Exhibit 10.35
EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (this “
Agreement ”) is by and between HealthTronics,
Inc., a Georgia corporation (“ Employer
”), and Clayton H. Duncan, an individual (“
Executive ”), and shall be effective as of
August 22, 2007 (the “ Effective Date
”).
Preliminary
Statements
Executive
desires to be employed by Employer upon the terms and conditions
stated herein, and Employer desires to employ Executive provided
that, in so doing, it can protect its confidential information,
business, accounts, patronage and goodwill.
Employer
and Executive have specifically determined that the terms of this
Agreement are fair and reasonable.
Statement of
Agreement
NOW,
THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good, valuable and binding
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I.
Term; Termination; Prior Agreements
Section
1.1. Term . Employer hereby hires Executive and Executive
accepts such employment for an initial term of one year commencing
on the Effective Date.
Section
1.2. Termination Upon Expiration . The term of this
Agreement shall automatically renew for successive one year periods
immediately following the expiration of the initial one year term
and each successive one-year term thereafter. Either Executive or
Employer may provide the other party with written notice of
non-renewal not less than 90 days prior to the expiration of the
then current term, and, as long as neither Executive nor Employer
terminates or gives notice of termination of this Agreement
pursuant to the other terms and provisions contained herein, then
this Agreement shall terminate automatically upon the expiration of
the term during which notice of non-renewal is properly given
pursuant to this Section. Neither the provision of written notice
of non-renewal, nor the termination upon expiration of this
Agreement following delivery of written notice of non-renewal,
shall itself be deemed a termination of this Agreement by any party
pursuant to any other Section of this Agreement.
Section
1.3. Termination Upon Death or Permanent Disability . This
Agreement shall be automatically terminated on the death of
Executive or on the permanent disability of Executive if Executive
is no longer able to perform in all material respects the usual and
customary duties of Executive’s employment hereunder. For
purposes hereof, any condition which in reasonable likelihood is
expected to impair Executive’s ability to materially perform
Executive’s duties hereunder for a period of three months or
more shall be considered to be permanent.
Section
1.4. Termination for Cause . If this Agreement has not been
previously terminated, and no party has previously given notice of
termination pursuant to Section 1.5 ,
Section 1.6 or Section 1.7 , then Employer
may terminate this Agreement “for cause” if:
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(a)
In connection with the business of Employer, Executive is convicted
of an offense constituting a felony or involving moral turpitude;
or
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(b)
in a material and substantial way,
(i) Executive (A) violates any written policy of
Employer, (B) violates any provision of this Agreement,
(C) fails to follow reasonable written instructions or
directions from the Board of Directors of Employer (the “
Board ”), or any other person authorized by the
Board to instruct or supervise Executive (for purposes of this
Agreement, any such authorized person is referred to as an “
Authorized Board Designee ”), or (D) fails
to use good-faith efforts to perform the services required pursuant
to this Agreement; and (ii) Executive fails to materially cure
such violation or failure within fifteen days after receiving
written notice from the Board clearly specifying the act or
circumstances that gave rise to such violation or
failure.
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notice of termination pursuant to this Section shall be in writing
and shall state the alleged reason for termination. Executive,
within not less than fifteen nor more than thirty days after such
notice, shall be given the opportunity to appear before the Board,
or a committee thereof, to rebut or dispute the alleged reason for
termination. If the Board or committee determines, by a majority of
the disinterested directors, after having given Executive the
opportunity to rebut or dispute the allegations, that such reason
is indeed valid, Employer may immediately terminate
Executive’s employment under this Agreement for cause.
Immediately upon giving the notice contemplated by this paragraph,
Employer may elect, during the pendency of such inquiry, to relieve
Executive of Executive’s regular duties.
Section
1.5. Termination for Good Reason . Executive is entitled to
terminate this Agreement for " good reason ," with
thirty days prior written notice, upon any of the following
occurrences:
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(a)
Within two months following any Change of Control, Executive may
terminate this Agreement, for any or no reason, provided that
notice of termination cannot be given prior to the consummation of
the Change of Control;
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(b)
Executive may terminate this Agreement if Executive’s base
salary, as provided hereunder, is diminished;
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(c)
Executive may terminate this Agreement if Employer requires that
Executive move to a city other than Austin;
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(d)
Executive may terminate this Agreement if the Board or any
Authorized Board Designee materially and unreasonably interferes
with Executive’s ability to fulfill Executive’s job
duties; or
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(e)
Executive may terminate this Agreement if Executive is reassigned
to a position with diminished responsibilities, or
Executive’s job responsibilities are materially narrowed or
diminished.
