Employment Agreement - Cyberonics Inc. and Robert P. Cummins
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of this 30th day of
September 1995, (the "Effective Date") by and between Robert P. Cummins, an
individual ("Employee"), and CYBERONICS, INC., a Delaware corporation
("Company"), with reference to the following facts:
RECITALS
A. The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication and objectivity of the
Employee.
B. The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company.
C. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon the Employee's termination of employment
which provides the Employee with enhanced financial security and provides
efficient incentive and encouragement to the Employee to remain with the
Company.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1. Employment.
1.1 Employment. Company hereby hires Employee, and Employee
hereby accepts employment, as the Company's Chief Executive Officer and
President, with such duties and responsibilities as are set forth in the
Company's Bylaws and at the direction of the Board.
1.2 Employment Term. The period of Employee's employment
hereunder shall commence on the date hereof and shall continue until and
terminate on the first anniversary hereof unless earlier terminated pursuant to
Section 3 (the "Employment Period"). After the expiration of the Employment
Period and with the mutual agreement of the parties, Employees employment with
the Company may continue on an "at-will" basis, subject to the Company's
customary terms and condition of employment for its at-will employees.
1.3 Place of Employment. During the Employment Period,
Employee shall render his services principally at the offices of the Company in
Webster, Texas.
2. Compensation.
As compensation for his services to be performed hereunder,
Company shall provide Employee with the following compensation and benefits:
2.1 Base Salary. Employee's initial base salary shall be
$18,083.33 per month. Employee's base salary shall continue at such amount
subject to adjustment by the mutual agreement
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of the parties. Employee's base salary shall be payable in accordance with this
Company's payroll practices as in effect from time to time, and subject to such
withholding as is required by law.
2.2 Bonus Plan. In addition to the base salary specified in
Section 2.1, Employee shall be eligible to participate in executive officer
bonus plans as determined by the Board from time to time. Employee's bonus under
such plans shall be based on criteria set forth or established pursuant to any
such plan.
2.3 Benefits.
(a) Vacation. Employee shall be entitled to four (4)
weeks paid vacation during each year of his employment by the Company, which
shall be administered according to the Company's standard employment policies as
in effect from time to time; provided, however, that Employee shall not take
more than two (2) weeks of vacation in any six (6) week period.
(b) Auto/Travel Allowances. In addition to the other
compensation provided for herein, during the term of this Agreement, Employee
shall be paid an automobile allowance of $350.00 per month and a personal travel
allowance of $500.00 per month. Such payments shall be payable concurrent with
salary payments made in accordance with this Company's payroll practices as in
effect from time to time, and subject to such withholding as is required by law.
(c) Business Expenses. The Company shall reimburse
Employee for all reasonable business expenses incurred by Employee in the course
of performing services for the Company, in accordance with the Company's expense
reimbursement policy as in effect from time to time.
(d) Other Benefits. The Employee shall be eligible to
participate in the employee benefit plans and executive compensation programs
maintained by the Company of general applicability to other key executives of
the Company, including (without limitation) retirement plans, savings or
profit-sharing plans, deferred compensation plans, supplemental retirement or
excess-benefit plans, stock option, incentive or other bonus plans, life,
disability, health, accident and other insurance programs, paid vacations, and
similar plans or programs, subject in each case to the generally applicable
terms and conditions of the plan or program in question and to the determination
of the Board or any committee administering such plan or program.
2.4 Withholding, Etc. The Company may make such deductions,
withholdings and other payments from all sums payable to Employee pursuant to
this Agreement which are required by law or as Employee requests for taxes and
other charges.
3. Severance Pay. Except as otherwise expressly set forth in this
Section 3, Employee's right to receive base salary or any other payments not
required by law shall cease upon the effective date of any termination of the
Employment Period, and the Company shall have no further liability or obligation
to Employee, his executors, administrators or assigns hereunder except for
unpaid salary, benefits and bonuses (if any) accrued to the date of termination,
and except as set forth below.
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3.1 Involuntary Termination.
