EXHIBIT 10(w)
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EMPLOYMENT AND NON-COMPETE AGREEMENT
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Agreement made as of November 1, 1996, between Hanger Orthopedic Group,
Inc., a Delaware corporation (the "Company"), and Xxx May ("Executive").
WITNESSETH:
WHEREAS, Executive has great expertise in the Company's and its
Subsidiaries' businesses;
WHEREAS, Executive's use of such expertise in competition with the Company
and its Subsidiaries would have an extremely detrimental effect on the Company
and its Subsidiaries; and
WHEREAS, the Company desires to retain the services of Executive and to
assure itself that Executive does not engage in competition with the Company and
its Subsidiaries.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive and Executive
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accepts such employment by the Company upon the terms and conditions set forth
in this Agreement, for the period beginning on the date of this Agreement, and
ending upon termination pursuant to paragraph 4 hereof (the "Employment
Period").
2. Compensation.
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(a) During the Employment Period, the Company will pay Executive a base
salary at the rate of $36,400.00 per annum in consideration for the services to
be rendered to the Company by Executive (the "Base Salary"). Executive's Base
Salary may be increased from time to time as determined by the Board of
Directors of the Company (the "Board"). In addition to the Base Salary payable
to Executive pursuant to this paragraph 2(a), during the Employment Period
Executive will be entitled to the benefits set forth on Schedule I attached
hereto.
(b) In addition to the Base Salary and the other benefits paid to
Executive during the Employment Period, Executive also shall be eligible to
receive awards of stock options from the Company, as well as cash bonus
compensation based on formulae related to year-end financial data of the Company
and determined in the reasonable discretion of the Board and its Compensation
Committee.
3. Services. During the Employment Period, Executive shall devote his
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best efforts and substantially all of his business time and attention to the
affairs of the Company or its
Subsidiaries (except for reasonable vacation periods subject to the reasonable
approval of the Board, or reasonable periods of illness or other incapacity).
During the Employment Period, Executive agrees to render such services of an
executive and administrative character to the Company and its Subsidiaries as
the Board may from time to time direct.
4. Termination. The Employment Period will continue from year to year
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unless terminated earlier by (a) Executive's death or permanent disability (as
determined by the Board in its good faith judgment), (b) by Executive's
resignation upon prior written notice to the Company of not less than three (3)
months, (c) the Board for Cause, or (d) the Board without Cause. For purpose of
this paragraph 4, "Cause" shall mean (i) the failure or refusal of Executive to
follow the lawful directives of the Board (except due to sickness, injury or
disabilities), (ii) inattention to duty or any other willful, reckless or
negligent act (or omission to act) by Executive, which, in the good faith
judgment of the Board, materially injures the Company or one of its
Subsidiaries, including the repeated failure to follow the policies and
procedures of the Company or one of its Subsidiaries, (iii) a material breach of
this Agreement by Executive, (iv) the commission by Executive of a felony or
other crime involving moral turpitude or the commission by Executive of an act
of financial dishonesty against the Company or one of its Subsidiaries or (v) a
proper business purpose of the Company, including but not limited to a decrease
in the staffing of the office in which Executive is working or the elimination
of the position filled by Executive.
If Executive's employment is terminated by the Executive in any manner
other than clauses (a) or (b) above, the Company will have the remedies
enumerated in paragraph 17.
If Executive's employment is terminated, then Executive may be entitled to
receive severance payments in the amount and under the terms set forth in
Schedule II attached hereto.
5. Non-Compete.
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(a) Executive agrees that during the Employment Period and for a period of
thirty-six (36) months thereafter (the "Non-Compete Period"), Executive will not
directly or indirectly (whether as employee, director, owner, stockholder,
consultant, partner (limited or general) or otherwise) own, manage, control,
participate in, consult with, render services for or in any manner engage in any
Competitive Business or solicit any other Person to engage in any of the
foregoing activities or knowingly request, induce or attempt to influence any
then existing customer of the Company or its Subsidiaries to curtail or cause
any business they are currently, or in the last 36 months have been, transacting
with the Company and its Subsidiaries (the "Non-Compete").
