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Exhibit 10.8
EMPLOYMENT AGREEMENT
(Amended and restated as of July 16, 1998)
THIS AGREEMENT is made and entered into this 28th day of October, 1996,
by and between ORTHOPAEDIC BIOSYSTEMS LTD., INC., an Arizona corporation
("OBL"), and GARY SCHEEL ("Employee").
In consideration of the mutual covenants and promises herein contained,
OBL and Employee agree as hereinafter set forth.
1. Term. This Agreement shall begin on the date hereof and shall
continue until terminated by written notice delivered to a party by the other
parry not less than ten (10) days prior to the date of termination.
2. Duties. Employee shall serve OBL as Executive Vice President of
Sales and Marketing and shall perform such services for OBL as are consistent
with said position. Employee shall report directly to OBL's President. Employee
shall devote his full time, energy, technical knowledge, know-how and skill
during regular business hours to OBL's affairs and to the promotion of its
interests in a manner consistent with the highest standards customarily
applicable to persons occupying similar positions. Without the prior written
consent of the Board of Directors of OBL, Employee shall not engage in any other
business or accept any other employment during the term of this Agreement.
3. Compensation. Employee will be paid a base salary at the annual rate
of $120,000 for the period commencing October 28, 1996 and ending December 31,
1997. Salary shall be payable in installments in accordance with OBL's salary
payment policy in effect from time to time. Employee s base salary, in all
subsequent calendar years, will be determined by the Board of Directors of OBL,
subject to the approval of Employee, and will be based upon Employee's
performance during the prior period.
4. Fringe Benefits. Employee will be eligible to participate in all
corporate benefit programs in accordance with OBL's benefit policies. Employee
will be eligible for three (3) weeks annual vacation after six (6) months of
employment, provided, however, that the three weeks vacation may not be taken at
one time. OBL will pay Employee's reasonable moving expenses to the Phoenix
metropolitan area, including two (2) house-hunting trips for Employee's spouse.
OBL will also pay customary seller's closing expenses and commissions in
connection with the sale of Employee's residence in the Memphis area and
customary closing expenses in connection with Employee's acquisition of a
residence in the Phoenix metropolitan area.
5. Definitions. As used in this Agreement:
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(a) The term "Corporate Revenues" means gross sales revenues
less returns and product and product repurchased from distributors, for the
period in question less (i) revenues recorded from Mentor, and (ii) revenues
generated from businesses hereinafter acquired by OBL; and
(b) The term "Incremental Revenues," as used herein, is
defined as (i) OBL's Corporate Revenues (as defined above) for 1997 reduced by
(ii) OBL's gross sales revenues, less returns, generated in 1996.
6. Cash Bonus. Employee will be eligible to receive a cash bonus for
calendar years 1997 through 1999 based upon the following formula. To be
eligible to collect a bonus for any calendar year, Employee must be employed by
OBL for the entire year. All bonuses payable with respect to revenues generated
by OBL in any year will be paid within the first seventy-five (75) days of the
subsequent year:
1997- Bonus equals 2% of Incremental Revenues in excess of 4 million
plus 3 % of Incremental Revenues in excess of $6 million. For
example, if 1996 gross sales revenues equal $1.2 million and
1997 Corporate Revenues equal $6 million, the bonus would
equal $16,000 (2% of [($6 million - $1.2 million) - $4
million]). If 1997 Corporate Revenues equal $7.5 million, the
total bonus would be $55,000 (Incremental Revenue of $6.3
million, reduced by the SA million base, equals 52.3 million x
2%, or $46,000, plus 3% of #300,000 (the amount of incremental
Revenue that exceeds $6 million), or $9,000, for a total bonus
of $55,000).
1998- Bonus shall equal the following percentage of 1998 Corporate
Revenues:
Bonus as Percentage
1998 Corporate Revenues of Corporate Revenues
$6 million - $8 million 1/2%
$8 million - $10 million 1%
Over $10 million 1 1/2%
No bonus payable if Corporate Revenues do not exceed $6
million.
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l999- Bonus shall equal the following percentages of 1999 Corporate
Revenues:
Bonus as Percentage
1999 Corporate Revenues of Corporate Revenues
$12 million - $15 million 3/8%
$15 million - $20 million 3/4%
Over $20 million 1 1/2%
No bonus payable if Corporate Revenues do not exceed $12
million.
7. Stock Options. Effective as of this date, Employee is granted the
option to purchase 25,000 shares of the common stock of OBL at 52.00 per share
which option may be exercised at any time after October 28, 1997, provided
Employee remains in the employ of OBL until October 28, 1997. If OBL is acquired
or merged into another corporation before October 28, 1997, and if Employee is
employed by OBL on the date of such acquisition or merger, Employee shall be
given the right to exercise the stock option as of the data of such merger or
acquisition.
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All option shares may be exercised at any time from the date upon which
the option vests until December 31, 2002.
