, then at the Executive's election:
(i) The Executive shall receive all such payments and benefits
the Executive is entitled to receive hereunder, and any liability for
taxes pursuant to the above shall be the liability solely of the
Executive; or
(ii) The aggregate amount of such payments and benefits shall
be reduced such that the present value thereof (as determined under the
Code and applicable regulations) is equal to 2.99 times the Executive's
"base amount" (as defined in Section 280G of the Code).
The determination of any reduction or increase of any payment or benefits under
this paragraph pursuant to the foregoing provision shall be made by a nationally
recognized public accounting firm chosen by the Company in good faith, and such
determination shall be conclusive and binding on the Company and the Executive.
4. 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 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 4.
5. SUCCESSORS. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement is made under and shall be governed
by and construed in accordance with the laws of the State of California.
6.2 PRIOR AGREEMENTS. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes all prior
agreements and understanding with respect to such subject matter, 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.
6.3 ARBITRATION. In the event of any controversy, claim or dispute
between the parties hereto arising out of or relating to this Agreement, the
matter shall be determined by arbitration, which shall take place in Orange
County, California, under the rules of the American Arbitration Association. The
arbitrator shall be a retired Superior Court judge mutually agreeable to the
parties and if the parties cannot agree such person shall be chosen in
accordance with the rules of the American Arbitration Association. The
arbitrator shall be bound by applicable legal precedent in reaching his or her
decision. Any judgment upon such award may be entered in any court having
jurisdiction thereof. Any decision or award of such arbitrator shall be final
and binding upon the parties and shall not be appealable. The parties hereby
consent to the jurisdiction of such arbitrator
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and of any court having jurisdiction to enter judgment upon and enforce any
action taken by such arbitrator. The fees payable to the American Arbitration
Association and the arbitrator shall be paid by the Company.
6.4 WITHHOLDING TAXES. The Company may withhold from any salary and
benefits payable under this Agreement 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.
6.5 AMENDMENTS. No amendment or modification of this Agreement shall be
deemed effective unless made in writing signed by the parties hereto.
6.6 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 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.
6.7 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.
6.8 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.
6.9 ATTORNEYS FEES. Should any legal action or arbitration be required
to resolve any dispute over the meaning or enforceability of this Agreement or
to enforce the terms of this Agreement, the prevailing party shall be entitled
to recover its or his reasonable attorneys fees and costs incurred in such
action, in addition to any other relief to which that party may be entitled.
6.10 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be personally served or sent by United States Mail,
and shall be deemed to have been given when personally served or two days after
having been deposited in the United States Mail, registered mail, return receipt
requested, with first class postage prepaid and properly addressed as follows:
If to Executive:
STEFAN SCHRECK, PH.D.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
If to the Company:
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Attn: Chief Executive Officer
6.11 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Executive agrees
to sign the Company's standard form of employee proprietary information and
inventions agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
"COMPANY"
ENDOLOGIX, INC.,
A Delaware corporation
By:___________________________
__________________________________________________Its: President and CEO
"EXECUTIVE"
STEFAN SCHRECK, PH.D.
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EXHIBIT A
STEFAN SCHRECK, PH.D. BENEFITS
- --HEALTH INSURANCE
- --DENTAL INSURANCE
- --PRESCRIPTION DRUG INSURANCE
- --GROUP LIFE INSURANCE