(a) Severance Payment. In the event that prior to the
first anniversary date of the Effective Date of this Agreement Employee's
employment with the Company is "involuntarily terminated" (as defined below),
the Company shall pay to Employee as severance pay, a cash payment equal to
$650,000 (the "Severance Payment"). The Cash Bonus shall be subject to
applicable tax withholding and shall be paid in a lump sum within five (5) days
following the effective date of the event giving rise to the Severance Payment.
(b) Involuntarily Terminated Defined. For purposes of
this Agreement, the term "involuntarily terminated" shall mean:
(i) the continued assignment to Employee of
any duties or the continued significant reduction of Employee's duties, either
of which is substantially inconsistent with the level of Employee's position
with the Company as of the date of this Agreement;
(ii) a material reduction in Employee's
salary, other than any such reduction which is part of, and generally consistent
with, a general reduction of officer salaries;
(iii) a material reduction by the Company in
the kind or level of employee benefits (other than salary and bonus) to which
Employee is entitled immediately prior to such reduction with the result that
Employee's overall benefits package (other than salary and bonus) is
substantially reduced (other than any such reduction applicable to officers of
the Company generally);
(iv) the relocation of Employee's principal
place for the rendering of the services to be provided him hereunder to a
location more than fifty (50) miles from the present location of the principal
executive office of the Company; or
(v) any material breach by the Company of
any material provision of this Agreement which continues uncured for 30 days
following notice thereof; provided, however, that none of the foregoing shall
constitute "involuntarily terminated" to the extent Employee has agreed thereto
in writing.
3.2 Voluntary Termination; Termination for Cause.
(a) No Severance Payment. In the event that Employee
voluntarily terminates his employment with the Company or the Company terminates
his employment for "cause" (as defined below), then the Company's sole
obligation to Employee will be (i) to pay Employee any salary, vacation or the
like accrued but not paid as of the date of termination and (ii) to provide
Employee with such right to continue health care benefits (at Employee's
expense) as required by applicable law. Notwithstanding the foregoing, it is
understood that a termination will not be deemed to be voluntary where Employee
terminates his employment as a result of the occurrence of one or more of the
events described in the definition of "involuntarily terminated."
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(b) For purposes of this Agreement, the term "cause"
shall mean:
(i) Conviction of a crime involving moral
turpitude;
(ii) The death or permanent disability of
Employee, with the term "permanent disability" defined as meaning a total or
partial physical or mental disability continuing for a period of not less than
three (3) consecutive months, which prevents Employee from substantially
discharging his duties and responsibilities as set forth herein;
(iii) Employee's malfeasance in connection
with his employment or neglect of his duties hereunder after written
notification thereof by the Company, which notice shall specify the alleged
instances of neglect of his duty, and shall provide Employee with 30 days in
which to remedy such neglect, if it is subject to being remedied;
(iv) Employee's material breach of this
Agreement or the confidential information agreement entered into with the
Company; or
(v) Employee personally engaging in knowing
and intentional illegal conduct which is seriously injurious to the Company or
its affiliates.
4. Confidentiality and Nondisclosure.
4.1 Exclusive Service. Employee agrees that so long as he
remains employed by the Company, he will not, except with the written approval
of the Company, engage in or be employed in any business competitive with that
of the Company either actively or as a passive investor (other than passive
investment in publicly traded securities), and will otherwise do nothing
inconsistent with his duties hereunder including, but not limited to, using any
of the Company's trade secrets, patents, trademarks, trade names, copyrights,
secret processes, plans of business operation, customer lists or other
intangible assets of the Company, whether presently owned or hereafter required,
other than in connection with his employment by the Company. Without limiting
the foregoing, the Company acknowledges that Employee has the outside
commitments described in Exhibit A hereto and hereby consents to such
activities.
4.2 Confidentiality Policies. Employee acknowledges that the
Company is a publicly held corporation and that as such, it is legally obligated
to maintain certain policies concerning the disclosure of nonpublic material
information concerning the Company, its products, operations and business.
