Severance Agreement – Fred Hite SEVERANCE AGREEMENT
EXHIBIT
10.46
Severance
Agreement – Xxxx Xxxx
XXXXXXXXX
AGREEMENT
This
Severance Agreement (the "Agreement") is made and entered into as of May 4, 2010
("Effective Date") by and between Symmetry Medical, Inc., a Delaware
corporation, and Xxxx Xxxx (the "Executive").
WITNESSETH
WHEREAS, Executive is an executive
officer of the Symmetry Medical, Inc. and/or its subsidiaries or other
affiliates (together, the "Company"); and
WHEREAS, the Company believes that
Executive has made and will continue to make valuable contributions to the
productivity and profitability of the Company; and
WHEREAS, the Company desires to
encourage Executive to continue to make such contributions and not to seek or
accept employment elsewhere; and
WHEREAS, the Company, therefore,
desires to assure Executive of certain benefits in the event of any termination
or significant redefinition of the terms of his employment with the
Company;
NOW, THEREFORE, in consideration of the
foregoing and of the mutual covenants herein contained and the mutual benefits
herein provided, the Company and Executive hereby agree as follows:
1. Employment
Term. The term of Executive's employment under this Agreement
shall commence on the Effective Date and continue until terminated at the
election of either the Company or Executive by giving notice of termination
pursuant to Section 3 or by Executive's death.
2. Qualifying
Terminations. The Company shall provide Executive with the
severance benefits set forth in Section 4 of this Agreement upon any
Qualifying Termination. As used in this Agreement, "Qualifying
Termination" shall mean Executive's resignation for Good Reason, as defined in
Section 4.g, or termination by the Company for any reason except the
following:
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a.
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Termination
by reason of Executive's Disability. As used in this Agreement,
"Disability" means Executive's inability by reason of illness or other
physical or mental condition to perform the duties required by his
employment for any consecutive one hundred and twenty day (120) day
period.
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b.
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Termination
for Cause. As used in this Agreement, the term "Cause" shall
mean the occurrence of one or more of the following
events:
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i.
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Executive's
conviction of a felony or of any crime involving moral
turpitude;
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ii.
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Executive's
engaging in any fraudulent or dishonest conduct in his dealings with, or
on behalf of, the Company;
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iii.
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Executive's
gross or habitual negligence in the performance of his employment duties
for the Company;
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iv.
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Executive's
material violation of the Company's business ethics or
conflict-of-interest policies, as such policies currently exist or as they
may be amended or implemented during Executive's employment with the
Company; or
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v.
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Executive's
misuse of alcohol or illegal drugs which interferes with the performance
of Executive's employment duties for the Company or which compromises the
reputation or goodwill of the
Company.
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In
addition, severance benefits shall not be payable if Executive's employment
terminates because of his resignation without Good Reason or because of his
death.
3. Procedural and Notice
Obligations. Any termination by Company of Executive's
employment or any resignation by Executive shall be communicated by a written
notice to the other party hereto. If the Company gives notice of
termination, the notice must state whether the Company believes the termination
is a Qualifying Termination and, if not a Qualifying Termination, the specific
provisions of this Agreement relied upon and the facts and circumstances, in
reasonable detail, claimed to provide a basis for such
termination. If Executive gives notice of termination, the notice of
termination must state whether Executive believes the termination to be a
Qualifying Termination and, if so, the specific provisions of this Agreement
relied upon and the facts and circumstances, in reasonable detail, claimed to
provide a basis for such termination. For the Executive to establish
a resignation for Good Reason: (i) the Executive must within ninety (90) days of
the initial occurrence of the event give written notice to the Company of such
occurrence; (ii) the Company must have failed to remedy that occurrence within
thirty (30) days after receiving such notice; and (iii) the Executive must
resign no later than sixty (60) days after giving such notice.
4. Severance
Benefits. Following a termination of employment for any
reason, Executive shall be paid, on the next regular payday, his earned but
unpaid salary, at his then effective rate, for services performed through the
date of termination and, within thirty (30) days following the termination, any
earned but unpaid incentive bonus for any previous completed year. In
addition, upon a Qualifying Termination, Executive shall receive the following
benefits ("Severance Benefits"), less any amounts required to be withheld under
applicable law, for twelve months following the Qualifying Termination (the
"Severance Period"), subject to the conditions set forth in Section 3,
Executive's execution of a Release Agreement, and the expiration of any
revocation period therein related to a Qualifying Termination. If the
Qualifying Termination occurs within twelve months following a Change in
Control, as defined in Section 4.f, then the number of
months in the Severance Period and the amounts payable under Section 4 shall be
multiplied by 150%.