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Without
limiting the provisions of Section 1.8 hereof,
Executive agrees that Employer can relieve Executive of
Executive’s duties hereunder prior to the end of the
applicable notice period provided for in this Section, and in such
event, Executive shall not thereafter be entitled to any of the
benefits or salary described in Article III hereof.
Furthermore, if the term of this Agreement expires upon notice of
non-renewal given pursuant to Section 1.2 prior to the
end of any notice period otherwise required under this Section,
then the applicable notice period required under this Section does
not apply and notice may be given at any time prior to such
expiration.
If
Employer does not relieve Executive of Executive’s duties
during any applicable notice period under this Section, and the
applicable notice period extends beyond the expiration of the term
of this Agreement pursuant to Section 1.2 , then the
terms and provisions of this Agreement shall govern
Executive’s employment by Employer until the end of such
notice period, and the term of this Agreement shall be deemed
automatically extended until the end of such notice
period.
Section
1.6. Termination of Agreement by Employer Without Cause .
Employer has the right to terminate this Agreement, other than
“for cause,” on 30 days prior written notice. Any
termination of this Agreement by Employer other than pursuant to
the express terms of Section 1.2 ,
Section 1.3 or Section 1.4 shall be deemed
a termination pursuant to this Section, irrespective of whether the
notice required under this Section is properly
given.
Section
1.7. Termination of Agreement by Executive Without Good
Reason . Executive may terminate Executive’s employment,
other than for “good reason,” upon 30 days prior
written notice stating that this Agreement is terminated other than
for “good reason”. Executive agrees that Employer can
relieve Executive of Executive’s duties hereunder prior to
the end of such 30 day notice period, and in such event, Executive
shall not thereafter be entitled to any of the benefits or salary
described in Article III hereof.
Section
1.8. Executive’s Rights Upon Termination . Upon
termination of this Agreement, Executive shall be entitled to the
following:
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(a)
If this Agreement is terminated pursuant to Section 1.2
, Section 1.3 , Section 1.4 , or
Section 1.7 then Employer shall pay Executive or
Executive’s representative, as the case may be,
Executive’s then-current base salary (excluding any bonuses
and non-cash benefits) through the effective date of termination
(which, in the case of Section 1.7 , shall follow any
portion of the applicable notice period during which Executive has
not been relieved of Executive’s duties hereunder), and
Employer shall have no further obligations hereunder.
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(b)
If Employer terminates this Agreement without cause pursuant to
Section 1.6 or otherwise, or Executive terminates this
Agreement pursuant to Section 1.5 , then, in addition
to receiving Executive’s then current base salary through the
effective date of termination, Executive (i) shall receive
within 15 days of the effective date of termination a lump-sum
payment equal to (A) 100% of Executive’s then-current
annualized base salary, and (B) cash bonuses, if any, paid by
Employer to Executive during the preceding twelve months, and
(ii) shall be released from the provisions of
Section 4.2 , notwithstanding that the provisions of
such Section would otherwise survive termination of this
Agreement pursuant to Section 1.9 . Executive and
Employer agree that the effective date of any termination pursuant
to Section 1.5 shall be the earlier of the end of the
applicable notice period, if any, or the date on which Employer
relieves Executive of Executive’s duties hereunder. Executive
and Employer agree that the effective date of any termination
pursuant to Section 1.6 hereof shall be only upon the
expiration of the 30 day notice period described in
Section 1.6 , regardless of whether Employer earlier
relieves Executive of Executive’s duties hereunder. As a
condition to receiving the severance payments provided in this
Section 1.8(b) , Executive must execute a full release
and waiver of all claims against Employer in a form reasonably
acceptable to Employer (excluding claims for amounts required under
this Agreement to be paid upon severance and existing
indemnification obligations to Executive).
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Section
1.9. Survival . Any termination of this Agreement and
Executive’s employment as a result thereof shall not release
either Employer or Executive from their respective obligations to
the date of termination nor from the provisions of this Agreement
which, by necessary or reasonable implication, are intended to
apply after termination of this Agreement, including, without
limitation, the provisions of Article IV . Furthermore,
neither the termination of this Agreement nor the termination of
Executive’s employment under this Agreement shall affect,
limit or modify in any manner the existence or enforceability of
any other written agreement between Executive and Employer, even if
such other agreements provide employment related benefits to
Executive.
Section
1.10. Termination of Existing Agreements . Any previous
employment agreement between Executive on the one hand and Employer
or any of Employer’s Affiliates (as hereinafter defined) on
the other hand is hereby terminated.