Employee agrees to comply with all of such policies as may be adopted by the
Company from time to time hereafter, or as may be presently existing. Employee
further agrees to fully comply with all laws, rules and regulations of the
Securities and Exchange Commission, any state securities authority, any court or
other regulatory authority or agency relating to or affecting transactions in
the Company's securities, and specifically agrees not to purchase or sell
securities of the Company while in possession of material nonpublic information
concerning the Company.
4.3 Trade Secrets and Confidential Information. Employee
agrees to execute, and abide by, the Company's standard employee confidential
information agreement.
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4.4 Survival. Employee's agreements under this Section 4 shall
survive the termination of his employment, and shall continue indefinitely.
5. Miscellaneous.
5.1 Arbitration. If any dispute between the parties arises out
of this agreement, such dispute shall be finally resolved by binding arbitration
conducted in Webster, Texas in accordance with the commercial rules of the
American Arbitration Association then in effect. Any such arbitration shall be
conducted before a single arbitrator. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
5.2 Assignment. This Agreement shall inure to the benefit of
and shall be binding upon the successors and the assigns of the Company. This
Agreement is personal to Employee and may not be assigned by him.
5.3 Severability. If any provision of the Agreement shall be
found invalid by any court of competent jurisdiction, such findings shall not
affect the validity of the other provisions hereof and the invalid provisions
shall be deemed to have been severed herefrom.
5.4 Applicable Law. This Agreement is entered into and
executed in the State of Texas and shall be governed by the laws of such State.
5.5 Entire Agreement. This Agreement expresses the entire
understanding of the parties with respect to the terms of Employee's employment
with the Company, and supersedes any prior agreement, understanding or the like,
whether written or oral.
5.6 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
5.7 Attorneys' Fees. In the event any party hereto commences
arbitration or legal action to enforce this Agreement, the prevailing party
shall be entitled to its reasonable attorneys' fees, costs and expenses incurred
in such action.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
CYBERONICS, INC.
By: /s/ Reese S. Terry, Jr.
---------------------------------------
Reese S. Terry, Jr.
Chairman of the Board,
Executive Vice President and Secretary
EMPLOYEE
By: /s/ Robert P. Cummins
---------------------------------------
Robert P. Cummins
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EMPLOYMENT AGREEMENT AMENDMENT
THIS EMPLOYMENT AGREEMENT AMENDMENT (the "Amendment") is made as of
this 10th day of January, 1996 (the "Effective Date") by and between Robert P.
Cummins, an individual ("Employee"), and CYBERONICS, INC., a Delaware
corporation ("Company"), with reference to the following facts:
RECITALS
A. The Company and the Employee are parties to an Employment Agreement
dated effective as of September 30, 1995 (the "Employment Agreement");
B. The Board of Directors of the Company (the "Board") and the Employee
have jointly determined that it would be appropriate for Employee's role with
the Company to be revised as set forth in this Amendment, and to adjust
Employees time commitment and compensation in accordance with this revised role.
AGREEMENT
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1. Amendment of Employment Agreement.
1.1 Compensation. Section 2.1 of the Employment Agreement is
hereby revised to read in its entirety as follows:
"2.1 Base Salary. Employee's initial base salary
shall be $18,083.33 per month. Effective as of February 1, 1996,
Employee's base salary shall be reduced to $12,583.33 per month.
Employee's base salary shall continue at such amount subject to
adjustment by the mutual agreement of the parties. Employee's base
salary shall be payable in accordance with this Company's payroll
practices as in effect from time to time, and subject to such
withholding as is required by law."
1.2 Severance Payment. As of the Effective Date of this
Amendment, the Severance Payment amount set forth in Section 3.1(a) of the
Employment Agreement will be reduced to $450,000.