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Company
shall pay to Executive an amount equal to Executive's annual base salary
as it existed prior to the Qualifying Termination (which shall be at least
equal to the Executive's base salary on the date of this Agreement and any
higher amount established after the date of this
Agreement). The payments due hereunder shall be made on the
Company's normal and customary pay days during the Severance
Period.
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Within
thirty (30) days following the last day of any computation period under an
incentive bonus plan or similar plan, Executive shall be paid a lump sum
payment equal to (i) any bonus to which Executive would have been entitled
if Executive had remained employed through the payment date and had
achieved all individual performance objectives, multiplied by (ii) a
fraction, the denominator of which is the number of days in any such
computation period and the numerator of which is the number of days during
the computation period the Executive was employed by the
Company. By way of example, should the computation period be
one year, during which the Executive worked 75 days, then the fraction
would be 75/365.
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During
the Severance Period, the Company shall reimburse Executive for any
amounts paid by Executive for COBRA continuation coverage, reduced by an
amount equal to the payments Executive made for such coverage immediately
prior to the Qualifying Termination. If Executive's right to
COBRA continuation coverage ends because Executive has enrolled in a group
medical plan offered by a subsequent employer, Executive's reimbursement
under this subsection shall end at the same
time.
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d.
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If,
as of the date Executive's employment terminates, Executive is a "key
employee" within the meaning of Section 416(i) of the Internal Revenue
Code (the "Code") and the Company has stock that is publicly traded on an
established securities market or otherwise, any payment that constitutes
deferred compensation because of employment termination will be suspended
until the first day of the seventh month following the month in which
Executive's last day of employment occurs. "Deferred
compensation" means compensation provided under a nonqualified deferred
compensation plan as defined in, and subject to, Section 409A of the
Code.
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e.
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No
payment or distribution by the Company to or for the benefit of Executive
of the severance benefits or any other amount in the nature of
compensation (whether payable or distributable under this Agreement or
otherwise) (a "Payment") will be paid that would be subject to the excise
tax or denial of deduction imposed by Sections 280G and 4999 of the Code
(an "Excess Parachute Payment").
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i.
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In
the event that the Company determines that any Payment would constitute an
Excess Parachute Payment, the Company will provide to Executive, within
thirty (30) days after Executive's employment termination date, an opinion
of a nationally recognized certified public accounting firm mutually
selected by the Company and Executive (the "Accounting Firm") that the
Executive would be considered to have received Excess Parachute Payments
if the Executive were to receive the full amounts described pursuant to
this Agreement or otherwise and setting forth with particularity the
smallest amount by the which the Payments would have to be reduced to
avoid the imposition of any excise tax or the denial of any deduction
pursuant to Code Sections 280G and
4999.
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ii.
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The
Payments shall be adjusted, in the order of priority designated by the
Executive in written instructions, to the minimum extent necessary so that
none of the Payments, in the opinion of the Accounting Firm, would
constitute an Excess Parachute
Payment.
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iii.
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Any
determination by the Accounting Firm shall be binding upon the Company and
the Executive. All fees and expenses of the Accounting Firm
shall be borne by the Company.
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f.
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As
used in this Agreement, a "Change in Control" of the Company
means:
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The
acquisition by any individual, entity or group (a "Person") of beneficial
ownership of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of the
Company.
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The
replacement of a majority of members of the Board of Directors during any
12-month period by members whose appointment or election is not endorsed
by a majority of the members of the Board of Directors prior to the date
of the appointment or election;
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A
reorganization, merger or consolidation (a "Combination"), in each case,
unless, following such Combination:
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a.
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more
than fifty percent (50%) of the then combined voting power of the
securities of the corporation resulting from such Combination is
beneficially owned by all or substantially all of the individuals and/or
entities who were the beneficial owners of the outstanding Company common
stock immediately prior to such Combination in substantially the same
proportions as their ownership of voting power immediately prior to such
Combination, and
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b.
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at
least a majority of the members of the board of directors of the
corporation resulting from such Combination were members of the Company's
Board at the time of the execution of the initial agreement providing for
such Combination;
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A
complete liquidation or dissolution of the Company;
or
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The
sale or other disposition of all or substantially all of the assets of the
Company.