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Nothing herein will prevent Executive from being a passive owner of not more
than 1% of the outstanding stock of any class of a corporation which is a
competitor of the Company or its Subsidiaries and which is publicly traded, so
long as Executive has no participation in the business of such corporation.
During the Non-Compete Period, Executive shall not, without the Company's prior
written consent, directly or indirectly, knowingly solicit or encourage or
attempt to influence any employee to leave the employment of the Company or any
of its Subsidiaries.
"Competitive Business" shall mean engaging in "Business" within the
"Restricted Territory." "Business" shall mean manufacturing, distributing,
wholesaling or retailing of orthotics or prosthetics, or the operation of
clinics to fit patients for orthotics or prosthetics, or any other related
businesses which the Company and its Subsidiaries are engaged in during and at
the expiration of the Employment Period. "Restricted Territory" shall mean the
United States of America, the District of Columbia and any U.S. territory in
which the Company or any one or more of its Subsidiaries conducts Business
during and at the expiration of the Employment Period.
(b) If, at the time of enforcement of any provision of paragraph 5(a)
above, a court holds that the restrictions stated therein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope, and geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
(c) The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this paragraph 5;
therefore, in the event of a breach by Executive of any of the provisions of
this paragraph 5, the Company or its successors or assigns may, in addition to
other rights and remedies existing in its favor, apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce or prevent any violations of the provisions
hereof.
6. Confidential Information. Executive acknowledges that the information,
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observations, data and trade secrets (collectively, "Confidential Information")
obtained by him during the course of his performance under this Agreement, and
previously as an employee of the Company and/or its Subsidiaries, concerning the
business or affairs of the Company or any of its Subsidiaries are the property
of the Company and its Subsidiaries. For purposes of this Agreement, "trade
secret" means any method, program or compilation of information which is used in
the Company's or any Subsidiary's business, including but not limited to: (a)
techniques, plans and materials used by the Company and its Subsidiaries, (b)
marketing methods and strategies employed by the Company
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and its Subsidiaries, and (c) all lists of past, present or prospective
customers, suppliers, referring physicians and all other referral sources of the
Company and its Subsidiaries. Executive agrees that he will not disclose to any
unauthorized Person or use for his own account any of such Confidential
Information without the Board's written consent, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of the Executive's acts or omissions to act or
become known to the Executive lawfully outside the scope of his employment under
this Agreement. Executive agrees to deliver to the Company at the termination of
his employment, or at any other time the Company may request, all memoranda,
notes, plans, records, reports and other documents and its Subsidiaries which he
may then possess or have under his control.
7. Inventions and Patents. Executive agrees that all Confidential
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Information and all inventions, innovations or improvements in the Company's and
its Subsidiaries' method of conducting their respective businesses, or any
reasonable development or extension of such businesses (including new
contributions, improvements, ideas and discoveries, whether patentable or not),
conceived or made by him (whether individually or in conjunction with other
Persons) during the Employment Period belong to the Company and its
Subsidiaries. Executive will promptly disclose such inventions, innovations or
improvements to the Board and perform all actions reasonably requested by the
Board to establish and confirm such ownership.
8. Other Businesses. During the Employment Period, Executive agrees that
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he will not, except with the express written consent of the Board, become
engaged in, render services for, or permit his name to be used in connection
with, any business other than the business of the Company and its Subsidiaries.
9. Annual Physical Examination. The Executive will assist the Company and
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its Subsidiaries (without cost to the Executive) in obtaining key man life and
disability insurance, including, without limitation, to submitting to an annual
general physical examination (and such other physical examinations requested by
the Company's insurers), and to share the results of such examinations with the
Company and its insurers.