Notwithstanding anything herein to the contrary, if at any time OBL
shall (i) sell all or substantially all of its assets, (ii) substantially all of
the common stock of OBL shall be sold by its shareholders, or (iii) OBL shall
merge with another company and shall not be the surviving entity in such merger,
then all options previously granted but not vested may nevertheless be exercised
by Employee prior to the closing of any such transaction. OBL agrees to give
Employee as much prior notice as is practicable prior to such closing to enable
Employee to make arrangements to exercise any options that become exercisable as
a result of any-such sale or merger.
8. Non-Disclosure. OBL and Employee mutually acknowledge that Employee
will have access to and become familiar with confidential, privileged and secret
information belonging to OBL, including but not limited to customers lists and
records, pricing and cost information, marketing and other sales promotion
materials, product specifications and designs, drawings, photos and other
materials relating to proposed new products and other similar materials, all
specifically designed to promote and maintain the business and good will of OBL
(the "Proprietary Information").
Employee acknowledges that dissemination, publication or use of the
Proprietary Information by any person except in connection with furthering OBL's
business would have a substantial adverse affect on OBL. OBL has advised the
Employee and the Employee acknowledges that the compensation to be paid to him
under this Agreement
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is in substantial part in consideration of his willingness to make and carry out
the obligations of this Paragraph 8 during the term of his employment and
thereafter. In specific recognition of the foregoing, and in consideration of
the compensation to be paid to Employee by OBL, Employee agrees during the term
of his employment and thereafter to keep all of OBL's Proprietary Information
that may be disclosed or delivered to him or learned by him at any time or from
time to time during the course of his employment, fully private and
confidential, and he agrees not to disclose or deliver the same to any third
party under any circumstances.
9. Non-Competition. Employee further agrees that during the term of his
employment and for a period of six (6) months following the date of termination
of his employment by OBL, whatever may be the cause of such termination, he will
not anywhere within the United States:
(a) of his own right or in concern with any other person,
corporation or business entity, knowingly, either for himself or for
any person, firm or corporation, call upon, solicit, divert or take
away, or attempt to solicit, divert or take away any of OBL's
customers; and
(b) of his own right or in concern with any person,
corporation or other business entity, knowingly engage, for himself or
on account of or as an agent or servant of another, directly or
indirectly, in the business of distributing, wholesaling, selling or
marketing of medical products or in the marketing or selling of
products designed to compete with the products then being sold or
offered for sale by OBL.
Employee acknowledges that the foregoing non-solicitation and
non-competition restriction placed upon Employee is necessary and that in the
event Employee's services for OBL should terminate for any reason, Employee will
BC in a position to earn a livelihood without violating the foregoing
restriction, and that it has been made clear to Employed by OBL that Employee's
ability to earn a livelihood without violating such restriction is a material
condition to Employee's continued employment by OBL.
Employee further acknowledges and agrees that OBL has attempted to
limit Employee's right to compete with OBL only to the extent necessary to
protect OBL
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from unfair competition. However, should the scope or enforceability of the
covenants contained herein be disputed at any time, Employee specifically agrees
that a court may modify or enforce the covenant to the full extent such court
believes to be reasonable under the circumstances existing at the time.
10. Covenant Not to Interfere with OBL's Business. Employee agrees that
during Employee's employment hereunder and for six (6) months thereafter
Employee will not attempt to solicit or induce any other employee of OBL to
leave his or her employment with OBL or interfere with the business relationship
between between OBL and its suppliers or customers.
11. Return of Materials. Upon termination of his employment with OBL,
Employee agrees that he will promptly return to OBL all documents, records,
notebooks, customers' lists or other written material and/or computer software
containing Proprietary Information, including all copies of such materials then
in his possession, whether prepared by him or others. In addition, Employee will
return all instruments, sample kits or other samples of OBL Products that may be
in his possession.
12. Enforcement. In the event that Employee shall breach this
Agreement, or in the event that such breach appears to be an imminent
possibility, OBL shall be entitled to all legal and equitable remedies afforded
by it as a result of the breach and may, in addition to all other forms of
relief. recover from Employee all reasonable costs and attorneys' fees
encountered by it in seeking any such remedy. Employee acknowledges that the
remedies at law for any breach will be inadequate and, therefore, in addition to
its legal remedies, OBL will be entitled to injunctive relief in the event of
any such breach or threatened breach, without showing or proving any actual
damage or the posting of any bond, the requirements of which are hereby waived
by Employee.
13. Applicable Law and Severability. This Agreement shall be governed
for all purposes by the laws of the State of Arizona. If any provision,
paragraph or portion of a paragraph of this Agreement is in any way contrary to
the public policy of a state wherein it is sought to be enforced, or for other
reasons is held to be unenforceable, then such provision, paragraph or
subparagraph shall be deemed severed
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and stricken from this Agreement, but all remaining portions of this Agreement
shall remain in effect and be fully enforceable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ORTHOPAEDIC BIOSYSTEMS LTD., INC.
By: /s/ D. Ronald Yagoda
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/s/ Gary R. Scheel
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GARY SCHEEL