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Despite
any other provision of this Section 4.f to the contrary, an event shall not
constitute a Change in Control if it does not constitute a change in the
ownership or effective control, or in the ownership of a substantial portion of
the assets of, the Company within the meaning of Section 409A(a)(2)(A)(v) of the
Code and its interpretive regulations.
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g.
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As
used herein, any voluntary resignation by Executive shall be for "Good
Reason" if the resignation follows any of these events: a material
reduction in the Executive's base salary or target bonus from its level as
of the date of this Agreement or any higher level established hereafter
(in a single or multiple reductions); a material reduction in the
Executive's duties or responsibilities from those that exist on the date
of this Agreement or as established hereafter; or a material breach or
repudiation by the Company of its obligations under this Agreement or any
other agreement prescribing the terms and conditions of his
employment.
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5. Settlement and Waiver of Claims by
Executive. Executive acknowledges and agrees that Executive's
acceptance of the Company's payment of the severance benefits pursuant to
Section 4 of this Agreement shall be deemed to constitute a full settlement and
discharge of any and all obligations of the Company to Executive arising out of
this Agreement, Executive's employment with the Company and/or the termination
of Executive's employment with the Company, except for any vested rights
Executive may have under any insurance, stock option or equity compensation plan
or any other employee benefit plans sponsored by the
Company. Executive further acknowledges and agrees that as a
condition to receiving any of the severance benefits pursuant to Section 4
of this Agreement, Executive will execute and not revoke a release agreement in
form and substance reasonably satisfactory to the Company pursuant to which
Executive will release and waive any and all claims against the Company (and its
officers, directors, shareholders, insurers, employees and representatives) that
exist as of the date of the release, including but not limited to any and all
claims arising out of this Agreement, Executive's employment with the Company,
and/or the termination of Executive's employment with the Company, and all
claims under any federal, state and local laws including the Age Discrimination
in Employment Act of 1967, as amended (the "Release
Agreement"). Notwithstanding the foregoing, the Release Agreement
shall not affect or relinquish (a) any vested rights Executive may have
under any insurance, stock option or equity compensation plan, or other employee
benefit plan sponsored by the Company, (b) any claims for reimbursement of
business expenses incurred prior to the employment termination date,
(c) any rights to severance benefits under Section 4 of this Agreement
and (d) any claims that cannot as a matter of law be
released. Company shall provide Executive with the Release Agreement
within ten (10) days of the date of any Qualifying Termination.
6. Executive's
Obligations. To induce the Company to enter into this
Agreement, Executive agrees as follows:
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a.
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Covenants
Not To Compete. During
Executive's employment with the Company and for a period of twelve (12)
months immediately after the termination of his employment, Executive will
not, directly or indirectly, without the prior written consent of the
Board of Directors (which consent will not be unreasonably
withheld):
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accept
employment with, or perform any services for any Competitor of the Company
or any of the Company's top ten (10) customers based on sales volume in
the prior fiscal year. For the purposes of this Section 6,
the term "Competitor" means a
company that manufactures orthopedic or aerospace products or services
that compete in the marketplace with products or services that the Company
provides at the time Executive's employment
ends;
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ii.
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accept
employment with or perform any services for any of the Company's customers
with whom Executive had contact within the last two (2) years of his
employment, if doing so would in any way reduce the level of business the
customer does with the Company or otherwise adversely affect the Company's
business relationship with the
customer;
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iii.
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accept
employment with or perform any services for any Competitor anywhere within
the Restricted Geographic Area (a) in the same or similar capacity or
function to that in which Executive worked for the Company, (b) in
any executive, officer or senior management capacity or function,
(c) in any sales, sales management, or customer management capacity
or function, (d) in any product development or product improvement
capacity, or (e) in any other capacity in which Executive's knowledge
of the Company's confidential information or the customer goodwill
Executive helped to develop on behalf of the Company would facilitate or
support Executive's work. For purposes of this Agreement, the
term "Restricted Geographic Area" means (i) each and every State of
the United States of America in which the Company is manufacturing or
selling any of its products or services at the time Executive's employment
ends; and (ii) each and every country in which the Company is
manufacturing or selling any of its products and services at the time
Executive's employment ends. However, if the Competitor has
separate divisions, business units or segments, some of which are not
competitive with the business of the Company, nothing herein shall
prohibit Executive from being employed by or working for only that segment
of the business that is not competitive with the business of the Company,
provided Executive's work does not involve any products or services that
compete with the Company's products and
services;
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iv.