10. No Inconsistent Agreements. Any and all employment, consulting or
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other similar agreements heretofore executed between the Company and/or its
Subsidiaries on the one hand and Executive on the other are hereby terminated.
11. Notices. Any notice provided for in this Agreement must be in writing
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and must be either personally delivered, sent by overnight courier (e.g.,
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Federal Express) or mailed by first
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class mail, to the recipient at the address below indicated:
To the Company:
Hanger Orthopedic Group, Inc.
0000 Xxx Xxxxxxxxxx Xxxx (Xxxxxx Xxxxx)
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
To Executive:
Xxx May
X.X. Xxxxxx, Inc. of Georgia
0000 XxXxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy of any of the foregoing notices to:
Freedman, Levy, Xxxxx & Xxxxxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X. (Xxxxx 000)
Xxxxxxxxxx, X.X. 00000
Attention: Xxx X. Xxxxxxxx, Esq.
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered,
sent or mailed.
12. Severability. Whenever possible, each provision of this Agreement will
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be interpreted in such manner as to be effective and valid under applicable law.
The parties agree that (i) the provisions of this Agreement shall be severable
in the event that any of the provisions hereof are for any reason whatsoever
invalid, void or otherwise unenforceable, (ii) such invalid, void or otherwise
unenforceable provisions shall be automatically replaced by other provisions
which are as similar as possible in terms to such invalid, void or otherwise
unenforceable provisions but are valid and enforceable and (iii) the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
13. Complete Agreement. This Agreement, those documents expressly referred
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to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
14. Counterparts. This Agreement may be executed on separate counterparts,
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each of which is deemed to be an original
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and all of which taken together constitute one and the same agreement.
15. Successors and Assigns. This Agreement is intended to bind and inure
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to the benefit of and be enforceable by Executive and the Company, and their
respective successors and assigns. Executive may not assign his rights or
delegate his obligations hereunder without the prior written consent of the
Company. The Company may assign its rights and delegate its duties hereunder
without the consent of the Executive to Permitted Transferees.
16. Governing Law. All questions concerning the construction, validity and
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interpretation of the Agreement will be governed by the internal law, and not
the law of conflicts of the State of Maryland.
17. Remedies. Each of the parties to this Agreement will be entitled to
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enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. Executive acknowledges that in his past, present
and future capacity as an executive officer of the Company and/or its
Subsidiaries, he was, is and will be critical to the success of the Company and
its Subsidiaries and that the Company would not have consummated the Purchase
unless Executive entered into this Agreement. Executive further acknowledges
that his material breach of this Agreement would cause the Company and its
Subsidiaries material adverse harm, including lost sales, profits and growth
potential. Executive believes it would be just and equitable for a court to
consider the foregoing factors when accessing damages against Executive for his
material breach of this Agreement.
18. Amendments and Waivers; Third Party Beneficiaries. Any provision of
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this Agreement may be amended or waived only with the prior written consent of
the Company and Executive. The failure of either party to insist, in any one or
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
Each direct and indirect Subsidiary of the Company shall be a third party
beneficiary of the Executive's obligations under this Agreement, provided that
this Agreement may be amended in any manner without the consent of such third
party beneficiaries.
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19. Definitions. "Person" shall mean and include an individual, a
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partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a governmental entity or any department or agency thereof.
"Permitted Transferee" shall mean (a) any successor by merger or consolidation
to the Company or any Permitted Transferee; (b) any purchaser of all or
substantially all of the Company's or any Permitted Transferee's assets; and (c)
any lender to (i) the Company, (ii) any Permitted Transferee and/or (iii) any
affiliate of the Company or of any Permitted Transferee. "Subsidiary" shall mean
any Person which the Company has the direct or indirect right to control, direct
or cause direction of management and policies of, whether through the ownership
of voting securities, by contract or otherwise, including but not limited to
X.X. Xxxxxx, Inc. of Georgia.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
HANGER ORTHOPEDIC GROUP, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President and Chief Executive
Officer
/s/ Xxx May
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Xxx May
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