Section
1.11. “ Change of Control .” As used in this
Agreement, “ Change of Control ” shall
mean the occurrence of any of the following:
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(a)
Any person, entity or “group” within the meaning of
§ 13(d) or 14(d) of the Securities and Exchange Act of 1934
(the “ Exchange Act ”) becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 50% of the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of the Board, but only if such event
results in a change in Board composition such that the directors
immediately preceding such event do not comprise a majority of the
Board following such event;
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(b)
a merger, reorganization or consolidation whereby Employer’s
equity holders existing immediately prior to such merger,
reorganization or consolidation do not, immediately after
consummation of such reorganization, merger or consolidation, own
more than 50% of the combined voting power of the surviving
entity’s then outstanding voting securities entitled to vote
generally in the election of directors, but only if such event
results in a change in Board composition such that the directors
immediately preceding such event do not comprise a majority of the
board of directors of such surviving entity following such
event;
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(c)
the sale of all or substantially all of Employer’s assets to
an entity in which Employer, any subsidiary of Employer, or
Employer’s equity holders existing immediately prior to such
sale beneficially own less than 50% of the combined voting power of
such acquiring entity’s then outstanding voting securities
entitled to vote generally in the election of directors, but only
if such event results in a change in Board composition such that
the directors immediately preceding such event do not comprise a
majority of the board of directors of such acquiring entity
following such event; or
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(d)
any change in the identity of directors constituting a majority of
the Board within a twenty-four month period unless the change was
approved by a majority of the Incumbent Directors, where
“Incumbent Director” means a member of the Board at the
beginning of the period in question, including any director who was
not a member of the Board at the beginning of such period but was
elected or nominated to the Board by, or on the recommendation of
or with the approval of, at least two-thirds of the directors who
then qualified as Incumbent Directors.
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Section
1.12. Excise Tax Limitation .
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(a)
Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided
under this Agreement and benefits provided to, or for the benefit
of, Executive under any other Employer plan or agreement (such
payments or benefits are collectively referred to as the “
Payments ”) would be subject to the excise tax
(the “ Excise Tax ”) imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended
(the “ Code ”), the Payments shall be
reduced (but not below zero) if and to the extent necessary so that
no Payment to be made or benefit to be provided to Executive shall
be subject to the Excise Tax (such reduced amount is hereinafter
referred to as the “ Limited Payment Amount
”). Unless Executive shall have given prior written notice
specifying a different order to Employer to effectuate the
foregoing, Employer shall reduce or eliminate the Payments, by
first reducing or eliminating the portion of the Payments which are
not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or
benefits which are to be paid the farthest in time from the
Determination (as hereinafter defined). Any notice given by
Executive pursuant to the preceding sentence shall take precedence
over the provisions of any other plan, arrangement or agreement
governing Executive’s rights and entitlements to any benefits
or compensation.
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(b)
The determination of whether the Payments shall be reduced to the
Limited Payment Amount pursuant to this Agreement and the amount of
such Limited Payment Amount shall be made, at Employer’s
expense, by a reputable accounting firm selected by Executive and
reasonably acceptable to Employer (the “ Accounting
Firm ”). The Accounting Firm shall provide its
determination (the “ Determination ”),
together with detailed supporting calculations and documentation to
Employer and Executive within ten (10) days of the date of
termination, if applicable, or such other time as specified by
mutual agreement of Employer and Executive, and if the Accounting
Firm determines that no Excise Tax is payable by Executive with
respect to the Payments, it shall furnish Executive with an opinion
reasonably acceptable to Executive that no Excise Tax will be
imposed with respect to any such Payments. The Determination shall
be binding, final and conclusive upon Employer and
Executive.
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ARTICLE II.
Duties of Executive
Subject
to the approvals by and the ultimate supervision of the Board and
each Authorized Board Designee, Executive during the term hereof
shall serve as Vice President of Development-Prostate Therapies and
Large Partnerships. Subject to the control of the Board and any
Authorized Board Designee, Executive shall have the
responsibilities commensurate with Executive’s title and as
otherwise provided in Employer’s bylaws and other governing
documents.
During
the period of employment hereunder, Executive shall devote all of
Executive’s working time, attention, energies and best
efforts to the business of Employer for the profit, benefit and
advantage of Employer, and shall perform such other services as
shall be designated, from time to time, by the Board or any
Authorized Board Designee. The foregoing shall not be construed as
preventing Executive from making personal investments in such form
or manner as will require Executive’s services in the
operation or affairs of the companies or enterprises in which such
investments are