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urge,
induce or seek to induce any of the Company's customers to reduce or
terminate their business with the Company or in any manner interfere with
the Company's business relationships with its
customers;
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v.
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urge,
induce or seek to induce any of the Company's customers with whom
Executive had contact during the last two (2) years of his employment with
the Company, to reduce or terminate their business with the Company or in
any manner interfere with the Company's business relationships with its
customers;
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vi.
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acquire
or maintain an ownership interest in any Competitor, except passive
ownership of up to two percent (2%) of any publicly traded
securities;
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vii.
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either
on his own account or for any other person, firm or company solicit, hire,
employ or attempt to solicit, hire or employ, or endeavor to cause any
employee of the Company to leave his employment, or to induce or attempt
to induce any such employee to breach any employment agreement with the
Company.
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viii.
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urge,
induce or seek to induce any of the Company's independent contractors,
subcontractors, consultants, vendors or suppliers to reduce, terminate or
modify in any way their relationship with the
Company;
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ix.
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disparage
the Company, its directors, officers, employees, products, facilities or
other persons or things associated with the Company or otherwise publish
or communicate any information or opinions that would reasonably be
considered to be derogatory or critical of the Company, its Directors,
officers, employees, products, facilities or other persons or things
associated with the Company.
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b.
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Confidentiality. Executive
will keep confidential and not, directly or indirectly, divulge or use for
any purpose whatsoever (other than in the performance of his duties for
the Company or as compelled by law), any of the Company's confidential
information, business secrets or trade secrets including, but not limited
to, information concerning such matters as the Company's products,
services, customers, finances and operations. All of the
Company's confidential information, business secrets and trade secrets
shall be the sole and exclusive property of the
Company. Executive's confidentiality obligations shall not
apply to any information that through lawful means has become generally
known outside the Company or is readily available in the public
domain.
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Upon the
termination of Executive's employment with the Company, or any time at the
Company's request, Executive shall immediately deliver to the Company any and
all memoranda, notes, records, drawings, manuals, computer programs,
documentation, diskettes, computer tapes, electronic data (in whatever form or
media), and all copies thereof, in Executive's possession or under Executive's
control, whether prepared by Executive or others, containing the Company's
confidential information, business secrets or trade secrets.
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c.
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Disclosure
of Developments. Employee
agrees to disclose promptly to Company all Developments made or conceived
by Employee (whether at the business premises of Company, at home, or
elsewhere), either solely or jointly with others, during Employee's
Employment Period. "Developments" means all products, methods,
inventions, improvement, concepts, designs, formulas, techniques,
processes, discoveries, know-how, and ideas related to Company's
business.
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d.
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Ownership
of Developments.
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All
Developments made or conceived by Employee (whether at the business of
Company, at home, or elsewhere), either solely or jointly with others,
during Employee's Employment Period will be the sole and exclusive
property of Company. Employee hereby assigns to Company all of
his rights, title, and interest in any and to all such Developments,
together with any Proprietary Rights related
thereto.
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Both
during Employee's Employment Period and thereafter, Employee agrees, at
Company's expense, to take such actions and to sign such applications,
assignments, and other documents as may be reasonably requested by Company
from time to time in order to protect Company's right, title, or interest
in any Developments and/or to obtain or maintain any Propriety Rights
related thereto.
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7. Survival
of Obligations/Extension/Severability/Remedies/Forfeiture.
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Survival
of Obligations. Executive
acknowledges and agrees that his obligations under Section 6 shall
survive the expiration or termination of this Agreement and the
termination of his employment with the Company, irrespective of the reason
for the termination of the Agreement and/or
employment. Executive further acknowledges and agrees that the
post-employment restrictions set forth in Section 6 of this Agreement
are and shall be construed as independent covenants and that no breach of
any contractual or legal duty by the Company shall be held sufficient to
excuse or terminate Executive's obligations under Section 6 of this
Agreement or to preclude the Company from obtaining injunctive or other
relief for Executive's violation or threatened violation of any provision
in Section 6, and the existence of any claim or cause of action by
Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the Company's enforcement of
Executive's obligations under Section 6 of this
Agreement.
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b.
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Extension. In the
event Executive violates any of the restrictive covenants contained in
Section 6, the duration of such restrictive covenant shall
automatically be extended by the length of time during which Executive was
in violation of such restriction.
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c.