1.3 Exclusive Service. Section 4.1 of the Employment Agreement
is hereby amended to read in its entirety as follows:
"4.2 Exclusive Service. Employee agrees that so long
as he remains employed by the Company, he will not, except with the
written approval of the Company, engage in or be employed in any
business competitive with that of the Company either actively or as a
passive investor (other than passive investment in publicly traded
securities), and will otherwise do nothing inconsistent with his duties
hereunder including, but not limited to, using any of the Company's
trade secrets, patents, trademarks, trade names, copyrights, secret
processes, plans of business operation, customer lists or other
intangible assets of the
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Company, whether presently owned or hereafter required, other than in
connection with his employment by the Company. Without limiting the
foregoing, Employee agrees to devote at least 87% of his working time
devoted to Company business through January 31, 1996, and at least 50%
of his working time devoted to Company business from February 1, 1996
through the remaining term of this Agreement."
1.4 Exclusive Service. Section 3.2(b)(iii) of the Employment
Agreement is hereby amended to read in its entirety as follows:
"(iii) Employee's malfeasance in connection with his
employment or neglect or inadequate performance of
his duties as determined at any time in the sole and
absolute discretion of the Board of Directors;"
2. No Other Changes. Except as expressly provided in this Amendment,
the terms of the Employment Agreement shall remain in full force and effect.
3. Miscellaneous. The Miscellaneous provisions set forth in Section 5
of the Employment Agreement shall apply to this Amendment as if set forth
herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
CYBERONICS, INC.
By: /s/ Reese S. Terry, Jr.
--------------------------------------
Reese S. Terry, Jr.
Chairman of the Board,
Executive Vice President and Secretary
EMPLOYEE
By: /s/ Robert P. Cummins
--------------------------------------
Robert P. Cummins
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EMPLOYMENT AGREEMENT AMENDMENT
THIS EMPLOYMENT AGREEMENT AMENDMENT (the "Amendment") is made as of
this 10th day of April, 1996 (the "Effective Date") by and between Robert P.
Cummins, an individual ("Employee"), and CYBERONICS, INC., a Delaware
corporation ("Company"), with reference to the following facts:
RECITALS
A. The Company and the Employee are parties to an Employment Agreement
dated effective as of September 30, 1995, as amended on January 10, 1996 (the
"Employment Agreement");
B. The Company has announced the execution of an Agreement and Plan of
Merger pursuant to which the Company may be acquired by another company. The
Board of Directors of the Company (the "Board") recognizes that such
announcement can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility or occurrence of a Change of Control (as defined
below) of the Company.
AGREEMENT
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1. Amendment of Employment Agreement.
1.1 Employment Period. Section 1.2 of the Employment Agreement
is hereby revised to read in its entirety as follows:
"(a) Employment Term. The period of Employee's
employment hereunder shall commence on the date hereof and shall
continue until and terminate on December 31, 1996 unless earlier
terminated pursuant to Section 3 (the "Employment Period"). After the
expiration of the Employment Period and with the mutual agreement of
the parties, Employees employment with the Company may continue on an
"at-will" basis, subject to the Company's customary terms and condition
of employment for its at-will employees."
1.2 Severance Payment. Section 3.1(a) of the Employment
Agreement is hereby revised to read in its entirety as follows:
"(a) Severance Payment. In the event that prior to
December 31, 1996 Employee's employment with the Company is
"involuntarily terminated" (as defined below), the Company shall pay to
Employee as severance pay, a cash payment equal to $450,000 (the
"Severance Payment"). The Cash Bonus shall be subject to applicable tax
withholding and shall be paid in a lump sum within five (5) days
following the effective date of the event giving rise to the Severance
Payment."
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2. No Other Changes. Except as expressly provided in this Amendment,
the terms of the Employment Agreement shall remain in full force and effect.
3. Miscellaneous. The Miscellaneous provisions set forth in Section 5
of the Employment Agreement shall apply to this Amendment as if set forth
herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
CYBERONICS, INC.
By: /s/ Reese S. Terry, Jr.
--------------------------------------
Reese S. Terry, Jr.
Chairman of the Board,
Executive Vice President and Secretary
EMPLOYEE
By: /s/ Robert P. Cummins
--------------------------------------
Robert P. Cummins
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