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Severability;
Modification of Restrictions. Executive
agrees and understands that the restrictions in Section 6 are reasonable
in light of Executive's position of trust with the Company, the highly
competitive nature of the Company's business and the fact that the Company
has invested substantial time, money and other resources developing the
confidential information, business secrets, trade secrets and
relationships with its customers, employees, vendors and
contractors. Executive also agrees and represents that the
restrictions in Section 6 will not impair his ability to find suitable
subsequent employment. Although Executive and the Company
consider the restrictions contained in Section 6 to be reasonable and
enforceable, Executive and the Company acknowledge and agree that if any
provision of Section 6 is determined to be unenforceable for any reason
(a) such unenforceability shall not affect the enforceability of the
remainder of the Agreement; and (b) the provision shall automatically
be deemed reformed so that it shall have the closest effect permitted by
applicable law to the original form and shall be enforced on that
basis.
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d.
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Remedies. Executive
recognizes that a breach or threatened breach of Section 6 of this
Agreement will give rise to irreparable injury to the Company and that
money damages will not be adequate relief for such injury. For
this reason, Executive agrees that the Company shall be entitled to obtain
injunctive relief, including, but not limited to, temporary restraining
orders, preliminary injunctions and/or permanent injunctions, without
having to post any bond or other security, to restrain or prohibit such
breach or threatened breach, in addition to any other legal remedies which
may be available, including the recovery of money damages. In
addition to all other relief to which it shall be entitled, the Company
shall be entitled to recover from Executive all litigation costs and
attorneys' fees incurred by the Company in any action or proceeding
relating to Section 6 of this Agreement in which the Company prevails in
any respect.
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e.
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Forfeiture. Executive
agrees that if he either fails to fully and completely comply with each
and every provision of Section 6 of this Agreement or challenges the
enforceability of any provision in Section 6, then in such event the
Company shall have the right to discontinue payment of any compensation
that would otherwise be payable to Executive under this Agreement without
any recourse by Executive, and Executive shall be obligated to repay
immediately all amounts the Company already has paid to Executive under
this Agreement. The Company and Executive acknowledge and agree
that such remedy is in addition to, and not in lieu of, any and all other
legal and/or equitable remedies that may be available to the Company in
connection with Executive's breach or threatened breach of Section
6. If Executive fails to comply with this provision, then in
addition to all other relief to which it may be entitled, the Company also
shall be entitled to recover from Executive all litigation costs and
attorneys' fees incurred by the Company in any action or proceeding
relating to this Section 7 in which the Company prevails in any
respect.
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8. Payments Upon Executive's
Death. Should Executive die while any amounts are payable
hereunder, this Agreement shall inure to the benefit of and be enforceable by
Executive's executors, administrators, heirs, devisees and legatees and all
amounts payable hereunder shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or if there be no
such designee, to his estate.
9. Notices. For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been given when delivered
or mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to
Executive:
__________________________________
__________________________________
If to the
Company:
0000 X.
Xx. Xx. 00
Xxxxxx,
XX 00000
Attention: Chief
Executive Officer
Copy
to: General Counsel
or to
such other address as any party may have furnished to the other party in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. Venue, Choice of Law and
Jurisdiction. The validity, interpretation, and performance of
this Agreement shall be governed by the laws of the State of Indiana, except its
choice-of-law provisions. The parties agree that all legal disputes
regarding this Agreement will be resolved by the state or federal courts located
in Ft. Xxxxx, Indiana, and irrevocably consent to service of process in such
city for such purpose.
11. Waiver, Modification and Complete
Agreement. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and the Company. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. No agreements
or representation, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not set forth
expressly in this Agreement.
12. Severability. The
invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
13. Execution in
Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same Agreement.
14. Assignment. This
Agreement is personal in nature and neither of the parties hereto shall, without
the consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder, except as provided herein. Without limiting
the foregoing, Executive's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a security interest
or otherwise, other than a transfer by will or by the laws of descent and
distribution as set forth in Section 8 hereof, and in the event of any
attempted assignment or transfer contrary to this Section 14, the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred.
15. Source of Payments; No Lien by
Executive. Any benefits payable under this Agreement shall be
paid solely from the general assets of the Company. Neither Executive
nor Executive's beneficiary shall have interest in any specific assets of the
Company under the terms of this Agreement. This Agreement shall not
be considered to create an escrow account, trust fund or other funding
arrangement of any kind or a fiduciary relationship between Executive and the
Company.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date set forth above.
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SYMMETRY
MEDICAL, INC.
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By:
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Xxxxx
Xxxxx, President and Chief Executive
Officer
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Printed Name:
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